$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.