The sales tax numbers for 2016 are in, and they show Lawrence was perhaps the hottest retail market in the state — and that is before sales of the Donald Trump inauguration T-shirts and the replica Meryl Streep Golden Globe statuettes.
As we have been telling you all year, Lawrence’s monthly sales tax collections have been growing at a faster rate than any of the other major retail markets in Kansas. Well, cities across the state have received from the state their final sales tax check of 2016, and Lawrence has retained that distinction.
Lawrence finished 2016 with sales tax revenues growing by 5.5 percent, compared with 2015 totals. When you combine sales and use taxes (use taxes are the tax you pay when you buy something online and the retailer doesn’t charge you a sales tax) the city’s total collections grew by 6.4 percent. That’s not a record year, but it is close to it. Here’s a look at the growth rates from recent years and the total amount of sales and use taxes received by the city:
— 2016: up 6.4 percent to $27.3 million
— 2015: up 4.4 percent to $25.7 million
— 2014: up 5.5 percent to $24.6 million
— 2013: up 1.9 percent to $23.3 million
— 2012: up 5 percent to $22.9 million
The 2016 growth rate ended up being the best since 1998, when sales tax collections grew by a whopping 8.5 percent. (You all remember the glorious year of 1998, when we were buying Beanie Babies and our only Russian worry was whether Boris Yeltsin inadvertently would become trapped in a vodka bottle.) Those were good times for Lawrence’s retail scene. But it may surprise people that this last five-year period has been every bit as good. Even though it may not have felt as fun, Lawrence’s sales tax collections from 2011 to 2016 have grown by 23 percent. From 1997 to 2002, they grew by 21 percent.
If local governments have funding problems, they should not blame consumers or sales tax collections.
In 2016, Lawrence definitely didn’t have anything to complain about on the sales tax front. Here’s a look at how Lawrence performed compared with the other major retail communities in the state:
— Lawrence: up 5.5 percent
— Olathe: up 3.6 percent
— Topeka: up 3.3 percent
— Overland Park: up 2.7 percent
— Manhattan: up 1.8 percent
— Johnson County: up 1.8 percent
— Kansas City: up 1.7 percent
— Sedgwick County: up 1.1 percent
— Lenexa: down 2.5 percent
For what it is worth, it also appears sales tax collections strengthened as the year went along. For example, when I reported on sales tax collections in April, Lawrence had posted just a 2.9 percent increase, and Topeka, Johnson County and Overland Park all were in negative territory. All those communities saw significant growth in sales tax collections since then.
As to why Lawrence had such good sales tax numbers, 2016 was the year Menards opened its large home improvement store in south Lawrence. City reports note that sales tax collections on building materials sold in Lawrence were up 24 percent compared with 2015. Sales tax collections on vehicles and car parts sold in Lawrence were up 9 percent. And sales tax collections on grocery items were up 5 percent.
The building materials number is the most interesting. It is not definitive proof that the Menards store is causing people to keep more of their dollars in Lawrence, but that is what it suggests. If the city wants to study something else, a good topic would be how much money do Lawrence residents spend outside the city, and have developments such as Menards and Dick’s Sporting Goods helped lessen that number? You would think city commissioners would want to have that information before they decide whether to reject new shopping center developments, like the proposal south of the SLT and Iowa Street interchange, which is now the subject of a lawsuit.
• Now that we have year-end numbers, it also is interesting to look at just how much business the largest retail markets in the state did in 2016.
— Johnson County (Home to Overland Park, et al): $11.44 billion
— Sedgwick County (Home to Wichita): $9.01 billion
— Shawnee County (Home to Topeka): $2.94 billion
— Wyandotte County (Home to Kansas City): $2.59 billion
— Douglas County: $1.71 billion
— Manhattan (Manhattan is in two counties so I used the city totals instead of trying to combine the two county totals): $1.12 billion
— Saline County (Home to Salina): $1.11 billion
— Reno County (Home to Hutchinson): $947.73 million
— Leavenworth County: $685.85 million
— Finney County (Home to Garden City): $673.75 million
— Ellis County (Home to Hays): $622.11 million
— Ford County (Home to Dodge City): $575.84 million
— Lyon County (Home to Emporia): $465.41 million
— Geary County (Home to Junction City): $427.35 million
• And just because the warm weather has done wonders for my arthritic fingers and toes, I decided to do one more math exercise to pass along. Here’s a look at per capita spending levels in the large counties. I find the numbers interesting because they provide a little more context. A county like Johnson County should have a lot more retail sales than a county like Douglas County, if for no other reason than it has a lot more people. The per capita numbers give you an idea of how well a market is doing in terms of pulling in outside residents to shop, and they also may give you an idea of whether residents of the county have more disposable income to spend.
— Ellis County: $21,430 per capita
— Saline County: $19,931 per capita
— Johnson County: $19,718 per capita
— Finney County: $18,320 per capita
— Sedgwick County: $17,612 per capita
— Ford County: $16,660 per capita
— Shawnee County: $16,449 per capita
— Wyandotte County: $15,853 per capita
— Manhattan: $14,884 per capita
— Reno County: $14,873 per capita
— Douglas County: $14,485 per capita
— Lyon County: $13,959 per capita
— Geary County: $11,540 per capita
— Leavenworth County: $8,647 per capita
Lawrence obviously finishes in the lower half of that list. Some people would argue Lawrence is destined to always be low on that list because we are too close to major shopping districts in Johnson County and Topeka. Others argue that Lawrence could move up the list if it allowed more shopping developments to occur in Lawrence, thus giving people less incentive to drive to Topeka or Johnson County.
That’s an argument that likely is to continue. One thing that is a little more concrete: State numbers show that out of the 93 Kansas counties that have a local sales tax, 56 of them saw their sales tax totals decline in 2016. Douglas County ought to be pleased that it is not yet among them.
