A familiar face at Lawrence City Hall may end up being the test case for new thinking about tax breaks for downtown residential projects. Former City Commissioner Bob Schumm has confirmed to me that he’s filed a request for tax breaks for a multi-story office/condo project he hopes to build on Vermont Street.
We’ve reported multiple times that Schumm has filed plans to build a five-story building on a pair of vacant lots in the 800 block of Vermont Street, just south of the old Headmasters salon building. Plans call for a ground floor of office space, and Schumm says he has a tentative deal for a bank to be the anchor tenant of that space. The second floor would house about 30 small, high-tech office spaces. The remaining floors would consist of 11 condos that Schumm would sell, and one top floor living space he plans to keep for himself.
Plans also call for 22 underground parking spaces. Schumm has said the underground parking garage likely would require him to seek some financial incentives from City Hall. Well, that incentive request has now been filed.
Schumm is seeking 10 years' worth of tax rebates under the Neighborhood Revitalization Act. The first five years would include an 85 percent tax rebate on the new tax value added to the property as a result of the project. In the final five years, the tax rebate would shrink to 50 percent. Schumm also is requesting industrial revenue bonds, which would allow him to receive an exemption from paying sales tax on about $2.8 million worth of construction materials for the project.
The request comes at an interesting time. City commissioners are considering a host of changes to the policies that govern financial incentives, especially those offered to residential projects. The city is seeking to draw a brighter line that it won’t offer tax breaks greater than 50 percent for residential projects. The commission is also considering a provision that would require such projects to have at least 10 percent of its units be rent-controlled to serve as affordable housing units.
That new policy isn’t in place currently, so technically Schumm’s project doesn’t have to meet the provisions. But that’s really just a technicality. Approving or rejecting a tax incentive is entirely discretionary on the part of the commission. Commissioners can set the amount of the tax incentive and the terms however a majority of them choose.
So, it will be interesting to see what type of incentive package this commission thinks a major downtown development should receive. Most of the other downtown development projects that have received incentives were approved by the previous city commission.
Schumm says his project has a strong argument for public incentives. It can be summed up in one word: Parking. Schumm says he has received bids for the underground parking garage. They have come in at about $1.1 million for the 22 spaces of parking. Schumm says it is clear to him that he can’t pass along the cost of the parking spaces — about $52,000 a stall — to the owners of the condos. In the Lawrence real estate market, people simply don’t pay that much for parking, he said.
“The thing is, nobody wants to pay for parking,” Schumm said. “And in downtown, there is no requirement to provide parking, but the city wants you to provide parking.”
That is where things get really interesting. Schumm is correct that downtown zoning does not require projects to provide any off-street parking. The city decades ago — like many cities — decided public parking spaces would serve downtown.
But downtown has changed over the years, and the city is urging more residential projects in downtown. As more people live in downtown, more of a strain gets put on the public parking supply. Developers have said they they’re willing to put in in their own private, below-ground parking garages to accommodate some of the new parking demand they are creating. But they often say they can’t put in the parking and still have a financially-viable project without some assistance from the city.
That’s where this project stands. Schumm knows the drill well. He’s been a downtown businessman since the 1970s, and until he lost his re-election bid last year, he was one of the longer serving city commissioners in the community.
Schumm says he thinks he has a strong case to get the incentives, but if he doesn’t, the project could still proceed under a different path. He could change the development from one that has condos to one that has apartments. By doing that, he thinks he could eliminate the below-ground parking garage. In other words, he’s confident that renters will be willing to hunt and peck for a parking spot in nearby public parking lots, but condo owners likely will expect a dedicated spot. Lawrence developer Doug Compton is already making that bet. He’s adding apartment units to the former Pachamamas building at Eighth and New Hampshire, and he’s not adding any private parking spaces.
“I’m confident he’s not going to have a problem renting those units,” Schumm said.
Schumm said he’s confident he could rent apartment units too. His proposed project is right across the street from a large, public parking lot, and it is only a short block away from the new public parking garage at the library. Schumm notes that as a downtown property owner, he’s already paying a special assessment on his property tax bill to pay for a portion of that new parking garage.
“I wouldn’t feel bad about using the garage,” Schumm said.
