Posts tagged with Rock Chalk Park
Concrete work begins on Rock Chalk Park rec center; city hopes Bill Self event will open center next year
I'm not sure that it is ready yet for a pick-up basketball game with my buddies, but the city's recreation center at Rock Chalk Park is starting to look a bit more like a recreation center.
Parks and Recreation officials report that the first concrete for the 181,000-square-foot recreation center was poured on Saturday, and walls for the building may start going up by the end of next week. Once that process begins, the building will start to take shape quickly because officials estimate the pre-fabricated walls only will take about eight weeks to install.
"The hope is to get this thing under cover before the weather turns bad," said Ernie Shaw, leader of the city's parks and recreation department.
Shaw said the official timeline for the facility is still July of 2014, but contractors are holding out hope that the facility will be open about two months before that. An early opening would give the city a chance to open the center with a bang. Shaw said the city would like for the first event hosted at the facility to be Kansas University coach Bill Self's youth basketball camps, which normally take place in June. That event immediately would introduce the facility to hundreds of area kids and their families.
But Shaw stressed that even during a large event like that, a portion of the facility would remain open to the public for free gym play, fitness room use and other similar activities.
"We will always have a portion of the facility open to the public," Shaw said. "That's a requirement that will never go away with any event."
The nearly $23 million project — that price includes related infrastructure in addition to the center itself — certainly is drawing attention from those in the sports world. Parks and recreation officials said 15 weekends through the end of 2015 already have been spoken for. When the center is up and fully operational, the city hopes to have about 30 weekends a year occupied by tournaments or some other sort of event that generates visitor spending in the community.
The city hopes to be a player for national and regional tournaments as well. But Shaw said the city hasn't yet finalized its structure for how it will compete for those tournaments. He said the city understands it will take a marketing effort to draw those events to Lawrence, but he said discussions are still underway about whether a city employee would be in charge of those marketing efforts, whether the Lawrence Convention and Visitors Bureau would lead the efforts, or whether the city would seek to contract with an outside firm for assistance.
Coming up with a plan will be important because competition in the region is likely to be significant. All signs out of Wichita point to a major youth fieldhouse project that we previously reported on coming to fruition. According to reports from Wichita media, the Wichita City Council earlier this week approved the final development agreement with a private company to build an approximately 60,000 square foot fieldhouse that will have 12 gyms in it. Unlike the Lawrence project, it is receiving special STAR bond financing form the state, which is expected to help developers build a major hotel and retail center around the fieldhouse. As we have reported, there also are several competitors in the Kansas City area.
The Lawrence project — which will have eight full-court gyms, an indoor turf field, fitness center and other amenities — is adjacent to land zoned for commercial development, but thus far plans for hotels, restaurants and retailers have not yet been filed at City Hall. There also are large amounts of property for sale near the intersection, but in checking with commercial real estate agents, they don't report the area heating up with interest yet.
But that may change as the sports complex continues to come out of the ground. In addition to the recreation center, work is underway on Rock Chalk Park, which will have a track and field stadium, soccer and softball facilities owned by a group led by Lawrence developer Thomas Fritzel. Those facilities will be leased to Kansas University. The first event is expected to be the KU Relays in April.
Another part of the development to keep an eye on is whether the city decides to pursue any naming rights for the facility. What I've heard is that the idea thus far isn't to offer an overarching naming rights opportunity for the entire center, but rather to offer rights for portions of the facility, such as individual courts or rooms. But all that is subject to change. The city is having its legal staff research what is permissible while ensuring that the facility maintains its tax-exempt status.
In the meantime, I think the city's top priority with the project is making sure the facility gets built on time. It appears on track, but if that changes, I can probably get them some help. I'll call up my pick-up basketball buddies. They have a lot of experience at throwing up bricks at a recreation center.
In other news related to parks and recreation:
• The city is seeking a $400,000 grant to build a trail from the Rock Chalk Park site near Sixth Street and the SLT to Queens Road. The trail — which would travel along an existing city utility easement — would tie into the system of trails that would be built on the approximately 140-acres that will be a part of the complex. Taking the trail over to Queens Road would allow the city to have a 10k trail in the area. City officials, though, concede the grant is far from a sure thing. It is an outdoors grant that traditionally has been used to fund improvements in state parks. The trail issue, though, will be one to watch. The city has plans for a 5K trail on the site, but it is unclear whether the project budget of $22.5 has enough money for the trails.
• The city has received a $20,000 grant to install new playground equipment near the East Lawrence Recreation Center. The grant requires the city to provide $20,000 in matching funds for the equipment, and to gather a team of community members to help install the equipment.
