Latest report shows Lawrence sales tax growth among tops in the state; are City Hall leaders paying attention?
It is the season for City Hall couch cushions strewn about and organ grinder music in the background. The city’s budget process is underway, and the last several years the theme has been that any loose change matters, as the city’s major operating fund in 2015 spent more than it received in revenue. It is budgeted to do so again in 2016.
That is happening despite a key positive trend: Lawrence is experiencing the best sales tax growth of any major retail area in the state.
State revenue officials have released their latest sales tax report — it basically measures sales through early April — and Lawrence continues to be on a roll. The report showed sales tax collections for the latest one-month period were up 6.2 percent compared with the same period a year ago.
The more important numbers, though, are the year-to-date totals. There have now been five sales tax reports issued by the state in 2016, so we are almost to the halfway point of the annual reporting period. Thus far, Lawrence’s growth rate is tops among the 10 large retail markets that we track. Here’s a look:
— Lawrence: up 4.6 percent
— Overland Park: up 3.6 percent
— Olathe: up 3 percent
— Topeka: up 2.5 percent
— Johnson County: up 2.1 percent
— Sedgwick County: up 1.4 percent
— Manhattan: up 0.8 percent
— Kansas City: up 0.3 percent
— Salina: down 3.3 percent
— Lenexa: down 8 percent
The most interesting number may be what’s driving Lawrence’s increase. The city has provided a breakdown of the industries that are seeing the largest increase in sales tax collections. The city noted three: grocery and beverage stores are up 6 percent from a year ago; bars and restaurants are up 7 percent; and sales taxes on building materials are up 29 percent.
The building material category is obviously an eye-catcher. There seems to be an obvious explanation to that large increase: Menards and its superstore near 31st and Iowa have entered the market.
But sometimes the obvious answer isn’t always the correct one. So, I looked a little deeper. Not all building materials are bought through home improvement centers. Many of them are bought through wholesale companies that deliver to job sites, and construction firms pay the sales tax on those materials. If Lawrence’s building scene is booming, that could account for the increase in sales tax collections, and it really wouldn’t have much at all to do with Menards. But the city’s building permit reports show that is not what’s happening. Construction totals are very high this year, but they are about 15 percent below the record-setting totals of 2015. Based off that, you would think sales tax collections for building materials would be down.
I also considered that perhaps there has been an increase in the price of building materials, which would cause the sales tax collections to increase, even though the amount of work has declined some. That doesn’t appear to be the case either. The construction cost index put out by the large construction company Turner indicates that the cost of building materials actually has declined some.
I don’t know definitively why Lawrence is collecting so much more in sales taxes for building materials, but it seems the Menards effect is a real possibility. It seems that what’s happening may be exactly what Menards officials said would happen: Lawrence residents who were leaving town to shop at Menards are now staying in Lawrence to shop at Menards. It seems likely some shoppers from nearby communities are coming to Lawrence to do their Menards shopping. Here’s a little fact that maybe has been overlooked: Menards really doesn’t have any stores in the Kansas City market. It has one in St. Joseph, but that is about it. That means the Lawrence store is the closest Menards store for lots of communities in Johnson County. Of course it also is the closest store for places like Franklin and Jefferson counties. The Lawrence store may be getting more out-of-town traffic than what you would think.
Again, I don’t know if that is what’s happening here. But I would think City Hall leaders would want to figure it out. If indeed Menards is keeping more retail dollars in Lawrence and attracting more retail dollars from outside Lawrence, then it seems possible other select retailers could do the same.
Perhaps this is causing you to think of the City Commission’s recent rejection of a proposed multimillion dollar retail center that would have brought several new brands to Lawrence near the Iowa Street and SLT interchange. The rejection has landed the city in a lawsuit filed by the proposed developers. The developers of that proposed center said their numbers showed 40 percent of all Lawrence retail dollars spent on apparel are being spent outside of Lawrence.
I can almost guarantee you that Menards had a similar study that told it that there were a lot of home improvement dollars leaving the Lawrence community.
Is the 40 percent number about apparel accurate? I don’t know. But I would think City Hall officials would want to find out. A trusted third party easily could be hired to figure it out, and many other retail questions. The problem is, Lawrence fights so much about retail development, it would be difficult to hire a third-party that both sides would trust. It is sad that we are so deep in the weeds that we can’t even get data.
But if the 40 percent estimate is accurate, then something else also is true: Millions of sales tax dollars are leaving the community every year.
Capturing them may be easier than operating the organ grinder.
Audit results about special taxing district at The Oread expected soon; questions about Eldridge tax break; eco devo leaders seeking firms to work on Menards project
Concerns about the operation or management of The Oread hotel’s special taxing district are expected to come to light soon, I’ve learned.
If you remember, City Hall reporter Nikki Wentling reported last month that the city had hired an auditor to review the special taxing district, which has generated more than $2 million thus far for the local development group that built the hotel.
The audit by the Wichita-based firm Allen, Gibbs & Houlik has now been completed, and city officials are promising to release its results. The city hasn’t yet provided any details on the audit, but there are certainly indications that there are some significant findings.
“The position we are in now is that we are contacting all parties that were involved in the audit, and we want them to hear everything we have found and what we intend to tell the public, so that there won’t be any surprises,” Commissioner Matthew Herbert told me.
Commissioners thus far haven’t said whether concerns center on how the private businesses have used the special taxing district or whether they are related to how the city has managed the district, or whether they are some other set of concerns. They have been tight-lipped about the audit, and, in fact, the audit only came to light due to an anonymous tip that the Journal-World received about its existence.
One issue the J-W’s article last month pointed out is an oddity with one business that is listed as having a home in the district. Records from the state indicate a business called Oread Wholesale L.C. is located at 1200 Oread Ave., the address of the hotel. Information from web listings and other sources indicate Oread Wholesale L.C. is a wholesale supplier of construction materials.