And perhaps he shouldn’t feel bad about it. Did commissioners build the garage only for certain types of parkers to use, such as library patrons or people using the nearby municipal swimming pool? I’m not sure that they did. But parking is in high demand at times in downtown. If residents of downtown are taking larger amounts of public parking, that will make it more difficult for visitors to find parking, and that could have ramifications.
That’s the type of tradeoff that commissioners have to weigh.
As for the affordable housing component, Schumm said his project doesn’t have any plans to set aside units for affordable housing stock. He noted most of the City Hall talk with affordable housing has been focused on rental units, and his project doesn’t call for any rentals. He said if such a requirement is put on his project, he’ll try to meet it. But he said it probably would require a greater incentive in order for the project to pencil out. As it is currently planned, Schumm said the condo units are projected to be marketed at $275 per square foot, or about $275,000 for a 1,000 square foot condo.
Schumm has been following this closely. He has even went up to Iowa City, where new City Manager Tom Markus came from. He’s talked to developers up there, and quickly learned that developers in Iowa City had figured out how to make a similar affordable housing requirement work because they received large incentive packages, often times significantly larger than what has been offered in Lawrence.
I think that is a point that hasn’t quite got full discussion yet in Lawrence: If Lawrence wants to require affordable housing in projects, does it need to increase the amount of incentives it has historically offered?
For those of you who have been following along with City Hall reporter Nikki Wentling’s series on affordable housing, there have been signs that Markus thinks that discussion needs to be had too.
“Our incentives packages tend to be pretty conservative [in Lawrence],” Markus said in an article earlier this month. So, that too will be interesting to watch.
Schumm said he is hoping that through all of this, city commissioners remember the importance of having people living in downtown. Schumm said he’s become convinced new living units in downtown are the primary factor that will protect downtown from increased competition of new development on the edge of the city.
“The pressure from development on the periphery will never end,” Schumm said. “The way to take care of downtown for the longterm is to ensure people are living here. Then you have people here 24 hours a day, and that will bring in the different mix of retailers to downtown.”
We’ll keep you updated on Schumm’s incentive request. City commissioners will receive it soon, but won’t act on it right away. It will go to city staff and also to the city’s Public Incentives Review Committee for a recommendation before it is voted on by city commissioners.
It is becoming a familiar issue for city commissioners to consider: Should a new multistory building in downtown Lawrence be offered some sort of financial incentive from the city?
It looks like the next project commissioners will be asked to consider is a proposed five-story commercial/residential building along Vermont Street that former City Commissioner Bob Schumm hopes to build.
Back in June, we reported that Schumm had plans for a major building on the vacant lot that is just south of the old Headmasters salon building in the 800 block of Vermont Street. Well, the proposal has changed a bit since then — we reported on some changes in August — and Schumm said he is getting closer to moving ahead with the project.
But Schumm told me he has decided he’s going to need a city incentive to make the project work as planned. Schumm said he plans to file this month an application for a property tax rebate through the Neighborhood Revitalization Act. No word yet on exactly how large of a rebate the project may seek. The city has given out rebates in the 50 percent range to 85 percent.
Schumm said there is one particular part of the project that makes the incentive needed.
“The project is going to have 22 underground parking spaces that are very expensive,” Schumm said.
That is becoming a theme with projects in the downtown area: Developers need help paying for parking.
Downtown is an interesting area when it comes to parking. For decades, the city’s code for parking in downtown has been different than it is in other areas of town. (My wife’s code for parking in downtown is different too, which is why you sometimes have to walk around a Ford Taurus on a sidewalk.) Along the key stretches of Massachusetts, New Hampshire and Vermont, buildings can be constructed without having to provide any off-street parking for customers or tenants. The city long ago decided the downtown area would be served by public parking.
One thing that has changed in recent years, though, is the city is urging more development of a residential nature in downtown. As more people live in downtown, more of a strain gets put on the public parking supply. Developers — I’m specifically thinking of the development at Ninth and New Hampshire — have said they’re willing to put in their own private, below-ground parking garages to accommodate some of the new parking demand they are creating. But they often say they can’t put in the parking and still have a financially viable project without some assistance from the city.