It remains to be seen how often we'll hear the Rock Chalk chant during this year's football season, but the traditional cheer is making quite a bit of noise in the Lawrence construction industry.
The latest building permit numbers are out, and the big Rock Chalk Park ship has come in. The city issued permits for a whopping $33 million worth of projects in August, led by a $25 million permit for the Rock Chalk Park sports complex near Sixth Street and the South Lawrence Trafficway.
For the year thus far, the city has issued permits for $148 million worth of projects. That's up 115 percent from the same period a year ago. What's even more impressive is that the $148 million total is more than what the city issued for all of 2012. In other words, builders have started more projects in the first eight months of 2013 than they did during the entire 12 months of 2012. In fact, it is not even that close. The city issued permits for just under $100 million worth of projects in 2012.
So, from that standpoint, the final four months of the year will look a lot like my Thanksgiving day suit — signs of gravy everywhere.
Here are some other facts and figures from the latest building permit report:
• Single-family home construction had another decent month. Builders took out 14 permits for single-family homes, up from 8 during the same period a year ago. Year-to-date, the city has issued permits for 114 single-family homes or duplexes. That's up 44 percent from the same period a year ago. One more decent month, and builders will have exceeded the total for all 2012, when 126 single family and duplex permits were issued.
• No new permits for apartment construction were issued in August, but apartment building in Lawrence is still having a booming year. Year-to-date, the city has issued permits for 374 living units, which is the highest total in at least the last five years.
• The city thus far in 2013 has issued permits for four projects that exceed $10 million in value. They are: The Rock Chalk Park sports complex at $31 million and counting; the Marriott TownPlace Hotel at Ninth and New Hampshire at $13.8 million; the apartment complex next to Walmart at 5100 W. Sixth St. at $13 million; and the city's recreation center at Rock Chalk Park at $10.5 million.
City commissioners will find themselves in an odd position tonight: They’ll get to decide whether they want one of their more controversial projects of the last several years to be audited.
More specifically, they’ll be asked to decide whether they want their city-hired auditor to more closely look into the Rock Chalk Park recreation center project.
Each year, City Auditor Michael Eglinski brings forward a list of topics for city commissioners to consider for performance audits. This year, at least three of the topics on his list for consideration are related to the controversial Rock Chalk Park recreation center.
Eglinski has proposed an audit of the processes the city will use to ensure fair prices are being charged for the estimated $12 million worth of infrastructure work taking place at the Rock Chalk Park site in the northwest corner of the city. If you remember, the city deviated from its bid policy and is allowing the infrastructure work to be built through a no-bid contract with a company led by Lawrence developer Thomas Fritzel.
The city has said it will review all the invoices for the work related to the infrastructure, and compare them with market prices to ensure that the costs aren’t inflated. But exactly how the city will do that isn’t entirely clear. This audit would examine some of those processes.
Eglinski has put this topic on his list of seven that he is suggesting commissioners give serious consideration. Eglinski has a larger list of topics that he said are probably lower priority items, but deserve consideration as well. Two of those topics have tie-ins to the recreation center. They are:
• A review of public-private partnership practices. The recreation center is one of the larger public-private partnerships in the city’s history. But this topic also could review some other high-profile projects, such as the proposed hotel development at Ninth and New Hampshire streets and The Oread hotel in the Oread neighborhood. Both of those private projects received significant assistance from City Hall.
• A review of the process for reviewing and approving incentives such as tax increment financing, transportation development districts, tax abatements, and industrial revenue bonds. The Rock Chalk Park project is expected to receive about $40 million in industrial revenue bonds. But perhaps the biggest incentive the project is receiving is the city is set to pay for essentially all of the roads, streets, sewers and other similar infrastructure to serve the track and field, soccer and softball complex that is part of the Rock Chalk project. Those facilities will be privately-owned by a group led by Fritzel. Kansas University will lease the facilities.
Eglinski — who reports directly to the City Commission, rather than to the city manager — is asking commissioners to choose four to five audit topics for him to work on this year. Here’s the complete list of seven higher priority topics that he’s presenting to commissioners:
• Recreation center construction invoice controls;
• Barriers to the city adopting additional performance measurements systems for services provided by City Hall;
• How the city can or should control the amount of fats, oils, and grease dumped into the city’s sewer system;
• A financial indicators report for the city. Eglinski annually completes this report that compares Lawrence’s finances to those of other cities.
• An examination of the police department’s workload, examining the claims that the department needs about 30 additional employees.
• A review of the condition of the city’s sidewalks and the community’s efforts to maintain sidewalks.
