Posts tagged with Fritzel
Bids to convert former Farmland fertilizer site into new business park come in far lower than expected
If you have about 450 acres of an abandoned fertilizer plant, now is apparently a good time to convert it into a business park.
The city is in the process of awarding two key construction contracts to convert the former Farmland Industries fertilizer plant on the east edge of Lawrence into a business park. And both bids for the contract came back well below what the city was expecting.
Last week the city awarded a $4.98 million bid to Lawrence-based R.D. Johnson Excavating for street construction, waterline installation and lot grading at the site. The city’s engineers had estimated the work to come in at $8.16 million. That’s a difference of almost 40 percent.
This week, commissioners are scheduled to accept bids to install the necessary sewer lines for the site. The low bid is from Amino Brothers at $601,089. The city’s engineers had estimated a cost of $1.41 million. That’s a difference of almost 60 percent.
I guess that is why you take bids.
City officials are hoping other construction firms are as hungry as these. The city in the next week or so is set to approve a set of bids for the $18 million library expansion project. Those bids have already come in, and my understanding is interest was extremely high by contractors.
On May 14, the city will be getting bids on an even larger project: the $25 million city recreation center. We’ll see how hungry recreation center builders are. But what we won’t see are any bids for the infrastructure work on that project.
The city negotiated a deal with KU Endowment officials and Thomas Fritzel’s Bliss Sports that calls for the recreation center building to be bid through the city’s normal bid process. But the infrastructure work for the KU and city project — things like streets, sewers, waterlines and parking lots — won’t be bid through the city’s open bidding process. Instead, Fritzel’s Bliss Sports will use its preferred contractors and will negotiate a price for that work. I’m sure the city will make Fritzel aware of these bids, assuming the price hasn’t already been fully determined. (Some dirt-moving work is under way at the site.)
The city has an interest to pass these bids along because the city likely will be paying for a portion of that infrastructure work. The Rock Chalk Park deal calls for the city to pay for 100 percent of the cost to build the recreation center building. The city then will pay for infrastructure work up until a point that the city’s total cost on the project reaches $25 million. So, if the city’s recreation center bid comes in at $19.9 million, which is the current estimate by the city, then the city will pay $5.1 million for the infrastructure/parking work. (I previously had said $7 million, which shows why I don't have a career in math.) That means the city would pay a little less than half of the infrastructure/parking costs that are estimated at $13.5 million. Some people have said that sounds about right, since the infrastructure will serve both the city-owned property and the property that will house the KU track, softball and soccer facilities.
But as the Farmland project has shown, estimates are more of an art than a science. If those estimates — much like the Farmland estimates — are 50 percent too high, then the city would be paying for about 75 percent of the infrastructure and parking costs for the entire Rock Chalk Park project. (That is assuming that the city’s estimate for the construction of the building comes in at $19.9 million. Perhaps that estimate is high also, which changes the dynamics even more.)
It will be interesting to watch but perhaps hard to sort out. What is clear is it seems to be a good time to be going out for bid on construction projects.
The city is taking advantage of the good prices on the Farmland project. Originally, the city thought it may only be able to install the streets, sewers and waterlines in this first phase. But because the prices were low, the city added an alternate that allows for about 12 pad sites to have preliminary grading work completed. That will speed up the process for future business park tenants to build on those lots.
Work on the streets and sewers at the Farmland site is expected to go on throughout the summer and into the fall. The city hopes to have lots ready to build upon at Farmland by late 2013 or early 2014.
It may end up being a good time to have industrial property to offer. I read this article today from the Washington Post about how European manufacturers are starting to relocate to the U.S. because of our cheap natural gas prices. Chemical companies, in particular, are among those migrating.
It is funny how quickly the world changes. When I covered Farmland’s bankruptcy about a decade ago, high natural gas prices were one of the leading factors that put the Lawrence fertilizer plant out of business. Not that I think it is very likely, but how odd would it be if the big new user for the revamped Farmland site is a fertilizer plant?
City set to go out to bid for $25 million rec center; commissioners asked to OK retail rezoning for area across highway from center
After a weekend of shoveling snow, perhaps you are looking for a new form of recreation these days. If so, mark your calendars for Tuesday evening to learn the details on the city of Lawrence’s biggest recreation project yet.
As previously reported, the city will host an open house to show off the designs for its $25 million, 181,000-square-foot recreation center set for an area near the northeast corner of Sixth Street and the South Lawrence Trafficway.
The open house will be from 4 p.m. to 6 p.m. Tuesday at City Hall. The public will get its peek at the plans just before city commissioners are set to send them out for bid. Commissioners at their 6:35 p.m. meeting on Tuesday will be asked to start the bid process for the project.
Under the process, the plans will be released to potential bidders on April 9 — the plans are complete enough for an open house but aren’t yet complete to the point that they can be shared with contractors.
Part of what is going on right now is the city has hired its own Quality Control Management Team to review the plans that have been developed jointly by Paul Werner Architects and Gould Evans. According to a city memo, the Quality Control Team of Craig Penzler’s CP/Sports and Dan Foltz’s KBS Constructors is reviewing the roof and mechanical engineering plans of the facility.
