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Wicked Broadband project seeks $500,000 city grant; downtown hotel project seeks adjustment to incentives package; historical society seeks $20k for new exhibit

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Reading the agenda for Tuesday night’s Lawrence City Commission meeting is kind of like reading my household’s credit card bill: There are plenty of questions, and all the answers seem to have dollar signs.

There are three outside organizations requesting financial assistance from the city, with two of them each asking for a half-million dollars.

We’ll try to fill in more details later, but here’s a look at the basics of the requests:

• Lawrence-based Wicked Broadband announced last month that it will start a pilot project to bring super fast 1-Gigabit Internet service to a neighborhood later this year.

A kick-off event for the project spelled out a lot of details about how the company, which previously did business as Lawrence Freenet, could bring the same type of high-speed Internet service to Lawrence that Google Fiber is bringing to Kansas City. At that event, the idea of financial incentives from the city wasn’t envisioned. Well, it is now.

The company has filed an application for a $500,000 economic development grant from the city, plus is asking to receive up to a $20,000 a year rebate in franchise fees it pays to the city. It also wants to have the right to enter into $10 per year leases to use a portion of new fiber optic cables that the city plans to install throughout the community in future years.

Joshua Montgomery, co-owner of Wicked Broadband, said there are several factors that have caused him to rethink the need for city incentives for the project. But perhaps the largest is that he’s been contacted by several significant New York-based capital investment companies that are interested in investing in a locally owned, high-speed Internet service. Those investors have made it clear that the city of Lawrence needs to do something to show that it is committed to the idea of bringing a high-speed network to the city.

“If the city says that it is behind it 100 percent, that opens the door for the next $30 million in private funding that will be needed to spread this service to the rest of the community,” Montgomery said.

Montgomery said the $500,000, one-time grant would allow the service territory for the pilot project to grow to 1,000 households, up from 500. The neighborhood or neighborhoods haven’t been selected yet. Wicked is taking pre-registrations for the service on its website. The neighborhood with the highest percentage of residents pre-registered will serve as the pilot project. An announcement is expected June 15.

Montgomery said he and his business partner and wife, Lawrence school board member Kris Adair, are putting up $500,000 in private money for the pilot project.

City commissioners on Tuesday aren’t being asked to approve the request. Instead, Tuesday’s vote is just to direct city staff to begin analyzing it.

Wicked Broadband’s service will be a direct competitor to existing Internet providers, such as Knology and AT&T, which generally do not receive such city subsidies. So, it will be interesting to hear what those companies have to say as the process unfolds.

As for Montgomery, he said he’ll argue that the city won’t be making an investment in a private company as much as it will be making an investment in a new infrastructure system that will be critical to future commerce. “It is an economic enabler,” Montgomery said.

•••

The second request comes from a group led by Lawrence businessman Doug Compton, which is seeking to build a new hotel at the southeast corner of Ninth and New Hampshire.

It is a bit more complicated to understand, and I’ll try to get a better handle on the numbers before Tuesday’s meeting. But the request seeks to raise the amount of Tax Increment Finance dollars the hotel is eligible to receive to $4 million, up from $3.5 million.

Unlike the Wicked Broadband request, this doesn’t involve the city writing a $500,000 check to the development. Instead, a TIF allows the project to get a rebate on a certain percentage of the property taxes it pays. It is kind of like a tax abatement, except the money has to be used to pay for infrastructure type of expenses. In this case, that includes a private parking garage for the hotel.

What makes it a bit complicated is that the developers also have proposed a multistory apartment/office project for the northeast corner of the intersection. It also uses Tax Increment Financing. It looks like a likely option is to increase the amount of TIF money available for the southeast corner hotel project by reducing the amount of projected TIF revenues available to the northeast corner apartment project.

If that is ultimately what happens, then the overall amount of incentive basically would be a wash. We’ll have to see how those details work out.

The more interesting part is what developers have said about the hotel project. It has had its necessary building approvals for months, but hasn’t yet started construction. A letter to the city now makes it clear that there are financial questions the investors are trying to answer.

Bill Fleming, an attorney for the development group, told the city in a letter that “the hotel investors are keenly interested in the ‘cost per key,’ which is the average cost for each hotel room.”

If the additional $500,000 in TIF money is not available to the hotel project, then that will raise the average cost per room the investors must pay.

“The investors may conclude the project is not feasible at that cost per key, and the project in that case will not proceed,” Fleming wrote.

That would be a major turn of events for the project, which faced stiff opposition from the adjacent East Lawrence neighborhood, and had to fight hard to win city approval.