Eglinski also compiled a list of 28 other audit topics that he has considered. They include audits of: cable television franchises; capital planning and budgeting; cash control testing; condition of public buildings; downtown parking; vehicle and equipment conditions; financial policies; flow of traffic; finances of the Eagle Bend Golf Course; cost accounting methods for the solid waste division; municipal court workload; funding of outside agencies; the parks and recreation department’s fee waiver policy and scholarship program; the performance of the city’s parking fund; the condition of pavement markings in the city; payment card industry data security standards; process for reviewing and approving economic development incentives; public private partnership practices; purchase card transaction reviews; record retention policies; reliability of the city’s population forecasts and estimates; risk assessment survey of department and program managers; safety and workers compensation; solid waste rate structure; span of control analysis; vehicle and equipment replacement; water conservation.
Commissioners will discuss possible audit topics at their 6:35 p.m. meeting tonight at City Hall.
The area around the proposed Lawrence recreation center and Rock Chalk Park site continues to heat up.
Lawrence developer Tim Stultz has filed plans at City Hall for a 40-acre development of single-family homes and apartments south and east of the recreation center site.
The plan is seeking rezoning for the area at the northwest corner of Queens Road and Overland Drive. The request seeks to create 15.89 acres of RM-12 apartment zoning, 21.54 acres of traditional RS-7 single family zoning, and 3.34 acres of small-lot RS-5 single family zoning.
Based on the preliminary plans, it looks like there will be the potential for about 80 to 85 single-family homes in the area. The plans aren’t yet detailed enough to indicate how many apartments may be a part of the project. But the plans do indicate that the development really wants to integrate the single family homes with the apartment development. Specifically, the plans talk about how the apartment complex will have its own clubhouse and swimming pool, and how that facility will be available to the single-family residents on a membership basis.
That’s not an unheard-of concept, but it is a bit new for Lawrence. It will be interesting to see if that may be a model for creating a more harmonious relationship between apartments and single-family development.
What will be particularly interesting to watch, however, is how quickly the area around the recreation center and Rock Chalk Park begins to fill up with new homes and apartments.
Obviously, the recreation center has brought out a lot of emotions on both sides of the fence, but the area really does have some elements to be a dynamic residential neighborhood. Homes within this area will be within walking distance of indoor basketball courts, a fitness center, an indoor turf field, a walking/jogging track, outdoor tennis courts, and about five miles of walking trails through the Rock Chalk Park area. That’s in addition to the various stadiums at the Rock Chalk Park site, which probably won’t be open for use by the public but will attract multiple spectator events. And time will tell whether the Rock Chalk Park facilities become venues for non-KU events, such as barbecue festivals, community runs and other celebrations.
But that is just one element of the area. If you are willing to lace your walking shoes up a little tighter, you can walk to an indoor pool as well. The city’s Indoor Aquatic Center is down the hill near Wakarusa and Overland drives. (It is about a mile, so you’ll need to lace them up tight. And notice my great sales skills: I mention down the hill but don’t mention the uphill trip on the way back.)
But maybe the most unique aspect for the area will be golf. The Links development — about 630 apartments that will surround a nine-hole golf course — certainly is within walking distance. As we previously have reported, it basically will be just east of the recreation center and Rock Chalk Park site. The Arkansas-based developers say they are going to start the project this year, but they have had timetables in the past that haven’t come to fruition. So, we’ll see.
The Links' development group, though, is further along than they have been. Hugh Jarrett, a spokesman for the group, shared details with me about the company's golf plans for the community. He said the nine-hole course will be open for public play, both on a membership basis and on a daily greens fee type of basis. He didn’t release any details about how much it would cost to play a round there. People who rent apartments at the complex will be able to play unlimited golf at the course with no green fees.
Based on plans filed at City Hall, the course will be more than a standard par 3 executive course. It won’t be as expansive as the city’s Eagle Bend course, but depending on its pricing, it certainly could be a competitor.
Here’s what the plans show for the course’s layout: Hole No. 1, 333 yards; No. 2, 254 yards, plays partially over about a half-acre lake; No. 3, 100 yards; No. 4, 250 yards, plays over a portion of what looks to be an approximately 3-acre lake; No. 5, 487 yards, plays over a portion of the same lake; No. 6, 112 yards, plays through a narrow alley of trees; No. 7, 487 yards; No. 8, 123 yards; and No. 9, 333 yards.
I’m sure I’ll hit a few balls out there some day. Fair warning: If you happen to be walking to the Indoor Aquatic Center that day, you may want to wear a helmet.
Bids to convert former Farmland fertilizer site into new business park come in far lower than expected
If you have about 450 acres of an abandoned fertilizer plant, now is apparently a good time to convert it into a business park.
