photo by: Chad Lawhorn/Journal-World photo

This June 2019 file photo shows the old Zimmerman Steel building just west of East 19th Street and Haskell Avenue. A group affiliated with Lawrence-based Mar Lan Construction recently purchased the building and plans to move the company's headquarters to the site.

City leaders have approved a sales tax break for a renovation and construction project for the headquarters of a locally based construction company.

As part of its meeting Tuesday, the Lawrence City Commission voted 4-0, with Commissioner Stuart Boley absent, to approve a request from Banks Street LLC for an industrial revenue bond sales tax exemption for a two-phase renovation and construction project at the site of the old Zimmerman Steel building, 701 E. 19th St. The project will house the headquarters of Lawrence-based Mar Lan Construction, which is currently located in leased space in downtown Lawrence.

As part of approved economic incentives, the city will forgo collecting about $27,000 in sales taxes and fees. Vice Mayor Brad Finkeldei said he thought the old Zimmerman building was unique and worth rehabilitating, and that the project would be a great improvement for the 19th Street corridor.

“I think it’s a good project and a very small cost to get a lot of reward,” Finkeldei said.

However, there was back and forth among commissioners given that the vote was split when the Public Incentives Review Committee considered whether to recommend the incentives request for approval. The PIRC members opposed to the request spoke about the strains on revenue for local governments amid the coronavirus pandemic and questioned whether the project deserved the dollars of local taxpayers. Those in favor said the project does provide infill development and supports a local business, both of which are stated goals of local governments.

Though commissioners acknowledged the review committee’s concerns, they agreed that the project met the requirements of the city’s economic development policy and aligned with goals to encourage infill development. Mayor Jennifer Ananda said the commission needed to consistently follow its own policies.

“We do need to support where we can and where it is aligned with our values and our priorities and our policies, so that we can be consistent,” Ananda said.

The commission approved issuing up to $2 million in industrial revenue bonds for the project, which would exempt Banks Street LLC from paying city sales taxes on project construction materials and renovation labor. By waiving its sales tax, the city forgoes the collection of about $24,470 for both phases of the project. The city also agreed to waive 35% of the required origination fee for the bonds — the origination fee was estimated at $8,000, which means the waived fees would amount to roughly $2,800.

The project is also seeking sales tax exemptions from the county and state. If approved, they would bring the total tax exemption to about $101,465.

The first phase of the project will include a $1.4 million renovation of the existing 7,745-square-foot building. The second phase will be the construction of a new 10,000-square-foot commercial building that will house office, warehouse and retail space. The new building calls for an estimated capital investment of $1.7 million and will be located on the eastern portion of the same lot. The renovation is estimated to start in January 2021, and the construction of the new building is slated for 2023 and 2024.

City Commission 11/10/20