•••

Maybe the folks at the Douglas County Historical Society are more than just masters of history. Perhaps they also are masters of timing. After those two big-ticket items, they are asking for a mere $20,000 in city funding. The money will be used to help fund a permanent exhibit on the second floor of the Watkins Museum commemorating the 150th anniversary of Quantrill’s raid on Lawrence.

The new exhibit is set to open on Aug. 17, and will “explore Douglas County’s history, issues that shaped the development of the community, and events that made it a focus of national attention.”

Ultimately, the exhibit will be expanded to the third floor of the museum. The bulk of the nearly $257,000 in exhibit costs has come from private individuals, businesses and grants.

City staff members are recommending approval of the $20,000 in funding. The money would come from the city’s guest tax fund, which receives its revenue from the guest tax charged at hotel and motel rooms.

Commissioners meet at 6:35 p.m. Tuesday.

Comments

Pr0digy 10 months, 3 weeks ago

https://www.lawrenceks.org/assets/agendas/cc/2013/05-14-13/wicked_fiber_application_economic_development_funds.pdf

Chris or anybody could you explain on page 2 of the Application for Economic Development Support/Incentives why COMMUNITY WIRELESS COMMUNICATIONS CO. shows on the Business Entity Search Station (BESS) for the Secretary of State's office as formed in 2006 and the net index started November 6th 2010 yet there were zero entries before hand? At what time did they first apply for city funds? I am confused it seems these test all started spontaneously and curious who actually gets those speeds

Also why Kristie Adair is listed as the owner/operator on the application to the city but the Secretary of State's corp directory site list Joshua Montgomery as the President or equivalent and Kris Adair as the Secretary or Equivalent in the Annual report submitted December 2012.

I know to some this may seem trivial but once the schools start requesting part of the network well it may become quite an issue...

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drbloom 11 months, 1 week ago

chootspa just because you apparantly can post 100 posts a day doesn't mean you speak for the average Lawrence resident. I know that Greek Housing at KU are enormously thankful for the service Wicked has provided. I have been overdelivered on speed and reliability for as long as I have been a customer. The costs may not be free, but they do help normal residents afford internet service that allows real interaction with the internet.

If someone on this board finds their opinion so important, go run for office and put yourself out there. As it is, you are just another internet troll crying about Compton and Wicked. I am not impressed.

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bballwizard 11 months, 1 week ago

Do not give wicked broadband $500,000.00!!!!!!!!!!!!!!!!!!!!'n

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russkie10 11 months, 1 week ago

If Wicked had NY investors lined up, then let them provide the $500K, Why should the city give any individual that amount of cash that won't benefit the city at large? He has gigantes to even ask the city for it.

2

J_Brown 11 months, 1 week ago

If you keep removing everything that is posted negative about Wicked soon there will be nothing left but positives. Hardly an accurate discription of this disscssion.

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Bob Forer 11 months, 1 week ago

Ponying up half a million dollars will certainly demonstrate to outsiders that the City of Lawrence is committed .....

to acting like a fool.

And what is that saying about a fool and his money?

2

jafs 11 months, 1 week ago

Personally, I don't need faster internet service, and am quite happy with what I have.

I certainly wouldn't be in favor of spending any tax revenue on creating ultra fast service, especially given the information above about this company.

1

Richard Heckler 11 months, 2 weeks ago

New and expanded growth = higher crime rates though never receive mention which is draining our pocketbooks and raising our taxes. Thanks local profiteers.

0

Richard Heckler 11 months, 2 weeks ago

Those tax incentives means new tax dollars are not going into the cookie jars. Why the preferential treatment?

If the city does not need the tax dollars why not issue 20 year tax abatements to the senior citizens of Lawrence?

If the city does not need the tax dollars why did city hall increase utility rates?

If developers cannot afford the developments which are being introduced perhaps the projects should be set aside.

Developers are NOT doing the community any favors after all this is about big profits for developers, landowners,financial institutions and the executives in the real estate industry.

Do taxpayers want the new tax dollars in the cookie jars? So maybe OUR residential property taxes can be significantly decreased.

2

Jonathan Fox 11 months, 2 weeks ago

I'm still trying to understand what's up everybody's A about a tax abatement? That empty lot isn't helping Lawrence any, but taking a smaller percentage of taxes from a huge hotel is still a huge income for the city. People here literally think that money is just being given to Compton. Please take an economics class so we can create some jobs and economic growth in Lawrence.

