Memorandum
City of Lawrence
City Manager’s Office
TO: David Corliss, City Manager
CC: Diane Stoddard, Assistant City Manager
FROM: Roger Zalneraitis, Economic Development Coordinator/Planner
DATE: December 3, 2009
RE: West Lawrence Labs Acquisition
History:
On November 10, 2009, Staff presented to the City Commission a request from the Lawrence- Douglas County Bioscience Authority (LDCBA) for the City to purchase the West Lawrence Labs building and provide enhancements to the HVAC operating systems within the building. This purchase would allow Crititech to remain in Lawrence, and for the additional space to be subdivided and leased to multiple tenants. The facility is seen as a potential graduation facility for businesses that come out of the West Campus Bioscience and Technology Business Center.
Under the proposed transaction, the City would issue bonds to finance the purchase of the facility and the improvements. LDCBA would pay to the City and County an initial payment of $25,000 per year for five years, followed by the principal owed on the bond and interest up to four percent per year. The City and County would pay the balance of the interest owed.
The City Commission received Staff’s report on the request and took public comment on the issue. The Commission voted unanimously to authorize staff to initiate the procedure for considering the transaction. The presentation was then made to the County Commission on November 11, 2009. It also unanimously supported the proposal to proceed with the initial steps for the transaction.
Public Incentive Review Committee (PIRC) Consideration and Recommendation:
The City initiated the formal approval process for the interest subsidy by presenting the proposal to PIRC on November 16, 2009. PIRC voted 7-1 to recommend that the City proceed with the LDCBA proposal for the acquisition of West Lawrence Labs. The one vote in opposition was based on a desire to see an appraisal completed before the sale. A draft of the minutes from the PIRC meeting is attached.
Next Steps: City-County Cooperation Agreement and Bond Ordinance:
Should the City and County wish to proceed further, the next steps include consideration of a City-County Cooperation Agreement to guarantee the bonds and consideration of first reading of a bond ordinance to authorize the issuance of the bonds to accomplish the purchase of the facility and the desired improvements.
Gilmore & Bell, bond counsel for the City and Douglas County, has provided a draft City-County Cooperation Agreement. The Cooperation agreement affirms that the City and County agree to split all costs associated with the project equally; creates a management committee consisting of a City and County official to oversee building operations and leasing; provides for remedy in the event that either the City or County do not make debt or other payments as scheduled; authorizes the Management Committee to draft a lease agreement with LDCBA; and ensures that property taxes are paid by the building. Staff welcomes feedback and discussion on the draft Cooperation Agreement.
Staff is also presenting a Home Rule Ordinance authorizing the issuance of $2,900,000 of General Obligation Bonds for the purchase of the West Lawrence Labs building. Authorizing the issuance of these bonds will enable the City to begin preparing all documentation necessary to complete the purchase and sale of the building by the end of January 2010.
Should the City Commission authorize finalization of the City-County Cooperation Agreement and first reading of the bond ordinance, future steps include consideration by the City of second reading of the bond ordinance (scheduled for December 15, 2009), and County consideration of the City-County Cooperation Agreement at its December 16, 2009 meeting. Additional future steps include the City Commission execution of a real estate purchase agreement and a lease agreement with LDCBA.
Requested Action
Authorize the Mayor to execute the finalized City-County Cooperation Agreement and approve on first reading the Home Rule Ordinance authorizing the issuance of General Obligation Bonds in the amount of $2.9 million for the purchase and improvement of the West Lawrence Labs building.