LJWorld.com weblogs Town Talk
City ends negotiations to purchase Abe & Jake's building next to City Hall
Well, it looks like dreams of Lawrence perhaps having the most picturesque Planning and Development Services offices in the country have been dashed.
There had been quite a bit of speculation in certain real estate circles that the city of Lawrence was close to buying the Abe & Jake’s Landing building that is immediately east of City Hall.
The city was interested in the building as a home for a combined office for its Planning and Development Services Department. Currently, the building permit and code enforcement portion of that department is in the former Riverfront Mall, while the planning portion of the department is in City Hall. The city has long wanted a combined office so it can have a “one-stop shop” for builders and developers doing business with the city.
And what a stop that would have been. If you have forgotten, the Abe & Jake’s building is one of the more unique in the city. The old 19th Century industry building sits along the south bank of the Kansas River and has huge windows overlooking the Kaw.
But it appears the deal is not to be. Mayor Bob Schumm confirmed to me that the city had been working for about four months on a potential purchase. But after architects brought back estimates on what it would cost to renovate the 24,000-square-foot building — which has about 50-foot-high ceilings in most places — the city recently backed away from the deal.
Schumm said he doesn’t see much chance the city will pursue the building in the future, and he said the city currently is not looking at any other locations for a joint Planning and Development Services office.
The deal would have come with an interesting twist: The city would have been buying a building it already owns. The building and property came under the ownership of the city when it purchased land in the area for City Hall. But the city in the 1990s granted Lawrence businessman Mike Elwell a low-cost, long-term lease on the building, in exchange for him making about $2 million worth of improvements to what had become an eyesore of a building.
Elwell’s lease on the building runs into 2087. The city really would have been purchasing that lease.
Elwell has made no secret that he wants to sell his rights to the building. We reported in January 2011 that the building — which basically has been an event venue and nightclub since Elwell finished the building in 2002 — was on the market for $1.3 million.
At the time, Elwell said he was receiving some interest from hotels and others who wanted to use the building as a small-scale convention center and events venue. But he said the slow economy was holding back those sort of deals. It will be interesting to see what eventually lands at Abe & Jake’s.
The fact the city was contemplating a deal for the property also brings up an interesting point. According to my sources, the city believed it could purchase and perhaps renovate the building without having to raise any taxes.
If so, this is just another reminder of how unique of a financial position the city is in. It has access to cheap money through the bond market that is lending money at historically low rates, and the city’s bond and interest fund has very sizable reserves at the moment.
Let’s do a little back-of-the-napkin math on all the projects the city has or plans to do without raising taxes: $25 million for a recreation center; about $7 million in infrastructure for the future business park at the former Farmland Industries site; let’s estimate $3 million for the Planning and Development Services offices; and then there is the approximately $300,000 per year the city says it has to cover the expected operational shortfall of the proposed recreation center. That $300,000 per year probably could finance about a $4 million bond.
That’s just off the top of my head, and the amount comes to $39 million the city can put toward a project or projects without having to raise taxes. I wonder how many folks realize how unique of a time period Lawrence city government finds itself in these days.
More on that another day.