The previous City Commission was pretty amenable to providing that assistance. Schumm’s project, though, is really the first such test for the new commission, so it should be interesting to watch.
I’ve heard some people say the city needs to just start requiring new construction in downtown to provide its own parking. I’ve heard others say that would be a momentum-killing strategy for downtown. It would create a two-tiered system in downtown: Hundreds of businesses get to take advantage of a code that doesn’t require them to provide for parking, while businesses that have come to the scene more lately have to take on the private expense of providing parking. And I have heard others, yet, say that instead of subsidizing developers to build private parking in downtown, the city simply needs to build more public parking. That, though, will take some new city resources, and perhaps some adjustments of parking rates. So, a lot to keep an ear open for on parking issues.
As for Schumm’s project, see below for some renderings from Lawrence-based architects Hernly Associates. The project is proposed to have a bank — the specific bank hasn’t been identified yet — on the ground floor, and 32 single offices of about 200 square feet each on the second floor, and 11 condos that will be for sale on the third and fourth floors. The fifth floor also will have a large condo, but don’t expect it to be for sale anytime soon. Schumm — who spent most of his career downtown as a restaurant owner — said he and his wife plan to sell their west Lawrence home and move into the top floor condo.
“When they take my keys away, I can walk to the senior center and everything else that is in downtown,” he said.
Any incentive request for the downtown project — which is being called Vermont Place — would first go to the city’s Public Incentives Review Commission for a recommendation and then to the City Commission for a final vote. The building's design already has won approval from the city's Historic Resources Commission, Schumm said.
Well, it looks like a certain basketball-oriented celebration that has been known to close downtown streets has been called off this year. But fear not, there will still be plenty of opportunities to celebrate — and close downtown streets — in the coming weeks.
What sort of a lineup have we got scheduled? What would you say if I told you that you could take out your hatred on tick-borne diseases by participating in a 5K race that will go through downtown and parts of East Lawrence? I would say if you are still ticked off about the KU-Michigan game, here’s your chance to actually take it out on the ticks. (Yeah, that joke sucked. Most tick jokes do.)
Mark your calendar for 8 a.m. on Saturday, May 11: The Kansas Tick-Borne Disease Advocates will host a race that will begin on Massachusetts Street at South Park, go through downtown to Seventh Street, head into East Lawrence, loop back onto Massachusetts Street at 15th Street and then finish at South Park. Massachusetts Street will be closed for a few minutes at a time as the runners come by in waves.
Several other events either have been approved or are in the process of being approved for the downtown in coming weeks. Here’s a look:
• At 8 a.m. on Monday, May 27 — Memorial Day — organizers will host The Home Run 5K in downtown Lawrence, an event that benefits Family Promise and the Lawrence Community Shelter. Perhaps the Royals pitching staff will participate. They usually are at the scene of a home run. (Yes, I’m a true Royals fan. I know Opening Day is not too early to lose your optimism about the team.)
The race will use the same route as the tick-borne awareness race. City officials, I believe, are trying to convince more events to use that route because it requires fewer resources from the Police Department to control traffic, and it introduces people to the city’s Burroughs Creek Trail that runs through East Lawrence.
• The Tour of Lawrence bicycle races will be back in Lawrence from June 28 through June 30. Once again, the events will happen both downtown and on the KU campus.
On Friday, June 28, downtown will host the Street Sprint portion of the tour. The 700 and 800 blocks of New Hampshire will be closed from 5 p.m. to 10 p.m. on June 28. That’s where the sprinting will take place. Eighth Street between New Hampshire and Massachusetts will be closed from 3 p.m. to 10 p.m. on June 28. That's where the post-sprint celebrating will take place. The area will have a kids zone and live music, and adult beverages also will be sold.
A word of warning to people who park along New Hampshire Street: Be sure to move your car by 5 p.m. on that day, because towing will take place to ensure the race route is clear. (It's a Friday, so you can tell your boss that it's super critical you be out of the office by 5 p.m. I think I’ll park there.)
On Saturday, June 29, the racing will shift to the KU campus. Several streets on and near the campus will be impacted by the race but none will be completely closed. Here’s a look at that route and others used during the tour.
