Lawrence sales tax collections remain strong; a look at how local shoppers are saving the city’s budget
While the Kansas Legislature continues to struggle to find a tax policy to fill a gaping budget hole (thus far the idea of using one hand to point fingers and the other to rub a magic lamp has fallen short), the city of Lawrence continues to receive good tax news. Sales tax collections remain on a roll in Lawrence.
Lawrence recently received its April sales tax check, which reflects taxes collected on sales made generally in February or late January. Whether it was big Valentine’s Day gifts, or the gifts you have to buy for forgetting Valentine’s Day, spending totals were up in Lawrence. Sales tax collections for the month grew by 5.1 percent in Lawrence, compared with the same period a year ago.
For some reason, spending in Lawrence was much better in February than it was in other major retail centers in the state. For example, Sedgwick County, Overland Park, Olathe and Topeka all saw declines in their sales tax collections for the month.
It is never wise to read too much into any one month, but the latest report continues a trend for Lawrence. The city now has received four of its 12 sales tax checks for 2017, and they have added up to a pretty positive trend. For the year, Lawrence has seen sales tax growth of 4.2 percent — or about $350,000 — compared with the same period a year ago. That puts Lawrence near the top of the pack of other large retail centers in the state. Here’s a look:
— Lenexa: up 10 percent
— Lawrence: up 4.2 percent
— Shawnee: up 4.2 percent
— Olathe: up 3.7 percent
— Topeka: up 2.9 percent
— Kansas City: up 2 percent
— Overland Park: up 1.1 percent
— Sedgwick County: up 0.4 percent
Sales tax numbers are a good indication of economic activity in a community, but they also are important to keep in mind this time of year for another reason. It is budget season at Lawrence City Hall. As we reported, City Manager Tom Markus released his recommend budget for 2018 last week. Sales taxes are a critical part of the budget.
While Lawrence’s performance this year is good, city officials are counting on it to remain good throughout the entire year. Markus’ recommended budget shows projections for how 2017 will end. The budget is projecting that 2017 sales tax revenues will come in 4 percent higher than 2016 totals. We are at 4.2 percent now, which is better than most cities in the state. Lawrence needs to keep up the pace to meet those projections.
A closer look at the budget shows just how important sales tax revenues have become to the city. It basically is the revenue source that makes up for all the other failing revenue sources. One struggling revenue source is franchise fees, which is a special tax you pay on several utility bills, such as electric, cable, telephone and gas bills. The city budgeted to collect $8.1 million in franchise fees in 2017, but city officials now project they’ll collect only $7.8 million. Licenses and permits — building permit fees are the big one in this category — were budgeted at $1.38 million for 2017. Now, they are projected to come in at $1.26 million. And then there are fines, such as the ones you pay for speeding or parking in a spot you are not supposed to. Evidently, Lawrence is becoming much better behaved in that regard. Fine revenue is really sagging. The city is budgeted to collected $3.02 million in fines in 2017 but is now projecting to collect only $2.4 million.
Just those three categories alone account for a $1.1 million budget shortfall at City Hall. Given that, you may think the city’s budget is in trouble. It is not, though. The city in 2017 budgeted to collect $72.22 million in revenues for its general operating fund. It is now projecting it will collect $72.81 million in the general fund. The city is on pace to have a nearly $600,000 budget surplus in its main operating fund.
The reason: sales taxes. The city budgeted to collect $28.5 million in general fund sales taxes in 2017. It is now projecting it will collect $29.7 million in sales taxes for the year — a $1.2 million surplus.
Lawrence shoppers are saving the city’s budget. A valid question, though, is: Could they save it even more?
As the city asks for this tax increase — and don't forget, the county may ask for one too — it will be interesting to watch whether it creates a debate about the city’s policy for allowing new retail development. An issue that continues to lurk just beneath the surface is the city’s 2016 denial of a proposed shopping center south of the South Lawrence Trafficway and U.S. Highway 59 interchange. The city is getting sued over that denial. The lawsuit is moving slowly. Whether that is a sign the two sides are trying to reach a settlement, I don’t know, but it would not surprise me given some of the chatter I have heard.
The developers commissioned a study that showed if the City Commission would have approved the shopping center in early 2016 that by 2018 the new retailers at the center would have added about $970,000 in new sales tax collections to the city’s budget. In case you are scoring at home, the 1.25 proposed mill levy increase in Markus’ budget will generate about an extra $1.1 million in property tax revenue. If the shopping center had been in place, perhaps a smaller mill levy increase would be needed. Opponents of the shopping center may not agree. It certainly is fair to note that developers' estimates don’t always come true.
What is likely to be true, though, is that by the time the city, the county and the school district get done with their budgets, there will be a fair number of people unhappy with their property tax bills.
It is becoming a familiar issue for city commissioners to consider: Should a new multistory building in downtown Lawrence be offered some sort of financial incentive from the city?
It looks like the next project commissioners will be asked to consider is a proposed five-story commercial/residential building along Vermont Street that former City Commissioner Bob Schumm hopes to build.
Back in June, we reported that Schumm had plans for a major building on the vacant lot that is just south of the old Headmasters salon building in the 800 block of Vermont Street. Well, the proposal has changed a bit since then — we reported on some changes in August — and Schumm said he is getting closer to moving ahead with the project.
