November 13, 2007

The Board of Commissioners of the City of Lawrence met in regular session at 6:35 p.m., in the City Commission Chambers in City Hall with Mayor Hack presiding and members Amyx, Dever, Chestnut and Highberger present.

RECOGNITION/PROCLAMATION/PRESENTATION:

Annual Service Awards were given to honor those City employees who achieved mile stones in years of service for the City.

With Commission approval Mayor Hack proclaimed the week of November 12 – 16, 2007 as “U.S. International Education Week.”

CONSENT AGENDA

As part of the consent agenda, it was moved by Chestnut, seconded by Amyx, to approve claims to 296 vendors in the amount of $2,367,214.74 and payroll from October 28, 2007 – November 10, 2007, in the amount of $1,728,150.79.  Motion carried unanimously.

As part of the consent agenda, it was moved by Chestnut, seconded by Amyx, to approve the Drinking Establishment License to Club Liberty, 642 Massachusetts.  Motion carried unanimously.

The City Commission reviewed the bids for an equipment building at the Wastewater Treatment Plant for the Utilities Department.  The bids were:

BIDDER                                  BID AMOUNT           

BA Green                                                        $125,629

                        Penny Construction                                        $136,350

                        GSR Construction                                          $163,800

As part of the consent agenda, it was moved by Chestnut, seconded by Amyx, to award the bid to BA Green, in the amount of $125,629.  Motion carried unanimously.             (1)

 The City Commission reviewed the bids for one (1) rough mower for the Eagle Bend Golf Course for the Parks and Recreation Department.  The bids were:

BIDDER                                  BID AMOUNT           

Van Wall Equipment                                       $17,168

                        Great American Outdoors                              $18,477

                        Turfwerks                                                        $21,000

Heritage Tractor                                              No Bid

As part of the consent agenda, it was moved by Chestnut, seconded by Amyx, to award the bid to Van Wall Equipment, in the amount of $17,168.  Motion carried unanimously.   

(2)

As part of the consent agenda, it was moved by Chestnut, seconded by Amyx, to approve a Reimbursement Agreement in the amount of $106,400 with Magellan Pipeline for gas line relocation at the airport to accommodate improvements to the runway safety area.  Motion carried unanimously.                                                                                                                         (3)

As part of the consent agenda, it was moved by Chestnut, seconded by Amyx, to approve the request to rezone a tract of land approximately 4.28 acres (Z-09-18-07), from RM12D (Multi-Dwelling Residential) and RS7 (Single-Dwelling Residential) to OS (Open Space) for Oregon Trail Addition and place on first reading, Ordinance No. 8206, providing for the rezoning of approximately 4.28 acres (Z-09-18-07) from RM12D & RS7 to OS.  Motion carried unanimously.                                                                                                                                (4)

As part of the consent agenda, it was moved by Chestnut, seconded by Amyx, to approve the request to rezone a tract of land approximately 5.792 acres (Z-09-20-07), from IL (Limited Industrial) to OS (Open Space) for Mary’s Lake Addition, Tract A and place on first reading, Ordinance No. 8196, providing for the rezoning of approximately 5.792 acres (Z-09-20-07) from IL to OS.  Motion carried unanimously.                                                                          (5)

Patricia Sinclair, Lawrence, pulled for separate discussion, the second reading of Ordinance No. 8195, allowing possession and consumption of alcoholic beverages on certain city property pursuant to the Bourgeois Pig Sidewalk Dining License.  She said it was troubling and a bad precedent to reward a business for failing to follow the ordinance.  It was a slap in the face to businesses that conformed to the City’s ordinances.  It appeared when reviewing City documents, the City did not issue a license to serve alcohol for consumption on the sidewalk to the Bourgeois Pig and the former owners which did not seem to be a valid reason for the previous owners to think they had a right to do so. 

Also, it was unclear who owned the Bourgeois Pig.  She said a search of the Secretary of State website showed RCJ, Inc. as a corporation from November 1993 as Charles E. Whitman as the resident agent.  It was the entity she believed was being referenced in the ordinance, but there was also a corporation called the Bourgeois Pig Inc. as Ryan Pope as the resident agent which existed since September 19, 2006.  To say that it was RCJ doing business as the Bourgeois Pig, she found confusing. 

She also wanted everyone to note this type had a license to serve alcohol and nothing was transferred with the sale, except for the business itself.  No liquor license was transferred with the sale and an individual must apply to the state on their own for a license to serve alcohol.  She said the new owners had to apply for a liquor license, but a license was not granted to corporations, but to individuals.  No license could have been granted to the Bourgeois Pig as such.  She asked Frank Reeb, Administrative Service Director/City Clerk, prior to the meeting, who actually was the liquor licensee, but he did not have that information. 

In addition to her general bad feeling about the precedent setting move and the fact that she had seen it happen quite often when there was no accountability when someone did not follow an ordinance and was caught, all they needed to do was follow the ordinance. 

She said if the new owners had a problem with the sale of the business, she said she suggested the new owners go back to the previous owners and try to get a better deal or be allowed to somehow undo the sale if the new owners were not happy with the terms of the sale.  She said people might be happy with the way the Bourgeois Pig conducted business in the past, but it did not give anyone any guarantees for the future.

She said she was respectfully asking the City Commission not to pass the ordinance on second reading; to ask for additional information and make that information public because no one had knowledge about who was the actual licensee or the contradiction in terms of the two different corporations that appeared to be associated with this endeavor. 

Mayor Hack asked Frank Reeb, Administrative Service Director/City Clerk, if he had any comments.

Reeb said he had checked the State Drinking Establishment License and the State Drinking Establishment License was issued to RCJ, Inc. doing business as the Bourgeois Pig.  Staff also had a list of the corporate officers of RCJ, Inc.  Providing a list of the corporate officers was one of the requirements for obtaining a state license as well as the City license.  It was his understanding a corporation could be a licensee of a drinking establishment and that was why one of the requirements for listing the corporate officers as part of the licensing requirements and was why the state did the background check on the corporate officers. 

Commissioner Amyx said in the discussions a week ago, the determination was made this body in 1994 and 1998 actually did approve that license for alcohol consumption in the sidewalk dining area.  He asked if the Commission approved a drinking establishment license that allowed alcohol consumption in the fenced area.

Reeb said that was unclear from the file and minutes.  He could not say for certain whether it was approved or not.  He could confirm that a drinking establishment license both at the state level and city level was approved and had been in issuance since that date, the licensed premises being only the structure itself.  It was important to note that RCJ, Inc., doing business as the Bourgeois Pig, if this ordinance was passed on second reading and was published and became effective, that licensed premises needed to report to the state and have their drinking establishment amended because the licensed premises would now be different.

Mayor Hack asked if they City Commission would like to defer this license approval for one week or approve the ordinance on second reading.

Commissioner Amyx said there was quite a bit of debate last week and he was ready to approve the ordinance.

Mayor Hack said it was important to remember there were a number of blanks noted as not applicable on that 1998 application.  The minutes from that meeting were inconclusive in terms of what was in front of the City Commission.  She said the City Commission realized this license approval was a unique situation.  She said the new owners were cooperating with the City since beginning this process.  She said while this was an isolated situation, it was not going to begin the snowball effect without some serious conversation. 

It was moved by Chestnut, seconded by Amyx to adopt Ordinance 8195 on second reading.  Aye:  Amyx, Dever, Chestnut, Hack, and Highberger.   Nay: None.  Motion carried unanimously.                                                                                                                                           (6)

CITY MANAGER’S REPORT:

David Corliss, City Manager, said staff continued to be involved in the training necessary for the transition to the International Codes and those codes were slated to come on line the first of the year.

Also, Dan Warner, Planner, and others in the Planning Department had been working on a redevelopment plan for the former Farmland property.  The City had an interest both as a neighbor and potential land use regulator.  The City Commission also indicated the City wanted to pursue acquisition of that property.  The revised draft No. 2 was available on the City’s website and would be discussed by the Planning Commission later this month.

He said Public Works staff had completed an update to construction specifications, which was a concern to previous Commissions and this Commission, to make sure those specifications had a good life and efficient use of resources. 

He said staff tried to receive a grant through K-State University to help the City with Integrated Pest Management which followed through with staff’s goal to move toward pesticide free and pesticide reduction in City facilities and City parks.  Staff was unsuccessful in receiving the grant, but staff was continuing to work and develop policies in that area.  Staff would keep the City Commission and others advised on their progress.

Finally, the Police Department provided a memorandum on their alcohol awareness campaign where they were involved in enforcing a number of alcohol related laws.                  (7)

REGULAR AGENDA ITEMS: 

Receive staff report on the approved Kansas Bioscience Authority-Deciphera agreements.

Mayor Hack said, as she stated in a previous meeting, due to financial interests in Deciphera, she was abstaining from the discussion and from the vote. 

Vice Mayor Dever presided over this agenda item.

David Corliss, City Manager, presented the staff report.  He said the City Commission unanimously approved the Deciphera agreements on October 23, 2007; however there were not adequate briefing materials for the tax refund provisions or adequate public discussion at that meeting.  He said a public discussion was held and all the Commissioners present discussed the various agreements, but did not highlight the tax refund provisions as part of that agreement.  He said the Commission discussed the entire agreement, particularly the tax refund provisions.  He said staff provided additional background information on those approved agreements.

One of the "guiding lights" of the City Commission’s consideration of this issue, over the past few months and weeks, was the city's financial commitment regarding that building in East Hills Business Park remained the same as what the previous City Commission approved on January 2, 2007.

He said on January 2^nd, the City Commission approved a Memorandum of Agreement with a number of different parties whereby the City pledged $125,000 a year, over ten years, to fund the bioscience work that the Kansas Bioscience Authority would coordinate in that building they would purchase. The City’s financial commitments were capped at $125,000 a year and were the agreements the Commission approved on October 23^rd.  That dollar amount remained the same which was an important aspect of this project.  The public resources that were going into this project, at that facility, had never exceeded that dollar amount the Commission approved on January 2^nd.  The financial commitments with the City and County are identical.  He said when the City was going to pay a certain amount for an employment award or going to have this responsibility, the same thing also held true for the county. 

The Decipera KBA Agreement the Commission approved on October 23^rd, was viewed as more favorable for the City than the agreement the Commission approved on January 2, 2007 from a number of important aspects.  The building in this case was going to be owned by a bioscience business.  Under the January MOU agreement that was unanimously approved by that Commission that had that same dollar amount, the Kansas Bioscience Authority was going to own that building and then seek out prospective bioscience tenants.  There was a strong hope there would be an important anchor as that tenant and hoped Decipera would be present which was publicly known at that time, but it was not guaranteed they were going to occupy even half of the building.  He said it was believed that ownership of that building was desired because that solidified Deciphera’s presence in the community which was an important goal for the City’s economic development. 

Several of the incentives were tied to employment numbers because this was the first time with an incentive package the City had a consequence to a company if they did not realize certain employment goals.  There was no discussion at this dais or any other dais about whether there was substantial compliance and it automatically happened only if certain employment goals were reached which was an important criteria for the agreement and was discussed on October 23^rd that there were important benchmarks for the company. 

The January MOU agreement did not have any performance requirements.  It was $125,000 a year for 10 years and a threshold cap for the construction build out of that facility where the City funds went to $1 million.  It went over that on a cost share basis with their other partners, but it was widely viewed those costs would meet that threshold amount to build out that facility because of the complexities and cost of building out a bioscience building.

If the Kansas Bioscience Authority owned that building there was a statutory exemption on that property and there would be no property taxes paid which was a concern to the Commission and they would need to work that issue out in some type of financial arrangement with the City’s future tenants.  There would be no property taxes paid on that building if the Kansas Bioscience Authority owned that building and used that building solely for public purposes.  The hope was they would have private tenants that would then pay part of the property taxes that would be due and owing on that building.  Whether or not those individual companies would actually ask for a tax abatement or not was not known and was a very strong desire on the Commission’s part that because they were putting money into the building, there would not be that request.  

It was important to note the Deciphera agreements indicated that in order for the City to provide for all those financial commitments, Deciphera must maintain Lawrence as its world headquarters and primary location for bioscience operations and must conduct substantial commercial bioscience operations in Lawrence. Again, this was an additional performance requirement in the agreement. 

There might be some question about the merits of Deciphera and he thought that was spoken to not only by what Deciphera provided, but by the review that was provided by the Kansas Bioscience Authority and, speaking with their money, indicating they thought it was worthy to make that investment as well.  It was a company the City’s economic specialist was familiar with and believed it was appropriate to place public investment in that facility.  

He said between Christmas and New Year’s Day of last year, there was a public announcement made by the Kansas Bioscience Authority, the Lawrence/Douglas County Bioscience Authority, City, County, and Douglas County Development Inc., who currently owned the spec building.  He said that announcement was the Kansas Bioscience Authority was going to purchase the building from DCDI and had a number of different commitments in that Memorandum of Understanding which was posted on the City’s website.  The Memorandum of Understanding whereby the City committed the same dollar amount it committed on October 23^rd, was on the City Commission’s agenda for January 2^nd and was unanimously approved by the City Commission with no public comment and no review by the Public Incentive Review Committee, no concern about whether or not that was a legal action of the City to make that commitment of funds.  He said there was no requirement related to any identity of the tenants or the number of jobs that would need to be produced for that building. There was a strong belief and it was well warranted that the Kansas Bioscience Authority, because they owned that facility, would aggressively seek to lease out that facility for bioscience tenants that would be worthy of occupying that facility, but there was no guarantee.  The property tax issue was a concern and it was a real possibility that once the KBA bought that building it would go off the tax rolls. There had been a number of events after that MOU execution.  He said Deciphera indicated an interest in becoming a tenant and that was not able to be worked out and Deciphera continued to want to grow in Lawrence and Deciphera sought to purchase the building.   