But, there are no signs of a wholesale construction material supplier operating at the upscale Oread. When the J-W went to the hotel last month seeking information about Oread Wholesale, a clerk at the hotel told our reporter that Oread Wholesale was listed as the address “just to get stuff shipped in.” The clerk said there was no warehouse on site.
What makes this element interesting is that the latest annual report on file with the state of Kansas for Oread Wholesale lists Thomas Fritzel as the primary owner of the company. Fritzel is also the leader of the development group that benefits from the special taxing district at The Oread.
The way that special taxing district works is that the development group gets a rebate on a large percentage of every sales tax dollar generated at the 1200 Oread address. When you buy a meal at The Oread, a large percentage of the sales tax gets rebated back to the development group, which then is supposed to use the money to pay for infrastructure projects and the private parking garage that were built as part of the project. If a wholesale construction supplier is selling materials at that address, then Fritzel’s development group would get a rebate on the sales taxes charged on that material as well.
A couple of questions come to mind:
Are construction material sales actually happening at 1200 Oread, or is the address just being used to take advantage of the benefits of the special taxing district?
If construction materials are being sold at 1200 Oread, is that the type of business that city officials intended to provide an incentive to? It certainly wasn’t the type of business ever mentioned publicly when Fritzel was lobbying commissioners to approve the incentive. That lobbying effort was all about providing an incentive for an upscale hotel that would help the city attract more visitor dollars. We previously have tried to talk with Fritzel about this issue, but with no luck.
It is important to remember that I don’t know what the audit’s findings are. Oread Wholesale may or may not be a part of the report. Either way, it is an interesting issue.
Another interesting issue may be brewing on this front. As we previously reported, this audit began in April. City commissioners in October approved a tax break for The Eldridge Hotel. The Eldridge Hotel and the Oread development group have a lot of cross ownership. Fritzel is the leader of both groups. I confirmed with interim City Manager Diane Stoddard that commissioners were aware of the Oread audit that was underway at the time the commission was voting on The Eldridge tax break. Commissioners approved The Eldridge tax break — valued at about $460,000 — on a 3-2 vote with Commissioners Leslie Soden and Lisa Larsen voting against it.
So, to summarize: The commission knew there was an audit underway regarding questions about the use of The Oread special taxing district, but it approved a new incentive that will benefit many of the same people who are involved in the audit at The Oread. If the audit comes back and finds that Fritzel and his development group have done no wrong in the Oread taxing district, then I suppose no harm, no foul. But if the audit does raise concerns about Fritzel and that development group, I suspect the public is going to have questions about why the City Commission didn’t wait to act on the Eldridge request until the Oread audit was completed.
I asked some commissioners whether they thought about waiting. Herbert told me he did but ultimately decided against it.
“I have thought about that quite a bit,” Herbert said. “Even though there are certainly some elements of cross ownership, they are two separate entities, and I think they ought to be treated as separate on that matter.”
I asked Commissioner Stuart Boley the same question, and his answer was more confusing. When I asked him whether he had given any thought to delaying that vote, he referred me to Toni Wheeler, the city’s attorney. I told him I didn’t think Wheeler was in a good position to comment on why Boley did or didn’t vote on a particular matter. Boley said he just wasn’t in a position to answer questions about the subject. I asked him if he could explain why he wasn’t in a position to answer questions about his thought process regarding a vote he had taken, and he told me he wasn’t in a position to answer that question either.
Mayor Mike Amyx was the third vote to approve The Eldridge incentive. We’ve traded messages, and we’re scheduled to talk on Monday. I’ll report back on his thoughts.
Again, it is tough to know what is next because it is unclear what the audit has found. But I think the findings could be significant, and they could represent quite a test for the City Commission. From my view, the greatest challenge facing the City Commission currently is regaining the trust of the public. The process used to build Rock Chalk Park damaged the trust level with some residents. The resignation of Mayor Jeremy Farmer from the commission also hurt. If this audit does create questions about how this special taxing district has been used or managed, it will be a key moment for the commission as it relates to building trust with the public.
Herbert told me that the city plans to be straightforward in its findings.
“We have every intention of going public with every piece of it,” he said.
There will be some considerations the city has to take into account as it releases the information. It is against state law to release some types of private business sales tax data.
Herbert also said he thinks the information will be coming forward sooner rather than later.
“Based on the information I’ve seen, we have a very vested interest in dealing with this pretty quickly,” Herbert said.
Stoddard, the interim city manager, also told me her plan is for the city to provide a full briefing to the public on the matter.
“I would anticipate something will be forthcoming,” Stoddard said. “The city is trying to be as transparent as we can at the appropriate points in the process.”
In other news and notes from around town:
• A project that is going much smoother at City Hall is the public incentive request for Menard Inc. to build a new production and distribution plant at Lawrence VenturePark. As we’ve reported, the project has won a positive recommendation from the city’s Public Incentives Review Committee, and has won the necessary approvals from the Douglas County Commission. City Commissioners are scheduled to vote on the project’s incentive package — valued at about $2.3 million — at their Jan. 5 meeting.
Folks in the business community are looking ahead toward when the plant may be built and in operation. Officials with the Lawrence chamber of commerce and the Economic Development Corporation of Lawrence and Douglas County, have begun reaching out to local contractors on behalf of Menard Inc.
Brady Pollington, vice president of the EDC, said he’s looking to hear from any Lawrence area firms who have an interest in working with Menards on their project. That could include building contractors, earth movers, landscapers, engineers, equipment suppliers, staffing agencies, and a whole host of other businesses that may be needed to operate the facility.
Pollington said he’s gathering the names of the firms and presenting them to Menards.
“I’ve had those conversations with Menards and told them that we want to get this information out to our members and our community,” Pollington said. “Menards told me they wanted to use as much local as they can.”
Any business interested in working on the project should send its information to Pollington at email@example.com.
Chamber releases year-end number on new jobs; discussion about environmental issues with Menards project
You can tell we’re getting close to the end of the year because the numbers are starting to pile up. And I’m not even talking about the fact the credit card statements are now coming on oversized pieces of paper to contain all the zeros. No, groups and organizations are starting to put out their year-end statistics. The latest is a report from the Lawrence chamber of commerce touting positive job growth totals.