New fabric and craft retailer opens in south Lawrence; sales taxes continue to surge, while questions persist about SLT shopping center
Nothing says fall like pumpkin spice and a head-to-toe wardrobe of fleece. There is obviously no shortage of pumpkin spice, as intravenous drip bags of it are now available on every corner. But I do have news on the fleece front. A national chain fabric and craft retailer has opened along south Iowa Street.
Jo-Ann Fabric and Craft Store has opened its Lawrence location in the shopping center at 27th and Iowa streets. The store officially opened at 9 a.m. Thursday with a ribbon-cutting and several giveaways. Apparently there are people who love fleece even more than I do (or perhaps they thought there was a pumpkin spice giveaway) because there was a line outside the store of several dozen people about a half-hour before opening.
Whatever the case was, the competition level in the fabric and craft world has increased in Lawrence. Jo-Ann occupies the space that formerly housed Hancock Fabric, a national chain that went bankrupt. Hancock primarily was a fabric and sewing store. Jo-Ann has a full line of fabrics and sewing supplies, but also has a larger inventory of crafting items. I got to take a special pre-opening walk through the store (it may or may not have ended prematurely when I rolled in a pile of fleece). Among the categories of crafting items were scrapbooking items, food crafts like cookie cutters, holiday decoration kits, craft paints and several other categories.
The store is broader than Hancock’s but not as large as Hobby Lobby and Michaels, the two large craft and fabric superstores in town.
In addition to the numerous customer giveaways, local schools are set to get something from the store. The company plans to provide a $2,000 grant to one school in the community, according to a press release from the company.
In other news and notes from around town:
• Maybe it was pumpkin spice sales. Maybe it was fleece sales. Hold the phone, could it be sales of pumpkin spice-scented fleece? Surely not, but something continues to have retail spending in Lawrence on a hot streak.
The latest one-month report from the Kansas Department of Revenue shows Lawrence sales tax collections are up 11 percent compared with the same one-month period a year ago. The report was the October report, but that’s not really when the sales were made. Because of the delay in sales tax reporting, the sales are more likely reflective of activity in August.
The 11 percent increase is impressive; the city collected about $220,000 more in sales tax during that one month than it did the previous year. But at this point, such an increase is not all that surprising. Sales tax collections in Lawrence have been really strong for pretty much the entire year. As we have reported month after month, Lawrence has seen the most robust sales tax growth of any of the major retail markets in the state. That continues to be the case.
Year to date, Lawrence sales tax collections are up 6.1 percent compared with the same period a year ago. Thus far, Lawrence has collected about $1.2 million more in sales tax revenues than it did during the same period a year ago. Importantly, the 6 percent growth is far exceeding what the city budgeted to receive in 2016. The city budgeted for a 3.7 percent increase. If my abacus is working correctly, the city has about $470,000 more in sales tax revenues than it expected to receive, and that number could grow more before the end of the year.
Here’s a look at how Lawrence’s sales tax collections stack up to some of the other large retail centers in the state:
— Lawrence: up 6.1 percent
— Olathe: up 3.6 percent
— Topeka: up 3.4 percent
— Overland Park: up 2.5 percent
— Manhattan: up 2.3 percent
— Kansas City: up 1.7 percent
— Johnson County: up 1.6 percent
— Sedgwick County: up 1.3 percent
— Lenexa: down 3.6 percent
One of the more interesting questions in town continues to be why are sales tax collections up so much? It is a bit of a guessing game, but the city does try to analyze each month’s reports. The city hasn’t yet released its report for this most recent batch of sales tax data, but the analysis for last month’s data is available. It shows the same thing we have seen most of the year. Three areas of the economy are performing pretty well. Sales taxes collected on building materials are up 25 percent; sales taxes from retail stores are up 9 percent; and sales taxes from grocery stores and other food and beverage stores are up 6 percent.
As we have noted before, Menards — a major seller of building supplies — is a new entrant into the market. That certainly could be playing a role in the increase in that category. Evidence continues to mount that there were people leaving the community to buy building supplies and now they are keeping more of those dollars at home.
You also could argue that the addition of Dick’s Sporting Goods, Ulta Beauty, The Boot Barn and PetSmart at 27th and Iowa streets has helped boost the retail totals. But it can’t be said definitely. It could just be sales of pumpkin spice chewing gum at Wal-Mart. It could just be that Lawrence’s slightly better population growth of the last few years is paying off.
Whatever is happening, though, is eye-catching. Add that to the pending completion of the South Lawrence Trafficway — it is scheduled to open by Thanksgiving — and you can see why Lawrence may be drawing some good interest from retailers who want to be in the market.
But, for all those positives, the city also has to contend with what potential retailers must surely view as a negative: a lawsuit over potential retail development at the intersection of the South Lawrence Trafficway and U.S. Highway 59.
As we have reported, a shopping center was proposed for the site, with thoughts that it would bring everything from an Old Navy to Designer Shoe Warehouse. The property already is in the city limits. The city’s long-range growth plans label the area as being appropriate for “auto-related” commercial development. It is not entirely clear what that means, but it is different from plain old regular commercial development. A debate ensued, the project gets rejected by the City Commission, and a lawsuit is filed by the out-of-state development group. That lawsuit is still in its early stages.
The City Commission’s rejection of that project in January left a lot of uncertainty about what is the appropriate use for that very high-profile piece of property. Nearly 11 months later, none of that uncertainty has been cleared up. Once the lawsuit was filed, city officials have hardly uttered a peep about what the future of that land should be.
Think about this: The South Lawrence Trafficway project has been more than two decades in the making. Now that it is completed, we don’t know what we want to have happen at its premiere intersection.
The iron is hot, but it seems that the community is paralyzed on whether to pick up a hammer to strike it.