He said when Deciphera sought to purchase the building one of the things they knew was the consortium of all those different entities were willing to put in substantial funds to see that building be used for bioscience purposes.  They knew, for example, the City was willing to put in $125,000 a year in order for that building to be used for bioscience purposes.  He said when the City began negotiations with Deciphera to try and provide incentives for them to stay in this community and own that building, they knew the City’s total dollar amount going into that facility. He said they were beginning to come up with the appropriate agreement which was led by the City’s economic development partners. 

He said staff’s memorandum discussed Deciphera and pointed out they had 26 full-time employees and 3 full-time consultants on site.  He said in Deciphera’s letter, it indicated they were completely out of space.  In 2007, their average salary for employees was approximately $72,000 for a total payroll of nearly 2 million dollars.  The lowest paid employee earned $15.00 per hour, which was in excess of the current living wage requirement of $10.73.  All the Deciphera employees would receive health and dental benefits.  Again, Deciphera wanted to stay in Lawrence and the Commission had indicated the desire to provide the right incentive package to stay.        

He said it was important to realize the way the agreement was structured was the $125,000 a year did not all go to Deciphera.   A lot of that money went to the Lawrence Douglas County Bioscience Authority which either made a transfer to the Kansas Bioscience Authority or in the case of the tax refund, made a transfer to Deciphera.

There were four incentive packages in the total package of agreements.  There was an improvement grant that went toward Deciphera; an employment grant, which was only if employment thresholds were made; the tax refund, only if employment milestones were made; and the non-Deciphera elements of the funds that went to the Lawrence Douglas County Bioscience Authority where there was hope they could occupy an incubator space. 

The improvement grant said that the Kansas Bioscience Authority was going to provide to Deciphera $3 million for the acquisition and equipping of the building.  The Kansas Bioscience Authority was going to be reimbursed for 50% by the local partners.  The local partners were going to pay $1.5 million over 10 years for the improvement grant.  The City’s annual requirement would be $46,875, which over 10 years amounted to $468,750. 

He said with the employment award, the funds did not go to Deciphera unless the employees were there which was a substantial improvement over what was approved in January.  The KBA and the consortium each paid to Deciphera a one time total sum of not to exceed half a million dollars if they met certain employment goals.  The City’s contribution to the employment award was after 50 employees, $39,062 and that same amount after 100, 150, and 200 employees for a total amount of $156,250.  When adding up all of the capital money, equipping the building and the employment goal awards, assuming they grew to 200 employees, they would be in the top 20 private employers in the community, the improvement grant of $468,750 and the employment award of $156,250, the total equaled $625,000.  If adding the first two elements of the four incentive packages, that came up with half of the money the City committed to the incentive package and half the money the City committed to the building back in January.

He said all the property taxes were initially paid by Deciphera, but it was eligible for a tax refund to be paid for by the City, the County, the Lawrence Douglas County Bioscience Authority, and the private Douglas County Development, only if it met certain employment goals.  He said staff thought this was viewed as superior because the property would have been tax exempt under Kansas Bioscience Authority ownership until it was used for private purposes and those private purposes might have requested a tax refund as well. 

He said when discussing property taxes there were a number of moving parts which was the assessed valuation of the property which was based on the appraised valuation of the property.  Currently, the property paid $88,237 in property taxes which was based on a value of a little over $3 million.  The property was being bought for roughly half a million less than that.  It was thought, with some good reason, the appraised value would initially go down on that facility.  As the building was outfitted, the building value would grow over time.  He said it was important to note there were a number of milestones where they want them to grow and completely outfit the building.  He said as he attended the Bioscience Authority meetings, they had impressed on him that if it was a bioscience company with 67,000 square feet of bioscience industry, there would be a lot going on in a building that size.  They did not need a lot of warehouse space for the end product, to the extent they were even looking at an end product in this research and development phase of the company.  If they were able to employ 200 employees out of 67,000 square feet, it was going to be a very substantial part of this community. The property tax refund provisions did not affect the people that were not contractually obligated under the agreement and all of the money still went to the school district and no abatement of those taxes. 

He said he conservatively estimated, which meant he assumed they might need to pay more than they had to, that they would meet all of those employment milestones and there would be that tax refund gap.  He said he conservatively estimated it would be $15,000 a year that the City would need pay as a tax refund.  He said it was a significant amount of money, but in the scheme of trying to incentivize Deciphera, they thought it was appropriate, again with Deciphera knowing how much money the City had initially promised the Kansas Bioscience Authority the City would pledge for their outfitting of the building and their attraction of tenants to the community.  He said that left, in staff’s opinion, a substantial amount of funds left over for the non-Deciphera bioscience projects the Lawrence Douglas County Bioscience Authority would be proposing to the City Commission in future months.  Those funds would be allocated and recommended, after City Commission review and could include incubator space and other incentives to other bioscience firms as well.  He said this was an exciting industry and it complemented a number of strengths of this region and the University of Kansas. 

He said to recap some of the key provisions of the agreement, the total consortium commitment was capped at 4 million dollars over 10 years, the City’s amount did not change from what had been originally approved, but significantly, the earlier agreement did not require any employment numbers and it could have been possible the building could have sat empty and the City could have spent the money just to have it outfitted.  He said in this case, the public funds were only going to occur as the employment grew which was very important.  He hoped Deciphera exceeded their employment goals, but it was possible they might not and might not make all of those employment goals within that 10 year period, in which the public funds would be reduced.                       

He said Deciphera had to maintain their world headquarters in Lawrence, and their primary location for bioscience operations.  He said staff thought it was very significant there were agreements that did not involve the City and Deciphera acquired rights of first refusal for property around them which indicated Deciphera’s strong desire that was part of that package, to grow in Lawrence. 

Again, he said the dollar amounts had not changed since January and staff thought it was likely the public’s financial commitment would be less.  The employment award was new to the incentive package and there would not be any debate about whether there was substantial compliance or any of those issues about downturns in the economy. They only get those funds if they met the employment thresholds. 

He said it was important to contrast the property tax refund with the MOU that was unanimously approved and was publicly discussed as well as that the KBA was eligible and would seek a tax exemption for that property if the building remained vacant.  However, they were not interested in a vacant building and they wanted to get tenants in that building and there would be property tax consequences for that building and probably a pass through to those tenants.  Those tenants might have asked for an incentive package, but the Commission at that time said “no” the incentive package would have been the financial commitment that went with the facility. 

The incubator space possibility had existed with the Kansas Bioscience Authority, but there was no funding mechanism.  Funds were available through this agreement to enhance the opportunities for incubator space and other bioscience initiatives.                      

Gerry Cooley, City Attorney, said they were dealing primarily with a City ordinance that appeared in the Code of the City of Lawrence under 1-2130 (Other Public Subsidies and Industrial Revenue Bonds) which read:

OTHER PUBLIC SUBSIDIES AND INDUSTRIAL REVENUE BONDS.

A business receiving a public subsidy for economic development purposes, as defined by this section, that is not in the form of a tax abatement, shall enter into a Performance Agreement with the City and shall be required to comply with the wage floor and health insurance requirements of this ordinance.   A public subsidy may include the granting of public funds or a public good to a business for the sole purpose of inducing the business to relocate in Lawrence or to remain in Lawrence for economic development purposes.  Examples of a public subsidy for economic development purposes in the form of public funds or a public good, include, but are not limited to, the construction of public infrastructure for the sole benefit of a business, without a general City at-large infrastructure benefit; the donation of public land or the reduction of rent for the use of City land or a City building, the reduction or elimination of required City fees, charges, etc.  A public subsidy below an annual amount of $100,000 shall not require compliance with the provisions of this ordinance.  The provisions of this ordinance shall not apply to a business receiving industrial revenue bonds, unless the industrial revenue bond recipient is receiving tax abatement for economic development purposes.

He said the fact was there had not been proposed a tax abatement for Deciphera.  He said it might be a technicality, but as lawyers and judges who interpret the law, they dealt in technicalities which were the law and applicable facts that came before the body who was being asked to judge those facts.  The fact was this was not a tax abatement, but simply a tax refund.  He said Corliss spent considerable time putting together and presented the figures on what the City’s annual expenditure would be at a conservative estimate.  He said it was $77,500 per year over a 10 year period.  In addition to that amount to Deciphera, there were funds that went directly to the bioscience group for the development of further tenants to the City of Lawrence to engage in bioscience activities and possibly create incubator space which would be an incentive for new companies or other companies to relocate in Lawrence’s bioscience community.  The figures clearly showed that Deciphera, at the maximum, would receive $77,500 per annum over a 10 year period.   He said it had been said the City Commission in its actions in this matter failed to recognize what was required of the City Commission under the law.  The law said if it was less than a $100,000 annual commitment, the ordinance did not apply.  He said it did not in this case and under those facts.  In addition, if this business was successful at the end of the 10 years, the full load of the property tax would be the burden of the owner of the property at the time without contribution from any governmental entity.  They had numerous businesses in this community who more than 10 years ago received tax abatements who were paying full tax loads.

Lavern Squier, President and CEO, Lawrence Chamber of Commerce, said economic development was a team effort.  The City of Lawrence, Douglas County, and the Chamber of Commerce for years comprised the funding units to the economic development effort and hence, became the “team”.  As the Chamber, they had worked with this project in a team oriented manner along with their partners.  Their partners in this situation had grown.  The consortium in this case was a unit of entities acting as team members which were the City, the County, the Lawrence Douglas County Bioscience Authority and Douglas County Development Inc., which was a private group focused on East Hills Business Park development. 

It was important to take a second look at who was Deciphera.  Economic Development was discussed sometimes in the abstract and in this case, this was a specific local company, they were trying to incent to stay here to grow and prosper.  If taking a moment to think about the types of jobs to look forward to and were currently realizing with Deciphera, that those were great jobs and jobs they had aspired to in conversations, i.e. high paying jobs in the community. 

Deciphera currently housed 26 full-time equivalents or FTEs, which included three full time consultants on site.  Second, the Deciphera average salary for employees in 2007 was approximately $72,000 for a total payroll of nearly $2 million.  The lowest paid employee was paid $15 per hour, well in excess of the current living wage.  All the employees received health and dental benefits.  He said Deciphera believed they had made a positive impact in Lawrence and were poised to make a bigger one in the next few years.  He said Deciphera was out of space and stated for future successes, they would require further significant expansion to house 200 employees.  Deciphera’s needs were immediate and absent the package of economic incentives being offered, the company would have an obligation to look elsewhere, outside of Lawrence in particular.  There were not that many building choices or opportunities for Deciphera in the community.  However, they had been solicited by communities outside Lawrence.  Deciphera and the Board of Directors wanted to remain in Lawrence if possible and the economic incentives were essential to that decision. 

He said the $72,000 average annual income was an average wage and Deciphera did not dissect the employees currently or the 200 employees.  However, Dan Flynn, President of Deciphera, mentioned in a Chamber luncheon, the 200 employees would be comprised largely of PhD scientists, so he did not expect the average wage would decrease.  He asked in looking at the wages, he asked what type of house a $72,000 annual income would buy.  If that was a one income purchaser of the house, the purchase price would be $210,000 to $220,000.  If adding one other income, based on the average Lawrence wage from 2006 of $29,875 with the other income, the purchase of the home could go as high as $400,000, which assumed a 15% down payment. The property taxes for the $210,000 price example, those taxes would be $150 per month, $1,800 per year and at the City’s portion, he estimated a 23% intake from a tax stream and the property tax total would be $414.00 per employee and for the one income buyer example, times 200 people, a Deciphera target employment achievement level would yield the City $82,800 a year.  The point was those jobs did add value to the community. 

He said this deal was about retaining a great small company in the community that had great growth potential.  As other companies had been helped in the past, which had paid off well, they were trying to do the same for this company. 

He said at the July 2007 annual meeting of the Bioscience Authority, Deciphera was called the best bioscience opportunity in the State of Kansas which was why KBA and their Board of Directors had felt compelled and supportive of Deciphera to the tune of investing dollar for dollar along with the community in terms of public funds.  He said their fund consortium was matching KBA’s money. 

The time, complexity, and scope of this project was very notable and there were seven contracts involved, in fact three contracts were signed off on by the City, four contracts for the County and the other contracts were document references for the agenda item on October 23^rd, in both the City and County’s case.  Those seven contracts covered issues of building purchase, right of first refusal on future property should the growth potential of the company be realized and they needed that adjacent property.  It covered the tax refund issue, the employment grants, the claw backs and a multitude of items.  There were six entities involved in those agreements and all went back to the MOU that was approved on January 2^nd.  This project was over one year old.   The City did not transact directly with the company at all.  The City’s contact was directed through one of the consortium members, Lawrence Douglas County Bioscience Authority which was the same as the County and DCDI.  LDCBA had the conduit responsibility to make two payments or two obligations to the Kansas Bioscience Authority and Deciphera.

Deciphera was required to pay 100% of the property taxes due annually to all taxing units.  The school district was not in this deal and they would receive 100% of their tax stream.  The company’s performance relative to employment levels and other requirements had direct impact to garner support as the City Manager mentioned. 

There were numerous standards in the document that they usually do not yield for.  Deciphera was committed to a gross scenario that was referenced throughout those documents.  Deciphera was willing to commit to those performance standards. 

Commissioner Highberger asked if they were going to address the public’s concern of conflict of interest and public meetings.

Cooley said it was a matter that was in the hands of the Attorney General at this time.  He advised, as the City Attorney, to let that process play out by the investigation of the Attorney General.  He did not think this was the appropriate forum to discuss those issues while it was in the Attorney General’s hands.

Corliss said he could discuss the issues related to placing the items on the consent agenda. 

Commissioner Amyx asked whether all the information outlined in the memo was included in those agreements placed on the agenda on October 23^rd.