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Richard Heckler 11 months, 2 weeks ago

What happens to the grant money IF the $30 million investment $$$$$$ do not surface?

Where are the letters of financial commitment bearing a financial institution letterhead in support of Wicked Broadband?

Are some KCMO "retailers" seeking the same market?

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Richard Heckler 11 months, 2 weeks ago

Typically hotel rooms are filled 5 days a week in metropolitan areas as sales people travel the USA to make money. There are also business conventions but largely it is sales people. Fly in Sunday night or Monday morning and pull out on Fridays.

This is why weekend rates are quite good in the metropolitan areas. Free Parking, happy hours and such.

In Lawrence the busiest days will be Friday and Saturday. Not every hotel is booked unless there are events scheduled typically KU stuff.

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Richard Heckler 11 months, 2 weeks ago

Developers coming in after the fact for more taxpayer money has become a pattern NOT an exception.

The powers that be like to paint concerned citizens as "naysayers" or "anti growth" for being a bit questionable about reckless use of tax dollars for reckless development decisions. Note 25 laters the cost of living continues to rise in spite of blowing tons of tax dollars on local developers.

How deep is this tax dollar money hole? Where is the payback for using taxpayers money? How red is the red ink regarding no rate of return on the tax dollar investments?

This game is for selling real estate NOT economic growth or jobs?

Why is it taxpayers must "buy" jobs for the community? Where did this nonsense originate? The powers that be then proceed to intimidate the public as "unfriendly to business" simply because many taxpayers see this corporate welfare as a scam on the taxpayers. That's right a scam because citizen taxpayers are in the red ink hole from day one. The more corporate welfare that goes up in smoke the brighter the red ink gets = zero net gain on the tax dollar investment.

Who truly believes that taxpayers do not want a sweet return on THEIR tax dollar money? Low wage jobs never pay back in addition to relying heavy on Social Services. The circumference of the red ink hole gets larger and the hole gets deeper.

Who wants economic displacement?

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Currahee 11 months, 2 weeks ago

The investors may just want to see a city commitment because it would cement government support for the project. More importantly, google fiber has been luring in businesses to KC because of the the availability of cheap fast internet. Not having gigabit internet reduces lawrence's attractiveness for potential businesses. At only 500k, I would consider this a bargain and a must in order for lawrence to compete with the KC metro area.

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Richard Heckler 11 months, 2 weeks ago

There are consequences of helter skelter aimless spending, aimless growth and over saturation of the markets that usually goes unmentioned by the local media.

Big city type growth brings on big city type crime rate increases not to mention city hall, elected officials and local profiteers are draining OUR pocketbooks and raising OUR taxes.

Some people move to smaller communities to get away from big city crime only to discover oops this plan isn't working.

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workinghard 11 months, 2 weeks ago

I did put in 1900 Harper, just north of Kennedy, and it says service unavailable.

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workinghard 11 months, 2 weeks ago

So I decided to do an availability search of all the elementary schools. The only schools with access was Schwegler (no surprise there-close to 23rd St), Cordley (no surprise-close to Mass St, Hilltop (again, no surprise) and Kennedy (that one was a surprise). I imagine Kennedy gets service because it is close to businesses on 23rd St. So if you live around any of the other elementary schools, you most likely not have access to Wicked. Now the question is, are they really trying to provide the service to the citizens or just KU students and businesses. Notice they don't name the New York investors. Why don't they ask KU and the business for the money and not taxpayers?

0

workinghard 11 months, 2 weeks ago

They still do NOT provide service to North Lawrence or East Lawrence. Tax payers should not be required to fund something they cannot access. At least ATT and Knology is available to most citizens. Montgomery keeps ignoring this issue and sweeps it under the rug. Until he provides service to these areas he should not receive taxpayer money.

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jhawk1998 11 months, 2 weeks ago

NO NO NO to more spending, even though I have a soft-spot for the historical society request, I just paid my property taxes and am broke. If the hotel is going to be such a lucrative investment they don't need my help. If the broadband service is going to be so popular they don't need my help. How bout we all send in what we can to pay for the historical exhibit and we call it a day? I say there should be a spending freeze this summer so we can all take a deserved vacation. I don't know about the rest of my fellow Lawrencians but I could use a break from all this money talk.

3

bearded_gnome 11 months, 2 weeks ago

okay in order that would be:

  1. no. suspicious of montgomery

  2. no. already enough incentives and don't like plans for NE corner of 9th.

  3. yes, should've had this kind of exhibit perminent in our community many years ago.

