Discussion highlights need for city to revisit economic development policy
Lawrence city commissioners on Tuesday voted 4-1 to approve sales tax breaks for developers to construct The Crossing, a market-rate apartment complex slated for west campus.
The complex, planned for a lot near the new Dillons at 23rd and Iowa streets, will include 341 rental units.
The industrial revenue bonds will give the developers — 23 Iowa Investors, an affiliate of Block Real Estate Services — a sales tax exemption on construction materials during construction.
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The area is already part of a tax increment financing district, which includes property tax reimbursement to KU Endowment, and a community improvement district that has a higher sales tax rate to help pay for developments.
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Monte Soukup, senior vice president of KU Endowment’s property division, said the complex is not aimed at students, and it will not rent units by the room like many student complexes do. They’re traditional multifamily housing.
Housing geared toward students is in progress in the KU Gateway District, near the KU football stadium on the opposite side of campus.
Soukup, who also serves on the city’s Affordable Housing Advisory Board, said in response to commissioners’ questions that the original economic incentive agreement creating the TIF and CID did include an affordable housing component.
The plan is to provide about an acre and a half to the land trust in Lawrence, ready to develop with roads, sewers and utilities within 10 years. KU Endowment has about six years left to deliver that, Soukup said.
Some community members voiced concerns about the request for tax breaks when the complex does not include any affordable units, which is a requirement for the incentives under the city’s economic development policy.
The city’s recently completed affordable housing study projected that the city will need 6,315 additional units — 2,920 for sale and 3,395 for rental — over the next 10 years. Although the city needs more housing of all kinds, more than half of the total units will need to be affordable for people whose incomes are lower than the area median income, the study found.
Susie Carson, economic development director for the city, said staff found the benefits of the project outweigh the cost of the incentive and recommended deviating from policy in this case.
Carson, who has been in her role for less than a year, said she didn’t want to come in and change policy before she understood the community. She said she now feels like she’s getting a very good grasp, and she plans to look at the economic incentive policy going forward.
The current policy was approved in 2019, and Carson said “it’s a different world” since then.
“I’ve already started collecting policies from numerous cities, both within the state and out of the state, so I am looking at those,” Carson said. “I’m also having conversations at the state and federal level to figure out how we can best use these policies in conjunction with other tools to make them go a little bit further.”
Commissioner Kristine Polian said she would approve this request, but she would reject the next one that does not include affordable housing.
“You don’t even have to tell me what it is because I want to see that we’re doing something about this policy,” Polian said.
Commissioner Amber Sellers said she wants to see how Carson’s vision for the economic development policy and the vision of Lea Roselyn, the city’s housing administrator, can come together so the city can have policy documents that complement and support each other.
“I like that I am seeing economic development and affordable housing — just housing in general — that those two groups are communicating with each other, and I want to continue to see that,” Sellers said. “… I think that’s the end game.”
Commissioners also recently approved a policy specifically for affordable housing incentives.
Mayor Brad Finkeldei and Commissioners Mike Dever, Sellers and Polian voted to approve the sales tax incentive request. Vice Mayor Mike Courtney voted against it.
Finkeldei said not all projects request IRBs, and not all projects would get them if they did.
“But this one, I think, given where it’s at, given the purpose of it, we want this project to come out of the ground as quickly as possible, and it benefits everyone to do that,” he said, noting that the Crossing will provide infill housing and serve the KU Innovation Park.
Courtney said he supports the project, but he voted against the IRBs because the city has specifically said it will give incentives for affordable housing and housing for older people. He said he’s looking forward to working with Carson and staff to see what the policy looks like going forward.
The development is estimated to cost about $104.4 million.
“The City’s cost-benefit analysis estimates the project-specific, one-time City sales-tax exemption at approximately $208,000,” according to the meeting agenda materials. “Actual impacts may be higher or lower depending on final eligible costs, where the contractor takes possession of the materials, applicable compensating-use-tax sourcing rules and actual purchasing activity.”
The developers do not receive TIF or CID reimbursements, Carson told commissioners.
See the complete meeting agenda item at this link.
Nearby, just north of the new Dillons grocery store, work is underway to develop additional retail buildings. Three confirmed tenants include CAVA, Playa Bowls and Jersey Mike’s Subs. Read more about that at this link.
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Mackenzie Clark (she/her), reporter/founder of The Lawrence Times, can be reached at [email protected]. Read more of her work for the Times here. Check out her staff bio here.
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