A look at the $200 million debate that is coming to west Lawrence; Schumm seeks to reverse denial of downtown condo project

photo by: Chad Lawhorn

Surely it has to be one of the nicer tractor paths in all of Douglas County. If you haven’t used the new Bob Billings Parkway and South Lawrence Trafficway interchange in west Lawrence, give it a try sometime. Be sure to go on the west side of the trafficway. You’ll find a brand new city-style street — I’m talking two, wide paved lanes, plus room for bike lanes, plus sidewalks on both sides of the street — that stretches a half mile west of the trafficway. Currently, corn fields and pastures line it.

Soon enough, the stretch of road will be the subject of about a $200 million debate.

As we have reported, plans have been filed at City Hall that would add about 2,000 new apartments and about 600 new single-family homes on about 160 acres of property southwest of the new interchange. The development would happen over the course of several years, but will require City Hall approvals. That certainly looks like it could be a tricky approval process. Doing a little math indicates that project is probably about $200 million worth of new development for the city. More on that in a moment, but first a reminder of why this is likely to create debate.

photo by: Chad Lawhorn

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As we reported in May, one city commissioner balked before the process really even got started. Commissioner Leslie Soden voted against even accepting the project’s application for annexation. Typically, commissioners routinely accept such applications, which then allows the annexation request to be heard by the Lawrence-Douglas County Planning Commission, which in turn makes a recommendation to the City Commission. The City Commission makes the final decision on whether the property should be annexed into the city.

The other four commissioners agreed to accept the application, so the project is moving forward and is awaiting a hearing date before the Planning Commission. But Soden’s vote against the project at such an early stage certainly signals that this project will face several hurdles. That’s probably fair enough. The project is large, and by crossing the SLT, it essentially will open up a new frontier for development.

But I found Soden’s reason for voting against the application interesting. She cited costs as her main concern. “We’re talking about reducing services, so the idea of expanding them . . . I feel like the City Commission has goals and priorities, and I’d rather be working on those,” she said at the time.

I caught up with Soden this week to learn more about her thinking. When I asked her about what type of costs she was concerned about, she said she primarily was referring to extension of streets, utilities, other infrastructure, and the annual costs to provide city services like police and fire protection to the area.

The costs to provide services like police and fire protection are real costs for the city to consider. But the cost to extend infrastructure is more complicated. I asked Soden what her understanding was of which infrastructure costs were paid for by the city versus which ones were paid for by developers. She said she’s still trying to learn more about that subject.

“I’m certainly curious about that,” Soden said.

Granted, it is not a well understood subject, but as the city faces tight budgets at a time when developers appear eager to undertake some large projects in the community, it seems like a topic that should get some discussion. Simply put, the city has a lot of ability to make developers pay a lot of the costs associated with new infrastructure for a project. Whether city officials take advantage of that ability can sometimes be a political thing, but there is a policy on the books that allows the city to pass those costs along.

It is called Administrative Policy No. 52. Here are some highlights:

• Developers pay the entire cost of all streets and curbs that are under 31 feet wide. Unless a new thoroughfare is needed to serve a larger area, typical city streets are under 31 feet. The city can provide financing for the projects through a special benefit district, which basically allows the developers to pay for the costs through a special assessment added to their property tax bills.

• In newly developing areas, the total costs of all sidewalks are borne by the developers or property owners benefiting from the sidewalks.

• Underground storm sewers, if needed, are the responsibility of the developer. Those costs aren’t eligible for financing through special benefit districts.

• Costs for new sanitary sewer lines are the responsibility of the developers or property owners who benefit from the new sewer service. Relief sewer lines, which are lines built to reduce the stress on existing sewer lines, are the responsibility of the city.

• Water line construction is done under the supervision of the city, but developers or property owners benefiting from the water service pay for the cost to extend the line. “All local water distribution mains and appurtenances will be normally constructed by the city with full estimated payment to be made in advance of construction by the property owner, developer, or others desiring the distribution main installations,” the policy states. If the city determines that a water main needs to be larger than 12 inches, the city will pay for the extra costs to make the line larger, under the theory that the larger line is providing increased service to other areas of town.