You want statistics. I’ve got ‘em. KU’s football team has a better 2016 record than Oklahoma, K-State and Missouri. After 96 hours of college football on a Labor Day weekend, you will go through 192 bags of Doritos, three overheated remote controls and not nearly enough ScotchGard. I even have a couple of new statistical reports on Lawrence’s economy. Retail sales are surging while home sales are slumping.
• First, a look at retail sales. In a trend that has held steady pretty much the entire year, Lawrence continues to lead the state in sales tax growth.
Lawrence officials recently received their August sales tax check from the state, and collections were up 3.8 percent compared with the same one-month period in 2015. (A reminder: Even though the report is for August, due to a lag in reporting, the report actually measures sales activity that happened about 30 to 60 days ago.)
As usual, the more important number is the cumulative total for the year. That’s where Lawrence continues to outshine the other large retail centers in Kansas. Here’s a look:
— Lawrence: up 5.3 percent
— Olathe: up 3.9 percent
— Topeka: up 3.2 percent
— Overland Park: up 2.3 percent
— Kansas City: up 1.7 percent
— Johnson County: up 1.5 percent
— Manhattan: up 1.4 percent
— Sedgwick County: up 1.2 percent
— Salina: down 2.8 percent
— Lenexa: down 6.1 percent
The numbers are good news for more than just the city’s retailers. If the trend continues, it will be good news for the city’s budget too. The city budgeted sales tax revenues to grow by 3.7 percent for 2016, or in dollar terms, about $940,000. If the city can finish the year with a 5.3 percent increase, it’ll exceed its estimates by about $360,000. Of course, things could change quickly, especially if Lawrence has a lackluster holiday shopping season for some reason.
As for why sales tax collections are on the rise, that’s always a bit of a guessing game. City officials, though, continue to point to a few key areas. The city hasn’t yet analyzed the August sales tax distribution, but in a report on the July distribution, the city noted the sale of building supplies continues to be the biggest driver of the increase. Sales of building materials are up 27 percent compared with the same period a year ago. The biggest change in that sector has been the opening of Menards store near south Iowa Street.
The city also notes the auto industry and the grocery store industry also are doing well. Year to date, motor vehicle and parts sales are up 8 percent, while sales from food and beverage stores (not to be confused with bars and restaurants) are up 7 percent.
There is one area that has declined significantly in 2016, but consumers likely don’t mind. Sales taxes charged on utility services — think water, gas and electricity bills — are down 11 percent year to date. Rates for those services haven’t gone down, but usage evidently has. But that too could change quickly.
• The news isn’t as bright for home sales. The Lawrence Board of Realtors recently released figures for July home sales. It was a rough month.
Home sales in Lawrence fell by about 23 percent in July, compared with the same period a year ago. The weak July pushed year-to-date totals squarely into negative territory. Year to date, home sales are down 5.3 percent, for a total of 756 sales.
The reason for the downturn is beginning to sound like a broken record. (Did somebody mention records? I hear KU’s football team has a better record than K-State’s.) The supply of homes on the market is very tight, according to real estate professionals.
Carl Cline, president of the Lawrence Board of Realtors, said the lack of homes for sale is having a “significant impact” on the market. “The drop in July sales is attributable to a shortage of supply and not a drop in demand,” he said. “Segments of this market have buyers in line for just the right listing.”
The tight supply of homes has been a pretty consistent theme for the Lawrence market all year. Really, it has been building for a couple of years. In 2014, the median number of days a home sat on the market before selling was 34. In 2015 that dropped to 24 days. Thus far in 2016 it has dropped to 16 days.
Other statistics of note from the recent report include:
— Despite there being a shortage of homes on the market, the sales of newly constructed homes dipped a bit in July, falling to 11, compared with 13 in July 2015. Year to date, however, sales of new homes are up by nearly 24 percent. Lawrence builders are on pace to post their second straight year of gains.
— The number of active listings on the Lawrence market stands at 288, down from 317 at the same time in 2015 and 417 in July 2014.
— Home prices are starting to rise significantly in Lawrence. Through July, the median selling price of homes is $176,175, which is up 6.8 percent compared with the same period a year ago. If July was any indication, those numbers may rise more rapidly during the rest of the year. The median selling price for homes in July rose 13.9 percent compared with July 2015.
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.
Lawrence sales tax collections gain steam; details on upcoming pole vault event; possible move for chamber offices
Lawrence City Hall and I have something in common: We’re both rooting for a warm-up. I’m rooting for one after my wife a few weeks ago decreed that the furnace shall not be used again until after Labor Day. (She didn’t say which year.) City Hall is rooting for a warm-up of sales tax revenues. Well, one of us got what we were looking for, and the other is still trying to learn how to knit an afghan.
The city recently received its March sales tax check from the state, and collections were up 7.4 percent compared with the same period a year ago. The March check generally reflected sales that were made in February.
That was a good batch of news because January and February sales tax checks — which reflected sales made primarily during December and January— were middling at 0.8 percent and 1.2 percent increases, respectively. For whatever reason, post-holiday sales seemed to soar. (I know I had to go buy llama hair and a loom.)
Actually, it may not be traditional retail sales like those that are driving the higher numbers at all. I’m still waiting on the latest numbers from City Hall, but earlier this year the city said the two largest categories of sales tax growth were sales of building materials, which were up by 28 percent compared with the same period a year ago, and sales taxes charged on hotel rooms, which were up 19 percent over the same time period a year ago. The building materials could be a sign of the new Menards store, and increased hotel activity could be a sign of events taking place at Rock Chalk Park and elsewhere around town. It is tough to know exactly what is driving the increases in either category, but they are noteworthy.
