photo by: Herron + Partners architects/City of Lawrence

A rendering shows the proposed design for a Q39 barbecue restaurant in downtown Lawrence.

Sometimes barbecue can produce false signals. When sitting across from my dining companion and she points to her cheek, I assume that means she wants to see if I can fit even more food into my mouth. Come to find out, she was just trying to alert me that I have half a bottle of barbecue sauce on my face.

So it might be with the Q39 barbecue restaurant proposed for downtown Lawrence. If you recall, the prospect of the popular Kansas City restaurant locating in Lawrence has become clouded. Lawrence city commissioners in February balked at moving forward with a set of financial incentives for the project, which is slated for a site near Sixth and New Hampshire streets in a portion of the former Journal-World printing plant.

After city commissioners declined to take action on the request to create a special taxing district, a representative for the restaurant said the project was officially on hold.

However, if you have driven by the downtown site, you likely have noticed a lot of construction going on at the building. A backhoe removed much of the building’s concrete parking lot, which is slated to become an outdoor dining area under the new plans.

So, is the project not on hold? Does it not need the incentives after all?

Patrick Watkins, the Lawrence attorney who is representing the Q39 developers, told me any such impression is a false signal.

“No, it is very much the opposite,” Watkins said. “We are dependent on the city granting the incentives.”

He said the fact that some construction work had continued on the site simply was indicative that some contractors were at a spot where stopping the work completely wasn’t feasible.

“You can stop work but there still will be some vendors closing up loose ends on their part of the project,” Watkins said.

photo by: Chad Lawhorn/Journal-World

He said while the exterior work was noticeable to people passing by, it actually was a small amount of work compared to what should be going on at the site. After all, Q39’s plan was to open in June, which means the project should be much further along than it is today. He said the site, as it sits currently, is probably six months away from being completed.

The question now is whether Q39 will complete the site. We all should get an indication of the answer on Tuesday. Lawrence city commissioners at their weekly meeting are being asked to set a public hearing date for the special taxing district that would support the Q39 restaurant.

Setting the public hearing date is not the same as approving the incentive, but it would move the incentive request one step closer to approval. As part of its consent agenda, the commission will consider setting May 6 as the date for a public hearing on the special taxing district.

As a reminder, Q39 is seeking approval of a Community Improvement District, which would subject sales made at the restaurant to a special 2% sales tax that is over and above the standard sales tax rate. Proceeds from the special 2% tax would be used to help pay for infrastructure improvements and other such costs that the Q39 project incurs. The special tax could be in place for up to 22 years.

City commissioners on Tuesday will have a piece of information that they didn’t possess in February. A city-hired consultant has conducted a study of whether the Q39 project actually needs the incentive to be financially viable.

The report by the consulting firm Baker Tilly said the project clearly needs the incentive to be feasible. The report found that without the incentives — the special taxing district and an exemption that will allow the project to avoid paying sales taxes on construction materials — the project would lose money.

With the incentives package, the project is projected to have a rate of return of about 4.8%, which Baker Tilley said is still below the 6% to 11% rate of return that most restaurant real estate projects expect.

The restaurant is expected to create 88 jobs, including eight managerial positions, according to information provided to commissioners via staff memo. That memo also estimates the Q39 group will invest about $7 million to prepare the old printing plant location into a restaurant.

Only a portion of the former printing plant is proposed to be used for the restaurant. The former loading dock area, which is the most southern portion of the building, would be used for Q39. The remainder of the former printing plant was once proposed to house upscale offices, a food hall and a unique open air entertainment area. However, those plans have been scrapped after the Kansas City developer who proposed them ultimately did not move forward in purchasing the building. (Note: The Journal-World has no ownership in the building. It is owned by members of the Simons family, which previously owned the Journal-World.)

The fact that the larger redevelopment fell through is one of the reasons Q39 is asking for the incentives, Watkins said. The Q39 project lost some economies of scale that would have occurred with the larger redevelopment, he said.

Watkins told me the new feasibility study commissioned by the city shows that the project is worthy of the requested incentives. The project, Watkins said, won’t do anything to reduce the city’s tax property tax revenues because the project is not seeking a property tax abatement. He also said the project will add to the city’s total sales tax collections because the former printing plant building isn’t doing anything currently to generate sales taxes.

Most importantly, he said, the project will spur development at a downtown location that has been unused for years.

“I think the project deserves a fair shot,” Watkins said. “Under the city’s economic development policy, it has a great cost-benefit to the city.”

Whether that thinking will carry the day at the City Commission is unknown. Commissioners in February didn’t reject the incentives request, but rather took no action because there didn’t seem to be a majority of commissioners that could agree on a path forward. Some expressed questions about whether the project was large enough to warrant the incentive. Others wondered whether the incentives would be fair to similar property owners who have redeveloped without the use of incentives.

Commissioners meet at 5:45 p.m. on Tuesday at Lawrence City Hall.