Leaders with The Chamber hosted a meeting for about 40 key investors in the economic development arena on Wednesday afternoon, and the headline number from that event was 484 jobs. That’s the number of Lawrence jobs that are expected to be created as part of new companies that The Chamber has helped recruit to town in the past year.
“2015 has been a fantastic year,” said Larry McElwain, president and CEO of The Chamber. “It will be a hard act to follow in 2016.”
The three companies that are accounting for the projected 484 new jobs are: USA800, the call-center company that we reported in July was moving into the I70 Business Center in North Lawrence; Integrated Animal Health, which we reported in April was moving its world headquarters to the Bioscience & Technology Business Center on KU’s West Campus; and Midwest Manufacturing. As we reported last week, the company is part of home improvement retailer Menards, and it plans to build a production plant in Lawrence’s VenturePark.
Other numbers cited by the chamber include $19.8 million in new payroll that’s expected to be created by the three companies and $28.6 million in new capital investment that will be generated by the companies.
The numbers, though, should come with a fairly significant asterisk. The Menards deal — and the 100 jobs anticipated with the plant — isn’t yet a done deal, and economic development leaders were highlighting that fact at Wednesday’s meeting.
“The announcement took place, and that is a victory, but it is not done yet,” said Brady Pollington, vice president of the Economic Development Corporation of Lawrence and Douglas County, which helped broker the deal. “We still need support from the community.”
The project, and its related financial incentives package, has thus far been well received by community leaders. Chamber officials on Wednesday did acknowledge that there likely will be some community discussion about Menards’ record on environmental compliance at other locations around the country. City Commissioner Leslie Soden briefly raised the issue at Tuesday night’s City Commission meeting, at which commissioners unanimously agreed to accept Menards’ application for a tax abatement and other incentives.
McElwain said he was pleased that Soden raised the issue. He said the environmental issues should be examined, and he predicted they won’t end up being a major issue for the project.
“We have absolutely no concern on the environmental front,” McElwain said. “We think this is a good company, and our process is very well designed to deal with any concerns that people may have.”
To back up, concerns about environmental issues related to Menards primarily are coming from some folks who have commented on this website and others about some violations in other jurisdictions that show up when you do a Google search for the company and its environmental record. I’ve asked City Hall reporter Nikki Wentling to look into the issue further to see what environmental issues have arisen elsewhere with Menards. We’ll let you know what we find.
Soden brought it up at Tuesday’s meeting because she said she had heard some concerns expressed by some residents. She felt it was important to let people know that the city will examine the issue.
“I think it would be good to let people know that we do have things in our performance agreement that would address something like that,” Soden said.
The city requires any company receiving a tax break to sign a contract that it calls a performance agreement. Among the issues in a performance agreement is a statement that the company will operate in a manner that follows applicable laws and regulations. If the company doesn’t, the city has the option of reducing or eliminating the tax abatement given to the company.
As reported on Tuesday, commissioners unanimously agreed to accept the tax abatement application from Menard Inc., which means the incentive request will now go to a city-appointed review board that makes recommendation on such matters.
While Soden brought up the environmental issue, she also made it clear that she’s looking favorably upon the potential Menards project.
“I’m really excited about this,” she said. “I think it is going to be great.”
Other information The Chamber shared at Wednesday’s event at Maceli’s included:
• As we previously have reported, General Dynamics is going through a large hiring phase at its customer service center at the East Hills Business Park. McElwain said the company is in the process of trying to hire 2,000 employees for the center, which provides customer service for a variety of government programs.
• A private fundraising campaign to raise money for economic development initiatives is on pace to raise $750,000 over a three year period. Bonnie Lowe, chief operating officer for The Chamber, said the campaign is in its second year and pledges are coming in on budget. McElwain told the crowd that planning would soon begin for creating a new capital campaign that will stretch beyond 2016. The Chamber estimated it has spent about 70 percent of the proceeds so far on increasing marketing efforts to bring new companies into the community.
• McElwain said work is beginning to identify some sites in Douglas County that would be appropriate for future industrial development. If the Menards deal is completed, that will significantly reduce the amount of property available for industrial projects.
“We’re selling roughly a third of what is available out at VenturePark for that deal,” McElwain said. “There are some of us looking at more tracts of land for expansion at a later date. We hope to have conversations with the city soon. We’re trying to take a 30,000-foot view of what is possible in Douglas County.”
Chamber announces tentative deal for $25 million, 100-job manufacturing plant on east edge of Lawrence
Lawrence may become a Menards town. The Lawrence chamber of commerce is announcing this morning that the giant home improvement retailer has plans to build a Lawrence-based manufacturing plant and distribution center that will bring 100 jobs to town.
Midwest Manufacturing, a division of Menard Inc., has reached a preliminary deal to buy 90 acres of property in Lawrence VenturePark, the new business park on the east edge of Lawrence that previously housed Farmland Industries. If the deal is finalized, Menards would become the first tenant of the new business park.
“It is an exciting opportunity,” said Brady Pollington, vice president of the Economic Development Corporation of Lawrence and Douglas County, which helped broker the deal. “The community will get 100 jobs, and people in Lawrence won’t have to drive 30 or 40 minutes to find a good job that pays a living wage.”
Menard Inc. plans to invest $25 million to build the project, which will include multiple buildings and 170,000 to 200,000 square feet of production and distribution space. Pollington said plans call for the plant to build exterior stone products, roof trusses and possibly other types of building products that are sold in Menards stores across the country.
Menards recently opened its first store in Lawrence near 31st and Iowa streets.
Pollington said all the jobs at the plant will meet the city’s living wage standards, which currently stand at $12.56 per hour plus benefits. The living wage levels rises each year because it is pegged to the federal poverty level for a family of three. The city’s living wage ordinance requires that firms that receive a property tax abatement must pay a wage that is at least 130 percent of the federal poverty level.