On Sunday, June 30, the event will finish with a Downtown Criterium, which is kind of like bicycle’s version of NASCAR short track racing, except the pit crews don’t fight at the end of each race. (The spandex must have a calming effect. Maybe NASCAR should try it.) It really is some action-packed racing, and it will require several streets in downtown to be closed from 6 a.m. to 9 p.m. That includes much of Massachusetts Street and parts of New Hampshire and Vermont.
As in the past, the event will receive $10,000 from the city’s transient guest tax fund. The event will use the money to help attract elite teams to the race. This year the money also will be used to increase marketing to cyclists in the Chicago and Dallas areas.
• And finally, on the weekend of Sept.14-15, an estimated 2,000 cyclists once again will be camping overnight in downtown Lawrence. The 2013 Bike MS event is set to take place from 6 a.m. Saturday, Sept. 14, to noon Sunday, Sept. 15, in South Park.
In case you don’t remember the event — which will be making its third appearance in Lawrence — it is a fundraiser for the Mid-America Chapter of the National Multiple Sclerosis Society. Near as I can tell, cyclists ride miles and miles — from the Garmin headquarters in Olathe to South Park — to justify partaking in a large beer tent that has been sponsored by an area brewing company in the past. (Personally, I just drink light beer and skip the miles and miles of cycling part.)
In addition to riders coming from the east, a separate group also will be leaving from Topeka to ride to South Park.
The event will require Massachusetts Street from North Park and South Park streets to be closed from 6 a.m. Sept. 14 to noon on Sept. 15. The Community Building Parking lot also will be closed at that time. Both South Park and the Community Building will be used as an overnight “Cycle Village.”
• This last event isn’t a race and it won’t impact traffic in downtown. But I thought I would mention it anyway because it may impact traffic near 27th and Iowa streets. At least it is likely to when my wife is driving by it, becomes distracted by it and uses the Ford Taurus to create a new drive-thru at the nearby Runza restaurant. Beginning April 13 and lasting for the entire week, there will be 5,860 multi-colored flags stuck into the ground near the southeast corner of 27th and Iowa Streets — in front of Landmark Bank and Runza.
The flags — about 20 inches high — will be commemorating the Week of the Young Child. The 5,860 number is meant to be one flag for every child that is in childcare in Lawrence. The flag idea is being put together by Child Care Aware of Northeast and North Central Kansas, a nonprofit group based in Lawrence.
So, don’t be distracted. I’ve warned you. But Runza folks, if you see a maroon Taurus with a driver pointing at the pretty flags, I’d take cover behind the counter.
Soon a yellow and black sign likely will be prominently displayed to reserve a prime parking spot in downtown Lawrence.
No, Hell hasn’t frozen over and the city isn’t beginning to reserve parking spaces for Missouri Tiger fans. (Although, we ought to consider it. If a Tiger fan is willing to go to the trouble to take his car down off the blocks in his front yard, the least we can do is help him get a parking space.)
But no, that’s not what city commissioners will be contemplating tonight. Instead, commissioners will be considering a program to allow Hertz — and its yellow and black sign — to begin an on-demand car rental program in downtown.
Hertz has four cars that are part of an on-demand program on the KU campus. The program has been used enough that the company has an interest in placing a fifth car in downtown.
The program works like this: Hertz will have a dedicated parking spot — hence the sign, which, have I mentioned, is yellow and black — in the free two hour lot on the west side of New Hampshire Street near Eighth Street. (City lot No. 4, if you are scoring along at home.)
If you think you may want to use the car sometime, you sign up for the program and get a swipe card. Then, you can rent the car anytime online, swipe the card to unlock the doors, and away you go.
Eileen Horn, the city-county sustainability coordinator, worked to get the program in place for downtown because she thinks it may actually make people more comfortable using public transportation.
Horn said some people are nervous about riding the bus, biking or walking to work because they never know when they may unexpectedly need to use a car.
“If you have to run and get your child at school for some reason, you’ll have a car to do it,” Horn said as an example.
City commissioners are being asked to give final approval for the program at their 6:35 p.m. meeting today.
There are no fees for the city to pay to be a part of the program. The city, however, will need to donate use of the parking space to Hertz. The city is proposing a month-to-month donation agreement to monitor how the program progresses.
Horn said she expects the program could begin in two to four weeks.