2

toe 11 months, 2 weeks ago

Compton's plea to commission. "You like Fritzel better than me. That's not fair!!"

3

Lawrence Morgan 11 months, 2 weeks ago

ljwhirled - thank you for your excellent comments. Lawrence needs a high speed internet badly and I, for one, appreciate what you've written here.

I am all in favor of a local ISP (Internet Service Provider). Could you give more information on the speeds so that the average person could understand it?

In a different area, If Lawrence had a local power service - which I think at one time was a possibility - much would be possible. But Lawrence, like San Francisco, didn't develop that possibility. I wonder about Baldwin City, which does have its own power service. Recently Santa Clara (in Silicon Valley) put in internet via the power lines, so that all of its residents could have the internet (and Santa Clara owns its own service). Could Baldwin City do the same? I know it wouldn't be google speed, but it would make the whole town internet ready at almost no cost, and that could be a major turning point for Baldwin City.

Also, what other cities in Kansas have their own power plants?

1

hs_reader 11 months, 2 weeks ago

Did everyone miss this or is it old news by now? "What makes it a bit complicated is that the developers also have proposed a multistory apartment/office project for the northeast corner of the intersection."

So they want to build another building at that intersection? Is there not enough vacant office space in the downtown area? Or housing? I hope they put in a stop light and not a roundabout a block from Mass street like I've heard they want to do. Not very pedestrian friendly.

1

Tomato 11 months, 2 weeks ago

If the city was going to spend 500k on showing it's committed to improving its infrastructure - why wouldn't it spend that money on trying to entice Google here instead of spending it on trying entice New York venture capitalists?

1

patkindle 11 months, 2 weeks ago

amazing, how soon we forget, I remember everyone oohing and aahing about how wonderful freenet was because they helped po folk and were competition to sunflower you folks sure changed horses in midstream plus know you can only cuss the journal world for their paper and not the internet, must be frustrating for you

0

waitjustaminute 11 months, 2 weeks ago

Free money, just show with a half-baked plan, give some lame excuses about how it's needed for this and that, and then wait for the checkbook to open. All the while, basic city services go underfunded, delayed and scoffed at. And it it's this bad at the local level, just imagine how screwed the system is at the state and federal levels.

2

Lane Signal 11 months, 2 weeks ago

When the city leaders look at Mr. Montgomery's track record, I think they should see a string of unfulfilled goals, but more than that, I think they will see a string of sneaky and deceptive business practices. Freenet was represented as a grass roots, nonprofit organization created to bring internet to the masses. It never really worked that way and the number of lower income beneficiaries was limited. Freenet may have been nonprofit, but it was designed to turn a profit on the support side. Now he wants us to pony up a huge pile of cash. I think not. It might be different if there was a track record of good faith effort and success realizing goals.

4

optimist 11 months, 2 weeks ago

So you don’t see a difference in asking the city to cut a check and the city simply not demanding a check from him? I don’t see his getting a tax reduction as taking anything from the city as the source of the money is not the city but rather the individual. As part of this project the city will receive infrastructure improvements to the area paid for by the builder. The city gets the benefit of that and the tax revenue that the jobs that are provided and the visitors that will stay there will bring. That in my eyes is a far better “investment” than cutting a check for some Google Fiber wannabe’s folly. I realize this concept is a little hard for some to get their heads around but that’s probably why Lawrence falls so low on the list of places to do business. Too many that think like you…

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jafs 11 months, 2 weeks ago

I love this combination:

Compton isn't asking for anything from the city. He is simply requesting to offset his costs...

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optimist 11 months, 2 weeks ago

I know Compton is the guy that everyone likes to hate, but I can't understand why. Is it envy because his is bigger than yours (bank account of course)? While I have no doubt that Compton does okay for himself I'm betting he isn't a fraction as "rich" as some of the haters out there assume. His project will bring jobs, some short-term and others long-term. The people that get these jobs will be glad to have them even if some of you don't think the jobs are worthwhile. These are two completely different projects we are talking about here. While the Wicked proposal is essentially a draw from the City's coffers, the Compton project will result in net gains to the city in the form of property taxes. Compton isn’t asking for anything from the city. He is simply requesting to offset some of his costs (some of it city infrastructure around the area) in the form of reducing his property tax costs for a defined period of time. Even during the period for which the property tax breaks occur the gain in property tax revenue to the city will be higher than either of the properties currently brings. Only a fool would look at that as a bad investment from the city’s perspective. As for shifting business from other hotels I have a couple of things to say to that. That assumes the city will not grow or draw in outside events, etc. With the additional hotel space the city can compete for additional outside events that it would otherwise not be able to compete for. The rooms must come first in order to court these events. As for competing against other hotels, that’s not necessarily a bad thing. Bringing in newer facilities will encourage other hotels to provide competitive amenities, services and pricing in order to compete. That’s never a bad thing for the consumers. The more people from outside Lawrence that come here to visit the more that will be spent by them and the more revenue to the city to provide things like the library and other projects.