• In addition, the development policy allows the city to charge several other types of fees to cover lesser costs associated with infrastructure. They include a “subdivision sign fee” to cover the cost of street and road signs, a “sanitary sewer post-construction fee” that recoups the city’s cost to do a video inspection of the line, and a traffic signal escrow fee to cover costs related to future traffic signals that may be needed as part of the development.

photo by: Nick Krug

A view looking southeast shows the overpass where Bob Billings Parkway meets the South Lawrence Trafficway on Thursday, April 14, 2016. A residential development is being proposed for the farmland area southwest of the interchange.

Don’t get me wrong, though, there are absolutely costs that the city at-large pays when development occurs. I’m sure some of them are infrastructure-related, because it is tough to come up with a fee that covers every conceivable cost.

But there are also revenues that are generated by a new development. It seems those also should be part of the discussion. When Soden made her vote against accepting the application, I don’t think the city had been presented with any revenue projections for the project.

I was curious about how much new revenue this project would produce for local tax coffers. That’s where the $200 million figure comes into play.

Through the Douglas County Appraiser’s office, I got property valuations for a couple of large, relatively new apartment complexes in Lawrence. The two I chose were The Connection, the 324-unit apartment complex at 31st and Ousdahl, and the 192-unit The Reserve on West 31st Street. The Connection is valued at $30.8 million and The Reserve comes in at $17.1 million. In other words, they are valued at about $85,000 to $95,000 per apartment. Extrapolate that out to 2,000 units, and you have a project that is valued at between $180 million to $190 million. In reality it probably would be higher because this would be brand new construction. And, we haven’t even factored in the single-family homes at this point. To put a $190 million project in perspective, this one 160-acre project would grow the city’s entire tax base by about 2.5 percent.

Based on the current mill levy of 130.992 mills, a $190 million residential project would pay $2.8 million in property taxes per year. This may surprise some, but apartment complexes occupy several of the spots on the top 10 list of largest property tax payers in the county. (Yes, I am searching for an updated list to share with you.)

To be clear, the city would not get all of those new tax dollars. The school district — and the state’s education fund — and the county also would get significant pieces of those new tax dollars. Based on current tax rates, the city would get about $688,000 in new property taxes each year. That, of course, assumes the project doesn’t receive any tax rebates or other incentives. Thus far the development group hasn’t sought any.

Will this project create more than $600,000 worth of new costs per year for the city? If so, what are they? I don’t know the answer to either question. But if Soden’s early opposition is any indication, the community may be gearing up for a debate that was common back in the 1990s and 2000s: Does residential development pay for itself?

That was a really divisive debate back in the day, and like many Lawrence debates, it never really was settled to the satisfaction of both sides. This proposed apartment project is important for several reasons: its size, its location, what it says about the future of Lawrence’s housing stock. But how the debate proceeds also may be the best indicator yet of what value this commission places on new development.


In other news and notes from around town:

• Speaking of development, it looks like former City Commissioner Bob Schumm does intend to make one more effort to win approval for his proposed condo/retail/office project in the 800 block of Vermont Street.

If you remember, a majority of city commissioners earlier this month refused to accept an application for an 85 percent tax rebate request for Schumm’s approximately $9 million project.

But I’ve now received a letter that Schumm has sent to city officials asking for reconsideration. The letter states that Schumm has had positive discussions with Lawrence-based Tenants to Homeowners about how one of the project’s 11 condo units could be put “up for sale at a price that would allow it to qualify as an affordable living unit.”

City officials recently have said they are more likely to look favorably on incentive requests for residential projects, if the projects contain some element aimed at addressing affordable housing. Whether making one unit an affordable housing unit will be enough to sway the City Commission’s mind is unclear.

I talked with Schumm briefly this morning. He said he’s now comfortable putting one of the units in the Lawrence Community Housing Trust program after learning more about how it could work within a condo structure.

“I don’t know what the city will do,” Schumm said of the request. “But I think we can show there is a lot of public good with this project.”

Courtesy: Hernly Associates