To:        Mayor and City Commissioners

From:    City Manager David Corliss

Date:     October 27, 2009

Re:        Bid Date for Carnegie Rehabilitation

 

The City Commission is requested to direct staff to proceed with establishing a bid date for the rehabilitation of the Carnegie building at 9th and Vermont.

 

Background

The Carnegie library building was originally built in 1902 based on a $25,000       donation from Andrew Carnegie.  The building housed the Lawrence Public library until 1972.   From 1972 until 2002 the building housed the Lawrence Arts center which subsequently moved to the jointly financed and City-owned building in the 900 block of New Hampshire.  Since the vacation of the Arts Center the building has been vacant and has received some largely exterior rehabilitation work completed in 2004 for $424,404. 

 

The City Commission has committed to use the facility for several important purposes.  The Lawrence Convention and Visitor’s Bureau is currently housed in rented City space.   Destination Management, Inc. is the entity which manages the CVB and historic society funding from Douglas County.   Additionally, DMI was recently awarded the contract to manage Freedom’s Frontier National Heritage Area.  FFNHA is the National Park Service Heritage Area which includes 41 counties in Missouri and Kansas, including Douglas County.  In addition to CVB and FFNHA uses, the building will also be programmed to allow for public uses (receptions, reunions, public meetings, etc.) that will generate additional downtown traffic.

 

Project Budget

 

As part of the 2010 City budget, the City Commission adopted Charter Ordinance No.  39 on August 18, 2009 increasing the City’s transient guest tax from 5% to 6%.  The protest period for the charter ordinance expired on October 27, 2009.    The new guest tax will become effective January 1, 2010.  We estimate that the new tax will generate slightly over $100,000 in additional guest tax funds.   The guest tax increase was sought in part to provide funding for the Carnegie rehabilitation project to provide permanent City owned space for both the CVB and Freedom’s Frontier National Heritage Area.    Staff believes that this historic location in our downtown will demonstrate our commitment to heritage tourism and provide additional opportunities for downtown events and visitor industry promotion activities.

 

As part of the 2010 budget process, staff provided a general budget outline for the project.

 

$50,000 per year from guest tax funds for 10 years

$500,000

Remaining funds from previously issued debt for the rehabilitation available for project                                                     

451,210

Save America’s Treasures Grant (NPS funded)*                

98,768

Estimated value of sale of tax credit**                              

75,000

Capital improvement reserve funds                                

350,000

Guest Tax funds currently available                                

100,000

 

 

Resources proposed for project:

  $1,574,978

 

*The Save America’s Treasures (SAT) grant (20-04-ML_0021) requires that the historic portion of project be completed by August 2010 (latest extension).  The grant requires a 100% match.  Staff believes that an acceptable portion of the project can be completed under this deadline with bidding on the project at this time.

 

** The historic portions of this project are eligible for a tax credit under the Kansas State Rehabilitation Tax Credit Program.  The credits could not be sold until 2012.  Twenty-five percent (25%) of the historic portion of the project would be eligible for a credit.  Conservatively estimating the historic portion of the project to be $400,000, this would mean a $100,000 tax credit.  The City has some history in selling tax credits, and we would conservatively estimate receiving 75% to 90% of the credit value.  We previously sold the last tax credit for the previous Carnegie work and received 82 cents on the dollar.  We have included $75,000 as the estimate for the historic tax credit value in the project budget (based on $100,000 tax credit).

 

This budget is approximately the cost estimate of the project.  The estimate for both the rehabilitation of the building and related public improvements is approximately $1.5 million.  We believe the current construction climate is favorable to keeping the project within the resources outlined above.

 

The City Commission has approved the design and site plan for this property, and recently renewed the site plan earlier this year.