The March sales tax check now has Lawrence’s year-to-date sales tax collections up by 2.9 percent for the year-to-date. The city still needs that number to grow to meet its budget projections for 2016, but thus far the city is not expressing much concern. The city needs sales tax growth to check in closer to 4 percent to 5 percent in 2016.
What’s most interesting about Lawrence’s sales tax numbers is that Lawrence is outpacing all of the other large retail communities in the state thus far. Here’s a look at growth percentages for some of the state’s larger retail centers:
— Lawrence: up 2.9 percent
— Kansas City: down 2.1 percent
— Sedgwick County: up 0.2 percent
— Johnson County: down 1.1 percent
— Salina: down 4.5 percent
— Manhattan: down 0.6 percent
— Lenexa: down 14.6 percent
— Topeka: down 0.3 percent
— Overland Park: down 1.0 percent
— Olathe: up 1.1 percent
In other news and notes from around town:
• For those of you who missed it in the J-W’s sports section, we now have more details about a unique pole vaulting event slated for later this month.
I reported last month that plans were in the works for a pole vault exhibition to be held in the parking lot of Salty Iguana Mexican restaurant at Sixth and Wakarusa. Now, KU officials have confirmed the event will be held as part of the Kansas Relays.
KU officials also have announced that the event will attract professional pole vaulters who will be competing for cash prizes based on how high they vault.
Among those competing will be former KU standout Jordan Scott, a seven-time Big 12 champion. The field will feature four men and four women.
The event is set to begin at 5:30 p.m. on April 21 at the Salty Iguana parking lot. In addition to the pole vaulting, there will be a bit of a parking lot party, with food and drink being sold at the event.
The pole vaulting event hopes to replicate the success of the Downtown Lawrence Olympic Shot Put event that is now in its fifth year. That event — which features some of the world’s best shot putters competing in a ring at the intersection of Eighth and New Hampshire — is set for 6 p.m. on April 22. That event is organized by eXplore Lawrence, the city’s convention and visitors bureau, but is held in conjunction with the Kansas Relays.
• File this one in the category of something to keep an eye on: The Lawrence chamber of commerce is in the process of looking for a new home for its offices and the KU Small Business Development Center. Bonnie Lowe, chief operating officer for the chamber, confirmed that the organization is shopping around for a new office as its current lease at Seventh and Vermont streets has expired. The Chamber — which has its offices above the Jos. A. Bank retail store — has signed a short-term extension while it looks for space.
Lowe said the chamber may decide to sign a new long-term lease at it current location, but she said The Chamber does have some interest in ground floor office space somewhere in downtown.
"That would probably be my preference," Lowe said of ground floor space. "From a visibility standpoint, that would really help."
Lowe didn't get into any locations that The Chamber is considering, so I don't know if the group is looking at ground floor space on busy Massachusetts Street or in one of the many office buildings, like the Hobbs Taylor Loft building, that is on New Hampshire Street. There also are probably some options on Vermont, as well.
Lowe did confirm that The Chamber is confining its search to the downtown area. I'll let you know when I hear more.
Holiday shopping numbers show Lawrence did better than most but still lagging expectations; heading off an American Eagle Outfitters rumor
This is the time of year where you are thinking about Valentine’s Day shopping. (Don’t mind that sudden noise. It is just the sound of 20,000 male cellphones trying to call a flower shop all at once.) But at Lawrence City Hall, they’re still thinking about the Christmas shopping season. New sales tax numbers are in that show Lawrence shoppers were merrier than most but still may not have been merry enough.
State revenue officials have sent January sales tax checks to cities across the state. Those checks are for sales taxes that actually were collected mostly in November — or in other words, the start of the holiday shopping season. (And yes, it was allowable to start early for Valentine’s Day too, although it will be great fun perusing the candy aisle of your favorite convenience store on Sunday.)
The sales tax numbers from the state show that sales tax collections were up 0.8 percent in Lawrence during that early holiday shopping season. The good news is that those numbers are better than those posted by many of the state’s other retail centers. The concerning news, though, is the city is betting on sales tax growth far greater than 0.8 percent for 2016. To meet its budget, the city needs to see sales tax growth closer to 5 percent.
Here’s a look at some of the numbers and how Lawrence stacks up to other area communities:
— Lawrence: up 0.8 percent
— Kansas City: down 1 percent
— Sedgwick County: down 0.8 percent
— Johnson County: up 0.9 percent
— Salina: down 4.8 percent
— Manhattan: down 3.8 percent
— Lenexa: down 4.3 percent
— Topeka: down 0.7 percent
— Overland Park: up 1.3 percent
— Olathe: up 0.2 percent
— City of Shawnee: up 23.5 percent
With the exception of Shawnee — where consumers there must shop ahead for both Valentine’s Day and Presidents Day — Lawrence’s numbers stack up well.(UPDATE: I've figured out the Shawnee numbers. The state's report was incorrect in one regard. It did not note that Shawnee's sales tax rate increased as part of street improvement program. So, sales taxes collections have increased, but that's primarily because the rate has increased. The Journal-World's sister publication, The Shawnee Dispatch, had an article on that recently.)
But as I noted earlier, Lawrence will need to see better months than this one, if it hopes to meet its aggressive sales tax projections for 2016. City officials are projecting a 5 percent sales tax growth. The city finished 2015 with a 4.7 percent sales tax growth. The city more typically has counted on 3 percent sales tax growth to make its budgets.
But as city officials have previously noted, 2016 will be the first full year of sales tax collections with both Dick’s Sporting Goods and Menards in town. There is a hope that the addition of those two big box retailers will keep some retail dollars in town that otherwise have been leaving the community. That seems to be a good bet, but what is less certain is whether the overall economy will hold up and put shoppers in a spending mood.
Traditionally, a drop in gasoline prices has been a good thing for Lawrence retailers. It is tough to say whether that will be the case this year.