The city is in the process of awarding two key construction contracts to convert the former Farmland Industries fertilizer plant on the east edge of Lawrence into a business park. And both bids for the contract came back well below what the city was expecting.
Last week the city awarded a $4.98 million bid to Lawrence-based R.D. Johnson Excavating for street construction, waterline installation and lot grading at the site. The city’s engineers had estimated the work to come in at $8.16 million. That’s a difference of almost 40 percent.
This week, commissioners are scheduled to accept bids to install the necessary sewer lines for the site. The low bid is from Amino Brothers at $601,089. The city’s engineers had estimated a cost of $1.41 million. That’s a difference of almost 60 percent.
I guess that is why you take bids.
City officials are hoping other construction firms are as hungry as these. The city in the next week or so is set to approve a set of bids for the $18 million library expansion project. Those bids have already come in, and my understanding is interest was extremely high by contractors.
On May 14, the city will be getting bids on an even larger project: the $25 million city recreation center. We’ll see how hungry recreation center builders are. But what we won’t see are any bids for the infrastructure work on that project.
The city negotiated a deal with KU Endowment officials and Thomas Fritzel’s Bliss Sports that calls for the recreation center building to be bid through the city’s normal bid process. But the infrastructure work for the KU and city project — things like streets, sewers, waterlines and parking lots — won’t be bid through the city’s open bidding process. Instead, Fritzel’s Bliss Sports will use its preferred contractors and will negotiate a price for that work. I’m sure the city will make Fritzel aware of these bids, assuming the price hasn’t already been fully determined. (Some dirt-moving work is under way at the site.)
The city has an interest to pass these bids along because the city likely will be paying for a portion of that infrastructure work. The Rock Chalk Park deal calls for the city to pay for 100 percent of the cost to build the recreation center building. The city then will pay for infrastructure work up until a point that the city’s total cost on the project reaches $25 million. So, if the city’s recreation center bid comes in at $19.9 million, which is the current estimate by the city, then the city will pay $5.1 million for the infrastructure/parking work. (I previously had said $7 million, which shows why I don't have a career in math.) That means the city would pay a little less than half of the infrastructure/parking costs that are estimated at $13.5 million. Some people have said that sounds about right, since the infrastructure will serve both the city-owned property and the property that will house the KU track, softball and soccer facilities.
But as the Farmland project has shown, estimates are more of an art than a science. If those estimates — much like the Farmland estimates — are 50 percent too high, then the city would be paying for about 75 percent of the infrastructure and parking costs for the entire Rock Chalk Park project. (That is assuming that the city’s estimate for the construction of the building comes in at $19.9 million. Perhaps that estimate is high also, which changes the dynamics even more.)
It will be interesting to watch but perhaps hard to sort out. What is clear is it seems to be a good time to be going out for bid on construction projects.
The city is taking advantage of the good prices on the Farmland project. Originally, the city thought it may only be able to install the streets, sewers and waterlines in this first phase. But because the prices were low, the city added an alternate that allows for about 12 pad sites to have preliminary grading work completed. That will speed up the process for future business park tenants to build on those lots.
Work on the streets and sewers at the Farmland site is expected to go on throughout the summer and into the fall. The city hopes to have lots ready to build upon at Farmland by late 2013 or early 2014.
It may end up being a good time to have industrial property to offer. I read this article today from the Washington Post about how European manufacturers are starting to relocate to the U.S. because of our cheap natural gas prices. Chemical companies, in particular, are among those migrating.
It is funny how quickly the world changes. When I covered Farmland’s bankruptcy about a decade ago, high natural gas prices were one of the leading factors that put the Lawrence fertilizer plant out of business. Not that I think it is very likely, but how odd would it be if the big new user for the revamped Farmland site is a fertilizer plant?
Business-oriented political action committee gets big donations, endorses Chestnut, Farmer, Riordan in City Commission race
The finish line is in sight, and it seems as if the race for the Lawrence City Commission is about to kick into another gear.
Last weekend, Lawrence residents saw a pretty clear sign that the competition is about to heat up: Campaign spending by a new pro-business political action committee.
A new PAC, called Lawrence United, sent out a postcard mailing to residents during the weekend endorsing three of the six candidates for Lawrence City Commission — Rob Chestnut, Jeremy Farmer and Terry Riordan.
The one campaign finance report the group has filed so far shows the PAC has some fundraising chops, thanks in large part to a sizable donation from one of the city’s larger construction companies.
Penny’s Concrete — the firm owned by longtime Lawrence businessman Bill Penny — gave $5,000 to the PAC during the Jan. 1 through Feb. 14 reporting period.