Corliss said the agreements did not change.  He said staff found out on the Thursday before the 23^rd of October, the agreements had been finalized and Deciphera was seeking a City affirmation by November 1^st.  He said Squier put together a briefing memo that discussed some of the agreement aspects.  All of the agreements including the exhibit that included the tax refund options were included in the packet.  The information was present, but the comprehensive explanation was not.  The County Commission had the exact same information on their website and what was presented to the County which was not a defense, but the actual fact they had the same information as well. 

Commissioner Highberger said he would like to go back to his original question and would like to know how this issue was placed on the consent agenda.

Corliss said he received the e-mail from Squier indicating that it was going to be on and he forwarded it to the City Commission.  Squier suggested it be on the Consent Agenda, but it was his decision to place it on the Consent Agenda.  He saw this issue as a continuation of what had been approved in January.  There was a strong desire to keep things off the October 23^rd regular agenda because the South Lawrence Trafficway was going to be discussed.  He said those were reasons and not excuses.  He said that was why the decision was made to go ahead and put that issue on the Consent Agenda.  He followed protocol and confirmed that decision with the Mayor.  He said Commissioner Highberger sent an e-mail on Monday saying he was surprised this issue was on the Consent Agenda because of the level of financial commitments and decided to place the item on the regular agenda where, in retrospect, the item should have been placed all along. 

Vice Mayor Dever asked about the original agreement, including the funding that was approved and whether it was done with Deciphera in mind. 

Corliss said the City, County, the University of Kansas, and the Chamber of Commerce created the local Bioscience Authority with the strong desire to retain and recruit bioscience industry to Lawrence and Douglas County.  The Bioscience Authority had been funded $200,000 of public funding for several years.  The state created the Kansas Bioscience Authority similarly to attract bioscience to the entire state.  They had a funding stream that allowed them to make incentives in a number of different avenues, including something similar to this or providing funds that went to a company, or in this case, use of the Spec Building that had been there for a number of years.  They used that building as the house for the Kansas Bioscience Authority to have tenants.  They hoped Deciphera would be an anchor tenant, but the agreement was not consummated based on any promises that Deciphera would be the anchor tenant.  There were other possible tenants as well. 

Squier said he would like to add one observation.  He said it was during this phase of the MOU that they agreed to the principles based on the KBA owning the building and collectively their funds would be used to acquire the building, improve the building, and put the building to use as a bioscience incubator.  Deciphera was thought of during those times, but not directly linked to the MOU.  It was KBA’s interest, as purchaser of the building, to get an anchor tenant as quickly as possible.  It was their pursuit of Deciphera following the signing of the January 2, 2007 MOU that led to these discussions.  It was the spring months the discussion accelerated and as Kansas Bioscience Authority staff assigned to this project changed from Clay Blair to Bob Thorton, that project went through some degree of time delay with a hand off, which led them into the summer months.  KBA’s interest was to get an anchor tenant.

Vice Mayor Dever asked when the City Commission approved those funds, it was speculative in nature and they were willing to put this money forth with no tenants or signed contract and simply build the space and hoped they would come.

Squier said it was speculative in the context of having a specific tenant involved.  It was not speculative in the context of its purpose.  The Kansas Legislature created the Kansas Bioscience Authority, a multiyear commitment and one of the largest ever in the State of Kansas as an Economic Development initiative.  They mirrored that creation on a miniature level with the Lawrence Douglas County area creating their own bioscience authority.  The merger of those two in that MOU was to carry out mutual missions of bioscience improvement and enhancement in Lawrence and Douglas County and the State of Kansas.  They also knew the Kansas Bioscience Authority, at that time, had entered into an agreement with the City of Olathe and the acceptance of land being donated to KBA and some being given back to Kansas State University, and the balance being kept for bioscience promotion purposes and further Kansas Bioscience Authority using their state funds to build an incubator in Olathe.

Commissioner Chestnut said going back to the original MOU, when Cooley talked about the $100,000 exemption, which in this case complied with the most recent agreements because that money was essentially split between Deciphera and the other incubator development, but in the MOU it was unclear because that commitment was $100,000 that went directly to the Lawrence Douglas County Bioscience Authority.  He asked if there was any discussion, at that point, about that exemption.

Cooley said he was not involved in the initial negotiations or discussions, but the annual payment by each member of the consortium went directly to the Lawrence Douglas County Bioscience group and it remained the same as it was in the beginning.  The structure of the transaction, from the time the initial MOU changed from a purchase by the state bioscience authority of the property and then trying to find a tenant or buyer of the property, late in the game changed to where Deciphera decided to purchase the property out right, with the assistance of the members of the consortium, but their contribution did not change at all.  The $100,000 exemption would have applied under any circumstance absent Deciphera’s request for tax abatement.  If tax abatement was involved, which was not something the City Commission wanted to do, but if it had been involved his presentation would not have been helpful or necessary.

Commissioner Chestnut said versus now the definitive agreements which really did have much more granular allocations where Deciphera and the bulk of it going to incubation where in the original memorandum of understanding it was all money going to the state.

Corliss said the money was going to the State Bioscience Authority.  It was not going to a private business.  The ordinance provisions that Cooley was reading from applied to a direct grant from the City to a private business.

Commissioner Chestnut said they made that allocation which was in excess of $100,000, because it went to a state agent.

Corliss said they had to look past the form of the different allocations.  The money that was talked about with the MOU was going to the state hoping they could pass those savings to the tenant.  The Bioscience Authority was not in the business to make money.  They were in the business to attract and grow the bioscience industry, which was the same with the local bioscience authority. 

Vice Mayor Dever called for public comment.

David Smith, Grassroots Action, said at first, second, and third glances this could appear to be quite a complicated issue.  The City Manager, the City Attorney and the CEO of the Chamber of Commerce have given them a lot of complex detail.  He said when scraping away the detail, one issue stood out, which was the discussion that led to this decision took place exclusively in private, behind closed doors, without public input or review which was wrong.  It was a violation of the public trust and democratic principle.  He said it was a technical and a substantive violation of the Kansas Open Meetings Act.  Public policy was supposed to be discussed in front of the public.  The City Commission was obliged to live up to that principle and Commissioners were not authorized to give unannounced tax breaks to private firms without citizen oversight and review.  He said the attempt to explain tonight some of the reasoning and process that went into this decision was in some respect admirable, but an attempt to explain did not correct an error.  There was a violation of public trust that must be remedied.  The remedy was not an explanation, but a solution and the solution was to rescind the decision.  It was mistaken because it was adopted without public discussion.  Decisions made behind closed doors should not stand.  He called upon the City Commission to reconsider the decision which might have been made in good faith, but it was the wrong decision by law, by principle, and for the City of Lawrence. 

He said he wanted to address a couple of other issues that had been raised.  A good deal of what had been said by the speakers focused on the issue to the extent it might be in some sense a continuation of a decision that was made in January.  He wanted to show some skepticism from that claim.  A couple of things distinguish the decision made on October 23^rd from the decision made in January.  The refund was now being given to a private firm that was never mentioned in January.  That was a huge difference for a community that has for years discussed how to give tax breaks to firms.  There was a tax abatement task force of 20 members appointed by the City Commission that met for a year and a long public discussion that led to a decision.  He said this City had a tax abatement ordinance, a Public Incentive Review Committee that was supposed to review requests for tax subsidies. 

A second feature which distinguished the October decision from the January decision was in the intervening time, the City had been coping with what it described as a budget crisis.  In the aftermath of the April election, the City Commission had been repeatedly coping with what had been portrayed as a serious budget shortfall.  Just last week the City Commission was contemplating the possibility of putting a sales tax proposal on the ballot which would raise the sales tax in Lawrence 7% to address the budget shortfall.  A decision to give a private firm a 10 year multimillion dollar break with an annual contribution from the City in the vicinity of $125,000 and more was something that should not be taken lightly.  This City Commission cut the budget of about two dozen social service providers in the City of Lawrence this year by 4%.  Two dozen of the front line providers of services for the poor and needy had their budgets cut.  In order to realize a savings of about $65,000 total and now on the basis of a decision made without discussion, a private firm most of them had never heard about before this process was being awarded $125,000 a year for 10 years.  He did not say that decision was wrong, but that it was not discussed.  A great deal of what had been said tonight addressed possible positives about Deciphera.  Many positive things had been said.  The City had a process for evaluating claims of that type.  Requests for public incentives went to the Public Incentives Review Committee and there they were subjected to careful scrutiny in the form of a cost benefit analysis the City used for all requests for a public incentive.  This request might pass that test, but if they did not apply the test and submit the proposal to the Public Incentive Review Committee for a formal scientific impartial cost benefit analysis, no one would know.  Much of what was said sounded plausible at first hearing, but this was first hearing.  He called upon the City Commission to rescind the vote, to go back to the drawing board, apply the standards the community used in the past after long deliberation and see if this request had merit.  They would not know unless they applied proper review.   Discussions made without public input or decisions made where the public input came after the vote should not stand. 

Gwen Klingenberg, Grassroots Action, said it was nice the Bioscience discussion happened in the past, but this was about closed door discussions with a specific group with the Chamber of Commerce present.  She had a grave concern about precedent with this tax refund and incentive package and the way it was created.  First they were telling the residents of Lawrence that they would be paying taxes four times for this project, yet they did not invite the community to the discussion.  What she meant by taxpayers of Lawrence paying 4 times:  1) the City would be refunding money, which was taxpayer money; 2) the County would be refunding money which residents of Lawrence also paid, the Lawrence Douglas County Bioscience Authority would be refunding money, which the residents of Lawrence fund through their City taxes and County taxes, which made three and four times the residents of Lawrence would fund this project.  No one could tell her who funded the Douglas County Development, Inc. so there could be more taxpayers’ monies involved and yet they did not think the taxpayers were stakeholders in those discussions.  Second, the City Commission were telling the residents that they would not only have the right but the precedent to create policy behind closed doors and give their hard earned money to whomever they chose however they chose.  As they all knew, once Lawrence set a precedent of ignoring their process, they must continue to follow the new set course to be fair to all other businesses.  They needed to try and be fair to the taxpayers of Lawrence.  The taxpayers were footing this bill, but were not part of the team Squier proudly talked about.  A tax refund was not in their policy toolbox and the original discussions last January did not talk about a tax refund.  They needed to not only be business friendly but taxpayer friendly.  The taxpayer had every right to require being involved in the development of a new policy.  She believed there was a war for the right to be involved in their government’s decision about the use of their taxes.  There was never a time or place or business so special as to ignore transparency and proper public process and was never appropriate to preach to the residents their excuse for avoiding that process.  They asked that the City Commission follow the approved processes and ask the City Commission to start now.

Louise Hanson said in a recent Journal-World article, Commissioner Highberger acknowledged he might have dropped the ball by not requiring a cost benefit analysis and other standard procedures of review for the Deciphera tax refund.  This error in judgment must be shared in full measure by the fellow City Commissioners.  Yes, the ball was dropped, but by the entire City Commission.  Serious mistakes were made that at the very least could be assessed as both ill considered and careless.  Worse than that, was the setting of City tax policy in executive session where the people could not see.  Taxpayers were being forced to fork over millions in precious city revenue with no adequate explanation of the grounds on which that policy was adopted.  Furthermore, citizens were denied representation in a process where they had a considerable stake.  She said the responsible next step when something like this occurred was righting the wrong.  The tax refund agreement along with related incentives must be reconsidered in the light of day where the people could watch and comment.  Only that result would restore the public trust in Lawrence’s city government.

Kirk McClure, member of the Public Incentive Review Committee, said they were all very happy Deciphera had chosen to come to Lawrence, Kansas.  Their concerns were not with the firm, but with the failed leadership they were confronting in economic development.  The decision on this was made in executive session.  They all knew they were not confronting litigation on this matter and were neither buying nor selling real estate.  They did not own this real estate nor would they become the owner on the real estate, so none of the conditions necessary to justify executive session were present.  They were told by the Chamber of Commerce that this was a team effort.  The City Commission and staff were appropriately present at the executive session, the Chamber of Commerce was present by virtue of the fact it was hired by the City to do work, but found it questionable because they were advocates of business and not for the interest of the city.  The Mayor was also present and admitted she participated in this meeting and also admitted she had an equity interest in Deciphera, so in fact the ownership of the party they were negotiating with was present in the executive session.  There was no confidentiality from the other side if the other side was in the room.  He said the only people excluded from the executive session were the taxpayers.  Apparently they were not part of the team.  This was a crisis in leadership.  They did not have skilled economic development planners on City staff and this was part of the reason why they had gotten into the problems they were in.  While the Chamber of Commerce might be highly skilled in marketing the City to firms, it clearly lacked the skills necessary to package those deals and put them forward to the City.  There was no greater evidence of this than the tax abatement problem.  Despite overwhelming evidence, tax abatements, tax refunds and rebates, the tax incentives did not influence either the expansion or location decisions of firms. They were too small of a percentage of their total revenues. 

The City Commission was told that many firms have graduated from their tax abatement and were paying full taxes.  He said that was not the case and 17 firms have been granted tax abatements in this town and in evaluating them in terms of the jobs and wages they produced; only six had met or were now meeting their promised jobs and wages.  Eleven were either out of compliance, out of business, or flat out left town.  The record was pretty unimpressive.  What that stated was the City was successful about 35% of the time, noncompliance occurred 40% of the time and complete failure of the firm 25% of the time, so two-thirds of the time this did not work.  A well run economic development program would not have those kinds of failures.  The City Manager told them that in fact they would have automatic enforcement.  He sat for years on the Public Incentives Review Committee and for years he fought the Chamber as it resisted every effort to improve the reporting requirements of the firms.  It resisted every effort to enforce the terms of the tax abatements.  They had a situation where non compliance was routinely ignored and brushed under the rug.  He asked the City Commission what they were going to do to correct this crisis in leadership. 