But Schumm told me he has decided he’s going to need a city incentive to make the project work as planned. Schumm said he plans to file this month an application for a property tax rebate through the Neighborhood Revitalization Act. No word yet on exactly how large of a rebate the project may seek. The city has given out rebates in the 50 percent range to 85 percent.
Schumm said there is one particular part of the project that makes the incentive needed.
“The project is going to have 22 underground parking spaces that are very expensive,” Schumm said.
That is becoming a theme with projects in the downtown area: Developers need help paying for parking.
Downtown is an interesting area when it comes to parking. For decades, the city’s code for parking in downtown has been different than it is in other areas of town. (My wife’s code for parking in downtown is different too, which is why you sometimes have to walk around a Ford Taurus on a sidewalk.) Along the key stretches of Massachusetts, New Hampshire and Vermont, buildings can be constructed without having to provide any off-street parking for customers or tenants. The city long ago decided the downtown area would be served by public parking.
One thing that has changed in recent years, though, is the city is urging more development of a residential nature in downtown. As more people live in downtown, more of a strain gets put on the public parking supply. Developers — I’m specifically thinking of the development at Ninth and New Hampshire — have said they’re willing to put in their own private, below-ground parking garages to accommodate some of the new parking demand they are creating. But they often say they can’t put in the parking and still have a financially viable project without some assistance from the city.
The previous City Commission was pretty amenable to providing that assistance. Schumm’s project, though, is really the first such test for the new commission, so it should be interesting to watch.
I’ve heard some people say the city needs to just start requiring new construction in downtown to provide its own parking. I’ve heard others say that would be a momentum-killing strategy for downtown. It would create a two-tiered system in downtown: Hundreds of businesses get to take advantage of a code that doesn’t require them to provide for parking, while businesses that have come to the scene more lately have to take on the private expense of providing parking. And I have heard others, yet, say that instead of subsidizing developers to build private parking in downtown, the city simply needs to build more public parking. That, though, will take some new city resources, and perhaps some adjustments of parking rates. So, a lot to keep an ear open for on parking issues.
As for Schumm’s project, see below for some renderings from Lawrence-based architects Hernly Associates. The project is proposed to have a bank — the specific bank hasn’t been identified yet — on the ground floor, and 32 single offices of about 200 square feet each on the second floor, and 11 condos that will be for sale on the third and fourth floors. The fifth floor also will have a large condo, but don’t expect it to be for sale anytime soon. Schumm — who spent most of his career downtown as a restaurant owner — said he and his wife plan to sell their west Lawrence home and move into the top floor condo.
“When they take my keys away, I can walk to the senior center and everything else that is in downtown,” he said.
Any incentive request for the downtown project — which is being called Vermont Place — would first go to the city’s Public Incentives Review Commission for a recommendation and then to the City Commission for a final vote. The building's design already has won approval from the city's Historic Resources Commission, Schumm said.
Rejection of south Iowa Street shopping center sends confusing signals about future of south Lawrence growth
I guess I shouldn’t be too surprised that this intersection has confused me. After all, for more than a decade it has had a “Bridge to Nowhere.” I’m of course talking about the Iowa Street and SLT intersection, where a bridge that leads to an uncompleted road has stood for years, and likely has confused many a visitor about why we build bridges that don’t lead anywhere.
On Tuesday night, the intersection was the center of debate for the Lawrence City Commission. As we reported, commissioners on a 4-1 vote rejected plans for an approximately 250,000 square-foot shopping center at the southeast corner of the intersection.
I wasn’t confused or surprised that the commissioners rejected the plan. I knew that was a real possibility. But I was confused about the reasoning that some of them gave. Mayor Mike Amyx led the way on the opposition, and gave quite a speech about how the city is not ready to cross over to the south side of the South Lawrence Trafficway.
I didn’t expect that to be an issue on Tuesday night, given that the city already has crossed the SLT at that very point. The property that the North Carolina-based development group was seeking approval for commercial zoning is already in the city limits. It has been in the city limits since 1979. There was no decision on Tuesday night about whether to cross some line.
Commissioners knew that. They were aware the property was in the city limits. In talking with several of them on Wednesday, they seemed to be talking not about the city limits crossing the SLT but about city infrastructure — think water and sewer lines — crossing the SLT.
I did not see that being a stumbling block for this project.
First, city water and sewer lines clearly are headed not just south of the trafficway but south of the Wakarusa River. The city is in the process of building an approximately $50 million sewage treatment plant south of the Wakarusa River. But even without that project, there would seem to be little question that the proposed shopping center site is eligible to receive city utility services. It is, after all, in the city limits. Why would people agree to pay city taxes if the city can’t provide their property basic services?
I asked Amyx on Wednesday if the time wasn’t right for the city to jump the SLT whether the city ought to de-annex the property? He said he wasn’t sure but that “discussion may need to happen.”
That would be a strange turn of events. The city decides — after 37 years — to de-annex a piece of property at what will be at one of the larger and busier intersections in the entire county. Most communities are seeking to annex property in that situation, not de-annex it.
To be clear, I don’t expect the property to be de-annexed. The future of the property, though, will perhaps get discussed. Both Commissioners Lisa Larsen and Leslie Soden told me Wednesday that they think the community needs to have a large discussion about whether to cross the trafficway and what type of development should occur there.