In other news and notes from around town:
• Part of my exciting lifestyle involves watching the Douglas County land transfers that show which pieces of property have recently changed hands. I know some of you also watch those because we’ve found ourselves in the same lonely corner at cocktail parties. The most recent listing from the county courthouse may have an entry that catches your eye: A group called American Eagle Properties Inc. has bought land in the Bauer Farm shopping center development near Sixth and Wakarusa.
There’s of course a national retail chain called American Eagle Outfitters, but as I told my wife when she was warming up the forklift to make more room in the closet, I don’t think this deal is a sign that American Eagle Outfitters is coming to town.
Instead, I did a little bit of searching, and found that American Eagle Properties appears to be more of a run-of-the-mill land holding company owned by a Colorado investor. According to media reports, it looks like the operator of American Eagle Properties used to own a Colorado-based beer distributorship that had American Eagle in its name.
As for what may go on the vacant property, I haven’t heard of any plans yet. It may be that the property just changed hands for investment purposes, but I’ll keep my eyes open for signs of any new projects.
If you have driven by the Bauer Farm property lately, you probably noticed there is a large amount of dirt work underway near the corner of Sixth and Folks Road. As we’ve previously reported, an apartment complex is going in near that location. I also have word that a credit union is building near the corner as well. I’m still gathering some information about that project, and I also hope to soon have a rendering to share of what the new apartment complex will look like.
Home sales up; housing construction hits recent high; sales tax numbers strong but create some budget worries at City Hall
As a quick homework conversation with my seventh-grade son confirmed, junior high math has surpassed me. But that doesn’t mean I can’t still do some calculations to determine the state of the Lawrence economy. So, here’s a look at the latest batch of numbers.
• The housing market in Lawrence remains strong. Homes sales through July are up 18 percent, according to a new report from the Lawrence Board of Realtors. Lawrence home builders are even getting in on the good news. Sales of newly constructed homes are up 21 percent for the year. The newly constructed home market has been one that has been slow to bounce back in Lawrence.
The statistic that shows how hot the Lawrence market is right now has to do with the number of homes on the market. Real estate agents measure how many homes are on the market versus how quickly they are selling. A balanced market between buyers and sellers normally has about four to five months worth of homes on the market at any given time. Currently, there are 1.9 months worth of homes on the Lawrence market. It is a seller’s market right now. Negotiating for a house in Lawrence right now probably would remind me of my efforts to get a date for prom. You have to be prepared to sweeten the offer. (I had to promise we would super size the meal.)
Thus far for the year, the median number of days a home is sitting on the market before it sells is 24. That’s down from 34 at this point in 2014 and 42 in 2013. One other statistic of note: Real estate agents have sold $160 million worth of residential real estate in Lawrence thus far in 2015. That’s up from about $129 million during the same time period a year ago. That’s a nice boost for the Lawrence economy.
• The uptick in the home construction market is becoming very clear when you look at the city’s building permit totals. Through July, the city has issued 152 building permits for either single-family or duplex homes. That’s up from 60 such permits at this time last year. It also is well above the recent averages. From 2009 to 2014, the average number of permits at this time of year was 75. My seventh-grade son tells me 152 is more than double the average.
With projects both near campus and in downtown, the apartment construction market also has been strong. The city has issued permits for 431 new living units. Since 2009, the average for this time of year has been around 150 living units. So, there had better be a lot more people wanting to live in Lawrence.
The other big trend is in the building sector is that there have been a lot of big-dollar projects. The city has issued permits for $167 million worth of projects thus far. There have been four projects in 2015 that have checked in at more than $10 million each: the $45 million Here apartment/retail building near the KU campus; an $18 million apartment/office building at Ninth and New Hampshire; $13.3 million in work for the city’s new sewer plant south of the Wakarusa River; and $12 million for a new independent living unit at Pioneer Ridge in west Lawrence.
As we have reported before, we’re on pace to set a new building record in the city. Since 2009, the average amount of construction for this time of year has been $63.5 million. I would tell you how much more $167 million is than the average, but I’m afraid it would require my son to take off his shoes and, trust me, you don’t want a seventh-grade boy doing that.
• Lawrence’s retail sales numbers are a bit like a rib dinner: There’s plenty to like, but the barbecue sauce in your ear can cause a problem.
The sales tax report from the state shows that Lawrence’s sales tax collections are up about 5 percent thus far. That’s good, and actually is better than the showing of several other large retail centers in the state.
But the issue is City Hall budget makers are counting on sales tax collections to grow by 5 percent in 2015 to make the budget work as planned. The last few reports from the state have shown that sales tax collections are growing at a rate slower than what was happening in the beginning of the year. If that trend continues, it could put pressure on both the 2015 and 2016 budgets.
Bryan Kidney, the city’s finance director, told me that it now seems likely the city won’t hit its 5 percent growth estimate for 2015. He said it is still too early to predict how short the city may come up on that projection. It has the potential to cause city officials to reduce expenses in the general fund both for the 2015 and 2016 budgets. The reason it would affect both the 2015 and 2016 budgets is because the recently approved 2016 budget was built with an assumption that there would be a surplus of revenue in the sales tax fund at the end of 2015 that would carry into 2016. In order for the 2016 budget to work properly, the surplus needs to be there. So, that could result in some expenditure cuts in the last part of 2015.
Cuts could be necessary in 2016, if the sales tax growth doesn’t hit projections during that year. The city is banking on sales tax collections growing by at least 3 percent in 2015. We’ll see. That could be close.
So, there are some budgeting challenges, but from a big picture standpoint, recent sales tax numbers have been a strong sign for the Lawrence economy. At the moment, we're at 5 percent growth, and that is better than really any other major retail area in the state. How much that growth rate slows is the key question for budget-makers.