It is a bit unusual for the city to hire a separate team to check the plans of an architect that is working on the city’s behalf. But, as you have perhaps noticed, this is a bit of an unusual project. The architectural firms of Paul Werner and Gould Evans certainly have been working with the city on the design of the recreation center, but it wouldn’t be completely accurate to say they have been working for the city.
During the design process, both architectural firms have been closely tied to Thomas Fritzel’s Bliss Sports company, which is the private company that has been the driving force behind the larger Rock Chalk Park sports village that will be built adjacent to the recreation center. So, those mixing of interests has caused the city to agree to spend a couple hundred thousand dollars or more to hire an independent review of the plans.
At this point, the independent review has found the plans to be solid. The review team will stay on the job during construction of the facility to serve as the city’s representative on the job site.
Once contractors receive the plans on April 7, they will have about a month to put together a bid for the recreation center. The city will open the sealed bids on May 9.
As a reminder, the city has committed to pay $25 million for the project. If the recreation center bids come in below $25 million, the city will pay the difference to Bliss Sports and/or a KU Endowment entity that is responsible for building the infrastructure for the Rock Chalk Park sports village.
We’ll see how much competition there is among area builders for the project.
• Recreation center plans aren’t the only reason commissioners will be looking at the intersection of Sixth Street and the South Lawrence Trafficway on Tuesday.
Commissioners at their weekly meeting also will be asked to rule on a contentious zoning request for property directly across the South Lawrence Trafficway from the recreation center project.
Essentially, commissioners are being asked to decide how much — if any — retail/commercial development should be allowed on 146 acres at the northwest corner of Sixth Street and the South Lawrence Trafficway.
If you remember, the city’s recreation center once was proposed to be located on a portion of that site. At the time, the city was planning to approve commercial/retail zoning for a good portion of the site, in order to accommodate hotels, restaurants and other uses that would complement the recreation center.
But when the project got pulled from that site and moved across the highway, there was talk from the City Commission that any idea of retail development on the site was done too.
Well times and thinking do change. The project now comes to the City Commission with a positive recommendation from the Lawrence-Douglas County Planning Commission.
The Planning Commission is recommending the northwest corner be allowed to have up to 155,000 square feet of retail uses in the future. City commissioners on Tuesday will be voting on a rezoning ordinance that will give the property that right.
In somewhat of a surprise move, the Planning Commission also has opened the door to retail development on the southwest and southeast corners of the intersection. The Planning Commission is recommending approval of a planning document that calls for the southwest corner to have up to 25,000 square feet of retail development, and the southeast corner to have up to 60,000 square feet of retail development.
At the moment, there aren’t rezoning requests for either one of those properties, but this plan makes it likely that such retail uses would be approved in the future. (Assuming the plan is followed, which isn’t always a good assumption.)
The southeast corner is vacant, but is next to a growing housing development just north of Langston Hughes Elementary. The southwest corner largely is thought of as the west campus for Lawrence’s First United Methodist Church. But there also is a vacant portion of ground near the church. That ground is owned by a group of investors, and Allison Vance Moore — a commercial real estate agent with Lawrence’s Colliers office and one of the city’s leading retail brokers — already has a "for sale" sign planted in that property.
It has been interesting to watch how opinions on this area have changed in a relatively short period of time. The Planning Commission in October voted to deny the retail rezoning for the northwest corner of the intersection. But by January, it became clear the political winds on the City Commission had shifted toward allowing retail zoning at the northwest corner, so the Planning Commission reconsidered the issue in February and recommended approval of the rezoning.
So, what has changed to cause the City Commission to now look favorably upon retail development at the site? It is tough to say for sure, but certainly commissioners have gotten an earful from the owners of the property, which is a group led by Lawrence developers Duane and Steve Schwada.
That group has been making the argument that the city is about to make a huge mistake in building the recreation center and Rock Chalk Park without a clear plan of how to build the necessary commercial and retail uses that visitors to the park will expect.
The Rock Chalk Park property — as currently zoned — doesn’t have any area for retail or commercial uses. Originally city commissioners assumed the vacant Mercato development, just south of the Rock Chalk Park site, could accommodate the necessary retail development for Rock Chalk Park.
But Schwada also controls that property, and there are indications he’s reluctant to change the plans of that development. It is the only site in town that is zoned for future big box store development. That was a hard-won victory at City Hall, so to change those plans to accommodate hotels, restaurants and other such uses may not be likely.
Instead, he has pointed to his property across the street. So, perhaps, the city has decided it doesn’t want to play that bluffing game with the Schwadas.
But that leaves a large question looming. If the area on the west side of the SLT is expected to carry the load in terms of hotels and such for the new Rock Chalk Park destination, who is going to pay to have the necessary infrastructure extended across the SLT?
If there are several million dollars worth of expenses to extend water and sewer to the site, are any hotels, retailers and such going to pay to develop on that piece of property? If they don’t, how is the Rock Chalk Park area going to have the necessary hotel and retail space that many people say is needed to support the development?
At this point, the city hasn’t done anything to indicate it is willing to pay to extend those pieces of infrastructure to the site. But, of course, just a few months ago the city was indicating that it wasn’t going to approve retail zoning for that property either.
