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$500k grant to Wicked Broadband up for debate at City Hall; tax abatements and Santa Fe Depot project also on tap for discussion


Get out your favorite pie chart (yum, pie) and your best laser pointer because it is going to be a day of numbers and economic development discussions at Lawrence City Hall.

I've doubled-checked and there won't be any actual pie, but here is a look at what's on tap (yum, on tap) today for a couple of City Hall meetings.

• After months of process, the city's Public Incentives Review Committee at 4 p.m. today will consider a request from Lawrence-based Wicked Broadband to receive a $500,000 grant to help the company create a super-fast Internet project that is similar to what Google is doing in Kansas City. As we reported in November, Wicked, formerly known as Lawrence Freenet, has chosen the downtown and East Lawrence neighborhoods as the site for a pilot project to bring super-fast 1 gigabit service to about 1,100 homes in the area.

But Wicked leaders say for the project to move forward they need a $500,000 grant from the city, along with several other incentives that include long-term, low-cost lease agreements that would allow the company to use a portion of city-owned fiber.

The city's public incentives committee, which normally looks at requests like tax abatements, is being asked to weigh in on the request. City staff members already have evaluated the request and are recommending against it. They note the unusual nature of providing a direct payment of $500,000 to a company, and they recommend that if the city wants to spend that type of money to advance fiber technology in the city, it ought to send out a request for proposals to hear what other companies may be able to provide.

This one may get very interesting, though, because Wicked leaders are using the request to highlight how little success the community has had in creating new jobs over the last decade. As we have documented several times over the past few years, it has been a bad decade for job growth in Douglas County, even though communities like Manhattan and Columbia, Mo., have seen some significant job gains.

"Clearly, our economic development policies are not working here," said Kris Adair, an owner/operator of Wicked Broadband and a Lawrence school board member. "I'm not going to say there is one person to blame, but I feel like the city may not be looking at things in an innovative, 21st century way. Other economies our size have been growing during this time period."

Adair said she is confident that if Lawrence had better access to high-speed Internet, it would get more consideration from companies looking to move to the community and also would foster more expansion and business startups. Wicked is projecting that once the pilot project is successful, it would seek up to $30 million in capital from private investors and the debt markets to undertake a project that would bring high-speed Internet service to a wide swath of the city.

Adair said Wicked in 2012 offered to donate all of Wicked's assets — a few strands of fiber and a significant amount of wireless Internet equipment totaling about $2.5 million — to the city. The city, however, would have been responsible for taking over Wicked's debt on the equipment, which was about $1.2 million at the end of 2012. Adair said she was disappointed that Wicked's offer never received public consideration from the commission, because she believes it could have helped the city create an innovative broadband network.

City officials, though, also have been miffed, it seems, at certain dealings with Wicked. The staff memo notes that Wicked's parent company, Community Wireless Communications, had signed a contract with the city committing to pay 5 percent of its gross receipts to the city as part of a license agreement for use on certain city structures and rights-of-way. The city notes it has not received a payment since the second quarter of 2012. Adair confirmed Wicked has not made the payments. She said that was partly because the company has incurred some out-of-pocket expenses as part of its efforts to get this pilot project off the ground. She said this latest proposal attempts to address those payment issues. The proposal would provide Wicked a $20,000 per year exemption from franchise fees for each of the next five years. If the proposal isn't approved, company leaders said today, they will pay the balance due to the city within 90 days.

Like I said, all of this may get interesting. But today, it is just getting started. The Public Incentives Review Committee is only an advisory board. It will make a recommendation on the $500,000 grant request and the other incentives. But ultimately, the issue will be brought to the City Commission for a final vote in the coming weeks.

• On to Issue No. 2. (Still no sign of pie.) This one has to do with traditional tax abatements. At their 6:35 p.m. meeting today, city commissioners will consider changing their tax-abatement policy so that projects of smaller dollar amounts can apply for tax abatements.

Currently, the policy states that a project needs to include at least $5 million in new, local investment before it can apply for a city tax abatement. The city late last year, though, deviated from that policy by approving a tax abatement request for a $2.3 million project by Sunlite Science & Technologies, a local manufacturer of LED lighting. Commissioners approved the request, in part, because the company had been housed in the Bioscience and Technology Business Center, which has a goal of being an incubator for startup companies. Commissioners reasoned that it is likely that those startup companies may need tax abatements and other incentives as they move out of the incubator. At tonight's meeting, commissioners will consider whether they want to formally change their tax-abatement policy to allow for the smaller projects.

• Finally, Issue No. 3. Commissioners will need to decide how much money they want to spend on rehabilitating the old Santa Fe Depot in East Lawrence. As we previously reported, the city has been awarded a $1.2 million state/federal grant to rehabilitate the depot at Seventh and New Jersey streets. The grant came with a $350,000 matching requirement from the city.

But upon further review, it has been determined by state transportation officials that some of the city's plans for the depot project aren't grant eligible. That means that if the city wants to complete the project as envisioned, it will need to come up with about $650,000 in local matching money instead of the $350,000 that was originally projected.

Items that have been ruled ineligible for grant funding include work on the eastside parking lot of the building and a host of interior improvements that would be in a space that would still be occupied by the Burlington Northern Santa Fe Railroad. City staff members are recommending that the city eliminate those elements from the project, in order to keep local costs in line with the original estimates. Commissioners will be asked to concur at tonight's meeting, which begins at 6:35 p.m. at City Hall.