He said the staff memo left many questions unanswered and came out after the fact.  He asked how the purchase price of the building was determined. He asked how they really knew if it was really worth this price.  He asked the full history of this building.  By his count, he knew three layers of subsidy that had already been given to this building.  He asked how many times they would ask the taxpayer to continue to fund this.  They were now giving an amount of money to a local organization, the local Bioscience Authority and it included among other things the capacity to abate taxes to private firms.  He asked if they were devolving their tax abatement process down to an organization other than the City Commission.  The agreement said the City Commission would have an active voice in it, and could not imagine a time when the City Commission did not control whether or not abatement was given or any other type of tax incentive was given to a firm.  He said they were told in press reports that they had to move quickly because they had competing communities.  The Kansas Bioscience Authority was a state agency and among its various duties was to see that they have no competitive bidding war between Kansas communities.  If there was, they had a crisis of leadership that went beyond this community and had to worry about who was running the Kansas Bioscience Authority.  They had a problem and it had to do with the leadership and economic development.  It reached ahead on this one because of some grievous mistakes about the way this decision was made.  No one was criticizing this firm and was happy in fact that the current agreement seemed to show some strengthening and improvements over the prior one.  He asked if this was the way they would continue to operate.  He said they have become the laughing stock of economic development in the Midwest.  This was a town known for giving things away and enforcing nothing.

Laura Routh, Lawrence, said she wanted to applaud the City for the employment goals, which were part of this rebate that had been established.  She understood they were binding, which was a good thing.  The abatement process currently was overly forgiving, as had been indicated by the previous speaker.  Adherence to the conditions of abatement should be presumed for all recipients.  It did not make sense to her that they would not require them to adhere to the conditions upon which their tax dollars were being granted. 

She was disturbed by what had gone on with this issue.  Violation of open meetings laws, back door votes without soliciting public input, failure to file financial interest disclosures.  She had been a public sector employee for over a decade and that in her opinion was so egregious to really take her breath away.  Worst of all, it seemed like the body politic, the City Commission, staff, was surprised the citizens were questioning this process and the outcome.  They were inferring the citizens were not smart enough to comprehend all the complicated details of this measure.  She said that was really insulting.  It was their job, they were the taxpayers.  They were supposed to watch and question and that was what they were doing because it was their money.  She feared that somehow the City forgotten that and it was the taxpayers’ money they were giving away.  All the while, they were telling them there was no money for sidewalks, busses, homeless, libraries, or schools or any other urgent need the community had.  In regard to Deciphera, the deal that was drafted might be a great thing for the City, but she did not know because they were not privy to the process where the deal was made.  She thought the manner in which the rebate had been constructed was unconscionable.  That alone spoiled it for her and a lot of other people.  It made the whole process look rotten.  There was a larger issue and caused her considerable discomfort.  She said individual Commissioners who have invested financial interest in a business should not be participating in any way in processes that award public dollars to that business.  That was wrong and it appeared to be what happened here.  She thought it was incumbent upon the City Commissioners to ensure that it did not happen. She thought this situation had brought into question the validity and credibility of every tax abatement this City ever awarded, which was a shame.  She hoped they could look at it as an opportunity and not a crisis to reform the process by which they award financial incentive to business they want to come to this community.

Patricia Sinclair, Lawrence, said one of the things she found disturbing was in all the documents, news reports and public comments, she did not see anything talking about the legal entity that was Deciphera at this point and time.  It had changed.  It was not a corporation, but an LLC, a Limited Liability Company, not a corporation.  There was a very big difference.  It was once a corporation, but was no longer.  She did not know all the ins and outs of this, but what she understood to be some general statements about an LLC were they did not issue stock, the investors were called members and their identity was a secret.  She said they did not have to tell who the owners were.  They found it increasingly when they had projects and real estate deals that came before the City Commission, they did not know who was making money from them nor had a financial interest.  They might not pay taxes as a company.  The discussion tonight centered on property taxes.  One liked to think that businesses had other forms of revenue they generated that went into public coffers other than a property tax, again a general rule for LLCs.  How they work their profit in general was excess money, or profit, went to the individual investors who were called members.  It was not like a company where they figure out profit and loss and then pay tax on their profits.  Those individual members declared it income on their personal income tax, so that possibly was a source of revenue depending on how their personal income tax statements worked out.  The personal liability of a member or investor was limited to the amount they invest.  If she put $5,000 into an LLC the most she was going to lose was $5,000.  An LLC could be dissolved under certain circumstances, the death of a member or other circumstances.  Unless there was a very specific legal document that was approved by the members of the LLC there was no accountability or legal need for them to follow a legal agreement with the City or others.  Whatever Corliss and others prepared was much too complex for her to know whether or not it was addressed, but they had seen other things where the City had made deals with people or regulations about how they would do housing, and come to find out they were unenforceable.  She said it was not a corporation and did not know if they could do what they said they were going to do or if they could pack up and leave if it did not go the way they wanted it to. 

Obviously limited liability was the ticket here.  Investors could put their money in and knew their liability as an investor was limited.  It had big tax advantages.  She asked if it was advantageous to the City to do this kind of business with an LLC as opposed to a corporation.  She was thinking no, but she could be wrong.  They did not know the structure of this LLC and unless Corliss had access to information which had been willingly disclosed by the LLC, they did not get to know.  They could choose to structure their management and so forth in various ways. 

She wanted to give a couple of names she picked up about historically as to who this group had been.  She also wanted to say the letter from Dan Flynn that was displayed, he mentioned a Board of Directors and he called himself the President and CEO.  It could be LLC’s could structure their management like that, but did not think they had a board of directors.  Even in the lingo, they were still being given the impression they were a corporation.  They were told by the Chamber of Commerce that Deciphera came from Boston.  She did not know if it existed in Boston under that name.  She said Flynn was associated with Millennium Pharmaceuticals in the Cambridge area.  There was a Deciphera Inc. in 2003 and that was no longer active.  The Kansas Secretary of State website showed that if someone did not file an annual report after a certain amount of time, then they lost their status for failure to timely file an annual report. She said June 24, 2003 a group called Biochenomix Inc., previously known as Deciphera, Inc.  It was not organized in Kansas, but organized in Delaware which was a real tip off because Delaware was one of the few states that had laws that were extremely friendly to business and not friendly to those who did business with businesses.  Many people choose to incorporate in the State of Delaware.  They failed to file a timely report and their status was forfeited.  Back in October 31, 2003 they had the same name, Biochenomix, LLC.  She asked who they were and how they related to the group they were talking about today.  She said she wished she could find out, but it was private.  On October 23, 2003 they had Deciphera Pharmaceuticals, LLC in Kansas Secretary of State Office and apparently that was the entity they were talking about today.  She said there was a reason they changed to an LLC and suspected it was not to help them out and make the best deal for the City of Lawrence.  She hoped they would be willing to reveal the members names and more about their organizational structure.  She thought it would be a sign of good faith and asked that the City Manager and City Attorney examine carefully any documents they were signing and making those guarantees and be certain an LLC would have to honor these and the appropriate people signed off on this.

David Holyrod said he wanted to go back to 1985.  Wilma Miller owned the farm where the East Hills Business Park was located.  It was the era of Bill Chestnut and they were all civil and helped people.  He said those were people that were committed to their ideas and principles.  He said Miller sold that farm and the County taxpayers bought it for $750,000 in three installments.  She forgave the interest on two of the installments and did not feel the taxpayers should pay anymore.  She had regrets about selling it, but her hope was it would provide a place for jobs for the young people in Lawrence to stay in Lawrence.  It was not quite what happened through the years.  She died and gave most of the money away.  She did not personally benefit from it.  He said 22 years later they had land that was free, a development corporation that was private that obviously someone was making money.  He thought over this period of time, that $750,000 should have been recouped into a fund for future industrial development land.  Now they had businesses coming that paid no taxes.  They had free land and someone building buildings making money, but the taxpayers keep footing the bill.  He said if Miller were alive, she would be at the meeting and be upset.  This town had gotten greedy.  He said he did not know what they were going to do about this, but something needed to be done because they should not be asked to come up with more money on industrial development land until some return came out of that park.  This company would not provide jobs for the young people.  He said he wanted to know how many people who worked at Deciphera were going to live in Lawrence.  If they were not going to live here, then it was a bogus argument.  

Ron Warmon, Jr., Lawrence, said he thought it was wrong the Mayor was not present.  She had a couple other things where she had to recuse herself and sat in the meeting.  He said she did not want to face the public because it looked really bad.  He said he took offense to something Vice Mayor Dever said in the Journal-World about jobs like Deciphera had to offer were the jobs they wanted, and did not want knuckle busters. 

Allan Hanson, Lawrence, said the session this evening was advertised in the newspaper as an opportunity for the citizens to ask questions and hopefully have answers from the City Commission.  He said obviously a decision about tax relief in a way that had never been used before in this community was a policy decision.  He asked if the City Commission believed they were responsibly discharging their obligations to the community by making such policy decision in private. 

Dave Strano, Lawrence, said he felt this body had been getting a lot of heat tonight and a lot of anger, which he thought came from an understandable place, but wanted to offer a thank you.  For years he argued that representative democracy in the City was a joke and this was the biggest example of that given to date and showed a lot of people the truth of the City.

Hilda Enoch, Lawrence, said the City Commission and Mayor went about this issue wrong, but thought their intentions were good and positive.  She thought that all over the state there was a great deal of excitement and there was a way they could do this and bring people along.  She said that was what they neglected to do and rightfully people were upset the City Commissioners did not bring the public to the table, let them find out about it, and be cheerleaders for it because she thought it was a very good and needed program.  She thought it would keep their kids in Lawrence and something they could be proud of, but the City Commission pulled the rug out from under the public and had to go back and bring the people along.

Commissioner Highberger asked if Corliss would answer the question about LLC’s.

Corliss said limited liability corporations were a lawful form of conducting business within the state.  He did not know of anything that concerned the City’s review of that structure.  Their contract was with them and a number of other entities that had a legal ability to contract and thought they would carry through with that.  He did not see a concern with that but would talk with Sinclair further and get additional information. 

Commissioner Highberger said he wanted to apologize because he did not fulfill his responsibilities as a City Commissioner.  The way he believed he failed in his job was while he asked that the item be removed from Consent Agenda when it did not get a full presentation at the October 23^rd meeting, he failed to ask the questions or demand it be explained fully.  There was no excuse for that.  He wanted to address some of the other issues raised, but his attorney advised him that he could not. 

The reason he was willing to vote for this abatement the first time was the amount committed by the City was less than the amount approved by the previous City Commission at its meeting on January 2^nd with more protections in place.  He said something like this should be reviewed by the Public Incentive Review Committee, but there was no current policy requirement.  He thought their should be a cost/benefit analysis for every public subsidy and PIRC review would be for every public subsidy and he would like to work toward that in the future. 

He was not sure if there was a policy change, but he thought this was a good deal for the community. He was told there were 200 people who drive from Lawrence to bioscience jobs in Kansas City every day.  If they could keep half those people in Lawrence, it would be a benefit to the community.  He could not prove that it would be a benefit because they did not have a cost/benefit analysis.  He was not ready to rescind the agreement, but suggested considering referring this matter to the Public Incentives Review Committee for review and have it come back to the City Commission.  If PIRC found the agreement was not in the public interest or they received a negative recommendation from the Attorney General, the City Commission should revisit this item, but he was not ready to rescind the item at this point.

Commissioner Amyx said the issue of the spec building came into play last September and he thought it was important to use buildings that already existed.  He said they had the opportunity to work with other agencies from the state, county and local bioscience authorities to look at that building.  It was announced on December 28^th this item would be on the City Commission’s agenda to discuss the commitment to the spec building.  The item was placed on the January 2^nd agenda and was approved with the commitment of $125,000 for 10 years.  He said it was important when looking at the bioscience industry, in Lawrence, to provide a space to accommodate that particular type of business along with incubator space for new businesses in that industry.  He said he was not ready to rescind this item.

He said he wanted to make sure taxpayers were always part of the process and believed he and his colleagues represented taxpayers very well.  Comments were made about blame over the last three weeks and who to blame.  He said he would take the responsibility on this particular item.  He said Commissioner Highberger was the most honest person he knew and he wanted the public to understand every item that came along.  He said Commissioner Chestnut and Vice Mayor Dever were still relatively new to the Commission and did not have the years of experience he had.  He said on October 23^rd the Vice Mayor asked if any member of the City Commission had any questions and he believed his questions were answered and the taxpaying public’s concerns had been met. 

He said Deciphera was performing incredible work in cancer research.  He said the Commission had made good decisions and would continue to make those decisions and he was ready to help in any way he could.

Commissioner Chestnut said he did not think he should take a free pass on this item.  Obviously, there was a need for process improvements in the way the Commission approached a number of public incentives. 

He said a second issue that needed to be discussed in a public forum was the process upon which the Commission decided what was qualified for executive session, who, what and where.  He said that was something that was important for the City Commission to be educated about again and a discussion they needed with the public as far as why, what circumstances apply, and when those things were happening.  He thought it was an important discussion to have and executive sessions were not unique to this Commission.  He said it was important for them to have that dialogue as to why that was being done.  He thought it was an agenda item going forward as far as education.

He said from a process improvement standpoint, there needed to be a very broad discussion about public incentives.  He said it was clear the Public Incentive Review Committee applied to tax abatements.  They were starting to move into a lot of other types of financing arrangements that needed to be explained.  Those were the type of elements coming up in discussions and needed to be part of the tool kit, but they needed to have a process. 

He said he agreed with Commissioner Highberger that they needed to get their hands around the cost/benefit analysis process.  He said he did not know if he agreed that all of that information should go in front of PIRC, but they needed to have a discussion about how to move forward. 

He said it was clear that ambiguity invited suspicion and that was what happened in this case.  The fact was they had ambiguity in this situation as far as what was happening and it created suspicion.  He thought it was unfortunate because it was a tremendous opportunity for the community.  He thought they had to go back to who was Deciphera.  Deciphera was a company that if they were to go out and look at the opportunities they had in this country, it would be a company they would want in Lawrence, Kansas.  Not only because of the economic development opportunities but also because of what they represent which was a development company in biosciences trying to cure different cancers.