Menard Inc. will seek a tax abatement for the project. The company will seek a 10-year, 50 percent tax abatement for the development, Pollington said. The total value of the incentive package is about $2.1 million, with some of the money coming from the state of Kansas for workforce training assistance, Pollington said.
Importantly, though, Menard Inc. is agreeing to pay for the land and the special assessments that are attached to the land as part of the deal. Pollington said the purchase price of the land and the payment of the special assessments — which were used to fund utility and road improvements at the park — will equal about $2.1 million. The fact the city is getting paid for the land may surprise some. The city did not pay to acquire the nearly 400 acres of the former Farmland property. Instead, it took over the property in exchange for assuming the environmental clean-up responsibilities of the property. The city received a multimillion dollar trust fund from the Farmland bankruptcy trust to pay for the clean up costs.
Pollington said the City Commission is expected to receive the abatement request in early December, and it likely will take several weeks for the proposed deal to be debated at City Hall.
Check back for more on this story later today.
Deal in the works for KC firm to buy homegrown, Lawrence manufacturer; Ulta Beauty open on south Iowa
In one way, Lawrence is kind of a hot spot in the extreme sports world of off-road racing, and I’m not even talking about the white-knuckle trek my wife’s Ford Taurus takes when there is a sale on South Iowa Street. No, Lawrence is home to HiPer Technologies, a homegrown manufacturing firm that has become a leader in making high-performance racing wheels for the ATV market. Well, there’s big news on the horizon for HiPer, and also questions about whether its future will remain in Lawrence.
HiPer is close to finalizing a deal to be purchased by Kansas City-based Weld Wheels, which is generally regarded as the top manufacturer of racing wheels in America. News of the deal started to circulated around town, and Andy Harris, chief executive of Lawrence’s HiPer, confirmed to me that the shareholders of HiPer have approved the sale. Now, HiPer and Weld are working on finalizing the remaining details.
One detail that is unclear is whether HiPer will continue to operate its Lawrence manufacturing facility near 31st and Haskell, or whether the company’s production will move to Weld’s large facility in Kansas City.
As word started to make its way through certain circles of town, people were telling me that HiPer indeed would be moving to Kansas City. Harris, though, said that detail is still being worked out.
“Is there a possibility for that to happen? Of course,” Harris said. “But that decision hasn’t been made yet.”
Harris said a timeline for finalizing the sale to Weld hasn’t yet been determined.
HiPer has 11 employees at its Lawrence facility, which is at 2920 Haskell Ave. If that address sounds familiar to you, then you need to spend less time memorizing the phone book. But indeed, it is the same address as the Peaslee Tech vocational training center. HiPer and Peaslee Tech share space in the same building, which previously was occupied by Honeywell Avionics years ago. HiPer is a tenant of the building, and its lease payments go to help support the operations of Peaslee Tech. No word yet on how a move may impact that situation. UPDATE: I chatted with Hugh Carter of the Lawrence chamber of commerce, and he said the chamber has been aware of the pending sale. He said both parties have been in discussions about how Peaslee Tech will be made financially whole as part of any move by the HiPer, if it comes to that. Carter said if the HiPer space becomes vacant, he thinks there are some good possibilities to lease it to businesses that want to be near the new Peaslee Tech and the school district's College & Career Center that has developed on the site.
I’m not exactly sure what the fortunes of HiPer have been in recent years, but it at one point was a technology company that generated a lot of excitement in Lawrence. Lawrence native Tom Darnell Jr. was a founder of the company because he worked on developing this new carbon fiber product with DuPont in the early 2000s. I thought carbon fiber was just a new flavor for my Shredded Wheat, but I soon learned it actually is a material that is more resistant to impact than aluminum but also lighter than aluminum. The unique profile of being both lightweight and strong has caught the attention of racers and other high performance wheel users.
“The majority of top (ATV) drivers use our wheels,” Harris said.
I think the company also has been looking for other products that can be made using the carbon fiber material, and some of the intellectual property is probably part of the proposed deal with Weld.
But thus far, HiPer has mainly been able to focus only on the ATV and utility terrain vehicle market. Weld, on the other hand, is in a wide range of wheel markets.
“We are definitely trying to expand our product line, and Weld is a good strategic partner to do that,” Harris said.
I’ll keep you updated on how the deal progresses.
In other news and notes from around town:
• Some people are excited about Menards opening — its first official day is today — while others are excited about Ulta Beauty opening on south Iowa Street. (And I suppose there are many excited about both because I know a little rouge can be the perfect complement to a tool belt.) Well, Ulta has opened its new Lawrence location at 27th and Iowa streets. The store opened over the weekend, and is going through its soft opening currently.
Its grand opening is scheduled for this weekend. I’ve had difficulty catching up with Ulta officials to get the details, but keep an eye out at the location. The store, in case you have forgotten, is next to Dick's Sporting Goods at the southwest corner of 27th and Iowa streets.
Ulta lists itself as the largest beauty retailer in the country, and offers salon services in addition to cosmetics, fragrance, skin and hair care products.
UPDATE: The store will host grand opening festivities on Friday, Saturday and Sunday, beginning at 10 a.m. each day. The store will provide a free gift valued at $5 to $100 for the first 100 people on each day of the grand opening. The store also will be giving away to select winners free hair and skin services at the store's full-service salon.
With Ulta open, three of the four major pieces of that retail development are now up and running. (Chick-fil-A is the third piece.) Now we’re waiting on an opening date for Boot Barn, which sells boots, jeans and other items. It is opening next door to Dick's Sporting Goods as well. I’ll let you know if I hear an opening date for that business.
That noise you hear is me trying to whistle the theme music that played before the big showdown scene in High Noon. That’s right, get ready for the showdown that has been eagerly awaited by everyone with an empty toolbox, a broken ladder, and plans of grandeur to build a massive Royals monument in the living room. Lawrence’s Menards store — right next to the Home Depot at 31st and Iowa streets — will open on Tuesday.