That implies that the community hasn’t already had such a discussion. That’s not accurate. The city has a plan for the area in question. It is called the Southern Development Plan. It dates back to 1994. Then it got revised in 2008, and it got revised again in 2013. That plan spells out how it expects the southern portion of the south Iowa Street corridor to develop. The plan maps out future development south of the SLT, all the way to the Wakarusa River.
The plan shows multifamily development south of the trafficway, lots of open space in the floodplain areas, and for the parcel in question it shows something called “auto-related commercial” development. That has come to be defined as a commercial development like an auto dealership, or a hotel that attracts travelers off of K-10, or some would argue it also could include a truck stop or fueling center.
The North Carolina development group wanted to change the plan to just say commercial development. It wants the same type of commercial designation as the shopping district just north of the SLT, which can house big-box stores and other retailers.
So, to be clear, the developers were seeking that the city change its plans. I would not have been surprised if the City Commission simply said it wasn’t interested in changing its plans. The commission could say it had a well thought-out plan, and that for the sake of consistent long-term planning it wanted to stick to it. That would have caused some grumbling by people who think the city is missing an opportunity in the retail world, but the city could honestly say it was following its planning principles.
But that’s not what the city said. Instead, commissioners are saying they’re not sure they like the plan that was just approved two years ago. Both Larsen and Soden told me they had concerns about an auto-related commercial development for the site. Larsen, Soden and Amyx all said they thought they needed to discuss changing the Southern Development Plan.
As a reminder, the plan was just approved by the commission two years ago. Amyx was on that commission, and voted for the plan at the time. I asked him what had changed in the last two years. He responded by saying he just “doesn’t think the time is right” for development to begin in that area. There seems to be a question about whether our community’s long-term planning is going to change every two years when new commissioners are elected. It probably wouldn’t be the first time.
I tried to reach the fourth commissioner who voted against the project, Stuart Boley, but he didn’t return a call on Wednesday. (In case you are counting, Commissioner Matthew Herbert was the lone yes vote for the project.) Boley said in the meeting that if the city was going to change its plans, let’s do it “intentionally.” I called him because I’m not sure what that means. The proposed plan change — which received a positive recommendation from both the Planning Commission and the city’s professional planning staff — was clearly going through a formal, intentional process. The first plans were filed in early 2014. Some would say that is a lot of process.
Again, my surprise in all this isn’t that the commission rejected this shopping center plan. Reasonable people can disagree on whether this proposal was the right one for Lawrence. There are debates about whether Lawrence has enough income to support more retail. There’s debate about the impact on downtown, and one of the more interesting questions is whether Lawrence is at risk of having too much of its retail space concentrated in one geographic area.
I thought that last one may be the question that ended up causing commissioners to reject the plan. I thought commissioners might say that they are worried south Iowa retail is going to grow at the expense of all other retail areas in the community, and Lawrence would end up like Topeka where the vast majority of shopping is along one street. In particular, I think some city commissioners are worried that the south Iowa Street shopping center would make it difficult for the commercially zoned area around Rock Chalk Park in northwest Lawrence to develop. That area is shovel-ready for retail development, but thus far hasn’t had any takers for several years.
But, you know what, it is kind of politically difficult right now to say that you want to reject a shopping center on south Iowa Street — which was asking for no financial incentives — so that you can give more time for the Rock Chalk Park project to develop. So, commissioners didn’t exactly say that on Tuesday. Instead, they sent an odd signal that they aren’t sure they are ready to develop south of the SLT, even though the city limits already extend south of the SLT. Listen, city commissioners have tough jobs, and they work hard at them. I don’t aim to be too critical here. But people who want to invest money in our community watch for signals from the City Commission. You have to wonder what those people are thinking now.
I’m left wondering how the city ended up in this position. Think about this: The South Lawrence Trafficway project has been underway for more than 20 years. For that entire time it has been known there would be a major intersection at south Iowa Street. It has been easy to predict that when the state decided to invest more than $190 million to finish the disputed SLT project that it would create development pressure in the area. Indeed, the entire south Iowa corridor is under development pressure today, and now the City Commission says it isn’t sure what type of development should happen there. How did that happen?
Surely, no one will suggest the SLT has sneaked up on us.
Like I said, the intersection is a confusing one. Soon, at least, the bridge will make more sense.
If you are a fan of Old Navy, feel free to blow your fog horn and do your best Popeye impersonation. A development that is proposing to bring Old Navy, Academy Sports, Designer Shoe Warehouse and a host of other retailers to south Iowa Street has cleared its first hurdle to approval.
The city's planning staff is recommending approval of the necessary rezoning requests and other such items needed to build the project at the southeast corner of Iowa Street and the South Lawrence Trafficway. But hold on there, sailor. Before you order a gross of skinny jeans and midriff T's, remember that a recommendation from the city's planning staff is kind of like a bitcoin: It is worth something if you can get somebody to take it.
This proposed retail development still must win approval from the Planning Commission, the City Commission, and the Douglas County Commission will even have to vote on a portion of it. So, the project is a long way from a done deal, but developments that receive a negative recommendation from the planning staff have a decidedly uphill battle.