The state should be releasing new sales tax numbers very soon, and I’ll work to get those reported in a more timely manner. (We’ve had other things going on to report at City Hall this month.) But here’s a look how Lawrence’s sales tax collections are stacking up with other major communities.
— Johnson County: up 1.3 percent
— Kansas City: up 4.1 percent
— Lenexa: up 4.9 percent
— Manhattan: up 2.5 percent
— Overland Park: down 2.4 percent
— Salina: up 3.2 percent
— Sedgwick County: up 2.3 percent
— Topeka: up 0.8 percent
Sales tax collections on the rise in early part of 2015; city sharpening pencil to build $50 million sewer plant on budget
While the forklift drivers are dutifully unloading all the clearance rack Easter candy at my house, there’s a new report out that shows Lawrence shoppers did a pretty good job of keeping the cash registers ringing during the Valentine’s Day period as well.
The latest sales tax report from the Kansas Department of Revenue shows taxable sales in Lawrence from the mid-February to mid-March period were up 4.2 percent compared with the same period a year ago. The year-to-date numbers for 2015 are even more impressive. Thus far, taxable sales — most of which are retail sales but also include sales taxes on items such as your utility bills — are up 5.6 percent compared with the same period a year ago.
The 5.6 percent growth rate puts Lawrence in the top half of the large retail centers in the state. Here’s a look at how other Kansas communities fared:
— Kansas City: up 6.4 percent — Lenexa: up 7.6 percent — Manhattan: up 3.4 percent — Overland Park: down 0.3 percent — Salina: up 5.6 percent — Sedgwick County: up 3.1 percent — Topeka: up 2.1 percent
It will be an interesting year to watch retail sales in Lawrence. There’s lots of activity on south Iowa Street. This year will be the first full year for Dick’s Sporting Goods in the market, PetSmart just recently opened its store next to Dick’s at 27th and Iowa streets. As we previously reported, Ulta Beauty and the Boot Barn also are scheduled to open later this year at the 27th and Iowa street shopping center. Then, just down the road, Menards will open the largest home improvement center in the city near 31st and Iowa. There are multiple pad sites available around that store, although there haven’t been signs yet that tenants have been found for those spaces. And there also is development out west. Sprouts is opening a new grocery store just north of the Sixth and Wakarsusa interchange.
All those stores have the potential to generate significant amounts of sales tax revenue, so it will be interesting to watch whether Lawrence’s sales tax totals over the next couple of years rise significantly. There’s certainly been a debate among some about whether the new stores will add new sales to the Lawrence market or whether it will just shift existing sales around. The numbers probably won’t be definitive. (That’s a way of saying we’ll probably continue to argue about that point.)
But thus far, retail sales in Lawrence are on an impressive run. In 2014, sales tax collections grew by 4.1 percent, which was the second fastest growth rate of the eight major cities that we track. That’s despite the fact that Lawrence continues to have per capita retail spending that is significantly less than other cities. In 2014, our per capita spending was $15,857. Fellow university community Manhattan had per capita spending of $19,236, or about 20 percent greater than Lawrence’s. Maybe Lawrence never will have per capita spending reach that level since we are so close to the major shopping areas in Kansas City.
But there certainly have been arguments that Lawrence can attract more outside-the-community shoppers from places such as Franklin County and Jefferson County who may find it more convenient to run into Lawrence than to deal with the larger crowds in Kansas City. If Lawrence could just increase its per capita spending — either through purchases made by Lawrence residents or by people outside the community coming here to shop — by 1 percent, it would add about $15 million in sales to the Lawrence economy. That $15 million in sales would add about $400,000 a year in new sales tax revenues to the city and county coffers.
If Lawrence somehow could grow its per capita spending levels to equal Manhattan’s, that would amount to about another $337 million a year in retail spending in the city. That would add about another $8.6 million to the sales tax coffers of the city and the county.
In other news and notes from around town:
• When it comes to big numbers, plans for a new sewage treatment plant south of the Wakarusa River kind of take the cake at Lawrence City Hall. If you remember, bids for that project created a few too many big numbers last month. Commissioners rejected the bids after they came in about $5 million more than expected. Well, the project has been rebid, and the results have proved that the best way to get a project to come in closer to engineers' estimates is to . . . raise the engineers' estimates. Previously the sewer treatment plant had an engineers' estimate of $45.9 million. When the project was rebid, engineers increased the estimate to $51.3 million, largely because construction costs are on an upward trend right now.
New bids for the project did come in below the $51 million estimate, but are still above the $45 million to $46 million that city officials have budgeted for. Garney Construction submitted the low base bid at $47.15 million. Crossland Heavy Contractors was the only other bidder at $49.3 million.
City officials, though, are optimistic they’ll be able to make the new bid work. Unlike the last time the project was bid, the city asked for several bid alternates that will allow certain parts of the project to be deleted. By making some deletions, it appears the bulk of the project will be able to be constructed within that $45 million to $46 million range. That price range is important because anything above that would likely require sewer rate increases greater than those that already have been approved.
“The City Commission has made it clear that it wants to move ahead with this project, but it wants to move ahead within the already approved rate plan,” City Manager David Corliss said.
Staff members are looking at the possible deletions and are expected to make a recommendation to the commission in late April.
“But we have some good options now,” said Dave Wagner, the city’s director of utilities.
As far as what may be cut, some options are directly related to the technical sewage treatment operations of the plant, while others are related to office space, vehicle storage and other such ancillary functions.
City officials say the new plant is needed to help the city meet EPA treatment requirements and also to give the city the needed treatment capacity to grow in the coming decades.
Plans being developed for former Sunrise Garden Center in eastern Lawrence; sales tax numbers show local holiday spending down slightly
Plans are in the works between a new nonprofit and a private business to take over the vacant eastern Lawrence property that formerly housed the Sunrise Garden Center.