Commissioner Amyx talked about the fact people had been touched by it.  There was a person who made a comment during public comment and mentioned his father, who he lost to cancer 16 years ago.  He considered it a great opportunity to be associated with an organization that would lend itself for cures for those types of diseases.  He said they had to take that into consideration, but it did not skirt the process issues or a lot of things they were obligated to do as elected officials, but moving forward it needed to be worked on. 

He said he was working with a reasonable expectation that they had a Memorandum of Understanding and a commitment the city made to biosciences.  He thought it was the right commitment to make in January and right commitment to make now.  One of the things to be clear about was the Memorandum of Understanding committed the City to a minimum of $100,000 a year for a minimum of 10 years.  That minimum commitment was now more than half as small as that.  What they had now was $46,000 a year and a lot of the incentives get paid if there were deliverables happening in employment.  He said when talking about budget considerations those were important, because unless they had performance of the organization, it more than halved their commitment to the budget in 2008.  In some ways, this agreement moving forward helped the City if they did not have significant movement in employment or additions to the building.  The fact was the minimum commitment was going to come out of the 2008 budget which would be less than half than what was budgeted.  He liked the idea the company was willing to step in and buy the building, reaffirmed the commitment to the community, and was a huge opportunity.  He said he had no inkling to rescind this item at this point and time, and he was very satisfied with the outcome, although the process was flawed.

Vice Mayor Dever said he first wanted to thank the City staff and all involved for getting this deal completed.  He said the work people put forth to try and attract this important bioscience company to this community and to keep them here was the right thing to do.  He said he made a big mistake by not asking for this item to be considered as a separate agenda item.  He clearly did not realize how important some of changes they were making were based on the feedback he received.  He said he believed the City Commission was simply altering an existing agreement and heard people say that was not true, but in reality, that was the way he viewed it and one of the reasons why he did not feel compelled to separate it from the other processes approved on the consent agenda. 

He knew trust was not a gift, but was earned and he was sorry for his actions and any of his fellow Commissioners’ actions that cost the faith and trust of the public.  He said it was important to him and important to the Commissioners.  He wanted to restore the public’s trust and he hoped that this issue would allow them to create a dialogue about utilizing City resources and taxpayer money. 

He wanted to address some comments made regarding their intentions, whether they are undemocratic or undiplomatic, it did not matter.  What really mattered was their intentions were good.  They were public servants and did this to try and help the citizens and the community.  It was difficult for him to be accused of anything other.  They made a commitment in January to spend money and thought all the Commissioners believed that was what they were doing again.  All the discussions they had were about mistakes they made and great ideas on all things they failed to do, but he hoped this would help them create a dialogue to help them improve the process.  He had been doing this job about seven months and was sitting there leading the meeting and he never anticipated that happening. 

It was not easy, but he believed they had two options.  They could rescind the vote and choose to put it through the public process through which it deserved, or they could choose to try and correct the mistakes they made in the past and not lose the opportunity.  He believed if it meant gaining back the public trust he would be willing to rescind the vote.  He was very startled by, and honestly impacted by, some of the comments made about the City Commission and some of the Commissioners in particular.  If people knew the time and effort people put forth, some would second guess their comments. 

Commissioner Highberger said if the City would have had an economic planner on staff, they could have avoided some of the difficulties over this issue and he would like that item to be placed on an upcoming agenda for consideration.  He said the City Manager confirmed the money for that position was in the 2008 Budget. 

He said this matter had been referred to the Attorney General for investigation and he welcomed that investigation because the more scrutiny the better.  He said if it turned out the City had made mistakes according to the Attorney General, or their process might need to be changed, then they should take that action.  He said he appreciated Vice Mayor Dever’s comments and understood those comments. 

It was then moved by Commissioner Highberger to refer the matter to the Public Incentive Review Committee and, based on that PIRC review, decide whether to take further action.

Commissioner Chestnut asked Corliss to explain what that PIRC review process would entail. 

Corliss said the Public Incentives Review Committee consisted of the Mayor, the Vice Mayor, a school board member, a County Commissioner, the Chair of the Economic Development Board and two at-large members.  Professor McClure indicated that he was one of those at-large members along with Brenda McFadden who has appointed in a professional financial analyst position.  That board then looked at the provisions of the tax abatement policy which had certain criteria for the evaluation of tax abatements and a cost/benefit analysis that was ran by the KU Public Institute of Policy Research.  He said pursuant to the ordinance, PIRC would then conduct a review of that cost/benefit analysis and provided a recommendation to the City Commission. 

Commissioner Amyx asked if Deciphera has made any movement on closing on that building based on the City Commission decision of three weeks ago.

Corliss said he was not aware of any of Deciphera’s actions as to that building, but their attorneys indicated Deciphera had not executed the agreement as of yesterday. 

Commissioner Amyx said he did not disagree with Commissioner Highberger’s motion, but based on the investigation right now, he was going to wait on any further action until that information came back from the Attorney General.  

Commissioner Highberger’s motion died for lack of a second. 

Vice Mayor Dever said the City Commission would not take any further action on the agenda item at this meeting.                                                                                                                 (8)

The City Commission then recessed at 9:00 p.m. for  a 15 minute break.

The City Commission resumed the regular meeting at 9:15 p.m.

Consider authorizing the Mayor to sign a letter to the Federal Highway Administration supporting the 32B alignment of the South Lawrence Trafficway.

David Corliss, City Manager, presented the agenda item.  He said at the October 23^rd meeting the City Commission authorized the drafting of a letter that would be signed by the Mayor to be sent to the Federal Highway Administration supporting the 32B alignment of the South Lawrence Trafficway.  The Commission requested that draft letter be shared with Commissioner Amyx to make sure the letter was following through with what the majority of the City Commission wanted.  He said the draft letter could be altered and corrected accordingly. 

Mayor Hack called for public comment.

Gwen Klingenberg, Lawrence, said she had a little concern about signing the letter supporting the 32B alignment along the SLT.  She said 20 years ago when the proposed alignment first started, perhaps, or perhaps not, the wetlands were wetlands or farmlands, but it did not matter because it was now an ecosystem that should not be disturbed.  As they learned through some of the T2030 meetings, there would be thousands of trucks coming through that area.  She said there were no way all those trucks and traffic would not harm this ecosystem. 

She said the City’s urban growth area was now south of the Wakarusa and the bypass needed to be looked at near the edge of town.  She said otherwise, they should call the trafficway the MLT, the Middle Lawrence Trafficway.

Lavern Squier, Lawrence Chamber of Commerce, said he wanted to repeat comments that had been made by their group in front of the Planning Commission which was the Chamber was in support of this routing and the letter the City Commission was taking action on.  The importance of transportation to economic development and community jobs was paramount.  Current employers’ concerns needed to be addressed and their concerns about transportation routing and capabilities to move truck traffic in particular, but also moving employee traffic effectively around the community.  In addition, those potential employers who were looking at the City, had concerns about lack of availability and lack of transportation connectivity.  Those situations needed to be addressed and he stood by the past actions of the Lawrence Chamber of Commerce in support of this item.

Dave Strano, Lawrence, said one thing to consider was that this body had repeatedly, along with the County Commission, insulted the native community in this City over and over again.  He said whether it was the Indigenous People’s Proclamation or even the drafting of this letter to begin with or the change of stance the City had regarding the 32^nd Street alignment.  He asked the City Commission tonight they had a chance right now to tell that sector of this community they would support their hopes and aspirations on this plot of land that was important.

He said Vice Mayor Dever had asked for ideas to regain the public’s trust in this body, and this was one right now.  They could not sign this letter and it would be one way to regain the public’s trust because right now, the effort to build the 32^nd Street alignment, as well as the Deciphera deal, Wal-Mart and pro development deals this City Commission had been responsible for since April, had proven to workers in this City, the Commission did not care about the workers’ interest, but the employers in the business community.  He said it did not trickle down and they were not the ones benefiting from this road.  He drove a school bus, trucks in the community, cargo vans, and was not going to be the one as a driver or commuter that was going to benefit from the 32^nd Street alignment.  He said he would shave one or two minutes from his travel time.  It was going to be the business interest and leaders in this community that supposedly give handouts to people like him, but it did not happen.  He was more impacted by more green space being taken away for roads and for development than he was going to be by having his driving time cut down by a minute or two.  He said the City Commission had a chance right now to restore faith in this City Commission, restore faith amongst working class people, poor people, people of color in this community, and if they signed the letter they were saying right now they did not care about what those people think and only care about the Chamber of Commerce, which was becoming more and more apparent with every decision this body made.

Hilda Enoch, Lawrence, said this SLT was fought over many years and was now a fight once again because Senator Roberts came up with money he thought he could get.  There was no public input as to whether the public wanted the SLT to go through that property which was beautiful and precious, and that other communities envied.  The City Commission was destroying that area for economic development which was a terrible mistake.  She asked the City Commission to not have that highway go through the Haskell native lands and the wetlands.  She said the Haskell community probably has given up and would have legal defense.

Patricia Sinclair, Lawrence, asked the City Commission not to send the letter.  She was unable to review the text of the letter, but understood it was in support of the 32^nd Street alignment.  She said a past Commission voted on this same issue the way she would have liked.  She said with the caveat, it was a vote expressing an opinion, but not something that would have any weight because they were not decision makers. 

Mayor Hack said the Commission decided, at the time, not to take a position on voting for the SLT route and they only gave individual comments. 

Sinclair asked why the current Commission felt they could support voting to write a letter in support despite operating under the same bylaws as the previous Commission.

Mayor Hack said it was a choice.  She said what was different now, was the federal money issue.  She said once the Federal Highway Administration became involved because the use of federal money, then it placed another layer of approval process.  The process had already taken place, the approval of the road and KDOT decision had already taken place.  All this was doing was resending a letter that was sent in 2005.

Sinclair said there was no way she could speak to all the points that had been documented with scientific research and historical research about the losses suffered by Haskell as an institution; the losses of land and others that had occurred over the years in terms of their culture and so forth.  She wanted to stress this was supposed to be a by-pass and as it was drawn it was not a bypass, but a way for people to get around town more easily and go on to Kansas City or Topeka if they so choose.  It was not the intention of it.  It was supposed to bypass the City.  She was particularly disturbed by the fact they came up with an exit at Haskell which did not used to be on the drawing boards.  Despite long conversations with the Corps of Engineers, there was no basis in terms of studies or anything for what kind of impact that exit, at Haskell Avenue, would have on the neighborhoods.  As a resident of the Barker Neighborhood, she was increasingly frustrated with the fact that their older neighborhoods were expected to bear the burden of expansion and growth.  Those residents were at that location first and they would like to stay.  They would like their neighborhoods to be places of quality of life and that was a particularly disturbing aspect of that plan that it did have an exit at Haskell and no clear study of traffic.  She said to support that route would be a tragedy to lose the wetlands, tragedy in terms of early stakeholders of that land and a disservice to the people who lived in the City already whose neighborhoods would be negatively impacted.  She said the wetlands provided a function other than beauty and a home to creatures.

She said it was unthinkable, at this point and time, they would be endorsing the alignment.  She said everyone would see people lying down in front of the bull dozers and she would be present, if that took place.

Jake Davis, Lawrence, said he encouraged the City to not take an affirmative position on this item because it would be a horrible black mark on the City’s environmental record.  The biosciences basket should not be where the City was putting all their eggs.  The green sector was a very big economic growth sector coming up in the next few years and thought it would be a detriment.  

Sven Alstrom, Lawrence, said he was not prepared to discuss the SLT, but some of his remarks he would make later did apply.  Cultural heritage involved, not only through the preservation of physical artifacts or the preservation of individual objects, monuments or buildings, but also through recognition of their natural heritage, which was an important part of culture.  Cultural heritage was naturally more difficult to preserve than physical objects.  This natural heritage included the countryside and natural environment; the streetscape of trees, type of buildings and scale of those buildings, which over time have defined the character of an historic district.  Sometimes the natural heritage was unique or irreplaceable as in the current situation with the hotel.  He thought the SLT had an element of cultural heritage to it and with regard to the earlier Commission item on Deciphera, he hoped the Mayor understood there was a great author, Peter Gombs, who wrote a book called The Good Life and there was one chapter called “Failure” and failure was a good thing because they could learn from it.  Some of the people who spoke on the SLT, there was a reason it had not been built; it was a failed concept.  They needed to learn from these failures, as in Deciphera and the SLT and do the right thing.  He said it would include the hotel, the next item he would speak about.  They needed to learn from those failures and think about the golden rule.  It was best to bring harmony in the community.

Vice Mayor Dever said one of the lines in the letter could be amended where it discussed the cultural response to the road way improvement and “it would not negatively impact the environment.”  He suggested revising the letter to read there would be “minimal impact on the environment.”

Corliss said he suggestion that sentence read, “The Lawrence City Commission believes the proposed third of the alignment project would provide necessary environmental and cultural responses to the roadway improvement.”  He said every manmade structure had that consequence to some extent.

Commissioner Amyx asked about the letter that discussed the 32^nd Street alignment and what the letter did now.

Corliss said the letter rescinded the earlier communication to the federal government and put the City on record in support of the 32B alignment.  It was a policy statement of the City saying what the City wanted as far as the alignment was concerned.  It was addressed to the same federal official as the letter last year.

Commissioner Amyx said he asked for this item to be placed on the agenda several weeks ago and he was in support, but since the decision was already made, he wanted to know if there was a need for the letter.  If it was reinforcement he understood.

Commissioner Highberger said he thought the Mayor was overly generous to him in their last discussion.  He believed that Commissioner Amyx and all the other Commissioners always do what was in the best interest, in their opinion, for the City.  He said on this point he had to respectfully disagree.  He agreed with Strano that the 32^nd Street route would be perceived as an affront to the Native American community.  It was an environmental mistake and something future generations would regret.  He thought it was moot to some extent at this point because there was no indication that the Federal Highway Administration was considering any further public comment at this point before the issue of record.  He opposed sending the letter. 