Based on the conversations I've heard, it wasn't a foregone conclusion that this project would receive a positive recommendation from planning staff. It is almost certain that the project is going to receive some opposition at the City Commission level. Commissioner Bob Schumm already has indicated he thinks the proposal would throw the city's retail market out of geographic balance. That's a debate that likely will emerge in the coming weeks, but the planning staff did not find the threat of creating a geographic imbalance enough to recommend denial.
Here are some key findings from the planning staff's reports:
• The project would add 460,000 square feet of new retail space, plus 80,000 square feet of hotel space.
• There are three fairly large areas in town that already have been zoned for retail uses but haven't really developed yet. The largest is the Mercato area near the Rock Chalk Park sports complex near Sixth and the SLT. The other two are the area near Johnny's Tavern in North Lawrence, which has been proposed for a riverside type of retail and entertainment area, and the area near Tractor Supply near 23rd and O'Connell.
The report notes if this proposed development is approved, it very well could increase the amount of time that those already-approved areas sit undeveloped. But the planning staff did not find that possibility a good reason to recommend denial.
• The report found the area is suitable for retail development. The city's comprehensive plan calls for the area to develop with a mix of apartments and commercial development that is of an "auto-oriented" nature. Think either a car lot or even a truck stop. The planning staff's report said the comprehensive plan does need to be changed to allow this development because the retail uses would be different than the auto-oriented uses envisioned in Horizon 2020. But the report recommends approval, saying that the proposed development would be a natural extension of the south Iowa Street commercial corridor.
• The report did not find a likelihood that the new retail development would substantially increase the retail vacancy rate in the city. The report said it was highly unlikely that the developer would build any part of the project without first having signed leases for the space. The report does note that it is likely up to three existing retailers in town — no names given — will relocate to the site. But the report noted that in recent years vacated store fronts in Lawrence have successfully redeveloped in a reasonable period of time. Think the formers Sears building which now houses Dick's Sporting Goods, and the former Food-4-Less, which now houses Discovery Furniture.
• Data suggests the city's retail market is now attracting more spending than it is losing. In 1999, the city had per capita retail spending that was 1 percent below the statewide average. In 2013, it had grown to 7 percent above the statewide average. Developers of the project, however, note that Lawrence still trails several other cities in that regard. Lenexa's per capita spending is 59 percent above the statewide average, Salina's 45 percent, Leawood's 42 percent, Topeka's, 33 percent, and Manhattan's 31 percent. The developers also note that Lawrence still well below 2001 totals, when per capita spending was 18 percent above the statewide average. The staff report didn't weigh in on how Lawrence compares to other communities, but said that the recent improvement in the per capita spending numbers was a sign that the retail market was healthy and could absorb more space.
Activity on the project will start heating up quickly. The Lawrence-Douglas County Planning Commission will hold a hearing on the proposal Monday evening. It could take votes on the necessary rezoning and comprehensive plan amendments needed for the project. If action is taken by the Planning Commission, the item could be before the City Commission in a couple of weeks.
Then, I think it will get pretty interesting. Based on talk I've heard, I think there are some conflicted city commissioners on this one. Here are some questions I think commissioners likely are mulling:
• Can they do anything to steer retail development toward northwest Lawrence and the new Rock Chalk Park sports complex? Thus far several retailers have taken a pass on that area — think Menards, Dick's Sporting Goods and PetSmart. Clearly there are commissioners who want development to go in that direction. They would like to see more retail options in western Lawrence, but retailers have said they like synergy that is created with the south Iowa corridor. But I've heard commissioners say they don't want Lawrence's retail market to develop like Topeka's, where most of it is located in one area of town.
• Can the city financially afford to say no? This is an interesting time to bring forward a large project at City Hall. The city is proposing a 1.85 mill property tax increase, and a larger tax increase likely soon will be proposed for a police headquarters building. The developers have estimated the project will add $1.1 million a year to the city's sales tax coffers by 2017, and the amount will grow to $2.1 million by 2020. Those are numbers put together by the development group, so you can take them for whatever you think they're worth. The city's planning staff didn't try to verify or refute those numbers.
But there's another set of numbers yet to come. Those will be estimates on how much the development will pay in property taxes. As we reported recently, the developers have said they don't intend to seek any tax rebates from the city on this project. That means the city not only will get to keep all the sales tax revenue generated by the project, but also all the property tax revenue. The property taxes will be significant. For example, the Walmart at 33rd and Iowa streets paid $390,000 in property taxes in 2013. This proposed development will be newer and will have about three times as much square footage as Walmart.
Will commissioners feel comfortable rejecting this proposal and its tax dollars, and then turning around and asking the public for another tax increase to pay for a police headquarters building?
It looks like it will be a summer of interesting questions and answers at City Hall.
Lawrence consumers are continuing to do their best impersonation of the Energizer bunny. They keep going and going and going. The latest numbers show that retail sales in Lawrence increased for the seventh straight month.
The new report measures retail spending for the mid-April to mid-May time period. And as they say in my house, April showers bring May flowers, a set of designer gardening gloves, a platinum-plated garden spade, and a new diamond tennis bracelet — because it can't all be about toiling away in the garden. All that is to say, consumer sales in Lawrence were up by 9.4 percent compared with the same one-month period a year ago.