The Lawrence firm of Paul Werner Architects also gave $1,000 to the organization. Werner has been in the news recently as the lead architect for the Rock Chalk Park sports village proposed for northwest Lawrence. Werner has served as the architect for many of the projects proposed and built by Thomas Fritzel, who has been the driving force behind the public-private partnership to build the Rock Chalk Park and city-owned recreation center.
The postcard mailer sent out this weekend didn’t go into any specifics on any issue, including the recreation center. Its main message was it supports “candidates who support creating a sustainable, vibrant and growing economy.”
Penny’s Concrete is the type of business that benefits from a variety of development — everything from new streets to new building construction. For whatever it is worth, and as we previously have reported, Penny has been a business partner with Fritzel on past deals, including a struggling housing development in Junction City that created some headlines recently.
In total, the PAC raised $7,700 in the reporting period. It received donations from five others: $500 from Lawrence-based O’Malley Beverage; $500 from OSS Solutions Inc., a Lawrence-based wireless consulting company; $150 from Doug Gaumer, president of the Lawrence operations of Intrust Bank and also the current chair of the Lawrence Chamber of Commerce; $150 from Kathy Gaumer, a Lawrence physician and wife of Doug; $200 from HKG Consulting, a medical consulting business that, based on the address of the business, appears to be run by the Gaumers.
According to paperwork at the Kansas Secretary of State’s office, United Lawrence set up a limited liability company to run the new organization. Casey Meek, a Lawrence attorney, is listed as resident agent of the company and also is listed as treasurer of the political action committee. The company’s articles of incorporation indicated the organization has a board of directors, but a document isn’t yet on file with the secretary of state’s office listing those directors. But I’ll give Meek a call today to see if he can disclose those members.
Political action committees aren’t unheard of in Lawrence City Commission politics. In the 1990s, a group called Progressive Lawrence actively campaigned for candidates that it thought would give neighborhoods more of a voice in the City Hall process. And candidates frequently receive donations from political organizations related to various building trades unions, police and firefighter organizations and other such groups.
Nonetheless, the mailing had candidates in the race talking. Political observers are now waiting to see if Chestnut, Farmer and Riordan start running more coordinated campaigns.
I’m not sure they will. The trio produces some interesting political mathematics to contemplate. Farmer finished second in the primary, Riordan finished third and Chestnut finished fourth. In this election, only the top three win a seat. So for all three of the Lawrence United candidates to win election, they’ll have to unseat the primary's top finisher, multi-term incumbent Mike Amyx.
History shows that knocking the winner of the primary out of the top three spots in the general election is difficult to do. In the approximately 20 years I’ve covered City Commission elections, I remember it happening only once. If that trend holds true, the fight for the final spot may very well come down to a battle between two of the Lawrence United candidate, in which case coordinated campaigning doesn’t work too well.
And I suspect the three candidates who were not endorsed by the Lawrence United group — Amyx, Scott Criqui and Leslie Soden — will attempt to turn that into a political positive as well. Endorsements by business-oriented groups don’t always play well in some Lawrence voting circles.
But as they say on Wall Street, past results don’t guarantee future returns. And with such a light turnout for this year’s primary election, who know what may happen in the April 2 general election.
But it looks like it will be a spirited contest to the end. Officials at the Douglas County Clerk’s office told me Lawrence United is the only political action committee that has filed paperwork with the office, but such groups can form at any time.
The $7,700 raised by Lawrence United was just from the period during the primary election. Campaign finance reports for the period leading up to the April 2 general election aren’t due until next week. It will be interesting to see how active the group has been since then, and how much more campaigning Lawrence United will do in the closing days of the race.
City’s Public Incentives Review Committee to consider Rock Chalk Park property tax abatement today; member raises questions about city’s analysis
The proposed Rock Chalk Park sports village in northwest Lawrence will create all types of exercises. Today, it will be a math exercise.
The city’s Public Incentives Review Committee will meet at 4 p.m. today to consider making a recommendation on a request for $40 million in industrial revenue bonds for the KU facilities that will be at Rock Chalk Park. The $40 million in IRBs come with a 10-year, 100 percent property tax abatement for the project.
It appears today’s meeting of the Public Incentives Review Committee won’t be without questions. Former City Commissioner Rob Chestnut, who also is a candidate for City Commission in this year’s race, is a member of PIRC. His full-time job is as a chief financial officer for a Topeka-based company, and he was appointed to PIRC to fill the position reserved for a financial analyst.
He seems to be taking that job seriously because he has put together a memo questioning whether the city’s financial analysis of the project is accurate. In short, Chestnut raises questions about whether the amount of incentives the city will be providing to the project will be greater than what it will receive in return.