Moved by Amyx, seconded by Chestnut, to authorize the Mayor to sign a revised letter to the Federal Highway Administration supporting the 32B alignment of the South Lawrence Trafficway.  Aye:  Amyx, Chestnut, Dever, and Hack.  Nay: Highberger.  Motion carried.                                                                                                                              (9)

Consider the following items related to the proposed Oread Inn project (12^th and Oread):

a)        Conduct a public hearing for the appeal of the Historic Resources Commission determination for DR-07-93-07. (HRC Denied 7-0 on 09/20/07)  

1)         Consider making a determination on the appeal of the Certified Local Government Review under K.S.A. 75-2715 – 75-2726, as amended:

2)         Consider making a determination to issue a Certificate of Appropriateness for the demolition of the structures located at 1140 Indiana Street, 1142 Indiana Street, 1144 Indiana Street, and 618-620 West 12^th Street and the new construction proposed for the site.

Mayor Hack called a public hearing to consider items related to the proposed Oread Inn project.

Lynne Braddock Zollner, Historic Resources Administrator, presented the staff report.  She said they have not had to do an appeal to the Historic Resources Commission’s decision by this Commission.  She said 19 years ago, the City of Lawrence decided that like the State had in 1977, the cultural resources were an important part of the community.  They were important in creating a sense of place and establishing good economics in the community, educational purposes and good welfare of citizenry.  The City Commission passed Chapter 22 of the Code of the City of Lawrence and established Lawrence Landmark of Historic Places and criteria to list properties on that landmark.  She believed the community and that Commission realized how important historic resources were, just like when the state passed the Historic Preservation Act in 1977.  She said it was not the intention to freeze everything in time and make it stay the way it was.  The intention and purpose of the State Preservation Act and Chapter 22 was to allow for a planning process that would make sure that as a community or state, they look at their historic resources or cultural resources and take them into account when they make decisions on how the community would grow.  It was not an effort to freeze frame and make the whole world a house museum, but to make sure they had a good planning process in place so when they made large community decisions about growth and planning, they look at those things that had created their sense of place, structures, districts and treescapes and those things that had become important to the community and consider them when doing large planning issues.  The State Historic Preservation Law was based on the 1966 National Historic Preservation Act which mandated the same thing for federal agencies and anyone taking money from federal agencies. 

She said this particular project was for demolition of existing structures located on the site, new construction, rezoning and a preliminary development plan.  What the Historic Resources Commission’s charge was, was to look at the demolition, new construction and rezoning.  The reason they had to look at it, in this particular case, was the property was within 500 feet of the Hancock Historic District and the Oread Historic District.  Both districts were now listed on the National List of Historic Places.  At the time of submission, the Oread District was listed only on the Kansas Register.  The project site was also located within 250 feet of the Snow House, which was listed as a landmark on the Lawrence Register of Historic Places.  The state statute and the local Chapter 22 looked at context of listed properties as well as the individual property.  The feeling of both of those sets of guidelines was if they preserve something and everything around it was diminished, then did they have an accurate reflection of what made it historic and important.  By looking at the context of what surrounded those properties, it made it better to help define that sense of place.  It helped them to better educate their children on what exactly had taken place as the community had grown.  It was not meant to be an extension of the listed property, but helped provide productive and good, compatible design as development occurred within that 500 or 250 feet so it did not negatively impact that historic resource. 

She said the structures were already constructed in 1927 and were commercial property.  She said the HRC review was required by the State Historic Preservation Act.  The City of Lawrence had an agreement with the State Historic Preservation Officer that they would conduct those reviews on a local level.  The Historic Resources Commission conducted those reviews on behalf of the City.  The Historic Resources Commission was also responsible for projects that required review under Chapter 22 under the Code of the City of Lawrence.  The HRC must use the standards and guidelines for evaluating the effect of projects on the environs that required that state law review for properties that were listed on the National or Kansas Register or within 500 feet.  The HRC must use the guidelines or criteria established in Chapter 22 for properties that were landmarks on the Lawrence Register or within 250 feet of those landmarks.

She said the HRC found four guidelines that this project did not meet.  In the meetings from the HRC there was discussion about the use, but the rezoning did not seem to be an issue for the Historic Resources Commission, but because they could not deal with the other issues that did not meet the guidelines, they could not approve one piece of it because they review it as one package. 

She said for Chapter 22, the Certificate of Appropriateness, the HRC found it did not meet standards 1 and 9. The City Commission must hold a public hearing to make a determination if there was a feasible and prudent alternative to the proposed project.  If, based on a consideration of all relevant factors, the City Commission found there was no feasible and prudent alternative, they should determine if all possible planning to minimize harm to the listed properties, associated with the project, had been identified and undertaken. 

She said she wanted to explain some definitions for people who were not familiar with the regulations that were associated with the state law review describing environs.  She said when talking about the “environs” it was the context with which the historic property existed in, uses, the significance of the historic property, scope of the project, and the surroundings. “Relevant factors” meant pertinent information submitted by the project proponents or opponents in written form including evidence supporting their position. The “feasible and prudent alternative” definition included items such as technical and design issues, the projects relationship to the community wide plan, and economic issues at well.     

She said for the state law review process, the City Commission was not overturning the decision of the Historic Resources Commission.  The HRC made a determination that this project did encroach upon, damage, or destroy the environs of the listed properties.  The City Commission’s charge was to make those determinations as to if there was a feasible and prudent alternative to the proposed project and if one was not available, to make sure that all possible planning to minimize that harm had been done.  The steps for the City Commission under the state law appeal would be to hold the public hearing, make a determination as to the feasible and prudent alternative question, and if no feasible and prudent alternative existed, to make sure all possible planning had been done. 

She said the appeal for Chapter 22 was different than the appeal for the State law.  It was a separate determination with a separate appeal process.  In this case, the City Commission was being asked to overturn the decision of the Historic Resources Commission to look at the facts of the case, the guidelines and standards in Chapter 22.  The City Commission was also being asked to issue a Certificate of Appropriateness so the project could move forward.  The Certificate of Appropriateness was what the project applicant needed to go to the building safety division to get their building permit.  It was required because this project was within 250 feet of the Snow House which was a landmark. 

She said she wanted to highlight Chapter 22, number 4, which stated the least stringent evaluation was applied to environs of this area of the landmark. In other words, the impetus of Chapter 22 was to protect the landmark and they needed to look at the context, but did not want to extend that landmark status out into the 250 feet.  She said when they looked at the Certificate of Appropriateness, almost everything in that environs was approved unless it could be shown how something would harm that listed property.  The City Commission action for the appeal for Certificate of Appropriateness was to hold a public hearing and make a determination if the project met the criteria established in Chapter 22 and then make a determination as to whether or not to issue the Certificate of Appropriateness. 

She said when looking at this type of case and the City Commission was being asked to make a judgment as to whether or not there were feasible and prudent alternatives, if alternatives were proposed, they would need to be specific alternatives and also findings of fact afterwards.   She said they needed to be clear in their articulations in their findings with the state law review appeal, which was to protect the City Commission if someone should challenge it on appeal from the determination made and also the State Historic Preservation Office would review the findings when notified with the outcome of the hearing.  The City Commission could place conditions on the project if they chose to approve it to meet that standard and say there were no feasible and prudent alternatives, but if certain things were done to maximize planning, they could approve it.  She said they needed to articulate specific reasonable and prudent alternatives, why they were or why they were not, and all possible planning. 

Commissioner Amyx asked when the appeal was filed.

Zollner said the City Commission would need to make a determination on the Certificate of Appropriateness this evening or the Commission could defer that as long as they held the public hearing.  As long as they held the public hearing and were in the process, they were okay on the time limitation.  They did meet the appeal deadline for the project and they were still within the 45 days.

Paul Werner, Paul Werner Architects, said he had seen several hotels on campuses and they were the only Big 12 University without a hotel on campus.  He said it was an incredible idea and great opportunity for the community.  He said they met with planning staff and everyone associated with that neighborhood to discuss this project.  He said he was excited to take part in this project.

He said there were a couple of issues they disagreed with.  He said it was mentioned that four of the structures were historic, but in their opinion those were not historic structures, but just old structures.  The definition from the State Historical Society defined historic properties as registered on the National Register of Historic Places or the Register of Historic Kansas Places, but none of those properties were listed on those registers and did not contribute to the district, but were just in the environs.  He said they made a commitment that early on, those structures that were contributing to the Hancock District should be saved. 

He said the HRC went by the strict guidelines of what they had to do, but that was not what the City Commission had to do.  He said the architect understood what needed to be done to make a hotel work and what was needed to make the proposal work. 

He said they needed to discuss why there were no feasible and prudent alternatives to this proposal.  It was about the program and the number of spaces needed to fit into a hotel to make this project work to provide underground parking, meeting space, and a first class facility.  

He said at the first Oread Neighborhood Association meeting one of the board members made a comment that it was the bookend on the other end of campus.  The other structures were the Alumni Center and the Student Union which was the public side of the University.  The proximity to Danforth Chapel, which was used 300 days a year and went through a great renovation and with a hotel, just blocks away, would be perfect along with the museums and the football stadium. 

He said regarding the site plan, they were not encroaching as much as everyone thought into the property line.   He said when this project first started, it was three parcels on the southern side.  At that time, they acquired the apartment building to the north which allowed the project to expand.  It also allowed the entire building to be moved 20 feet to the north, which lined up with the houses across east and west.  It allowed the entrance drive to be expanded to allow for more stacking of cars and expand parking.  At this time, with their most recent proposal they were in the neighborhood of 200 underground parking spots.  It was important they moved the building 20 feet to the north to increase the stacking at the entrance.  More importantly, it moved the structure approximately 200 feet away from the Snow House.  It was interesting to that Corbin was right across the street from the Oread Historic District.  Corbin was 120 feet from one of the listed structures on Ohio Street.  He said the easy answer was the environs of the Oread District included several large buildings.  The troubling thing about Corbin and the opinion from the HRC was it seemed to be a timing issue.  He said if that relationship was so bad, maybe those structures should not be in the district. Their environs were large scale buildings that were university like. 

He said the difference with the University building and what they had done was the underground parking.  The issue was to provide as much parking as they could.  They thought it was a distinct difference than the other University buildings and was clearly a positive aspect on how the mass of the building changed. 

He said there was no argument there were pedestrian issues at the site along with bus and vehicle traffic and no way to make traffic any worse.  The traffic situation improved by realigning Oread to 12^th Street, making a 90 degree turn really helped the busses.  He said when coming up 12^th Street, there were pedestrian sidewalks across Oread and one sidewalk on 12^th Street.  The trash and service entrance was on the east side, away from the Hancock District and single-family homes.  Medians were placed on Oread Avenue which mimicked the historic character as 12^th Street went further west.

He said from day one, they knew parking would be a huge issue and they were proposing 200 spaces by double stacking cars.  He said they liked the idea of valet parking and if they chose to post a parking person to prevent students or other people who might want to park in that area it would work fine at 200 spaces.  He said the proposed improvements were a benefit to the community and the City at-large.  The proposal had incorporated all possible planning techniques in order to lessen any possible harm to the historic district and to the Snow House.  What the program required for this type of facility, there was not a feasible and prudent alternative.

Nancy Longhurst, General Manager, Eldridge Hotel, said she wanted to tell the City Commission what a privilege it was for her personally to walk into the Eldridge Hotel every single day of her life.  They were on the National Register of Historic Places.  She wanted the City Commission to know the next chapter in their journey with the Eldridge Hotel was the Oread project.  She said their team was building something the community would be proud of and she was excited.

She said tourism was economic development in the biggest sense.  It provided revenue, jobs, pride in the community, enhanced image of Lawrence, bringing together multi generations, groups, organizations and the community.  It enhanced the quality of life for the Oread Neighborhood by providing a neighborhood gathering place and getting more people vested in the area.  It provided KU a state-of-the-art hotel and meeting facility, and provided a place where students, faculty, alumni, and the citizens of Lawrence could gather, celebrate and enjoy the Oread Neighborhood together.  Successful tourism development was identifying and understanding the opportunities and challenges they had in Lawrence, defining key markets, developing and implementing a sustainable plan or unified vision, building strategic partnerships for business, measuring their success, and how could that success be measured.  By the economic impact of the hotel itself, the unique qualities of Lawrence and the University of Kansas, the ability of Lawrence to capture sufficient market share, and the integration and collaboration with other resources or other businesses.  The real measure was the quality of service and experience they provided and accountability. 

In the United States, tourism was a $1.3 trillion industry.  One hundred billion in tax revenues for local, state and federal governments and without the tax revenue generated by the travel and tourism industry, each United States household would pay an additional $898.00 in taxes.  Tourism was huge and was one of the country’s largest employers with 7.3 million in direct travel related jobs and $162 billion in direct payroll.  Approximately 2.6 million hotel rooms were sold every day in the United States.  She said the impact in Lawrence in 2006 was 443,944 over night visitors and lodging revenues were $15 million.  Food and beverage revenues were $8 million, retail revenue $5 million and other miscellaneous revenue, for a total direct spending in Lawrence of $34,529,000.  Economic impact also the local sales tax generated the 2% on the 200,000 rooms in Lawrence.  There was also the transient guest tax which was collected at the rate of 5% and direct visitor spending in the community.  In 2006 there were 184 reported to the Convention Bureau and 23,500 total conventions delegates attending, which were people spending money in this community. 

She said the total impact of tourism for the state for 2004 had a direct impact of $5.6 billion and 77% of each tourism dollar spent in Kansas was retained in the state itself.  It produced 166,000 jobs and it was 12.6% of the total employment in this state.  It generated $1.8 billion in federal, state and local government taxes in 2004. 