Thus far we have six sales tax reports in for 2014 and, year-to-date retail spending is up 4.7 percent for the year. That growth rate is more than double the 2.1 percent growth in sales that was posted in 2013. If the pace continues — and that is a bit like counting your Gucci handbags before the UPS driver delivers them — this would be the third year out of four that sales tax collections have grown by more than 4 percent. And get this, you have to go all the way back to the 1996-1999 time period to find the last time that sales tax collections have grown by more than 4 percent in three out of four years. I don't know exactly what that means, other than we're in a pretty good stretch right now.
As for how we are doing compared with other retail centers in the state, we're right in line. It is worth noting that the city actually is posting better growth rates than one market that traditionally sucks dollars away from Lawrence: Topeka. Here's a look:
• Dodge City: up 0.1 percent
• Emporia: up 6.4 percent
• Garden City: up 6.8 percent
• Hays: down 19.3 percent
• Hutchinson: up 3.6 percent
• Junction City: up 1.2 percent
• Kansas City: up 3.4 percent
• Leawood: up 0.8 percent
• Lenexa: up 4.9 percent
• Manhattan: up 1.7 percent
• Ottawa: up 4.7 percent
• Overland Park: up 5.4 percent
• City of Shawnee: 5.8 percent
• Topeka: up 2 percent
• Sedgwick County: up 4.5 percent
Retail sales numbers could take on some additional importance in the coming weeks. The planning commission next week is scheduled to vote on a proposed shopping center at the southeast corner of Iowa Street and the South Lawrence Trafficway. Discussion of whether Lawrence's retail market can safely absorb more retailers is expected to be part of that meeting. The sales tax numbers are some of the best data we have on that subject.
I hope to get my abacus out in the coming days and crunch a few numbers in that regard.
It appears everybody this year did their pre-Christmas calisthenics. Jumping jacks? No. Jumping the line at the checkout counter? Yes. Push-ups? Forget about it. Pushing your way to the discounted Halloween candy corn? Absolutely.
What? How can you not know what I'm talking about? A certain someone in my household told me this was critical. You must stretch your shopping muscles before the holiday season begins.
Regardless, lots of Lawrence shoppers apparently did just that. According to a new report from City Hall, retail sales from mid-October to mid-November were up by a solid 8.4 percent, compared with the same period a year ago. We'll have to wait another week or two for the next sales tax report to see whether that momentum carried into the true holiday shopping season.
But the report does give us a look at how retail spending shaped up in 2013. The report is based off the December sales tax payment the city received from the state, which means we now have 12 months of sales tax data.
The result? A fair to middling year for retail sales in Lawrence. Consumers in Lawrence racked up $1.38 billion in taxable sales in 2013. (The majority of it is retail sales, but it also includes the sales tax you pay on your utility bills, for example.) That's up 2.1 percent from 2012 totals.
A 2 percent growth rate is nothing to sneer at. Remember, back in 2009 and 2010, the city saw retail sales actually decline. And over the last 10 years, the city's retail sales have grown on average by about 2.3 percent per year. So, in that regard, 2013 was just a tick below average. But the 2.1 percent rate was the slowest since the economy started to recover after the recession. In 2011, sales grew by 4.5 percent and in 2012 they grew by 5.2 percent. Clearly, the recovery lost some steam in 2013.
And you perhaps could argue that it lost a little more steam in Lawrence than it did elsewhere in the state. Statewide, sales tax collections grew by 3.5 percent, according to figures from the Kansas Department of Revenue. But the growth was really hit or miss. Several of the state's larger retail areas didn't see that much growth. Here's a look at how several area communities and some of the larger retail markets in the state fared.
— Baldwin City: up 2 percent
— Emporia: up 3 percent
— Eudora: up 10.5 percent
— Garden City: up 6.2 percent
— Hays: down 12.7 percent
— Hutchinson: up 4.4 percent
— Junction City: up 0.2 percent
— Kansas City: up 5.8 percent
— Leavenworth: up 4.7 percent
— Lecompton: up 7.8 percent
— Manhattan: down 0.3 percent
— Olathe: up 4 percent
— Ottawa: up 4.7 percent
— Overland Park: up 2.9 percent
— Shawnee: up 3.9 percent
— Tonganoxie: up 8.9 percent
— Topeka: up 1.4 percent
— Sedgwick County: up 3.3 percent
One other thing I like to do is see how much Lawrence retail sales have grown after being adjusted for inflation. That exercise shows something important has happened. On an inflation-adjusted basis, Lawrence sales have again reached the level they were at prior to the recession. In other words, we finally have gained back our losses. Here's a look at the actual sales totals, with the number in parenthesis adjusted to 2013 dollars, based on the consumer price index.
2013: $1.38 billion
2012: $1.35 billion ($1.37 billion)
2011: $1.29 billion ($1.34 billion)
2010: $1.23 billion ($1.31 billion)
2009: $1.25 billion ($1.36 billion)
2008: $1.28 billion ($1.38 billion)
We'll have an even clearer picture of 2013 in the next few weeks when the report showing sales activity for late November and December is released. We'll have to wait and see what that shows about the true holiday shopping season. In the meantime, I have a lot of old candy corn left to eat.
Menard’s project highlights city rule on vacant space; a look at how Lawrence ranks in state retail report
Build it, and it will be empty. That's the motto of Lawrence, at least in one way.