This spring will be another season that Lawrence green thumbs won’t be able to go to Sunrise Garden Center for bulbs, plants or just advice on what this green stuff is on their thumbs. If you remember, Sunrise closed its doors in late 2013, and the 3.5 acre site at 15th and New York streets has been vacant ever since.
But a new nonprofit is putting together a plan to buy the property, along with a Lawrence-based business that manufactures tofu. Melissa Freiburger is the co-founder of The Sunrise Project. She said her nonprofit has teamed up with Central Soy Foods in an effort to purchase the site. Central Soy Foods would use the site to manufacture its tofu and tempeh products, and the nonprofit would use the greenhouses and other assets to host youth programs and other events that educate about the importance of locally grown foods and other issues of sustainability. Freiburger envisions the site serving as a community greenhouse and also hosting cooking, gardening and similar workshops.
“We really just want to create a very vibrant green space in the community,” Freiburger said.
Central Soy Foods is led by longtime Lawrence businessman David Millstein. If you remember, we reported back in August that Millstein was seeking a new location for the company’s production plant. But a plan to move the operation to a rural homestead didn’t win the necessary approvals. Currently, the company — which has been around since 1978 — operates on a fairly small scale. It produces about 2,000 pounds of tofu and tempeh per week. It primarily sells its products in local grocery stores and a few chains in the Kansas City area.
Millstein told me he thought the site would work very well for the project. He’s proposing to keep the two gabled greenhouses, in part, because he considers those structures to have historical value. Millstein has been a longtime historic preservationist with several buildings in downtown Lawrence. He said he’s contemplating removing the one hoop greenhouse on the site and replacing it with a production facility. He said one other food producer in the area has expressed an interest in sharing the space. He also said he thinks there could be someone who would want to operate the greenhouses to sell micro greens or other such products to area restaurants and grocery stores.
“It has a chance to be a really symbiotic green project,” Millstein said.
The project, though, does have to win some approvals from City Hall. Millstein said he is hopeful neighbors will find the project compatible with the neighborhood.
“I think there probably would be less commotion with this project than when it was Sunrise,” said Millstein, who said the most of the time the site would have fewer than 10 employees at it.
The project also still has some financial questions. Freiburger said the nonprofit is seeking to raise $250,000 to meet its share of the purchase price of the property. The nonprofit — whose legal 501(c)3 name is Lawrence Community Food Alliance — has started a fundraising drive. Freiburger said one neighbor of the site already has pledged $25,000 to the project.
“We feel like it really can become something amazing for the neighborhood,” said Freiburger, who lives near the property. “And the longer the site sits vacant, I know there is a fear that it will become apartments or something like that.”
People can find out more information about how to donate at the group’s website, sunriseprojectks.org.
In other news and notes from around town:
• I don’t know about you, but I didn’t have much tofu in my stocking this past holiday season. (I once did ruin a good pair of shoes, though, trying to hide tofu in my stockings at a dinner party.) Regardless, there are new numbers out about retail sales in Lawrence during the holiday season, and they suggest stockings may have been a touch light this year.
The city has received its latest sales tax report from the Kansas Department of Revenue. Technically, the report is the first one for the 2015 calendar year, but since sales taxes are paid in arrears, the numbers provide a picture of sales activity during the holiday season. This report generally shows sales from about mid-November to mid-December.
The report found sales tax collections in Lawrence fell by 1.4 percent, compared with the same period a year ago. Lawrence seemed to be on the wrong side of the trend this past season. Of the other large retail markets in the state, only one other posted a decline. Here’s a look:
— Kansas City: up 1.8 percent
— Lenexa: up 2.2 percent
— Manhattan: up 2.3 percent
— Overland Park: down 3.5 percent
— Salina: up 5.1 percent
— Sedgwick County: up 0.4 percent
— Topeka: up 0.8 percent
But we don’t yet have a full picture of the holiday spending. The next report will more fully capture that last two weeks before Christmas, so perhaps here in Lawrence we were just later in getting our holiday shopping started.
As always, City Hall officials will keep a close eye on sales tax collections this year. Healthy sales tax growth is an important part of the city’s budget. It will become an even more important aspect if commissioners are serious about trying to figure out how to build a new police headquarters without increasing taxes.
Sales tax revenues in 2014 grew by a very healthy 4.1 percent. One month isn’t anything to fret about, but if Lawrence wants to match or exceed that pace in 2015, it won’t want many more reports like this most recent one.
Numbers show retail sales in Lawrence grew faster than many cities in 2014; west Lawrence retirement complex seeks sales tax break
We’re part of the billion-dollar club and growing. No, I haven’t resorted to just reading you my mail from the credit card companies. I’m talking about Lawrence’s retail economy and how the latest numbers show we continue to be part of a fairly elite Kansas club. In fact, in one regard, we’re one of the faster growing members of the club.
The final sales tax numbers for 2014 are in, and Lawrence once again topped the $1 billion mark in taxable sales. We are one of nine cities in the state to crack the total. This isn’t Lawrence’s first time to surpass the mark, but we don’t often focus on how large Lawrence’s economy is in relation to the rest of the state. So, let me clear the smoke from the abacus, and we’ll change that right now. Here’s a look at a whole host of figures about Lawrence’s retail economy:
— Taxable sales in Lawrence — everything from retail goods to utility bills — totaled $1.44 billion for the most recent 12-month reporting period. (For you accountants in the crowd, I should note that this technically isn’t all money from 2014. Sales tax reporting lags by one to two months, so the report the state issued in December technically gets us into late November or early December. But the world isn’t perfect, so let’s move on.)