0

grammaddy 11 months, 2 weeks ago

Freenet sucks as an internet provider. I doubt if it will b e any better as WICKED.

3

J_Brown 11 months, 2 weeks ago

Joshua Montgomery, co-owner of Wicked Broadband, said there are several factors that have caused him to rethink the need for city incentives for the project. But perhaps the largest is that he’s been contacted by several significant New York-based capital investment companies that are interested in investing in a locally owned, high-speed Internet service. Those investors have made it clear that the city of Lawrence needs to do something to show that it is committed to the idea of bringing a high-speed network to the city.

“If the city says that it is behind it 100 percent, that opens the door for the next $30 million in private funding

Does anyone actually belive this?

2

1yardstare 11 months, 2 weeks ago

The real SCAM is Fritzel taking the City's taxpayers for millions and millions for Rock Chalk Park. Don't forget what happened in Junction City.

0

nouseforaname 11 months, 2 weeks ago

Please don't give any more money to Josh Montgomery. He's really good at telling people what they want to hear and then never fulfilling those visions. Plus, because he's a "local" service he seems to believe that the City needs to subsidize his operations. How many of the Freenet subscribers were low-income? I bet it falls way short of his initial pitch that he told the Commission. The sad thing is, there's no way for the City to recoup any of the money once it gets handed over to Montgomery and he falls way short on his promises.

As for Compton, does Lawrence have vacancy problems with hotel rooms? I can't imagine that there's that many people visiting Lawrence often enough to support another hotel. I understand KU events bring in people, but those are specific events and we have a lot if hotels it seems like already. While I appreciate development of the downtown area, I don't want to see another Riverfront Mall failure (which, ironically, is now partially a hotel) just because some developer only sees the money to be immediately made in construction.

5

jafs 11 months, 2 weeks ago

It's very unlikely that investors didn't have the same questions before the project was approved, and could have make these requests at that time.

Getting the project approved without asking and then tacking on this request now seems very manipulative to me.

12

Bud Stagg 11 months, 2 weeks ago

Mr. Compton, Gamble with your own money. That hotel will not do much for the economy or provide good jobs. It will probably displace another hotel. I don't think the city should be a part of putting one hotel out of business or putting another in business.

If Mr. Compton wants to bring some new industry or high paying jobs to town, then we can talk.

9

Matthew Herbert 11 months, 2 weeks ago

The city can't SERIOUSLY be considering giving Wicked BadFreenet half a million dollars, right?

3

gccs14r 11 months, 2 weeks ago

So if Compton doesn't build his hotel, maybe the lot can be converted to greenspace and we can again have an outdoor movie venue downtown.

7

Keith Richards 11 months, 2 weeks ago

Compton is worth millions upon millions and he is worried about $500k making this project unfeasible?

If the hotel has 100 rooms, the extra TIF would amount to $5k/"key". At ~$150/night room cost, it would only take the hotel 33 nights to recoup the $500k TIF.

SCAM

10

average 11 months, 2 weeks ago

Everyone who saw this coming, feel free to send in another $10 to a project with no 'here's how many people we need in neighborhood X' nor any timeline.

But, you can be pretty sure he'll be at city hall again, real soon now.

3

Amy Heeter 11 months, 2 weeks ago

Just say no to Joshua, Freenet, wicked and New York city.

7

jack22 11 months, 2 weeks ago

It's time for the city to get Doug Compton his own charity meter like the ones we set up downtown to help the homeless. Anytime anyone wants to help Doug buy a new apartment complex or jet airplane they can drop their spare change into a meter in front of his hotel. I'll be the first to donate my fifty cents to buy the meter so Doug doesn't have to stand on the sidewalk all day with his hat in his hand asking us for another hand out.

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Keith 11 months, 2 weeks ago

Regarding the hotel, we must give the already wealthy everything they ask for, then listen to them gripe about the 47% takers.

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Douglas Thompson 11 months, 2 weeks ago

Why is it every time Wicked/Freenet/Whatever They Are Called Today is in the news, they are asking the city to give them something? Free access to water towers, discounted access to right aways, $500,000.

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