We began reporting earlier this month that sources and employees at the store told us the mega retailer would open on Tuesday or Wednesday, but now Menards has made it official with a news release saying that Tuesday is the day.
In its release, the company said the new store at 1470 W. 31st St. will be open from 6:30 a.m. to 10 p.m. Monday through Saturday and from 8 a.m. to 8 p.m. Sunday.
“We have noticed there is much excitement in the air with the anticipated store opening,” Rob Jones, general manager for the Lawrence Menards, said in a press release. “Our team has been working really hard, and we’re excited to show everyone what we’ve been working on starting Tuesday.”
For those of you not familiar with a Menards, it is a major home improvement retailer, selling a full line of building materials, but it also carries name brand appliances, pet products, lawn and garden supplies, and the store even carries what it calls “convenience groceries.” (I remember seeing one of those approximately 5 gallon jugs of cheese puffs at a Menards store. Combine that with one of those beverage can holders that you wear around your head with an easy-to-access straw, and that is both convenience and luxury defined.)
The opening of the store is the latest game changer for the south Iowa Street retail corridor — which has seen Dick’s Sporting Goods open at 27th and Iowa and a host of other smaller redevelopments up and down the corridor. Menards is the biggest single store — by square footage — to open in Lawrence in years. When you look at the size of Menards you have to look at what is both inside and outside. Unlike Home Depot, Menards has an outdoor lumber yard. That combination makes Menards more than twice as large as the Home Depot store, which was built to smaller-than-normal standards after Home Depot in the early 2000s failed to win approval from the City Commission for a full-sized store.
As I’ve said before, it will be interesting to see if Home Depot tries to expand its Lawrence store. It will be even more interesting to see if this current City Commission would approve an expansion. The majority of the commission has changed since the Menards plans were approved by City Hall in 2013.
We’ll have to wait and see on all of that. A more immediate issue to watch is whether more development begins to occur around the Menards site. Everybody has been focused on the big Menards store, but the development plans for the project allow for several other lots surrounding the Menards to be developed with retail uses. The last plans I saw showed six lots that could accommodate everything from typical chain restaurants to multi-tenant buildings similar to what exists in front of Best Buy and Home Depot. No specific plans have been filed for buildings yet, and it is a little hard to estimate how large of a store the sites could accommodate because there are some floodplain issues in play. But I’ve previously had some people familiar with development tell me that perhaps a 20,000 square foot building could be accommodated, which could bring several national retailers into play.
As for whether the opening of Menards will create high-pitched competition in the home improvement sector, we’ll have to wait and see on that too. Menards and Home Depot are obviously used to competing against each other in a lot of markets. I’m sure those two retailers know what they need to do to compete. It will be interesting to watch how the competition impacts other, smaller businesses that are in that segment. I thinking about everything from McCray Lumber on Sixth Street to the Ace Hardware stores in town. I even heard from some people associated with the wholesale building, plumbing and electrical supply businesses in town. Menards is expected to compete for some of that wholesale business too. We’ll see how that all shakes out.
Health club buys west Lawrence tennis center; plans advance for tennis expansion at Rock Chalk Park; more on Menards
This is indeed the weekend when many in Lawrence will start to shift their attention from that sport played with the funny shaped ball to one played with a round ball. That’s right. It is time to turn our focus to tennis. What? What were you thinking, and why do you have Beware of the Phog written on your forehead? Maybe you have something else on your mind, but tennis is where some multimillion dollar developments are occurring.
As we reported in July, KU Athletics is working on a deal to build a new 78,000-square-foot tennis center complete with six indoor courts and six outdoor courts at Rock Chalk Park in northwest Lawrence. At the time, KU officials said they weren’t sure what they would do with the university’s existing tennis center at 5200 Clinton Parkway in west Lawrence.
Well, it now looks like Genesis Health Clubs is going to get into the tennis business in Lawrence. The company has bought the Jayhawk Tennis Center and a vacant piece of ground next to the tennis center, according to land transfer filings at the Douglas County Courthouse. I’ve been hearing for weeks that Genesis was working on a deal to purchase the tennis center, and I’ve tried to get folks to talk to me about it. But they’ve avoided my phone calls like John McEnroe avoids pleasantries with a line judge. I’ve got a call into them now that the sale has been completed, so hopefully I’ll hear back and have more information to report.
When I originally heard of the deal, I assumed Genesis was buying the building in order to convert it into a far west Lawrence fitness center. But members at Genesis say they’ve been told the idea is to use the building as a tennis center. Who knows, maybe there also will be a fitness center component to the facility as well, and the vacant land gives the company quite a few options.
If the idea is to maintain it as a tennis center, that could get interesting. KU officials tell me their plans very much include selling public memberships to the new tennis center at Rock Chalk Park. If Genesis does so as well at Clinton Parkway, Lawrence will have two public tennis centers. As I’ve long said, there’s a reason why the inventor of tennis is buried in Lawrence. Am I confused again?
In all seriousness, I am told Lawrence does have a pretty active tennis community. The new facility at Rock Chalk Park certainly could put Lawrence in the running to host some sizable tennis events. Jim Marchiony, an associate athletic director at KU, said the new facility would give the university a chance to host the Big 12 Championships in Lawrence. The last time KU won the right to host the Big 12 meet, it used courts in the Plaza area of Kansas City, Marchiony said.
Marchiony said KU would make the facility available to noncollegiate tennis tournaments and events as well. The new facility could be paired with the eight existing lighted, outdoor tennis courts that are owned by the city and are adjacent to the city’s recreation center at Rock Chalk Park.
KU’s tennis center basically will just be at the other end of the parking lot from those courts. Plans call for the tennis center to be on the southern end of Rock Chalk Park, just south of KU’s soccer field.
In addition to the six indoor courts and six outdoor courts, plans call for the center to have an elevated seating area that can accommodate about 500 spectators in the indoor facility. The center also will have an expanded locker room for the KU women’s tennis team, and a special members lounge and locker room, according to Paul Werner, the Lawrence-based architect designing the project.
