Lawrence City Commission approves economic incentives request for West Campus development
photo by: City of Lawrence screenshot
City leaders have voted to approve an economic incentives package for a development on the University of Kansas’ West Campus that will include research-related buildings, retail businesses, affordable and market-rate housing and a child care center.
As part of its meeting Tuesday, the Lawrence City Commission voted 4-1, with Commissioner Courtney Shipley opposed, to approve a Tax Increment Financing (TIF) district and 5-0 to approve a Community Improvement District (CID) sales tax of 1.5% for the project, known as The Crossing. Though the commission was generally supportive of the project, there was some discussion among a couple of commissioners about potentially lowering the level of incentive provided.
Commissioner Brad Finkeldei said he thought the purpose of a TIF and CID was to help pay for infrastructure costs that otherwise would have to be covered by the city’s capital improvement plan, and he supported the use of the incentives.
“And in exchange for that you get properties that are producing property tax, a little bit in the short run, more in the long run, but also producing sales tax and providing amenities, infill development in the middle of our town,” Finkeldei said.
West District Improvement Company, which is owned by the Kansas University Endowment Association, is developing the project, which will serve as the gateway to the KU Innovation Park, according to a city staff memo. The multi-phased development will be on approximately 80 acres within the West District of the University of Kansas campus and will include an “intergenerational residential community,” research-oriented office space, an early child care center, and a mix of restaurants, activities, and neighborhood amenity retailers. The project also plans to donate 1.5 acres to the nonprofit Tenants to Homeowners for the construction of permanently affordable housing in a future phase.
KU Endowment will be paying the upfront costs for infrastructure improvements related to the project, including sewer line upgrades, street construction and a traffic light at the intersection of 21st and Iowa streets, and is requesting the TIF and CID sales tax to help reimburse a portion of those costs. Infrastructure investments are estimated at $15 million for the first phase. The TIF is also being structured to cover financing costs that KU Endowment may incur.
Mayor Lisa Larsen said that while she thought it was a great project and a good example of a public-private partnership, she was having a difficult time with the 95% rate of reimbursement given the rate of return projected for the project. A financial analysis projected it to be 9.78%, and Larsen said that given that rate she would be willing to support a lower reimbursement rate, somewhere in the neighborhood of 60% to 70%. Shipley said she loved that the neighborhood was designed to be walkable, but spoke about the interests of taxpayers, noting that the property has already not paid taxes for decades because of its tax-exempt status.
The developer is requesting a 20-year TIF to capture 95% of eligible property taxes for reimbursement, with the remaining 5% flowing to the taxing jurisdictions. The property has been property-tax exempt since 1942, and the redevelopment converts exempt property into commercial property that will be subject to property taxes. For the CID, the developer is requesting a 22-year, 1.5% CID sales tax be captured for reimbursement to the developer. This 1.5% will be an additional sales tax on top of the regular sales tax. Revenues from regular sales taxes within the district will flow to the taxing jurisdictions as normal.
Finkeldei said he supported the rate as proposed and that he thought it wasn’t as easy as lowering the number, and that the project would have to shrink as well if the reimbursement were decreased. Vice Mayor Bart Littlejohn and Commissioner Amber Sellers also said they were comfortable with the 95% rate. Sellers said she didn’t see it as out of the ordinary given the use of TIF and CID and the particulars of the project.
“This can seem daunting, but this is something that for the size of the project, the rate of the return and the opportunity that it brings, this makes good sense,” Sellers said.
Under state law, the TIF required a supermajority to move forward, or four votes in favor, and ultimately Larsen said she did not want to stop the project from proceeding and ended up voting for the TIF as proposed.
The commission also heard from neighbors regarding the project. Several members of the adjacent neighborhood, who indicated they were generally supportive of the project, asked for a larger buffer zone between the development and the neighborhood. Currently woods and green space of varying width exist between the homes and the West Campus area. The neighborhood requested a 150-foot buffer zone. Commissioners asked for the developers to continue conversations with the neighbors regarding that aspect of the project, which will be part of a later phase of the development.