In 2004 leisure travel grew by 8.7%, but it decreased 13.9% in business travel.  It was a trend they were going to change.  In breaking down the tourism expenditures, 50% came from people that came from out of state, but 25% were residents in the State of Kansas that went to different communities and spent their money.  She said shopping accounted for the largest share of tourism expenditure in the State of Kansas.  Combined with food and transportation, those three components represented nearly 75% of visitor expenditures. 

She said travelers were spending money on airfare, motor coach, trains, or renting a car.  If they came to a convention they buy gas in the community, get food, and stay in the hotel, recreation.  They had all the outside and services coming in to fill up the hotels and all the jobs they had.  At the Eldridge alone they had over 100 employees that were actively on the payroll.  They go to the theatres, shopping, and help fund the schools in the community, museums, bakeries and farms. 

She asked how tourism would affect Oread.  The City of Lawrence and the University of Kansas were the only Big 12 School and City that did not have a hotel or conference center located on campus or within a few blocks.  She said they would build a hotel that KU and the citizens of Lawrence could be proud of.  The Oread would help sell the community, the university and the Oread neighborhood. 

They had vision, which was very important.  The people she worked with were very visionary.  It was the way they thought, the way they talked and was refreshing to be around every day.  Their vision was to work with the neighborhood, the City of Lawrence, and the University of Kansas to construct a project that enhanced and maintained the historic environs of the Oread Neighborhood.  They also wanted to be a leader and set a venue where businesses, University, citizens, neighbors, students, all felt welcomed to gather whether it was for a cup of coffee, a cold beer, or a meeting.  They wanted people to come and gather in their facility.  To build a hotel where KU alums could come back to Lawrence to stay connected to the University was another vision.  This hotel would help promote the City of Lawrence and the University of Kansas.  It would also create a one of a kind hotel structure that could promote and enhance the Oread Neighborhood, the City of Lawrence, and the University.  Their vision included vehicular and pedestrian issues that had plagued the Oread Neighborhood and University for years making a safer environment for those who visit, live, recreate and enjoy Lawrence.  The vision was to build a hotel that addressed those deficiencies.  Their location would also attract alumni who might not otherwise become invested in the City of Lawrence.  As they do, they might continue to make other investments in the City because they would be enjoying Lawrence’s quality of life. 

She said the Oread customer was also new corporate business outside of Lawrence.  She said because of the Eldridge extended, they were bringing businesses in from the outside.  They were not taking existing business and taking it from other properties.  They were bringing new businesses that had not been to Lawrence before because they have felt they had not had the facilities.  They were coming in and they were holding their meetings.  It was amazing to watch it grow.  She said they talked to business owners in Kansas City or Topeka and they wanted to come back to KU and the City of Lawrence to hold their meetings.  During football weekends, the entire town was full.  Wedding receptions would be a huge market at the Oread.  KU Continuing Education had a lot of new programs, but right now they were going to Overland Park because they needed more nice facilities.  She said more people were staying in hotels closer to home for many vacations.  They shop, swim, play golf, and tour KU.  She said they were missing a huge sector of association meetings and in this part of the State they were going to Overland Park.  Students, faculty and citizens of Lawrence were also a prime part of their customer base. 

She said they had letters of support from the Provost, Kevin Corbett at the KU Alumni Association, Candy Davis and Oread Neighborhood Representatives. 

She said corporate business meetings had increased by 80% at the hotel since the reopening in 2005.  Last week she was in New York for the American Hotel and Lodging Association meeting in New York City.  She had new data from experts there, but one really intrigued her called the hotel chain scale.  It described all the different kinds of hotels that there were.  There were luxury hotels, upscale which the Eldridge would be considered, mid scale without food and beverage which would be like a Holiday Inn Express, a mid scale with food and beverage and an economy.  What the experts were telling them was 65% of all new hotel rooms in the United States under construction for 2008 and 2009 were upscale hotels, which was what the travel wanted and what the Oread would be.  It was data from Lodging Eco Metrics which tracked all hotels being built in the United States currently.

She said a key priority was marketing.  They had two people on staff beating the bushes every day bringing new business to town.  They had product development under the Oread, something they would be working on continually, education and communication, building relationships, joint efforts with the Lawrence Convention and Visitors’ Bureau for the promotion of their City.  They also had long term strategic planning.  They did their marketing and advertising through print, television, online website, and different publications.  They knew who their market was.  They were individuals 45 and above, household incomes of $40,000 and above.  College students, business men and women, and their geographic areas were Kansas, Oklahoma and Missouri.  They were members of Historic Hotels of America, currently on Channel 9, Kansas City Star, E Blast Pay Per Click, internet marketing, the Journal-World to promote Lawrence and their hotel and the Lawrence Visitor’s Guide was distributed all over the City as well as the state guide.

Through this process of working with the neighborhood association, it had been a top priority to listen and respond to the request of the Oread Neighborhood representatives.  From the very first day they entered into this process, they asked what size and shape this building would need to work to the desired economic model.  It had always been a seven story mixed use building that consisted of retail, hotel, extended stay, condos, and some meeting room space.  As things evolved, tweaks were made to deal with pedestrian, trash, storage, deliveries, setbacks, roof top observatory.  Every time they listened, they responded to the neighbors’ needs and concerns.  The developer committed to the renovation of Oread Apartment at 1201, 1203, and 1205 Oread and a residence at 1209 Oread.  Those structures were listed as contributing structures.  The developer was committed to the realignment of Oread Avenue, 12^th Street and Indiana Street.  The developer was committed to new sidewalks, stairway, landscaping, irrigation, sculptures, etc.  The proposed size, location and design of the Oread must remain unchanged in order for visions and benefits described to be achieved.  In order for them to be successful, they knew as hoteliers how to make the hotel work.  Everything they proposed and put together they knew it was what it took.

Mayor Hack called for public comment.

Dennis Brown, Lawrence Preservation Alliance, said he did not hear very much in the applicant’s presentation about why they felt there were no feasible and prudent alternatives to this particular design.  It was the purpose of this public hearing.  This commercial building being proposed next to a residential neighborhood in a historic district was huge.  A person they talked with that was very knowledgeable about architectural design told them the building was crammed on the site.  A person they talked with that was very knowledgeable about City planning told them the building was stuffed on the site.  Those were not descriptions that made them comfortable when evaluating building design.  They supported appropriate infill development and recognized that sometimes waivers to the codes were needed, but the proposal came to the Commission with seven waivers requested, including two inch side peripheral setbacks on both the east and west sides.  At seven stories and 95 feet, the building was also extremely tall.  It would be downtown’s tallest if it were proposed for downtown.  It was proposed for on top of a hill bordering a residential area.  Because this proposal bordered one National Historic District and was near another, it was reviewed by the Lawrence Historic Resources Commission.  Through HRC, the City had an agreement with the State to evaluate proposals for registered properties or their immediate environs.  The HRC evaluated size, massing, setbacks, special relationships, and whether any demolition proposed was necessary due to the dilapidated condition of the building.  If demolition was warranted, the overall objection of HRC was to ensure a new design did not physically dominate the historic structures nearby.  This project failed on all counts by unanimous votes by the HRC.  The project, if built, would damage and encroach upon the historic district.  That ruling was made by those with the knowledge and authority to make it.  The City Commission was being asked to rule that there was nothing the City could do about it and they had no choice but to build a massive 7 story hotel condo project at this exact location and nothing else that could be built would be feasible.  The developer met with the Oread Neighborhood leaders and had their support.  They applauded that.  They did wish that neighbors had kept historic guidelines more in mind when those talks were taking place.  The developer had the support of the current owner of the Snow House.  They had an unsolicited letter from the long time previous owner professing her profound disappointment in the project.  He said neither carried more weight, which was the point of historic register listings, to always focus on the big picture so that no one person in time could commit irreversible damage.  He said there were feasible and prudent alternatives.  First, while LPA agreed a hotel at this location was desirable, they did not think it could be established that it was essential.  Other designs could be profitable at this location and better serve the neighborhood.  A neighborhood, residential commercial mix with commercial on the ground floor and three to four stories of rooms, extended stay, and condos above would be one option.  With this plan it might even be possible to say that 1142 Indiana, a current sticking point for staff and HRC.  He said 1142 Indiana, if it were in the borders of the Hancock Historic District, would be qualifying as a contributing property.  LPA recognized the community’s support for a hotel at this location.  They suggested that a 5 story structure would go a long ways toward minimizing damage to the historic district.  They noted that most of the buildings in the district were 3 stories tall.  Stair stepping up from 3 stories to 5 would still allow for a very large building, but one they felt would not cross the line into domination of the district. The developer was proposing 5 stories of room and conference spaces with the 6^th and 7^th floors being condos.  He asked how they could rule the condos had to be on the 6^th and 7^th floors even at the expense of adjacent historic structures.  He agreed with all of Longhurst’s comments, but they had nothing to do with condos on the top two floors of this design.  Put the condos in the apartment building the developer owns catty corner from the site or another nearby site.  It was a feasible and prudent alternative and a very reasonable suggestion to make.  A successful project could be developed here, but this proposal was not it.  The Commission needed to direct the applicant to work with the Architectural Review Committee of the HRC to reduce the size of the project and lessen its impact on historic properties; and direct staff to tighten up the waiver requirements.  The staff report concluded, “Staff was of the opinion that the project can be redesigned to meet the goals and objectives of the applicant while meeting the intent of the applicable standards and guidelines and protecting the context of the significant cultural resources.” 

He was present on the authority of a 10-0-1 vote of the Lawrence Preservation Alliance Board to strongly support the staff recommendation and the 7-0 vote of the HRC.  Staff, HRC and LPA were all saying that a hotel design could be achieved here that would not harm the historic resources in the immediate area.  The applicant was seeking to design and build what he wanted regardless of the impact of those resources.  His refusal to work with the HRC’s Architectural Review Committee indicated he was expecting the City Commission to find a way around historic guidelines that others had to follow.  He believed that would be the worst possible message they could send tonight. 

Dasia McKay Mahor, Lawrence, said regarding Chapter 22, if a 90 foot structure within 150 feet of a protected property was not harming the surrounding environs, she did not know what was.  She believed there was a feasible and appropriate alternative, which was to deny the proposal as it stood now at this location.

She said just because a property had not been declared historic, did not mean it was old.  It meant that property owners have leased or rented their properties and it was against their interest financially to have them registered as historic properties.

When making the comparison between hotel and university structures, she was not aware that Frasier and Corbin Hall were private companies asking for public tax funds, but if it was the case, she appreciated that mindset. 

She said regarding the benefits of the Oread Inn to this community, University groups and Oread Neighborhood Association itself were having meetings at the existing sites for years, so the fact that they needed the hotel to provide them with a venue to do this, they had been doing it for years and was not required. 

She understood the need to increase tourism and attract conventions to the City, but if there was this great need then it needed to be built somewhere where it would be economically feasible.

KT Walsh, Lawrence, said she just returned from the Arts and Economic Development Symposium held in Johnson County.  It was about brining dollars into your community, especially through tourism.  They had national arts researchers from the RAM Corporation, a CEO from Phoenix who ran a foundation, and other panel members from around the nation.  They hammered repeatedly on place making, adaptive reuse of historical buildings, not losing the character of the town because it was why people came to your town, respecting architecture as one of the arts, and was all to win the prize of talent that would want to come to your town because of the sense of place. 

She agreed with Brown’s comments the structure needed to be scaled down and in her opinion it was too large in relationship to the adjoining Mt Oread Historic District, the Hancock National Historic District, and the Oread National Historic District.  With the addition of the ECM building and the plans there, the changes to the context were growing larger. 

She said after years of work by Judy Billings and many other people, they have been designated as part of the Freedom’s Frontier National Heritage Area.  It would bring even more heritage tourists to town and statistically they spend more money than any type of visitor.  Heritage tourists were very sensitive and informed about the built in environment.  They looked for communities that respect the historic scale and character of their town. 

Everyone knew the Fritzel Company did high quality construction, but she would reiterate the words of Dennis Brown that it was time for the Fritzel Company to hire a historic preservation expert to consult on their projects.  Bo Harris who worked in historic districts in Lawrence and Kansas City saw this as money well spent.  The architects could make informed, educated design decisions that would respect the surrounding historic districts.  When work was done in or near historic districts, it impacted the entire community since they were all cultural resources that told the story of the past.  The Fritzels would be coming before the City Commission repeatedly because of their ideas for Downtown Lawrence, so she was also requesting the City Commission to require them to meet with the neighbors on every proposal.  When they decided to rehab and add on to the Standard Mutual Life Building on 8^th Street and remove four public parking spaces, she was afraid they never contacted their neighbors, especially Tom Wilcox at Round Corner Drug.  It was not alright to selectively meet with their neighbors, but had to meet with them every time, it was courteous and prudent.

Jeff Morrow, Lawrence, said he lived and worked in that neighborhood for 25 years.  When he worked at the Crossing in 1979 and 1980, he thought the building was shot.  The Yello Sub building when he bought it in 1981 was pretty shot.  He thought now if he was faced with those prospects, he would find no reasonable and prudent alternative but to do something else.  He thought those buildings had lived their economic life and could probably fix them at great cost and have space that would be economically illogical.  One of the things he liked about this project was over the years he noticed the center of gravity the University shifted away from the north end of the campus out west.  It used to be the Student Union and north end of campus was quite a hub, but over time with the change in the way large lecture classes were held, the improvements to the eating facilities on the west side, the north end was gone into decline and it was a good thing there was a change occurring at that location.

David Holyrod, Lawrence, said he lived about 500 feet from this area and has lived there for 35 years.  Anyone that knew him knew he had talked about something like this for 35 years.  Now someone was finally thinking about it. 

