photo by: Rendering by H2B Architects

Penn Street Lofts

City leaders have awarded nearly all of the requested $2 million in incentives for a mixed-use housing development planned for the Warehouse Arts District.

As part of its meeting Tuesday, the Lawrence City Commission voted to approve three of the four economic incentives requested for Penn Street Lofts, or all but about $14,000 of the approximately $2 million requested. The four-story, $11.8-million development will include close to 50 apartments, which will be leased at affordable rates. The complex will accept Section 8 vouchers.

The four-story, $11.8-million development will include close to 50 apartments that will be leased at affordable rates. The complex will accept Section 8 vouchers

Vice Mayor Brad Finkeldei said in making his decision he considered various factors, including the cost-benefit ratio of the project, that it has federal support, and the large number of affordable units it will provide. He also emphasized that the complex will be accepting housing vouchers.

“To have a new facility that will accept vouchers, I think, will be a big deal going forward,” Finkeldei said. He said it was his understanding more vouchers would be available in the near future.

The city’s incentives report indicates that cost-benefit eligibility requirements have been met for the property tax rebate, the sales tax exemption and the fee rebate portion of the request. The cost-benefit ratio for the city would be 1.30, meaning that, for every $1 in public incentives, $1.30 of benefit value would be returned. The city’s policy is that the cost-benefit ratio be at least 1.25. The ratio is not met when the affordable housing funds are included, but city staff have said the analysis does not account for community benefits such as affordable housing. The project has already been awarded $7.9 million in Federal Low-Income Housing Tax Credits and $448,000 from the National Housing Trust Fund.

Commissioner Lisa Larsen also said she was supportive of the project due to the cost-benefit ratio and because she felt the project meets housing needs indicated in the city’s housing market study. She noted that the average rent of the affordable apartments is required to meet federal affordability requirements for those making 60% of area median income, which is calculated annually. Other commissioners also generally agreed that the project met city goals, though they did not think it should be awarded all the incentives requested.

The project’s developer, Tony Krsnich, requested a $550,000 grant from the city’s affordable housing trust fund, which is largely funded by a special sales tax that Lawrence voters approved in 2017. Krsnich also requested $1.4 million in economic incentives, including a 15-year, 95% Neighborhood Revitalization Area property tax rebate; an Industrial Revenue Bonds sales tax exemption on construction materials; and a rebate of approximately $14,400 in building permit fees for the affordable units. The request to rebate the fees failed to get enough support to pass, as several commissioners noted that rebated fees was not a common practice of the city.

Commissioner Courtney Shipley voted against the Neighborhood Revitalization Area rebate, saying it was hard for her to feel the location of the project was an area that needed revitalizing given the developer’s other successful projects in the area.

City staff recommended that commissioners approve the request. In a memo to the commission, staff stated that, as with most neighborhood revitalization projects, Penn Street Lofts is more of a community development project than an economic development project, with the focus being delivering a community good as opposed to expanding the tax base and job growth.

As the Journal-World previously reported, the city’s Public Incentives Review Committee and its Affordable Housing Advisory Board voted to recommend the economic incentives. The building will be constructed on three currently vacant lots at 800 Pennsylvania St. The building’s ground floor will consist of about 4,500 square feet of commercial and retail space and seven market-rate live/work rental units and its upper floors would house 47 affordable units. Five of the affordable units will be permanently affordable and the remainder will remain affordable for 30 years, after which time they could be rented at market value.

On April 13, the Lawrence school board approved in a 6-1 vote a total of approximately $443,000 of incentives for the project.

The plan will next go before the Douglas County Commission during its April 15 meeting.

The county, City of Lawrence and Lawrence school district all have the discretion to determine the rebate percentage and duration of the NRA for their taxing jurisdictions. According to a memo sent to county commissioners, the Public Incentive Review Committee is requesting the county approve a total of approximately $463,000 of incentives for the project.

County commissioners were set to consider the item last week but deferred taking action.

— Dylan Lysen contributed to this report.

City Commission Meeting 04/14/20