photo by: MultiStudio/University of Kansas

A rendering provides an overview of how a $300 million development project on the east side of David Booth Kansas Memorial Stadium could take shape. The silver multistory building nearest the stadium is a Marriott hotel. The two red buildings along Mississippi Street would be home to student apartments, with restaurants, retail and office space on the ground floor. An outdoor plaza area is located between the three buildings.

KU needs another $300 million worth of development around its football stadium to create a true “gateway” to wow potential students and attract new dollars critical for the next generation, university leaders told the Journal-World.

An upscale Marriott hotel, a mix of restaurants and retailers, more than 400 new student apartments, and a unique 20,000-square-foot plaza area for outdoor entertainment are among the features that KU leaders contend will turn the area near 11th and Mississippi streets into a new year-round economic center for Lawrence.

“This results in a more prosperous KU that will lift the university and the city,” Jeff DeWitt, KU’s chief financial officer, told the Journal-World in an interview this week.

Public taxpayers, though, had better be prepared to do some of the lifting.

KU will seek about $85 million in public financial incentives — everything from STAR bonds from the state to a special taxing district from the city — to help pay for the project. But KU also is planning to raise approximately $100 million from its donors, and expects its private development partner in the project — the firm that built the new KCI airport — to invest more than $125 million in cash in the venture.

All of that is in addition to the $448 million that KU currently is spending to rebuild the west side and north end of David Booth Kansas Memorial Stadium. That project, expected to be complete in August, includes a convention and conference center in the north bowl of the stadium. It received $85 million in state and federal grant funds to help make it feasible. When the two phases of the project — which KU calls the Gateway Project — are added together, there will have been $759 million in development at the site. DeWitt believes that will rank it as the largest single commercial development in Lawrence’s history.

But key public approvals are still needed. Lawrence city commissioners at their meeting next week are expected to receive a briefing on what steps they will be asked to take to approve their portion of the incentives package. If the public financing components are approved in the coming months, the project could begin construction in late 2025, DeWitt said. Chancellor Douglas Girod has said he would want a plan that will allow KU to play in the stadium during any future construction work.

But perhaps you have a question more fundamental than timelines or even dollars: Where am I going to park? After, all the east side of the football stadium includes one of the larger surface parking lots on campus.

“I want you to tell everyone we have parking,” DeWitt said, noting that has been the No. 1 question he’s heard from everyone as KU has worked on plans for the project over the last 18 months.

The project would eliminate 361 surface parking spots on the east side of the stadium, but they would be replaced by 1,000 parking spaces in a garage structure. However, there is another key detail to that parking: All of it would be underground, which means tailgating on KU game days would be forever changed.

DeWitt said tailgating activities would still happen on the hill. He said rooftop areas on the hotel and two buildings that would house student apartments also are likely locations where new types of tailgating activities could be held.

photo by: MultiStudio/University of Kansas

A rendering shows how a $300 million development project on the east side of David Booth Kansas Memorial Stadium could look from the intersection of 11th and Mississippi streets.

Year-round activities

If you remember, the need to improve David Booth Kansas Memorial Stadium — one of the oldest college football stadiums in the country — is what got this project started more than two years ago.

This latest proposal would complete that stadium revamp by rebuilding the east grandstands, and also renovating some areas in the south endzone. The east grandstands would become more vertical and would move about 100 feet closer to the field. That move was required in order to give developers enough room to build the hotel and other amenities.

While football has been a driving force for the project, the eastside renovations to the stadium itself are more undefined than other parts of the project at this point. Whether the east grandstands will include suites, and what seating capacity will be are details that are still being determined, DeWitt said.

It is everything else that is around those east grandstands that are getting a lot of attention, and excitement from university leaders. In some regards, that’s intentional because KU is emphasizing that the Gateway project will be a year-round attraction for KU and Lawrence. To help ensure that happens, DeWitt said a decision has been made that the entire stadium and amenities around it now will be managed by the Chancellor’s office, rather than KU Athletics.