“I believe the city could lose money on the proposed project,” Chestnut writes in his memo.
That runs counter to what the city’s financial analysis has shown. The city has run a “cost-benefit analysis” that shows for every $1 in incentives offered to the project that it will receive $1.62 back in benefits. That’s important because the city has an economic development policy that says projects receiving tax abatements should have a cost-benefit ratio of at least 1 to 1.25.
But Chestnut makes two major points about the city’s analysis:
• The city’s analysis assumes the $50 million project will start paying property taxes after the 10-year tax abatement has expired. But that does not appear to be the plan in reality. I’ve heard from multiple people that the developers of the project — Thomas Fritzel’s Bliss Foundation, and various KU entities — believe the project should receive the automatic property tax exemption Kansas University receives for its property. The state has not granted that exemption because the facilities will be owned by Bliss — a private, for-profit company — rather than KU. I believe the plan is to use the next 10 years to win such an exemption from Kansas lawmakers.
According to Chestnut’s memo, the city’s model assumes property tax payments in years 11 through 15, and counts them as a benefit that will be received by the city. With those property tax payments, the city’s cost benefit ratio reaches the $1.62 in benefits for every $1 in incentives. Without the property tax payments, though, Chestnut says the project falls into negative territory. His calculation is that the project receives 98 cents in benefits for every $1 in incentives.
• The city’s analysis doesn’t count one item that could feasibly be considered an incentive to the project: the amount of infrastructure the city will pay for Rock Chalk Park.
How much money the city will pay in infrastructure costs for the project isn’t yet known, but it very easily could be several million dollars. The amount the city will pay in infrastructure costs will be determined by how much the city pays to build its recreation center building. The city will pay $25 million for its share of the Rock Chalk Park project, which includes the recreation center building. If the bid for the recreation center building comes in at $22 million, the city’s current estimate, it will pay $3 million in infrastructure costs. Some of that infrastructure is expected to serve both the recreation center and the KU portion of Rock Chalk Park.
But for the purposes of the cost-benefit analysis, the city did not input any infrastructure number into the model. Chestnut notes that if the city even included just $1 million of infrastructure costs in the cost-benefit model, it would create a significant reduction in the city’s cost-benefit ratio.
It will be interesting to see how the PIRC meeting goes today. The committee has some members who are known for asking tough questions. In addition to Chestnut, former City Commissioner Boog Highberger also is on the committee.
Much of this discussion probably hinges on how people view the nature of the project. Most of the city commissioners I have talked to have viewed this property tax abatement issue as more of a technicality than anything else.
They’ve noted that if KU Athletics owned the facilities, rather than leased them, the property automatically would be property tax exempt.
But in recent weeks, new questions have arisen about how much Fritzel’s Bliss Foundation will be able to use the facilities as a privately run, for-profit events venue. The agreements between Bliss and the various KU entities seem to give Bliss much leeway in hosting events at the facilities.
It has been unclear how many and what type of non-KU events Bliss may seek to host at the facility. When I asked KU Athletics about it last week, the response was that the issue was still a matter of “ongoing discussion.”
Another issue to keep in mind is that the model the city uses may not be the best for capturing all the possible benefits of the proposed Rock Chalk Park.
The city’s model seems to be pretty heavily weighted toward measuring how many new jobs will be created by a project. That number has been uncertain with this project. The original application for the IRBs used a jobs figure of two jobs for the project. Then Bliss filed an amended application that says the project will involve 17 jobs. I’m not up to speed on what led to the difference.
But the main economic development part of this project long has been considered to be the amount of visitor spending it can attract to the community. I’m not sure how much the city’s traditional model accounts for that type of benefit.
Plus, supporters of the project would argue an immeasurable benefit is what this project does for Kansas University. It can help with recruitment, it can free up funding to do other improvements — such as at Memorial Stadium or Allen Fieldhouse — and it possibly can solidify KU’s position as a member in good standing with the Big 12 Conference.
Those benefits are hard to measure in any type of model.
So, we’ll see how it goes at this afternoon’s meeting. Ultimately, the PIRC recommendation will only matter so much. The City Commission still makes the final decision on the IRB request.
Commissioners are scheduled to vote on that IRB request just hours after the PIRC meeting. City Commissioners meet at 6:35 tonight at City Hall.
An entity controlled by Thomas Fritzel will be the exclusive provider of all concessions on the Kansas University portions of the proposed Rock Chalk Park project, according to documents released today.
And that's not the only way Fritzel or his related entities could turn a profit from the project that has been billed largely as a public sports village.
