Lawrence city commissioners on Tuesday held off on approving a sales tax exemption for Q39, a Kansas City-based barbecue restaurant, to redevelop a prominent old downtown building, but they voted in favor of seeking further analysis of other potential tax breaks.
Commissioners voted to defer a resolution to give the applicant an industrial revenue bond, or sales tax exemption, on construction materials to finish the project; however, they voted to allow the city manager’s office to analyze potential costs and benefits of an additional tax incentive agreement with the applicant, and then revisit the IRB request later.
The commission voted to allow city staff members to analyze the potential costs and benefits of a Community Improvement District sales tax for the property of 2% over 22 years. The applicant will have to pay for the cost of third-party financial analyses and legal work to ensure compliance with state statutes.
It was not entirely clear whether that answer would be sufficient for the applicants.
“This is a $36,000 ask on a $5 million project,” attorney Patrick Watkins said of the IRB just ahead of the commission’s vote. “I think if an IRB is not approved tonight, what makes us think that a CID would be approved for a much larger ask later in the project?”
Part of the hesitation for commissioners was that the project is only improving a portion of a massive building in desperate need of major renovation — the old Lawrence Journal-World printing press building in the 600 block of New Hampshire Street.
“What’s left of the Journal-World building is probably easiest described as as more burden than benefit,” Watkins, representing Q39, told commissioners. “It’s 70,000 square feet of industrial newspaper printing plant. It’s the elephant in downtown Lawrence.”
Multiple proposals — for a conference center, a grocery store, an entertainment venue — have all come under contract to purchase the building, but none of those groups were able to find a way to develop the property, Watkins said.
Q39, too, had planned to develop a portion of the building along with other developers working on a larger portion of the building. Those developers were planning to take the lead on seeking incentives from the city, but they have backed out.
However, “We believe that Q39 being there will cause more development,” Watkins said. He said the Q39 project would also handle a lot of major utility issues that would then be resolved for other developers who could come into the building.
Mayor Mike Dever said the plan felt “piecemeal” to him. He said he wanted to help support development of aging infrastructure, but he wasn’t sure about the sales tax break on construction materials and he wanted to see further analysis of the other requested incentives to better evaluate them.
Dever also said he wanted to encourage a larger project — not a portion of a larger project.
Commissioner Lisa Larsen said she was unable to support the request for the IRB because she didn’t think it fell within the city’s economic development policy, and she thought there were plenty of other businesses that have put their own money into development.
Vice Mayor Brad Finkeldei was in favor of the tax breaks, saying that “filling a vacant building at the north end of downtown would be huge.”
“I do think we have people poking around at other parts of it, and would be nice to have them all here at once, but they’re not,” Finkeldei said.
Commissioner Bart Littlejohn said he liked the idea of the jobs the business would bring, and he thought the project would go a long way toward a thriving downtown.
The motion to defer the vote on the IRB request but proceed with the analysis of the CID passed 4-0. Commissioner Amber Sellers was not present for the meeting.
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Mackenzie Clark (she/her), reporter/founder of The Lawrence Times, can be reached at mclark@lawrencekstimes.com. Read more of her work for the Times here. Check out her staff bio here.
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August Rudisell/Lawrence Times