“Clearly, the most important tenant is football,” DeWitt said. “Let’s not kid ourselves. But everything else we do there will be for the benefit of the entire university. There are a lot of universities building stadiums for eight football games a year. That is not what this is.”

Instead, KU has hired a convention and events company — the Oak View Group, which manages centers across the country — that has committed to bringing 200 events per year to the conference and convention center.

DeWitt said projections call for about 15 trade shows per year — many of them national in scope — to use the new center. There also will be academic conferences, conventions for associations, and the stadium and plaza area can be used for a variety of entertainment events ranging from soccer matches to concerts, DeWitt said.

Plus, one other key category: weddings, weddings, weddings.

Karla Leeper, KU’s vice chancellor for strategic communications and public affairs, said Baylor University has a center in its stadium, and it reports weddings are the No. 1 type of event booked there.

“This will be very easy to book, if you do this,” DeWitt said of his certainty regarding the projection of 200 events per year.

But it is critical to complete the second phase of the project, he said. Oak View Group said that if a hotel isn’t part of the project, the center likely would not be in the running for any national-level type of events, and that the conference and convention center would operate at only about half its potential, DeWitt said.

Hotel developers further said that it would be difficult to get a top-of-the-line hotel at the site if it wasn’t part of a larger project that included the restaurants, retail, entertainment plaza and other amenities.

Then, there’s the parking conundrum. KU’s chosen development partners — Virginia-based Edgemoor Infrastructure & Real Estate and Kansas City-based Sunflower Development Group — said providing large amounts of parking wouldn’t be feasible unless there also was a significant amount of development on the site.

Here’s a look at the major components of the latest proposal:

• A 162-room Marriott hotel. It would carry the same design and amenities as Marriott’s Cascade hotel in the Plaza district of Kansas City, Missouri, DeWitt said. That upscale hotel features four restaurants, a lounge and a coffee shop, according to its website. The facility also features a fitness center and spa. The hotel would be connected directly to the stadium and its conference/convention center.

• 16 condominium units would be built on the upper floors of the hotel for people who want to own a home next to the stadium.

• Two multistory student apartment buildings that would be constructed on the current parking lot area of the stadium. Combined, the two buildings would have 443 beds. DeWitt estimates the university will need about 1,000 new beds for student housing in future years, as KU has had two of its largest freshmen classes in history, and as deferred maintenance on the Jayhawker Towers likely will cause most, or all, of that dorm complex to eventually be demolished.

• About 40,000 square feet of retail, restaurant and office space would be located on the ground floors of the two student apartment buildings.

• A 20,000-square-foot outdoor plaza that would be built near the center of the east grandstands. The plaza would be designed to accommodate a variety of events.

• 1,000 parking spaces would be provided in a two-level, underground parking garage. The garage would essentially span the entire length of the stadium, and the various buildings would be built atop the parking structure.

The Public Price

DeWitt said consultants are estimating the project could boost Lawrence tourism spending by about $100 million per year, which would be about a 30% increase over the amount of tourism spending that currently happens in the city.

But to get that bang, the public will need to provide some bucks.

The biggest share of the $85 million in requested incentives will involve the public forgoing the collection of much of the future tax revenues that the project would be expected to produce. But the public also would be asked to pay a higher sales tax rate not just at the development near the stadium, but rather across the entire KU campus, including any future development on KU’s west campus.

Here’s a look at the public incentives that KU and its developers are hoping to receive:

• STAR Bond financing: This special incentive was first used in the development of the Kansas Speedway and Legends shopping district in Kansas City, Kansas. The program basically allows developers to receive 90% of all new sales tax revenues generated at the site to pay for infrastructure and other such improvements needed to make the development feasible. The incentive is particularly powerful because it includes not just local sales taxes but also state sales taxes, which makes up the largest part of sales tax totals. The STAR Bond financing is expected to provide about $60 million of financing, and of that, $50 million will come from the state’s share of the sales tax, DeWitt said. Both the city and the state must provide approvals for the STAR Bonds.