The new facility will be a significant upgrade over the current facility at Clinton Parkway. That facility has five indoor courts, limited spectator seating, and spectators often can’t see the play that is happening on all courts.
Marchiony said KU hopes to be able to move into the new center in time for the start of the KU women’s spring 2017 season. Marchiony said KU has struck a deal to continue playing at the Clinton Parkway facility in the interim.
As we previously reported in July, the KU tennis center at Rock Chalk Park will be built using a public-private partnership that is similar to what KU used to build its track and field, soccer and softball facilities at Rock Chalk Park. The tennis facility will be owned by an entity led by Lawrence businessman Thomas Fritzel. The Fritzel entity — Bliss Sports — also owns the track and field, soccer and softball facilities, but leases them to KU Athletics, although the Fritzel entity retains some rights to use the facilities for private uses.
The sale of the Clinton Parkway property is reflective of that partnership. KU Athletics — and its related entity Jayhawk Tennis Center LLC — did not directly sell the center to Genesis Health Clubs. Instead KU Athletics sold the property to Fritzel’s Bliss Sports. Bliss Sports later that day then sold the property to Genesis Health Clubs.
Marchiony said KU Athletics made the decision to sell the property to Bliss, and left it to Bliss to decide what it wanted to do with the property. Terms of the deal between Bliss and KU Athletics weren’t disclosed, but Marchiony said it was a fair market transaction.
As for the Rock Chalk tennis center, it already has won a positive recommendation from the Lawrence-Douglas County Planning Commission. It now needs to win special use permit approval from the Lawrence City Commission. That appears to be a pretty straightforward approval. There have been no requests for tax incentives or for financial participation from the city, which would complicate the approval process at City Hall. I look for the project to be on the City Commission’s agenda in the next few weeks.
In other news and notes from around town:
• I reported earlier this week that I thought we would get an announcement from Menards soon on the opening date for its new store near 31st and Iowa. I also told you that I had heard from some folks that Oct. 20 was a likely date. Since that report, I have heard from more employees of the store who say they definitely have been told to prepare for an Oct. 21 opening, although there may be some activity of a special nature on Oct. 20 as well. Like I said earlier, we should get an official announcement next week.
Another ‘escape room’ business likely to locate in Lawrence; rumors, rumblings and other speculation about an opening date for Menards
Years ago, when my wife suggested I start sleeping in the basement, and then she boarded shut the only exit, I thought we were just having fun. Little did I know that we were missing out on a business trend. Indeed, figuring out how to break out of a locked room is becoming quite the trend in Lawrence.
Last week, we told you about Breakout Lawrence, a new business venture that is in the works. The idea is people pay for the challenge of figuring out how to escape a themed room full of puzzles, quizzes and other mind-bending exercises. Shortly after our article about Breakout Lawrence appeared, I got a call from another group of entrepreneurs who said they also are opening a similar business in Lawrence. This one will be called Locked In.
Shannon Buerger and her daughter Camas House will own the new business. The pair have been negotiating for a second-floor space above a retail shop on Massachusetts Street, but I don’t think that has quite been finalized. So, it remains to be seen where the business will land.
These businesses are becoming a trend not just in Lawrence. They’re called escape rooms, and the idea that started in the Far East is starting to find its way to metro areas across the country. They each work a little differently, but the general concept is that you and a group of friends pay a fee, enter a themed room — everything from a faux motel room to a haunted house — then have to solve a variety of challenges that give you clues that ultimately lead you to discovering a code or a key that will allow you to unlock the room. Generally, you have about an hour to complete the task. If you haven’t, they’ll let you out anyway. (I have found basement rules are a little more strict.)
“I was reading a Time magazine, and there was a short article about an escape room in New York City,” Buerger said. “It talked about how it was such a booming business, and I thought it would be a great thing for Lawrence.”
Buerger said the business hopes to have about 1,200 square feet of space that can accommodate two escape rooms. She said the first one will be built around a zombie apocalypse theme. Much like Breakout Lawrence, she hopes to have the business open by Thanksgiving. (Full Disclosure: I too am opening one of these businesses, but it will be open only on Thanksgiving. It will be called Breakout Elastic Waistband.)
Buerger said Locked In will charge $25 per session. The business hopes to be downtown and have late-night hours that will appeal to the college crowd. But Buerger said the business also will seek to be family friendly. Groups will be limited to eight people, but she said the company will have a policy of not putting strangers in the room together, so some groups may be smaller. She said most of the puzzles and challenges will be geared toward ages 12 and up. (Forget zombies, as the parent of 12-year old boy, I can attest being locked in a room full of them will provide a special type of motivation to escape.)
We’ll keep an eye on how all of this progresses. Both businesses have left some details unsaid here. (Breakout Lawrence also had not finalized a location when I spoke with them.) Both businesses are obviously in a race to capture the public’s attention. It should be fun to watch. I’ll let you know if I see any new details — once I get out of the basement.
In other news and notes from around town:
• If somehow I were to be locked in a room with seven other people for an hour, I would field an hour’s worth of questions about when the Menards store in Lawrence will open. Everybody wants to know, and I wish I had a definitive answer.
I don’t, but I think we all will have one soon. I’ve been told by a Menards official that a press release with details about the opening is set to be issued in the middle of next week. I’ve also been told by others that employees at the store are preparing for an Oct. 20 opening. I’ve gotten no confirmation of that from Menards.
But there are plenty of signs that opening day is near. Lots of delivery trucks are accessing the site. And it is pretty easy to keep track of the progress. Unlike Home Depot next door, a good amount of Menards’ lumber yard is in a covered, outdoor area that is easy to see when you drive by. You can start to see products piling up in that yard.