City planners will be reminded of that tonight. The Lawrence-Douglas County Planning Commission will consider a proposal by Menard's, the large home improvement chain, to build a 190,000-square-foot store just east of 31st and Iowa streets. As we previously reported, the city's planning staff is recommending denial of the proposal.
But you may not be aware of one of the reasons the project has received a negative recommendation: When large retail projects are proposed in the city, planners are required to look at a retail market analysis to determine what the city's retail vacancy rate will be after the project is built. The way the rules are written, the vacancy rate is to be calculated by assuming the new project will be 100 percent vacant.
So when city officials do the calculations for this project, they put aside the fact that Menard's has no plans to build a 190,000-square-foot building and then leave it empty. Instead, the city adds the 190,000 square feet of the new store onto the city's estimated amount of vacant square footage, which stood at 643,000 square feet the last time it was calculated, in 2010.
When the city planners add on the 190,000 square feet, that pushes the city's supposed vacancy rate to 8.4 percent from 7 percent — which is just above the 8 percent total that is supposed to be a red flag when it comes to vacancy rates. According to a planning staff report, if you add in the approximately 65,000 square feet of smaller retail space proposed to be built along the outer edges of the Menard's project, the vacancy rate would jump to 9.6 percent.
But the city's planning rules also suggest planners go a step further. The city staff looked at all the retail zoning that currently is in place in the city, but doesn't yet have any buildings on it. That totals about 932,000 additional square feet. The city then makes the assumption that all of that will be built, and then be completely empty. That produces a frightening vacancy rate of 17.8 percent.
Planners, of course, don't think people are going to build large retail buildings without first having a tenant to occupy them. The city's planners understand the city's building market better than most because they are on the front lines of development proposals. But already I have heard people complaining about the city's Planning Department and why it would make this type of assumption. Well, city planners get the thankless job of being a referee in the city's politically charged development arena.
In other words, the job of a planner is to apply the rules to the project — not to rewrite the rules. Rewriting the rules is the job of city commissioners, and the rule that requires the city to assume large new retail buildings are going to be vacant has been on the city's books for at least the past decade.
Its days may be numbered, though. Scott McCullough, the city's planning director, told me the process has begun to change the rule. But it won't reach the City Commission in time to be considered for the Menard's proposal.
The rule change probably will get some opposition as well. There is certainly a group of local citizens that is very convinced the city's retail scene is overbuilt. They argue that even though a new Menard's building won't be empty, the addition of that much retail space in the city will cause an approximate amount of retail square footage elsewhere in the community to go vacant. That theory is how the rule got put in place to begin with.
In other words, the way the city's rules are written right now, retail is assumed to be a zero-sum game. For every one square foot of new retail space that comes into town, you must assume one square foot elsewhere will become vacant. Maybe that is the case in some economic climates. But maybe it isn't the case in other economic conditions.
What's certain is that retail zoning requests are a judgment call. The first round of judging will begin tonight at 6:30 p.m. at City Hall, when the Planning Commission meets. Ultimately, city commissioners will make the final decision on the Menard's request.
• One other piece of information that was included in the city staff's report was a mention of a state report that ranks how Lawrence's retail scene is doing compared to other Kansas cities. It is called a “pull factor” report, and it is basically a look at how Lawrence's per capita sales tax collections compared to the statewide average. It is called a pull factor because it is assumed that cities with averages much higher than the state are “pulling” customers from other communities to shop.
It is a perfect statistic for retail developers because it can be manipulated to fit the situation. When the pull factor is low, it can be argued that more retail development is needed in order to stop the amount of Lawrence residents who go outside of the city to shop. When the number is high, it can be presented as evidence that retail demand is high and the market can support additional retail development.
But the numbers are interesting because they do a good job of showing how Lawrence's per capita spending stacks up against other cities. The most recent report, which is for the state's 2012 fiscal year, shows Lawrence's numbers have rebounded. The city's pull factor was 1.07, which means it is 7 percent higher than the statewide average. As recently as 2000, the city's pull factor was .99. Going back farther, the city hit a high-water mark of 1.13 in 2000. So, we're somewhere in the middle of the range but trending upward.
Here's a look at how other large towns in the state fared. I'll leave the analysis up to you: Lenexa: 1.52 Overland Park: 1.51 Salina: 1.47 Garden City: 1.47 Manhattan: 1.40 Leawood: 1.40 Topeka: 1.37 Hutchinson: 1.27 Liberal: 1.23 Dodge City: 1.22 Olathe: 1.18 Pittsburg: 1.13 Junction City: 1.12 Wichita: 1.11 Fort Scott: 1.09 Coffeyville: 1.08 Emporia: 1.08 Lawrence: 1.07 Parsons: 1.05 Shawnee: .93 Atchison: .89 Kansas City: .86 Newton: .87 Leavenworth; .73 Prairie Village: .64
Business prepares to move to make way for South Lawrence Trafficway; details and speculation about what else the SLT may bring
Construction on the South Lawrence Trafficway is still at least six months away from getting started, but signs of the coming changes already are starting to show up.
The one known business that will have to relocate due to the SLT recently has signed a deal for a new southeast Lawrence location. The business formerly known as RSC Equipment Rental will move to 930 E. 30th St., which is the space that used to be the parking lot and maintenance facility for the city’s public transit buses.