So, as I’m prone to say, it will be interesting to watch.
An entity controlled by Thomas Fritzel will be the exclusive provider of all concessions on the Kansas University portions of the proposed Rock Chalk Park project, according to documents released today.
And that's not the only way Fritzel or his related entities could turn a profit from the project that has been billed largely as a public sports village.
I’ve quickly read through four separate agreements involving Fritzel’s Bliss Sports, Kansas University Endowment’s RCP LLC and Kansas Athletics. The documents are complicated, and I’m not promising I’ve caught every detail. I’ve put a call into Fritzel for more explanation, but haven’t yet heard back from him. But here’s what I’ve gleaned from the documents.
• A signed operating agreement between KU Athletics and Bliss Sports states Bliss “shall have the exclusive right to control and manage concessions associated with any use of the stadiums, including athletics-sponsored events, developer-sponsored events and third-party sponsored events.”
In other words any event held on the KU portion of Rock Chalk Park — this agreement doesn’t cover the city’s recreation center — will have its concession needs served by Bliss Sports.
But the agreement goes on to say that “any net revenues” generated from concession sales will be deposited into a special escrow-like account called a “maintenance fund.” That fund can be used by KU Athletics to make repairs at Rock Chalk Park over the years.
That sounds like a pretty good deal for the university, and it may well be. But what is not clear from the agreements is what, if any, controls will be placed on how Bliss runs the concessions.
For example, would Fritzel be allowed to create another entity — let’s call it Fritzel Foods — that would serve as the supplier for the Rock Chalk Park concessions business? If so, the hypothetical Fritzel Foods could purchase the supplies needed for the concessions business, turn around and sell the supplies to the concessions business for a profit, and seemingly none of those profits would have to be deposited into the maintenance fund.
I’m not saying that’s the intention, but I am asking whether there is anything that prevents it.
The details related to the concessions business were surprising because Fritzel had not made any such details clear when he gave an interview to the Journal-World on Jan. 18.
“It will be run just like Allen Fieldhouse, 100 percent like Allen Fieldhouse,” Fritzel said when describing whether his entities would be in a position to make any money off the Rock Chalk Park. “The important thing is Kansas Athletics controls everything.”
The agreements released by Fritzel today were signed Feb. 12. The documents indicated they replaced a previous set of agreements signed on Oct. 12. What those agreements called for is not known.
• Bliss, in addition to KU Athletics, will have the right to charge “reasonable parking fees” for any event on the KU portion of the project. Both Bliss and KU Athletics must agree to the parking rates, but the agreement states: “It is the intent of the parties that as a general rule, at a minimum, parking fees will be charged for conference-wide collegiate athletic events; statewide, regional, national and world-wide sporting events; and third-party sponsored events.”
City Manager David Corliss told me this afternoon that the city will want to create a separate agreement to make it clear that the City Commission would have to approve any parking fees on a per-event basis. It has been proposed that the city would contribute money to help build the parking lots that would serve both the city and KU portions of the project. Corliss said that means the city will want to be involved in setting parking policy for the development.
Like the concession revenue, the parking money would go into the maintenance fund. Like the concessions revenue, the questions of how Bliss would be allowed to operate the parking system remain.
• Bliss would have the authority to use any of the stadiums and other KU-related facilities rent-free. KU Athletics would have limited ability to deny Bliss use of the facilities. Bliss could host private athletic events at the park without city approval. Any non-athletic events hosted at the park would require a special use permit from the city.
• As previously reported, KU Athletics will pay $1.3 million a year for 30 years to Bliss Sports to cover Bliss’ costs to finance the project. Also as previously reported, Bliss will maintain ownership of the facilities for 50 years. What has not been previously disclosed is that the lease also calls for KU to pay lease payments in years 31 through 50 as well. Fritzel made no mention of that provision when interviewed by the Journal-World in January.
The rate of the lease for years 31-50 will be the “fair market rental value” of the property as determined by Bliss and agreed to by Kansas Athletics.
City commissioners tonight are scheduled to take their biggest vote yet on the recreation center project. Commissioners are being asked to approve a development agreement that spells out how the city would help pay for infrastructure at Rock Chalk Park, rebate approximately $1 million in building permit and other city fees the project normally would be required to pay, and provide a 10-year property tax abatement for the project.
Corliss said his recommendation will continue to be for commissioners to proceed on the project. “I’m not seeing anything in these agreements that is still not a good deal for the University of Kansas and the community,” Corliss said.
Commissioners meet at 6:35 tonight at City Hall, Sixth and Massachusetts streets.
The city now has posted the full agreements. They can be found here.
Well, that didn't take long.
One day after Mayor Bob Schumm said he wanted to see the agreements between Thomas Fritzel's Bliss Sports and the various KU entities involved in the Rock Chalk Park property, Fritzel has produced them.
Fritzel has provided four sets of agreements to Lawrence City Hall. (He also dropped off a set of copies for me, as well.) I'm just now starting to read them.
The city will be posting the documents to its Web site shortly. I'll provide a link once it does.