It will be interesting to watch whether area residents become the recipients of price wars between Menards and Home Depot as the two battle to gain or keep market share in the early stages of this new competition. As I’ve said before, I think it also will be interesting to watch whether Home Depot files plans at City Hall to expand its Lawrence store. Menards is more than twice the size of Lawrence’s Home Depot. Officials with Home Depot previously wanted a larger store in Lawrence, but Home Depot was unsuccessful in the early 2000s in winning city approval for a larger store.
We’ll see how that all plays out. But in the meantime, I think it is a safe bet that we’ll be able to shop at the new Lawrence Menards before Halloween. That’s a scary thought for my credit card indeed.
Update on reopening plans for Ladybird, Jefferson’s, Biggs on Mass following fires; a guess on when Menards will open
If anything good comes out of the fires that have temporarily closed three downtown restaurants, it is that the pairing of doughnuts and bourbon may finally get its due. I have updates on reopening plans for the three eateries — Jefferson’s, Biggs on Mass, and Ladybird Diner — and yes, one of them really does involve doughnuts. (Also known in my house as the Breakfast of 18th Place. We’re fine with being middle of the pack if it means we can skip the Wheaties and instead have a chocolate glaze every morning.)
“I tell people that several years from now people are going to look back on the fire at Biggs, and say ‘that was the best thing that ever happened to doughnuts in Lawrence,’” said Meg Heriford, an owner of Ladybird Diner at 721 Massachusetts St.
If you remember, on March 3 a fire started in the smoking pit area of Biggs on Mass, and ever since that barbecue restaurant and the adjacent Ladybird Diner have been closed while crews work on removing smoke damage and replacing interior furnishings.
Heriford hopes to have Ladybird reopened sometime this summer. “I just don’t know if it is going to be the beginning of summer or near the end,” she said.
In the meantime Heriford has rented a commercial kitchen in town to work on new recipes for artisan doughnuts, which she said will be a larger part of the business when the diner reopens. Heriford said she recently was experimenting with a salted caramel popcorn doughnut with bourbon icing, another one that featured mango and chiles, and one that had espresso icing with cornflakes and bacon. Given the circumstances, I think one certainly should be the Fire in the Hole Doughnut, my own personal creation where you have the doughnut of your choice, while sitting in the hole is a round ball of Tabasco infused dough fried in Tabasco sauce. (Well, maybe there is a reason why I’m not yet on The Food Network, and perhaps even a reason why Bobby Flay sought that restraining order.)
Regardless, Heriford said work is continuing on the building rehabilitation, and she said it is much more extensive than she ever thought.
“The extent of the smoke damage caught us all off guard,” Heriford said. “I walked in after the fire and saw that we didn’t have any structural damage. We had a basement full of water, but I thought we would have everything cleaned up in a couple of days.”
Instead, Heriford has found that removing the smoke odor from the restaurant is complicated. The entire ceiling had to be removed, and new duct work also is required. Once the smoke issue is taken care of, there is a lot of work for the restaurant to reopen. Furnishings will have to be reinstalled, and a staff will have to be hired and trained again, Heriford said.
Heriford is trying to keep the Ladybird in the Lawrence food scene in the interim by selling pie from her sidewalk dining area every couple of weeks. She also has reached a deal where The Bourgeois Pig, 6 E. Ninth St., is selling Ladybird pies on the weekend.
Next door at Biggs on Mass, the latest plans are for the barbecue restaurant to reopen sometime in June. Owner Doug Holiday said he’s received a building permit from city officials, and work is underway to rebuild the back area of the building where the fire started. A major part of the renovation work at Biggs involves replacing all the electrical panels in the building, which were damaged by the water.
“There are no winners in this deal,” Holiday said. “Well, maybe the cleaning companies.”
Jefferson’s, 743 Massachusetts St., is the third business that is closed due to fire damage. Fire struck that building on Jan. 15, but it appears it may still have the most work to do to reopen.
Brandon Graham, an owner of Jefferson’s, told me that he hopes to reopen sometime in August, but said it is still too early to know whether that timetable is feasible.
“It is a complete remodel at this point,” Graham said.
Graham said the rebuilding process was complicated by the fact he did not have access to the building for a full month after the fire. Insurance officials were still investigating the cause of the fire. Graham said he still doesn’t know exactly what happened. An old air make-up unit on the roof played a role in the fire, but Graham said a transformer near the building also blew up near the time of the fire. Graham said he’s not yet learned whether a surge from the transformer caused a problem in the rooftop unit, or if something else occurred that caused the fire and the transformer problems.
At this point, Graham is focused on getting the restaurant reopened. He said the restaurant — which was known for burgers, wings and other sports bar fare — will come back with much of the same look and feel. One thing that won’t be back, though, are the thousands of decorated dollar bills that adorned the walls of the restaurant.
“They were ruined,” Graham said. “Everything stunk. We took them down and took them to the bank.”
How many were there? Well, you’ll get a chance to guess that. The restaurant plans to hold a contest where patrons guess how many dollar bills were on the wall. The winner will receive free wings for a year. Graham said the restaurant will restart the tradition where patrons can decorate a dollar and have it posted on the wall.
Graham said he’s optimistic the crowds will return to the restaurant once it reopens.
“We get quite a few questions about when we are going to reopen,” Graham said. “That makes us feel good that people in the community care about what is going on with us. I feel for our neighbors up the street who are going through it too. It is a difficult thing to deal with.”
In other news and notes from around town:
• High on the list of questions I receive — somewhere near the ones about tongue ointments for Tabasco burns — is: When is Menards going to open?
Well, I’ve received no information from Menards about its Lawrence opening date. But I get the question enough that I thought I should remind you what I’ve previously reported. Menards officials during the planning process told me it takes about nine to 10 months to build a Menards store. The company received a building permit from the city in September. I think that means there is a good chance the store could be open by the time the next school year starts in late August. Menards and Sprouts, the grocery store near Wakarusa and Overland drives, both started construction near the same time. Sprouts is set to open on July 1, although that building is significantly smaller than Menards.