I’ve quickly read through four separate agreements involving Fritzel’s Bliss Sports, Kansas University Endowment’s RCP LLC and Kansas Athletics. The documents are complicated, and I’m not promising I’ve caught every detail. I’ve put a call into Fritzel for more explanation, but haven’t yet heard back from him. But here’s what I’ve gleaned from the documents.
• A signed operating agreement between KU Athletics and Bliss Sports states Bliss “shall have the exclusive right to control and manage concessions associated with any use of the stadiums, including athletics-sponsored events, developer-sponsored events and third-party sponsored events.”
In other words any event held on the KU portion of Rock Chalk Park — this agreement doesn’t cover the city’s recreation center — will have its concession needs served by Bliss Sports.
But the agreement goes on to say that “any net revenues” generated from concession sales will be deposited into a special escrow-like account called a “maintenance fund.” That fund can be used by KU Athletics to make repairs at Rock Chalk Park over the years.
That sounds like a pretty good deal for the university, and it may well be. But what is not clear from the agreements is what, if any, controls will be placed on how Bliss runs the concessions.
For example, would Fritzel be allowed to create another entity — let’s call it Fritzel Foods — that would serve as the supplier for the Rock Chalk Park concessions business? If so, the hypothetical Fritzel Foods could purchase the supplies needed for the concessions business, turn around and sell the supplies to the concessions business for a profit, and seemingly none of those profits would have to be deposited into the maintenance fund.
I’m not saying that’s the intention, but I am asking whether there is anything that prevents it.
The details related to the concessions business were surprising because Fritzel had not made any such details clear when he gave an interview to the Journal-World on Jan. 18.
“It will be run just like Allen Fieldhouse, 100 percent like Allen Fieldhouse,” Fritzel said when describing whether his entities would be in a position to make any money off the Rock Chalk Park. “The important thing is Kansas Athletics controls everything.”
The agreements released by Fritzel today were signed Feb. 12. The documents indicated they replaced a previous set of agreements signed on Oct. 12. What those agreements called for is not known.
• Bliss, in addition to KU Athletics, will have the right to charge “reasonable parking fees” for any event on the KU portion of the project. Both Bliss and KU Athletics must agree to the parking rates, but the agreement states: “It is the intent of the parties that as a general rule, at a minimum, parking fees will be charged for conference-wide collegiate athletic events; statewide, regional, national and world-wide sporting events; and third-party sponsored events.”
City Manager David Corliss told me this afternoon that the city will want to create a separate agreement to make it clear that the City Commission would have to approve any parking fees on a per-event basis. It has been proposed that the city would contribute money to help build the parking lots that would serve both the city and KU portions of the project. Corliss said that means the city will want to be involved in setting parking policy for the development.
Like the concession revenue, the parking money would go into the maintenance fund. Like the concessions revenue, the questions of how Bliss would be allowed to operate the parking system remain.
• Bliss would have the authority to use any of the stadiums and other KU-related facilities rent-free. KU Athletics would have limited ability to deny Bliss use of the facilities. Bliss could host private athletic events at the park without city approval. Any non-athletic events hosted at the park would require a special use permit from the city.
• As previously reported, KU Athletics will pay $1.3 million a year for 30 years to Bliss Sports to cover Bliss’ costs to finance the project. Also as previously reported, Bliss will maintain ownership of the facilities for 50 years. What has not been previously disclosed is that the lease also calls for KU to pay lease payments in years 31 through 50 as well. Fritzel made no mention of that provision when interviewed by the Journal-World in January.
The rate of the lease for years 31-50 will be the “fair market rental value” of the property as determined by Bliss and agreed to by Kansas Athletics.
City commissioners tonight are scheduled to take their biggest vote yet on the recreation center project. Commissioners are being asked to approve a development agreement that spells out how the city would help pay for infrastructure at Rock Chalk Park, rebate approximately $1 million in building permit and other city fees the project normally would be required to pay, and provide a 10-year property tax abatement for the project.
Corliss said his recommendation will continue to be for commissioners to proceed on the project. “I’m not seeing anything in these agreements that is still not a good deal for the University of Kansas and the community,” Corliss said.
Commissioners meet at 6:35 tonight at City Hall, Sixth and Massachusetts streets.
The city now has posted the full agreements. They can be found here.
Well, that didn't take long.
One day after Mayor Bob Schumm said he wanted to see the agreements between Thomas Fritzel's Bliss Sports and the various KU entities involved in the Rock Chalk Park property, Fritzel has produced them.
Fritzel has provided four sets of agreements to Lawrence City Hall. (He also dropped off a set of copies for me, as well.) I'm just now starting to read them.
