Memorandum

City of Lawrence

City Manager’s Office

 

TO:

David L. Corliss, City Manager

 

FROM:

Diane Stoddard, Assistant City Manager

 

CC:

Cynthia Wagner, Assistant City Manager

 

Date:

 

March 7, 2011

RE:

Proposal from Treanor Architects to Establish a Neighborhood Revitalization Area at 1040 Vermont

 

The City is in receipt of a request from Treanor Architects to establish a neighborhood revitalization area at 1040 Vermont.  This request was received by the City Commission in January 2011. Treanor has indicated that they are ready to proceed with this project. 

 

Background:

Kansas Law enables cities to establish neighborhood revitalization areas in order to encourage redevelopment under the Neighborhood Revitalization Act (NRA).  The establishment of a revitalization area enables a property owner to receive a rebate on a portion of the incremental increase of property taxes associated with an improvement project within the area. 

 

Treanor Architects wishes to relocate its Lawrence office to 1040 Vermont.  Plans include remodeling the interior and exterior of the existing building, and adding a second story. Treanor estimates these costs at $2.1 to $2.2 million. Treanor is requesting a 10 year declining scale rebate program be established for the incremental increase in a portion of the property taxes on the property in accordance with the chart below:

 

Year

Rebate %

2012

95% of Incremental value of improvements

2013

95% of Incremental value of improvements

2014

95% of Incremental value of improvements

2015

95% of Incremental value of improvements

2016

85% of Incremental value of improvements

2017

85% of Incremental value of improvements

2018

70% of Incremental value of improvements

2019

50% of Incremental value of improvements

2020

30% of Incremental value of improvements

2021

20% of Incremental value of improvements

 

Treanor is requesting that the City, Douglas County and USD 497 all participate in the revitalization program.  Douglas County and USD 497 will need to determine its level of participation and information has been forwarded to the County Administrator and Superintendent of Schools regarding the request.

 

Parking Pass Request:

Part of Treanor’s proposal is to request 50 parking passes for 10 hour lots.  Treanor would pay the City $195 per year for each parking pass for the next 10 years.  The presumed incentive regarding this portion of the request is holding the cost steady with no increase for the 10 year period.  Mr. Zalneraitis took this into account with his analysis, which is referenced in his memo, discussed in the next section. 

 

Benefit Cost Analysis

 

Prior to leaving the City, Economic Development Coordinator/Planner Roger Zalneraitis completed a benefit/cost analysis for the proposal. The benefit/cost analysis concludes that the project would yield a net positive benefit for the City, Douglas County, and USD 497, as proposed.  Over a 15 year period, the project generates a $660,000 (present value/discounted) increase in revenue for the City, County, School District and State of Kansas.  Specifically, he concluded a cost-benefit ratio of 2.09 for the City, meaning that for every dollar of additional costs and tax rebates, the City will receive $2.09 of new revenue.  Total discounted revenue to the City would be about $40,000.  The cost/benefit ratio for Douglas County would be 3.71, with $60,000 in present value increase in revenue.   The School District would not incur any costs related to the project, but would anticipate approximately $85,000 in discounted increased revenue.  These figures are shown on the chart below:

 

Taxing Jurisdiction

Cost/Benefit Ratio

Present Value of Increased Revenues Over 15 years

City of Lawrence

2.09

$40,000

Douglas County

3.71

$60,000

USD 497

Not applicable (no costs)

$85,000

 

Draft Neighborhood Revitalization Plan

 

Staff has prepared a draft Neighborhood Revitalization Plan, which is required by State statute, which mirrors the Treanor request.  This plan should be reviewed by the City Commission, the Public Incentive Review Committee, and the taxing jurisdictions.  The plan includes the rebate schedule referenced earlier in this memo.  The plan also includes provisions for Douglas County to retain 5% of the incremental increase in property taxes as an administrative fee over the 10 year period. 

 

Next Steps/Calendar

 

A draft calendar has been prepared to consider items related to this request.  The calendar envisions a meeting of the Public Incentive Review Committee on March 29 and a public hearing to be scheduled with the City Commission for April 5, 2011. 

 

Requested Action

 

1.        Refer the Treanor request to the Public Incentive Review Committee for a recommendation; and

2.        Set a date of March 29, 2011 at 4 pm for consideration by the Public Incentive Review Committee; and

3.        Set Tuesday, April 5 as the date of a public hearing to consider the 1040 Vermont Neighborhood Revitalization area request.