RSC Equipment Rental now goes by the name of United Rentals, after the RSC chain of stores was purchased by United recently. The company rents aerial lifts and other types of construction equipment.
The company plans to use the existing 5,000-square-foot building on the site, but it will undergo about $250,000 worth of remodeling, according to plans filed at City Hall. An employee at United told me the move is likely to happen in the next month.
The business now is at the southeast corner of 31st and Haskell. But soon enough, a new road will run through that location. No, the new road won’t be the South Lawrence Trafficway. It will be the new road called 32nd Street, which will be the local road that will run just north of the SLT. It will replace the thinly paved joy of driving that we currently know as 31st Street.
If you have forgotten about that new street, you probably have forgotten about several others. The South Lawrence Trafficway project likely will produce the most change in the city’s street network of any project in decades. Take a look at the map on this page to see the details. Here’s a reminder of what you are looking at:
• A portion of Haskell Avenue will move about 1,000 feet east of where it is today. Haskell will start making its shift to the east at about the point where it intersects with 29th Street today. In other words, right near where Hiper Technologies is located, or — if you are an old timer — where the Honeywell avionics plant used to be. Haskell will shift back to its current alignment before it reaches the Wakarusa River bridge. (At that point the road is actually called County Route 1055 because it is outside the city limits, for all you geography sticklers.)
• The existing portion of Haskell Avenue between 29th Street and the current 31st Street will remain in place to serve as a frontage road for the businesses — such as the new United Rentals building — that are just west of the existing Haskell Avenue.
• The existing 31st Street between Haskell and Louisiana will be removed and the property will be converted back to wetlands. The new 32nd Street — which will be four lanes — will be the local route through the wetlands.
• Louisiana Street south of 31st Street will undergo major changes. The road will be moved a half-mile to the west, in order to get the road farther away from the Baker Wetlands. In other words, if you are driving on Louisiana Street north of 31st Street and want to continue south, you are going to have to turn west onto the new 32nd Street. You’ll take that new road — which turns into the existing portion of 31st Street in the city — for a half-mile. Then you can turn back south onto the new Louisiana Street. The new Louisiana Street eventually will curve back to the east and connect with the existing Louisiana Street (technically E 1400 Road outside the city limits) before it crosses the Wakarusa River. If you are trying to picture where the new Louisiana Street will intersect with 31st Street, it will be just east of the large apartment complex at 31st and Ousdahl.
The state plans to accept bids on the SLT project in September, and construction in the wetlands could be begin this fall. Work on the Haskell and Louisiana parts of the project wouldn’t begin until 2014.
All of these new roads — with the largest, of course, being the new four-lane SLT — will create a lot of question both in the business community and at City Hall. The best way to get a feel for some of them is to go to Google Maps and type in the area of 31st and Louisiana. Zoom in several clicks, and the map will show you the route of the SLT and of the new 32nd, Haskell and Louisiana streets. That map does a good job of highlighting several pieces of property that seemingly will have a lot more development pressure in the near future.
Some properties and questions that jumped out at me include:
• The former Gaslight Mobile Home Park just east of Home Depot. As we have reported, Menards has filed a plan to build a new store on the property, plus have lots for several smaller retailers or restaurants. This is going to be an issue very soon. The Planning Commission is tentatively scheduled to review the plans in April. In order for the project to be approved, the city is going to have to change its planning documents. The city’s planning documents call for the property to be developed as apartments.
Here’s the question: Will the city stick to those plans when a major retailer clearly wants to be on the site? Now that a new 32nd Street is going to be built just east of the site, the property will be on one of the most highly improved roads in the city. That’s generally where most cities want their retail.
The more political question is whether the City Commission will do everything it can to steer all new retail development to Sixth Street and the South Lawrence Trafficway in northwest Lawrence? After all, that is where the city will be investing $25 million for a new recreation center. But Menards has had plenty of opportunities to sign a deal to locate in the existing — and vacant — Mercato development at Sixth and the SLT. Company officials have told the city the site doesn’t meet their current needs. Will the city hold its ground on steering development to Sixth and the SLT, or will it blink?
• The former E&E Display building at 29th and Haskell. That’s a decent size manufacturing/warehouse building with some vacant/underutilized ground near it. When the SLT is built, it really will only be about a minute away from the freeway. I’ll keep my eyes open for some sort of jobs producing deal for that location. If one doesn’t materialize, given its location, economic developers should be asking what’s wrong with our community?
• The vacant ground directly behind Wal-Mart at 33rd and Iowa streets. Until you look on the Google Maps, it is easy to forget about that piece of property. But the map makes it clear that it is one to remember. The ground stretches all the way from the Walmart/Crown Toyota area on the west to the former Printing Solutions building at 31st and Louisiana on the east. The entire piece of property will have great visibility from the South Lawrence Trafficway. As a bonus, the new Louisiana Street will cut through the property as well.
City commissioners talk about the need for planning, but what is the plan for that area? I’m sure there is something in a plan somewhere about that area, but it is an area that hasn’t been talked about by city commissioners for awhile. It would seem — given its location next to major retailers such as Wal-Mart, Kohl’s and others — that the market may have an interest in putting some retail there. Will the city share that interest?
It will be interesting to watch, and I’m pretty sure I won’t be the only one watching. In fact, if you see a tent staked up on that vacant property, that’s my wife. She wants to make sure she doesn’t miss out on any early-bird specials.
