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CITY COMMISSION AGENDA ITEM |
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Department: |
City Manager’s Office |
Commission Meeting Date: April 4, 2017 |
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Staff Contact: |
Diane Stoddard, Assistant City Manager |
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Recommendations/Options/Action Requested: |
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Consider authorizing the establishment of the temporary Catalyst Program for Lawrence VenturePark and East Hills Business Park to spur economic development activity within these targeted areas. |
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Executive Summary: |
Staff is proposing the establishment of a special economic development program, the Catalyst Program, to spur economic development activity within the targeted areas of Lawrence VenturePark and East Hills Business Park. The primary reasons to establish this temporary program is to catalyze development activity, particularly for initial anchor tenants for Lawrence VenturePark, and in recognition that the City’s current economic development policies do not handle speculative (spec) development effectively because current policy require identification of specific job creation and wage targets. With spec development, a developer may not know the exact tenant that will lease space. The Kansas City region has seen significant successful spec industrial activity over the past several years. The City of Lawrence needs to be responsive to this trend and responsive to the fact that we have only 1% industrial vacancy, according to the recent 2017 Lawrence Market Snapshot from Colliers International. By incentivizing private spec development, spec projects do not have to be developed by local government, along with the financial risk associated with them. Also, development of spec industrial space will help existing Lawrence businesses find the space that they need locally. We are aware of several local businesses, including Amarr, that have recently signed leases for space outside of Lawrence due to the lack of inventory. The Catalyst program recognizes the unique risks to the developer associated with spec projects and also enables our existing businesses to take advantage of the program to stimulate expansion. Staff believes this program has the opportunity to establish Lawrence as an active participant in this regional growth opportunity. Staff is suggesting the Catalyst Program be set as a temporary two year program, subject to extension upon review of results. It could also be ended during the two year period if needed. There is current interest in this kind of development in the community and this program may be the impetus to spur potential projects to the next step.
Details of the program requirements and benefits are included in the attached program outline. Developers would be required to commit to projects of a certain size within a given time horizon in order to take advantage of the program’s benefits. Benefits would include Industrial Revenue Bonds with a 50% property tax abatement for a ten-year period and an additional 20% abatement if the project was LEED Silver qualified. Land would be provided by the City at no cost (County owned properties would require County approval) and the developer would be required to pay the special assessments on the properties. The City will be responsible for these special assessments on City-owned tracts absent moving them to private ownership. So, the program is meant to be beneficial to the City by developing idle properties and moving special assessment obligations to private developers and the program is beneficial on the private development side as it would offer a streamlined approval process and no land cost (projects would go directly to the City Commission for authorization and would not be subject to other aspects of the City’s economic development policies or process) and addresses the lack of responsiveness of current policies to speculative development in particular. Staff believes that this win-win combination will catalyze development activity within the next year in these locations. |
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Strategic Plan Critical Success Factor: |
Economic Growth and Security |
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Fiscal Impact (Amount/Source): |
The fiscal impact to the City is not known. However, by spurring economic growth on these properties, additional revenue will come to the City due to property tax base and jobs, along with responsibility of payment of special assessments by an entity other than the City. |
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Attachments: |
Colliers International 2017 Market Snapshot Lawrence VenturePark Special Assessments |
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Reviewed By: (for CMO use only) |
☐TM ☒DS ☐CT ☐BM |