The city will be posting the documents to its Web site shortly. I'll provide a link once it does.
Rock Chalk Park project likely to ask for property tax abatement from City Hall; questions about for-profit ownership emerge
New details keep emerging about Thomas Fritzel and Kansas University’s proposed Rock Chalk Park sports complex in northwest Lawrence.
The newest one is that the developers of the project will be asking for a 10-year property tax abatement from the city. City commissioners also will be asked to provide up to $40 million in city-issued industrial revenue bonds for the project.
That request for industrial revenue bonds hasn’t particularly been talked about a lot so far, but it didn’t come up entirely out of the blue. Kansas University Endowment briefly mentioned the need for industrial revenue bonds in an Oct. 2 letter, and City Manager David Corliss recently reminded city commissioners that such a request may be coming forward. (A quick note on industrial revenue bonds. Technically the bonds are issued by the city, but they are not the responsibility of the city to pay. The city's full faith and credit are not pledged to the bonds. What City Hall ramifications there would be if there was a default on $40 million worth of industrial revenue bonds is an interesting question, but legally, the city would not be obligated to pay the debt.)
The request for a property tax abatement, however, is a new arrival on the public scene. City staff members reported in a recent memo that the current understanding is that the ownership structure of the proposed Rock Chalk Park now may preclude the project from receiving an automatic property tax exemption from the state of Kansas. If that’s the case, then the city will be asked to use its powers to grant a property tax abatement.
From a dollars and cents standpoint, I’m not sure this changes much with the project. I think there had been an assumption that the facilities at Rock Chalk Park wouldn’t pay property taxes. For example, Allen Fieldhouse and Memorial Stadium don’t pay property taxes. Thus a KU track and field stadium, soccer field and softball stadium wouldn’t need to pay property taxes either.
But this latest twist highlights that there is a difference between the ownership structure of KU’s traditional sports venues and what’s proposed at Rock Chalk Park. It essentially can be summed up in two words: For profit.
The ownership of Allen Fieldhouse, for example, isn’t controlled by a for-profit entity. As currently proposed, though, the facilities at Rock Chalk Park—we’re not talking about the city’s recreation center at the moment—would be owned by a for-profit entity, controlled by developer Fritzel.
As we previously reported, the plan is for Bliss Sports — a for-profit, limited liability company controlled by Fritzel — to own the facilities for the first 30 years and lease them back to KU. That in and of itself creates a problem with the project’s ability to get an automatic property tax exemption from the state.
But there is now another question about the ownership interest of the project. It previously has been said that KU Endowment will own the land that the facilities sit upon. Well, a land transfer of the property occurred just prior to the New Year, and the KU Endowment Association does not show up as the owner of the property. Instead, a for-profit entity, called RCP LLC, is now listed as owner. The company is so newly formed that records showing the members of that company don’t yet exist at the Kansas Secretary of State’s office.
But I did get in touch this morning with Dale Seuferling, president of the KU Endowment Association. He assured me that KU Endowment Association is the sole member of the for-profit company. He said the new entity was formed because there obviously will be a lot of activity at the site, and the association felt for liability reasons it would be appropriate to have the land owned by its own entity. He said the association has used such a structure for other active pieces of property it owns.
It is worth noting, however, that the creation of this for-profit entity to own the land is different than what had previously been communicated. An Oct. 2 letter to city officials stated “KU Endowment will purchase the tract of land.” Maybe this is a distinction without a difference. I don’t know.
I think the need for the project to receive a property tax abatement, though, will raise the level of understanding in the community that this project has a significant, private, for-profit element to it. The facilities will be owned by a for-profit company, and technically, so will the land.
Now, the question is whether there is any expectation that a for-profit entity — Bliss Sports would be the leading candidate — will be allowed to conduct activities at the property that generates revenue and profit? In chatting with Seuferling this morning, I’m still not clear on that question. But I’ll keep asking around about it, and report what I learn.
Another interesting issue is the long-term situation with property taxes at this site. A city-issued tax abatement for the property only will be good for 10 years. As proposed, Fritzel’s for-profit entity is scheduled to own the facilities for 30 years.
Will the project have to pay property taxes in years 11 through 30? It has been estimated the KU portion of the project will have a market value of about $50 million. The property taxes on that will be substantial. I asked Seuferling, and he said he didn’t know the answer to that question. He said he hadn’t specifically discussed that issue with anyone.
I’ve heard elsewhere, though, that the project — during the next decade — may seek a special piece of legislation from the Kansas Statehouse that would create a specific property tax exemption for Rock Chalk Park, even though the facilities would be owned by a private company.
I hope to get some answers, and when I do, I’ll pass them along.