photo by: Richard Gwin

The East Hills Business Park, located along Kansas Highway 10 in East Lawrence, celebrated its 20th anniversary in 2008.

At their meeting on Tuesday, members of the Lawrence City Commission will try to settle business that began nearly 30 years ago with the conception of the East Hills Business Park.

East Hills was a joint venture between the city, Douglas County and the Economic Development Corporation of Lawrence and Douglas County. Several lots remain unsold, and with them more than $400,000 of outstanding special assessments. Those assessments remain on the books, and the city and county are working on an agreement to settle a large part of them.

In a report in July, city auditor Michael Eglinski noted a history of the city not collecting some economic development-related payments on deadline. He said in the report that approximately $450,000 in special assessments for property at East Hills was due in May 2014 from Douglas County but was never received. In August 2015, the City Commission waived $45,000 of the special assessments. Eglinski said commissioners needed to be presented with options on collecting the rest of the payment, deferring or waiving it.

At that time, Assistant City Manager Diane Stoddard said there was no risk to the city of not collecting or forgetting about those payments.

“Staff and the county has been in regular discussions about that dating back to 2014,” Stoddard said. “It was the intention of both parties to handle this issue.”

Essentially, the special assessments cover infrastructure costs related to building East Hills. The city set up a benefit district at that time, which meant the company that bought the lot would eventually pay special assessments to cover much of those infrastructure costs, as opposed to local taxpayers. Waiving special assessments from unsold lots means that the city — and by extension taxpayers — will certainly not recoup those costs as was originally thought.

As part of the 1989 partnership, the county purchased all of the land while the city funded or financed the infrastructure for the project, such as street and sewer projects. The county made the land purchase with the intention that it would get its investment back as lots were sold, according to a letter from the county administrator to the city. But not all went as planned.

“Because the competition for new business escalated in the ’90s, making it necessary to offer free land to be competitive, things did not work out as intended,” County Administrator Craig Weinaug said in a letter to City Manager Tom Markus.

There are eight lots within East Hills that remain unsold and are still owned by the county, according to a city memo. Though the bonds the city originally used to finance the street and sewer projects have been paid in full, the special assessments on these lots have yet to be collected. The outstanding assessments tied to those lots are estimated at $415,000, which includes accrued interest.

As the owner of the lots, the county has paid property taxes on them and 5 percent of the undeferred costs annually, according to the memo. Weinaug said following the agreement as originally laid out would put undue financial burden on the county.

“Following the requirements of the agreement literally would put all of the costs on the county, even though that was not the intention of anyone at the time that the agreement was approved,” Weinaug wrote. “The County therefore requests that the remaining assessments be waived.”

The city notes in the memo that five of the eight lots will never be developed. Two of them are serving as storm drainage for the park, and three “have significant development challenges” because they are irregularly shaped and/or landlocked.

City staff are therefore recommending that the special assessments on those five lots, which total about $260,000, be waived entirely. As far as the assessments on the remaining lots, staff are recommending that they be “deferred indefinitely” until the lots are sold for development.

City commissioners will discuss waiving and/or deferring the special assessments at their meeting at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.