Home sales up in January; new numbers on county’s property tax base; median home values fall sharply in Baldwin, Eudora, rural areas; weekly land transfers
The signs of spring are starting to show up: morning sunlight and chirping birds, an article in the newspaper about crabgrass prevention, and me looking for my hidey-hole when my wife starts talking about the spring cleaning of the garage.
Of course, one other sign of spring soon will be the banners, balloons, pyrotechnic displays and whatever else real estate agents are using these days to attract attention to the large number of spring open houses. So, with that, how about some real estate news today? There are a few new reports of interest out.
• Lawrence home sales in January continued to show signs of improvement. A new report from the Lawrence Board of Realtors found home sales in January were up 44 percent compared to January 2012, rising to 36 from 25. It continues a multimonth streak of sales increases on a year-over-year basis, which has given real estate professionals cautious optimism that a recovery is starting to take hold in Lawrence.
One of the more interesting numbers in the report is that there has been a significant decline in the number of homes on the market, which real estate agents say is a sign the market is starting to get more balanced between buyers and sellers. In January, there were 380 homes on the market, down from 460 during the same period a year ago.
The number of days a home is sitting on the market, though, hasn’t yet started to show that trend. The median days on market: 81, up from 72 a year ago.
• The Douglas County Appraiser’s office has new information out about the county’s real estate tax base. It appears Douglas County and the city of Lawrence once will again will avoid a major hit to their property tax bases.
The numbers aren’t final yet because property owners can still file appeals related to their properties’ assessed values, but the appraiser’s office shows a decline of 0.29 percent for 2013. The total assessed valuation — remember, assessed value is the taxable value, not the market value — checks in at $1.024 billion in 2013, down from $1.027 billion in 2012.
The county is not used to declines but it has avoided the 5 percent or more declines in values that many other markets across the country have experienced.
Just for some historical perspective, I looked up some past numbers. Since 2008, the county’s tax base has grown just 1.3 percent during the tough economic times. Since 2003, the county’s tax base has grown 36.7 percent. To put an even finer point on how the last decade has been a tale of two halves, the numbers show that in the last half of the decade, the county’s tax base has grown by less than 2 percent total. For the first half of the decade, the numbers show that from 2003 to 2008, the tax base grew by 35.8 percent. In case you are wondering, the rate of inflation for that time period was about 17 percent, according to the Consumer Price Index.
The housing bubble was fun for governments who rely on property tax dollars. Now, the question they’re all still trying to figure out: What is the new normal?
• The appraiser’s office hasn’t provided a report that shows the assessed valuation by community yet, but normally Lawrence tracks closely with the overall county total — since Lawrence has most of the county’s tax base within its boundaries.
But there may be real questions about what happens to the tax base in some of the smaller communities and townships in Douglas County.
The appraiser’s office has put together a report estimating the median market values for residential property in each city in the county. The report shows significant drops everywhere but Lawrence. The median value in Lawrence in 2013 is $159,625, down 0.6 percent from the median of 2012.
That’s nothing compared with what the report shows for the other areas of Douglas County. Here’s a look:
• Eudora: the median market value has dropped 10.2 percent to $125,600, down from $140,000. • Baldwin City: Down 7.4 percent to $132,700 from $143,400. • Lecompton: Down 16.6 percent to $83,950 from $100,670 • Rural Douglas County: Down 22.8 percent to $153,400 from $198,805.
I haven’t had a chance to talk to the appraiser yet about these numbers, but it seems to indicate the real estate market outside of Lawrence hasn’t held up as well as the market inside of Lawrence.
• Finally, I have fallen behind on our weekly updates of land transfers and property sales as recorded by the Douglas County Register of Deeds. Click here to see listings for the last couple of weeks.
Lawrence’s latest retail chain store is about to make its debut.
Officials with Ross Dress for Less have confirmed that they will hold their grand opening celebration at 9 a.m. on Saturday. The store is going into the location at 3234 Iowa Street that previously was occupied by Old Navy. In other words, it will be in the building right next to Kohl’s department store near 33rd and Iowa.
It looks to me, though, that shoppers will get their first chance at the new retailer on Friday. I drove by the location yesterday. (I bought a $4 tie at Kohl’s after a Sertoma club luncheon created a battle between some pasta salad and the tie I wore to the event. The pasta salad won.) There was a sign on the Ross building that said the store was opening Friday.
I never have been successful in actually talking with a Ross official on the phone, so I don’t know much about why the retailer chose to come to the Lawrence market or why it took it almost a year to open the store once it filed its plans with City Hall.
But they are here now, and according to a release from the company, this will be its third new store in the “Kansas City area” since October 2012. It is opening 20 other stores, in addition to the Lawrence store, this week. Overall, the company has about 1,000 stores across the country, and it bills itself as the “nation’s largest off-price apparel and home fashion chain.”
I don’t know exactly what that means, other than I can probably expect to see a new addition to my monthly credit card bill. But according to the company’s Web site, it carries a large line of women’s clothing, in addition to some clothing or men and children, plus some shoes, accessories and home decor items.
We’ll see whether it carries $4 ties because I’m pretty sure my battles with pasta salad aren’t done. Or with BBQ sauce or with grape jelly or with chocolate pudding or with . . .