— Lawrence’s sales tax collections grew by 4.1 percent compared with the same period a year ago. Of the nine cities that had $1 billion plus in sales, Lawrence had the second highest growth rate of the bunch. Only Lenexa at 7.8 percent had a more robust year. Here’s a look at the group of nine, ranked by growth rate:
Lenexa: $1.21 billion, up 7.8 percent
Lawrence: $1.44 billion, up 4.1 percent
Kansas City: $2.15 billion, up 3.8 percent
Salina: $1.04 billion, up 3.7 percent
Overland Park: $3.93 billion, up 3.6 percent
Sedgwick County: $8.6 billion, up 3.2 percent (Wichita accounts for the vast majority of this total, but I can’t be more precise because Wichita doesn’t have a city sales tax.)
Topeka: $2.54 billion, up 2.4 percent
Manhattan: $1.08 billion, up 2.4 percent
Olathe: Approximately $2 billion. (A growth rate isn’t readily available for Olathe because it switched sales tax rates midyear in 2014, and my abacus told me such complicated calculations weren’t part of its contract.)
— Lawrence’s per capita spending continues to be on the low side, the latest numbers show. Lawrence had per capita spending of $15,857. Compare that to Lenexa, which had per capita spending of $24,034, tops in the group. Lawrence’s low number can’t be explained away by our status as a university town. Manhattan had per capita spending of $19,236. Geography is probably more of a factor. We’re close to two very large retail markets. Johnson County had more than $10 billion in taxable sales. Shawnee County had nearly $3 billion in taxable sales. What does that tell us? Two things: 1. Lawrence may be in the middle of the most competitive retail corridor in the state. 2. Those Johnson County SUVs have heavy-duty springs to carry all that stuff.
I expect there to be considerable discussion about Lawrence’s retail future in the next several months. One part of that conversation may be for leaders to determine what is a realistic expectation for per capita sales. Does Lawrence concede that it will be a distant No. 3 to Shawnee and Johnson counties when it comes to per capita spending? (We’re obviously not going to catch either one in terms of total spending.) Or, can Lawrence take the approach of some of the cities that have surrounded Overland Park? Overland Park has been the longtime retail giant in Johnson County. But that hasn’t stopped other cities near Overland Park from having robust per capital sales. Here are a few: Merriam, $60,934; Lenexa, $24,034; Leawood: $20,748; Overland Park, $21,861; city of Shawnee, $14,355. As you can see, some have done very well at competing with Overland Park. Others, like Shawnee, have struggled. Its per capita spending is less than Lawrence’s.
— The latest numbers also give an indication of how many retail dollars are near Lawrence. If Lawrence’s per capita spending numbers are to grow, probably three things need to happen: 1. Lawrence residents need to start making more money. 2. Lawrence needs to start getting more shoppers from outside the city limits. 3. Lawrence residents need to make fewer purchases outside of the city. Remember, per capita spending really isn’t a measure of how much each Lawrence resident spends. It is just an equation of total taxable sales divided by total population. So, if you get more people from outside the city buying things, Lawrence’s number goes up. But where will Lawrence get more outside shoppers? City leaders clearly have made a bet that tourists will do some spending. That is part of what Rock Chalk Park is about.
Beyond that, people hope residents from surrounding communities will come shop in Lawrence. But let’s face it, getting people from Johnson County and Shawnee counties to shop in Lawrence will be difficult, unless it is for specialty shopping like you find in downtown. But, there are two other markets to the north and south of us that don’t have all the big retailers that Johnson and Shawnee counties have: Franklin County to the south and Jefferson County to the north. A proposed shopping center near Rock Chalk Park would do more to draw the Jefferson County shoppers, while a proposed center south of the Iowa Street and SLT interchange would do more to draw Franklin County shoppers. These latest numbers from the state give us an indication of how much retail spending is going on in those counties. In Franklin County retail spending totaled $289 million. In Jefferson County it was about $115 million.
Of course, those numbers measure how much was spent in the county; not how much was spent total by their residents. There are large numbers of shoppers in both counties that go to nearby Johnson and Shawnee counties, respectively. But the numbers do give you a sense of the size of the markets. Franklin County is about 2.5 times larger as a market than Jefferson County.
The question city leaders may have to answer in the near future is whether Lawrence wants to get more aggressive in trying to capture dollars from either of those markets.
In other news and notes from around town:
• Today’s a day to probably keep an eye out for more City Commission filings. The deadline isn’t until noon on Jan. 27, but this is one race you probably don’t want to be late to. Several candidates already are campaigning hard. We have two incumbents who haven’t yet announced their plans. I think Commissioner Terry Riordan is likely to run again, but I’m not certain of that. If he does file, he’ll be the 12th candidate to file for the race. The race two years ago had 11 candidates.
As for Commissioner Mike Dever, he hasn’t yet made an announcement, but conventional wisdom is he may not seek another term. He’s already served two, four-year terms. But four years ago, he waited to the last-minute to announce his candidacy, so we’ll see.
• We told you last week that city commissioners at their meeting tonight (Tuesday) will receive an incentives request for an expansion of The Eldridge Hotel. Well, there is also another incentive request for a different type of living project. The folks at Pioneer Ridge at Wakarusa and Harvard are seeking industrial revenue bonds to help with the construction of a new independent living complex. We reported on Pioneer’s expansion plans in October. But the incentives request is new.
The company is seeking about $14.5 million in industrial revenue bonds in order to take advantage of a sales tax exemption that comes with the bonds. The bonds will allow the company to buy its construction materials for the project without paying sales taxes. That’s likely to save the company a few hundred thousand dollars in sales taxes. But the company is not asking for a property tax abatement on the project.
As for the expansion, it calls for 76 new independent living units to be built on the vacant site just to the south of its existing facility.
Just like The Eldridge Request — which is seeking both an IRB and a property tax rebate — commissioners are not expected to take any final action at their meeting this evening. Instead, they’ll refer the requests to staff for study and recommendations.