• Tax Increment Financing: The concept is similar to a STAR Bond, but smaller. In this case, it only will involve a rebate on property taxes. Both the hotel and student apartments would be subject to property tax, since they are being developed by a private entity. The TIF would seek a rebate on the vast majority of those new property taxes, with the rebate being used to pay for needed infrastructure. City approval is required for the TIF.

• Community Improvement District: This program would create a new 1.5% sales tax that would be charged on all purchases not only at and around the football stadium, but also across the entire campus. That would mean the special tax would be charged on concessions at both the football stadium and Allen Fieldhouse, and also on purchases made at the KU Bookstore and other shops scattered around campus. Proceeds from the special tax would be used to help fund the development. It also would include future development that KU may undertake on its main campus and West Campus, which stretches all the way to Bob Billings Parkway and Kasold Drive. City approval is required for the CID.

The City Commission will play a key role in the approval process of all the incentives packages, but traditionally projects on university properties are not required to go through the city’s planning and development approval process. The city may have leverage to ask for some development oversight as a funding partner in the project. The site is immediately across the street from a dense residential neighborhood.

DeWitt said that even with the incentives, local government is still expected to see some increased tax revenue as a result of the project. He said the consultants, for example, are projecting that the City of Lawrence would collect an additional $27.8 million in sales taxes — over and above what it would be giving up through the incentives — over the next 20 years. In other words, the city would see its sales tax collections increase by about $1.4 million a year, according to the projections.

Some of that would come from additional spending at downtown businesses, DeWitt said. He said KU asked its consultant to determine whether the Gateway project would be positive or detrimental to the existing downtown business district. The consultants said they are confident the project will drive more spending to downtown, DeWitt said.

The incentives are in addition to the $126 million in capital that the Edgemoor/Sunflower consortium will invest in the project. It also is in addition to the approximately $100 million that KU Endowment is expected to contribute to the project through new donor fundraising. That $100 million amount is on top of the $248 million that KU Endowment has raised for the current stadium renovations. That would bring the total to nearly $350 million in donor donations for the project, which DeWitt said is six times larger than any donor funded project in the university’s history.

One financing element you won’t see in the latest proposal is new debt being taken out by Kansas Athletics Inc. Kansas Athletics is planning to take on about $115 million in debt as part of the current stadium renovation project. That new debt comes at a time when KU Athletics is struggling to figure out how to provide $25 million a year in payments to student athletes, which likely will become permissible under new regulations governing student-athletes. DeWitt, the university’s CFO, said he cannot recommend that Kansas Athletics take on any additional debt beyond the $115 million, at this time.

“They are maxed out,” DeWitt said of the athletic department.

‘A New Level’

Football may have started this project, but DeWitt insists that the university as a whole is now at its center. DeWitt said the project likely will be more important in how it can attract ordinary students as opposed to its ability to woo future quarterbacks and linemen.

“It is the first thing a student is going to see when they come to the university,” DeWitt said. “This is going to help us with our enrollment. It will help the entire campus.”

KU’s new Welcome Center, where all prospective student tours start, is on the north end of Oread Avenue. Most visitors to the center will travel along Mississippi Street and be greeted by the Gateway project.

The competition for prospective students is expected to become more fierce among universities in the very near future. The entire higher education system is facing a “demographic cliff” that is spurred by smaller graduating high school classes. The financial crisis of 2008 caused families to have fewer children. By 2026 — 18 years after the crisis — the average size of high school graduating classes will be noticeably smaller for years to come.

“We are going to be taking a piece of a smaller pie,” DeWitt said. “You had better be better at what you do.”

Then, there is simply the ‘wow’ factor involved with this project. University leaders say to not underestimate its importance. It could come as people attend a concert at the stadium, or perhaps less excitingly, a bored teen attends a cousin’s wedding at the events center. Those may be the first times those families have ever had reason to come to the KU campus. Making a big impression can go a long ways, DeWitt said.

“I think Lawrence is one of the coolest college towns in the country,” said DeWitt, who previously served as the chief financial officer for Washington, D.C., and the city of Phoenix. “But, I think this will take us to a new level. This will really put us over the top.”