If you have been near the 31st and Iowa area lately, perhaps you have gotten a sense of how big Menards is going to be, especially in comparison to the Home Depot that is next door. According to information filed with the city, Menards will have about 250,000 square feet of space under roof. That’s compared to about 94,000 square feet for Home Depot. Plus, Menards will have an approximately 150,000-square-foot outdoor lumber yard.
Home Depot certainly didn’t want to have such a small store in Lawrence, but that is all they could get approved by city commissioners in the early 2000s. I will not be surprise if Home Depot files plans for an expansion in Lawrence. I have no inside information on that, but I have noted that Home Depot has sought something called a zoning certification from the city. That’s just a piece of paperwork that confirms what the zoning is for a particular piece of property. Sometimes it is just for a lender or tax purposes, but other times it is the first step in a company putting together plans to build on a piece of property. It will be interesting to see how big of a home improvement battle we have at 31st and Iowa.
• Town Talk will be off tomorrow. Contrary to the rumors, I will not be recovering from doughnut experimentation. I will be parking cars at the Lawrence Swap Meet at the Douglas County Fairgrounds as part of a fundraiser for my kids’ 4-H club.
Two retail projects drive construction totals to new high in 2014; another good report on Lawrence job numbers
A little more than $9 million is being added to the Lawrence economy as we speak, and that is not even counting the spending my wife is doing on the post-Halloween candy that is on sale. Instead, I’m talking about two new retail construction projects underway in the city.
Construction work is underway on a Menards home improvement center near 31st and Iowa and on a Sprouts grocery store near Sixth and Wakarusa. The latest building permit reports from City Hall show the Menards project has a construction value of $5.5 million, while the Sprouts project checks in at $3.75 million.
Those two projects led the way in September, and the month ended up being the busiest one yet in 2014 for the local construction industry. The city issued permits for $17.1 million worth of construction work in September. That topped the $14.8 million worth of permits the city issued in June.
For the year, the city has issued building permits for $78.56 million worth of construction projects. That’s well below the $152.9 million worth of projects that were started through the end of September 2013. But last year was one of the larger construction years on record for the city, which included tens of millions of dollars for work at the Rock Chalk Park sports complex. In 2012, the city had issued permits for $75.4 million worth of construction, so 2014 is shaping up to be on par with an average building year in Lawrence.
One area of the Lawrence construction industry that has been below average is single-family home construction. City officials have issued permits for 65 single-family homes thus far in 2014. During the same period a year ago, the city had issued 121 single-family permits. At this point, that number should be of some concern. At 65 permits, single-family home construction is below the pace in 2011, when the city hit a new low for single-family permits issued. In fact, this year’s construction is significantly below that pace. Through September of 2011, the city had issued 76 single-family permits, or about 17 percent more than this year’s total. We’ll see what the final three reports of the year bring, but builders will need to start 30 new homes before the end of the year to avoid setting a new low.
As for when Menards and Sprouts may open, Menards officials previously have said they expect construction to take about 10 months. I suspect that will be pretty dependent upon the weather cooperating this season. Sprouts officials have not said when they expect to open, but it is a significantly smaller project than the Menards store, so I think it might be the first to open.
In other news and notes from around town:
• While we are talking about construction projects near Sixth and Wakarusa, I know some of you have been wondering what the construction is on a pad site just east of the Walmart store. As we previously have reported, plans filed with the city say it is a medical office building. But I haven’t yet had any luck confirming what type of medical professional plans to locate there.
• While we are on the subject of specialty grocery stores, I will tell you I’m hearing the same things about Trader Joe’s that some of you are: Some employees of the Leawood store have been telling Lawrence customers that Trader Joe’s may soon come to Lawrence. I called over to Trader Joe’s and tried to get an official there to tell me the same thing, but she stopped short of that. She said there’s been talk around the store of such a project, but no announcements or anything that indicates that the idea is more than just talk, at the moment.
But it is worth keeping an eye on. As we have previously reported, the large retail project proposed for the area south of the Iowa Street and SLT interchange has drawn strong interest from a specialty grocer, the development group for the proposed project has said. I don’t have any insight into whether the grocer is Trader Joe’s, Whole Foods or some other player.
• And while we’re talking about numbers, here’s one last set of them: monthly job totals for the Lawrence metro area. Putting stock in one month’s worth of numbers is never too wise (as a set of lottery numbers from my fortune teller proved), but recently we reported that Lawrence in August had the highest job growth of any metro area in the country.
So, I wanted to see how September’s numbers came in for Lawrence. The latest report from the Bureau of Labor Statistics shows the numbers aren’t the best in the country, but they aren’t too bad. The report found the number of jobs in Lawrence and Douglas County grew by 1.5 percent — or 800 jobs — in September, compared with September 2013. That was better than the 0.7 percent average for Kansas as a whole. Lawrence ended up having the second highest job growth rate of any metro area in the state, although it is worth noting that the numbers are still preliminary.
— Manhattan: 2.1 percent
— Lawrence: 1.5 percent
—Topeka: 1.2 percent
— Kansas City, Kan./Mo: 0.5 percent
— Wichita: 0.3 percent
Lawrence also is outperforming the state when it comes to its unemployment rate. Lawrence’s unemployment rate in September was 4 percent, which is down from 4.7 percent in September 2013. That’s a significant drop. Lawrence’s unemployment rate in September was better than the statewide average of 4.4 percent, and tied Manhattan for the lowest unemployment rate of any metro area in the state.
As for Lawrence having the fastest job growth rate of any metro area in the country in August, hopefully you can get a refund on the 15-foot plaque you had ordered for the occasion. As we reported last month, the August numbers were preliminary. The August numbers have now been finalized, and Lawrence’s job growth total were adjusted downward a bit. The new figures show Lawrence jobs grew by 4.6 percent instead of the 5.9 percent originally thought.
That adjustment was enough to drop Lawrence from the No. 1 spot. Midland, Texas, topped us, and a few other cities may have as well. But the 4.6 percent figure was still a very strong showing for the local economy.