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  • Comments

    Nick Combs 4 years, 4 months ago

    So, basically Kris Adair is upset that the city didn't bail them out of $1.3 million dollars in debt and doesn't want to get into business with a company that not only doesn't pay what it agreed to pay but offers as a solution to NOT pay what it agreed to pay for another five years?

    It's rare that I say this, especially after the debacle that is the new track and field stadium, but I applaud our city leaders for being unwilling to give half a million dollars to a company that CLEARLY does not have its stuff together whatsoever.

    For the record, a high-speed fiber optic network would do amazing things for Lawrence, including job creation and making us more attractive to companies, but let's not do it by getting in bed with horrible business people, please.

    Clark Coan 4 years, 4 months ago

    It would be nice to have a downtown supermarket to serve Downtown, East Lawrence and North Lawrence residents. This would probably take a tax abatement and issuance of low-interest industrial revenue bonds. In exchange for these subsidies, they could be required to sell local produce and other food products to further help the local economy. Maybe Compton could invest in such a project since it would serve his apartment renters.

    Phil Minkin says a supermarket could go in the old Borders space. Not a bad idea.

    Joshua Montgomery 4 years, 4 months ago

    Wicked Broadband provides FREE service for Habitat residents, residents of the Lawrence Housing Authority, O'Connel Youth Ranch, Headquarters, Just Food, Judah Worship Center, Ecumenical Christian Ministries, all of Downtown Lawrence (wireless), Relay for Life, dozens of single family homes and the Community Homeless Shelter.

    Our record speaks for itself:

    Letters of Reference from Customers: http://goo.gl/NXQF5u

    Letters of support to the City: http://goo.gl/hHQq30

    Amy Varoli Elliott 4 years, 4 months ago

    Your record does speak for itself, that's why nobody thinks working with you is a good idea.

    Lawrence Morgan 4 years, 4 months ago

    I agree completely with Joshua. Wicked has been in the forefront on this technology, and it provides free service for the above groups of people. I will write city commissioners and any other persons who should be contacted, if necessary, to provide my support for Wicked Broadband. They have been there when other companies have not!

    Matthew Herbert 4 years, 4 months ago

    The strategy here for the city commission is simple. Reject the proposal - get Wicked to pay the money they owe the city and THEN, once the company is cleared of debts to the city, perhaps we can all participate in a good faith debate and discussion. This should be no different than how a real estate transaction would go down (legally); you can't sell a house until the lien has been removed. Until Wicked holds up their end of previous deals, NO NEW DEALS.

    Bob Forer 4 years, 4 months ago

    I agree. Past bad faith in dealings should preclude continued business relationships. But if we are going to follow that rule, shouldn't the city have rejected a no-bid contract with Fritzel on Rock Chalk Park?

    Mike Silverman 4 years, 4 months ago

    AT&T and WOW are living life in the slow lane here in town.

    Kudos to Wicked for at least stepping up to the plate and making a proposal. If nothing else, this city needs to have a conversation about how to get fiber infrastructure built.

    Nick Combs 4 years, 4 months ago

    I 100% agree that Lawrence needs to have a conversation about a fiber infrastructure. It would be a fantastic addition to the city, a jewel in our crown.

    ...if done by a trustworthy, responsible company with an actual proposal, not just a plea for money.

    Clark Coan 4 years, 4 months ago

    Well, Google Fiber is in Olathe, so why can't we get them to come here even if it requires a subsidy?

    Mark Rainey 4 years, 4 months ago

    Google is kind of a joke, where are they providing service? They are interested in locations where overhead utilities only are used because usage fees on poles are cheap. They market this game of "sign up and someday we'll come", but have not delivered, and will ask for subsidies as well.

    Mark Rainey 4 years, 4 months ago

    I don't think google is in Olathe, they have less than a 1000 customers city wide. Google like internet is available now in parts of Lawrence area.

    Dave Greenbaum 4 years, 4 months ago

    I assume to be fair and accurate in reporting the debts owed to the city by AT&T and Knology/Sunflower/WOW have been examined as well as economic impact as these companies outsource jobs outside the community?

    Additionally, I know many of the places Wicked is providing free service received subsidies from the city for operating expenses. If these organizations asked for increases from the city to cover the costs they need to pay for internet service...how that would compare to the 500,000 being asked for by Wicked. Sunflower and Knology provided only minor discounts to their services for these non-profits (non-residential rates for service from these companies is usually 2 x 3 x residential rates). I'd love to see those numbers to get a complete picture.

    Lawrence Morgan 4 years, 4 months ago

    David, I agree with you on this point. Sunflower and Knology have provided only very small discounts to non-profits.

    Richard Heckler 4 years, 4 months ago

    How does the city justify so many tax abatements over the years?

    How is it that the taxpayers can afford such activity?

    Often when abatements expire the receivers say bye bye.

    Another very sweet abatement is on the table tonight for a senior living center to which I say forget it. http://www.lawrenceks.org/assets/agendas/cc/2014/01-21-14/01-21-14_cc_agenda.html

    Taxpayers might realize a substantial fiscal advantage if our city commission did not meet so often.

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