The Oread Apartments were owned by Wilma Miller.  Her father acquired those because the man that built them was at Haskell, Mr. Plank, and defaulted on his loan.  She owned these apartments for many years and if it had not been for her, they would probably not still be there.  She sold them to Fred Hagaman and went through a cycle and was ready to bulldoze them if she got them back.  She had all the original drawings for those buildings.  That building had more historic value than some of the houses.  The houses on the north side of the cul-de-sac have been wrecked.  Years ago in the 1970’s there were plans to build a 7 story condominium project where Stadium Apartments were located. 

He said he thought the design for this project was boring.  His dad was 88 years old, owned property on the next block, and they considered doing something on the block for years, but he did not want to go through the hassle of fighting this nonsense over and over.  This project offered an opportunity for people to go to the museums and have dinner.  Lawrence was behind the 8 ball and someone needed to start pushing it fast uphill or it was not going to go any place.

Jody Meyer, member of the HRC, said she was not speaking for the HRC.  She said it might be interesting to know they first started looking at this particular intersection last summer and at that time it was also a project of this nature but certainly not at the height it was now.  At the first meeting it was deferred and decided not to go forward with the project.  A year later when this project came back under a different ownership group and was dramatically different from things they had seen from this intersection before, particularly the fact it was tremendously higher than before.  It was a bit surprising to the members who were members at the time last year because they voiced concerns about the height then and those were being taken into account in 2006.

She wanted the City Commission to know the members of the HRC were encouraging development at that intersection.  No one was sitting on the HRC saying they had to preserve the Crossing.  They welcomed the idea of a project like this, but the project, as it stood, was unacceptable to them under the standards they used.  When the project came to the HRC in September, the first project plans this year were submitted close to the deadline for their meeting.  When they first addressed the plan in August, they did not have a lot of time to go over all the plans and the project was deferred until September.  When this project came back in September, it was not the same project it was in August and there was a conservatory that was on top of the building that was not there now.  They had concerns at that point and time and they wanted to work with the developers about this project, but it was made very clear that there was no room for discussion.  The HRC were not given any options.  One thing that a lot of people who came before the HRC were worried about was precedent and what was allowed before.  People really liked to see what had been allowed before in terms of their review.  In terms of future environs review, the decision the City Commission made would influence further applicants.  This building was taller than any other building around and the height was taller than the US Bank building.  When Hobbs Taylor went through the various processes to get that, one of the considerations on the height was how big the lot size was it was on.  There was not that much land in comparison to what Hobbs Taylor was to this location. 

She said she also wanted the Commission to consider the financial motivations and if there were any reasonable and prudent alternatives to that.  The vast majority of people who came and had a project with the HRC, one of the arguments they had about not having to comply with various standards were because of the financial problems they had to go along with that.  It was expensive to rehabilitate buildings and to construct it new.  A lot of people came and said they could not do it because it was cost prohibitive.  There were some people where they say they did not have that information and the property was too important and wanted to make some modifications.  One example was a house on Rhode Island Street which was a contributing structure and the property owner was livid when they did not approve the project.  The property owner said there were no alternatives and it was not financially viable to do anything other than what he wanted to do.  They all assumed he would appeal that.  At the last HRC meeting he came back with a completely different proposal.

In a letter from Mr. Gough, counsel for Triple T LLC, the Mayor stated there might be additional phases of redevelopment on adjacent properties.  She did not know what that meant and obviously if they were in the environs, it was something else that would come before HRC review, but if allowing a project like this and decided there were no feasible and prudent alternatives, you would be setting things up for other projects to go through the motions of an HRC approval process knowing that they went to the City Commission before and it was not a problem, so they were not going to worry about the decision of the HRC.  She thought that would be a disservice to the goals of historic preservation to let people think they could hop, skip and jump over that. 

She did not think this Commission had enough information from the developers to find there was not a feasible and prudent alternative.  Just because someone said they could not do it and did not want to do it, did not mean there was not.  She wanted the Commission to think about if there was a feasible and prudent alternative and do not go based on someone saying there was not.  She said if they could provide further information, it would be appreciated.  She had asked the developer at the August meeting to provide a 3D model of the project, but they did not do that.  She did not know if the HRC had that model, if it would have changed the HRC decision.  It was something the City Commission should request.  She said it might have had some impact on the decision the HRC made, but there was more information to be gathered.

Marci Francisco, Lawrence, said she was pleased to have the opportunity to participate in some discussions about this project.  She said the comment she wanted to make regarding was this prudent or feasible, was whether all possible planning had been done to preserve this area and she also wanted to emphasize that one of the things she was concerned about over the years in the community was demolition by neglect.  She felt the work to preserve and restore the properties for the Oread Apartments at 1201, 1203, and 1205 Oread and the house at 1209 Oread certainly contribute to the stabilization of this block and hoped the City Commission considered that as an important part of the City Commission’s deliberations. 

She said her father lived in one of the houses across the street on Indiana when he was in his medical fraternity in Lawrence.  Another small piece of planning was they had an opportunity to talk to the developers about the cars as they exited the parking and try to avoid the lights shining on the houses and instead have them on the space between the houses.

Sven Alstrom, Lawrence, said he was a former HRC Commissioner in Lawrence and also in Aspen, Colorado, he had the opportunity of meeting Tom Fritzel for the first time since he was totally aware of his opposition to the current design.  He spoke with the former owner of the Snow House and she was opposed to this project, and he was authorized to speak on her behalf to oppose the project.  The former owner of the Snow House was very sensitive to the history of Lawrence; she was 92 and was a resource to the community. 

He said Lynn Zollner, Historic Resources Administrator, wrote an excellent report which detailed why the applicant should be denied further consideration of the current design since clearly there were other building configurations which many believed could be included for this project. 

One of Paul Werner’s points he made was the initial project was proposed on only three land parcels.  Therefore, there were other alternatives because they started off with a smaller parcel.  He said Werner’s arguments about Corbin and the relationship of that building to Ohio was not a very good argument because historic preservation did not really kick in until the 1960s and 1970s, long after Corbin was built.  What they were talking about now was honoring the history of the existing resources. 

The building had 200 parking spaces and there was one bus a minute going by.  There was a reason it had 200 spaces; it would generate a huge amount of traffic.  A smaller building was needed and Brown had suggested a 5 floor structure and he supported that idea.

He said with regard to the tourism points and business presentation, a smaller hotel would better exemplify and scale of nearby historic development patterns in the original town site.  There were no commercial buildings in the original town site.  Not honoring those traditions made for a better hotel with the current proposal with the top two floors dedicated to fourteen private condominiums. 

He believed the Planning Commission was ill advised in changing the zoning.  The building was 238 feet on the Indiana side.  When Werner mentioned they moved the building back 20 feet, he did not think anyone could tell the difference because of the size of the building.  Commercial buildings in the original town site were along Massachusetts and 9^th Street commercial zoning, and not abruptly inserted into residential area, via the recent rezoning approved by an ill advised Planning Commission.  This building was taller than many commercial buildings on the main street.

He said his personal objection was the commercial neighborhood zoning parcels that were there for The Crossing and Yello Sub could be modernized.  There was no objection to redeveloping those properties, but the old zoning was neighborhood commercial.  The new hotel proposal had less neighborhood commercial within the 216,000 square foot structure.  The hotel had less than 5% neighborhood commercial and was less neighborhood commercial that could exist by simply rebuilding on the two parcels without any rezoning.  He believed the City Commission should not approve this project because there were other alternatives, but it was wholly ripe for litigation.  Also, the Planning Commission change of zoning was adverse to public benefit.  In other words, this proposal had fewer neighborhood commercial than could be on the site under the old zoning.

Carol Von Tersch, Lawrence, said everyone who had spoken tonight in opposition to this project was a friend of hers and it was a complicated situation.  She said the prior owner of the Snow House always told her the reason she left the neighborhood was because they had been robbed three times.  She lived in the Snow House for 30 years and thought she really knew the neighborhood pretty well and better than most of the people who had spoken.  She saw the reluctance of people to invest money in their homes because of the lack of stability in the Oread Neighborhood.  She saw properties deteriorate because of that and for 30 years there was the involvement of the Oread Neighborhood Association to find ways to curb some of the deterioration by encouraging blight ordinances and trying to attack demolition by neglect.  All of those were side issues, but for this project, the way she saw it, the construction of this hotel and infusion of capital in that kind of quality investment in the neighborhood would do more to advance historic preservation in the Oread Neighborhood than a lot of the other efforts they tried to make.  It would be a good project and a big project, but the reality was they were on the edge of the University and the neighborhood was not what it was 50 years ago and not what it was 100 years ago. 

David Longhurst said he wanted to address one point, which had to do with the size of the hotel.  The size was enormously significant as to whether or not this thing penciled out.  When you run a hotel you have controllable expenses and uncontrollable expenses.  A hotel had one general manager, one laundry facility, one head housekeeper, one maintenance director, it had fixed expenses.  This hotel might have a $5 million parking garage.  They had to support that expense by the per occupied room revenue generated.  If this hotel did not have enough rooms, it did not generate enough revenue to make it work.  The controllable expenses were per occupied room expense.  It did not matter how many rooms you had.  The fixed expense had to be carried by the number of rooms.  If they took off two floors from the hotel, it did not pencil out.  It had to be this size.  The meeting capacity had to be what it was.  Size was critical to the economic viability of the project.  It worked, but if they took off two floors it would not work.

Commissioner Highberger said he understood the argument about needing a certain size and scale for the hotel project to work, but a very good point was made about how the two top floor condos figured into the penciling out for the hotel to work.

Longhurst said they would generate revenue from the condos, but also condos in the hotel environment would be part of the hotel inventory.  If someone owned a condo and was going to be in Lawrence for three months out of the year, they could make that space available for extended stay or an overnight guest for a football game.  He could do whatever the condo owner would allow him to do.  In addition, if a person had a condo in his hotel, he could provide for the condo owner housekeeping, room service, and laundry service.  In other words, he could generate revenue because he already had the infrastructure in place to provide that service.  It was an amenity for the condo owner and one of the advantages for being in the hotel was they could avail themselves of all services they made available to their guests, which generated revenue.  There might be some condo owners who would live there 100% of the time, but they could still provide laundry, room service and housekeeping services.  It was a source of revenue. 

Alstrom said earlier, he passed a note to Corliss during Nancy Longhurst’s presentation and requested the Mayor and other Commissioner’s to exercise Robert’s Rules of Order and the economic argument in Longhurst’s presentation, in part, were not relevant to the subtopic on the agenda of HRC approval and whether there were available alternatives.  The economic arguments should not be in this portion of the meeting and the Mayor had the obligation to control the meeting. 

Moved by Amyx, seconded by Chestnut, to close the public hearing.  Motion carried unanimously.                                                                              

At 11:30 p.m. the City Commission recessed for 5 minutes.

Following the five minute break, Mayor Hack said due to the lateness of the evening and because two of the Commissioners were not feeling well she items 4, 5, and 6 on the Regualkr Agenda would be deferred until the November 27^th City Commission meeting.                           

David Corliss, City Manager, asked if there was any additional information the City  Commission wanted from staff or the applicant because it might expedite the Commission‘s consideration and deliberation for those items on November 27^th.

Commissioner Highberger said the findings of “no feasible and prudent alternatives” needed some work.  He said he was not sure how he was voting on this project, but he could not vote to approve the project based on the current draft.   He said there was too much information in some places and not enough specificity in other places.

Mayor Hack said she agreed.  She said it would be helpful to nail down some of that information from the applicant’s proposed findings. 

Vice Mayor Dever said they talked about the lack of economic feasibility information and they might want to debate whether the project could fly with 5, 6, or 7 stories and whether or not those issues had been clearly stated.  He said the applicant did a tremendous job in indicating why this needed to happen and how they were going to benefit from the additional stories, but they needed those numbers generated so the Commission could understand how the public improvements would be impacting the overhead cost of the hotel.

Commissioner Chestnut said he appreciated the comments about the revenue side of the equation, but there had not been a lot of detail about cost estimates because obviously it was both sides, the revenue and costs and what were staff’s views.  He said he wanted to make sure the City Commission was doing due diligence on the cost side. 

Corliss said Commissioner Chestnut moved on to the TIF item which was helpful, but on the first item with the historic preservation, if there was interest in the Commission in saying there was no feasible and prudent alternative, the applicant had provided proposed findings and he was trying to facilitate any additional discussion.                                                                             (10)

PUBLIC COMMENT: None

FUTURE AGENDA ITEMS:

11/20/07	Vice-Mayor Dever plans to be absent
TBD	State Legislative Statement Downtown Redevelopment Issues (public procedures and financing options) Airport business park land use and public financing issues on a December meeting Possible modifications to sidewalk dining laws Oread Neighborhood Association issues from the 11/7/2007 study session Commission review of Neighborhood Revitalization Act plans

COMMISSION ITEMS:

Moved by Chestnut, seconded by Amyx, to adjourn at 11: 50 p.m.  Motion carried unanimously. 

APPROVED:  

_____________________________

Sue Hack, Mayor

ATTEST:

___________________________________                                                                        

Frank S. Reeb, City Clerk

CITY COMMISSION MEETING OF November 13, 2007

1. Bid – Equipment Bldg for Wastewater Treatment Plan to BA Green for $125,629.

2. Bid – 1 rough mower for Eagle Bend Golf Course to Van Wall Equipment for $17,168.

3. Reimbursement Agreement –  gas line relocation at airport to Magellan Pipeline for $106,400.

4. Ordinance No. 8206 – 1^st Read,  Rezone (Z-09-18-07) RM12D & &S 7 to OS, Oregon Trail Add.3

5. Ordinance No. 8196 – 1^st Read, Rezone (Z-09-20-07) IL to OS, Mary’s Lake Add.

6.         Ordinance No. 8195 – 2^nd Read, Allow alcohol in sidewalk dining area for Bourgeois Pig.

7.         City Manager’s Report.

8.         Deciphera Agreements - KS Bioscience Authority .

9.         Letter to FHA supporting the 32B alignment of SLT.

10.       Oread Inn Project - 1140, 1142, 1144 Indiana & 681-620 W 12^th.