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Commission Board Meeting on Wed, July 30, 2014 - 4:00 PM

Meeting Agenda: 

4:00 p.m.

CONSENT AGENDA
(1) (a)  Consider approval of Commission Orders; and 
(b) Authorization to solicit construction bids for Project No. 2013-18 Deck replacement for Bridge No. 08.74N-07.95E Route 1039 bridge over Washington Creek at Lone Star town (Keith Browning)

REGULAR AGENDA
(2) Consider approval of an Engineering Services Agreement for a preliminary engineering study and pre-design report for Project No. 2014-9, the replacement of Bridge No. 05.07N-17.00E, reconstruction of approach roadways, and stream channel stabilization (Keith Browning)

(3) Consider authorization to apply for a Kansas Department of Wildlife, Parks & Tourism grant to design and construct an ADA-accessible trail near the Lone Star Lake marina building (Keith Browning)

(4) Consider waiving formal bidding process and authorizing staff to enter into agreement with Central Power Systems for semi-annual inspection, service and maintenance contract for all Douglas County owned back-up generators. (Scott Ruf)

(5) (a) Consider approval of Accounts Payable (if necessary)  
 (b) Appointments
 -Board of Zoning Appeal (2) eligible for reappointment 10/2014
 -Building Code Board of Appeals (1) eligible for reappointment 12/2014
 -Fire District No. 1 – 12/2014
 Jayhawk Area Agency on Aging Board of Directors – (2) vacancies
 Jayhawk Area Agency on Aging Tri-County Advisory Council – (2) vacancies
 (c)  Public Comment
 (d) Miscellaneous

RECESS

RECONVENE

6:35 p.m.

(6) Neighborhood Revitalization Act project for 1106 Rhode Island and 1101/1115 Indiana Street  (Diane Stoddard)

(7) Adjourn

Meeting Location: 
County Courthouse
Street Address: 
1100 Massachusetts Street, Lawrence, KS 66044, USA
Meeting Minutes: 

Thellman called the regular meeting to order at 4:00 p.m. on Wednesday, July 30, 2014, with all members present.

CONSENT AGENDA 07-30-14

Thellman moved approval of the following Consent Agenda:

Commission Order No.14-033 (on file in the office of the County Clerk); and

Authorized Public Works to solicit bids for Project No. 2013-18, deck   replacement for Bridge No. 08.74N-07.95E, which carries Route 1039   over Washington Creek near Lone Star town.

Motion was seconded by Gaughan and carried 3-0.

PUBLIC WORKS 07-30-14

The Board considered approval of an Engineering Services Agreement for a  preliminary engineering study and pre-design report for Project No. 2014-9,  for the replacement of Bridge No. 05.07N-17.00E (south of Vinland), for the  reconstruction of approach roadways and stream channel stabilization. Keith Browning,

Director of Public Works presented the item. The not-to-exceed  fee  for the preliminary engineering study which includes a geotechnical engineering study with a boring report is $22,615.30.

Once the study and report is complete, staff will negotiate with BG  consultants to complete the construction plan.

Thellman opened the item for public comment.

Thellman moved to approve an Engineering Services Agreement with BG Consultants, Inc. for a preliminary engineering study and pre-design report for Project No. 2014-9, the replacement of Bridge No. 05.07N-17.00E, reconstruction of approach roadways and stream channel stabilization. Motion was seconded by Flory and carried 3-0.

PUBLIC WORKS 07-30-14

Keith Browning, Director of Public Works, asked the Board to consider authorizing staff to apply for a Kansas Department of Wildlife, Parks & Tourism grant to design and construct an ADA-accessible trail near the Lone Star Lake Community Building.

Terese Gorman, County Engineer, explained this Recreational Trail Program is a grant program which provides funding in the amount of 80% state and 20% local of the total project costs, with high priority given to improving accessibility in ADA compliant projects. There is a significant grade change which accounts for the 280 linear feet. Gorman anticipates the total project amount to be $275,000 with minimum local funding at 20% or $55,000. The grant requires a commitment letter guaranteeing where the County share of the money is coming from.

Gaughan asked if the trails would be asphalt. Gorman responded these trails would be concrete, which allows for more grade control to conform to ADA guidelines.

Thellman opened the item for public comment. No comment was received.

Flory moved to authorize staff to submit the application with supporting documents to the Kansas Department of Wildlife, Parks & Tourism for a grant to design and construct an ADA accessible trail near the Lone Star Lake Community Building and commit local funding for budgeted sources, using the CIP for the matched sources in the event the application is approved. Motion was seconded by Gaughan and carried 3-0.

Flory moved to amend his motion to include approval for the County Administrator to sign the “Letter of Approval” when completed by staff. Motion was seconded by Thellman and carried 3-0.

EMERGENCY COMMUNICATIONS 07-30-14

The Board considered waiving the formal bidding process and authorizing staff to enter into agreement with Central Power Systems for a semi-annual inspection, service and maintenance contract for all Douglas County owned back-up generators. Scott Ruf, Director of Emergency Communications, presented the item.

The County owns numerous back-up power generators to allow critical functions to continue to operate in emergency situations after a loss of power. Using one source, to service and maintenance all generators under one agreement, allows assurance that the generator and associated equipment is continually tested, inspected and serviced.

Gaughan asked if all five towers that have generators are covered under the agreement. Ruf stated that is correct and will add the Globe, Lecompton, LEC Flare and Jail towers into one contract.

Gaughan asked if the contract we currently have now is something we established when we purchased the generators themselves or do we have a relationship and we continue to use them. Ruf responded they hold contracts for a lot of state agencies and we purchase generators from state agencies. The LEC was purchased through a RFP process and Central Power won the bid. Since we bought the generators from Central Power, the first year comes with a warranty. After the first year we continued the service relationship.

Flory stated this is a five-year agreement; we have the budgeted funds so you are seeking authorization to waive the formal bidding process and enter the agreement. Ruff stated that is correct. Flory replied he supports the request.

Flory moved to waive the formal bidding process and authorized the Emergency Communications Director, and the Director of Facilities and Maintenance to enter into a five-year service and maintenance agreement with Central Power Systems for all of County backup generators. Motion was seconded by Thellman and carried 3-0.

ACCOUNTS PAYABLE 07-30-14

Thellman moved to approve accounts payable in the amount of $2,025,282.97 to be paid on 07/31/14. Motion was seconded by Gaughan and carried 3-0.

MISCELLANEOUS 07-30-14

Flory updated the other members of the Board on the status of the Marion Fire District Petition. The County has received confirmation from the Osage County Commission that if we are willing to detach a slightly different area in the petition, they are willing approve the request.

The response was received after the July 1, 2014 deadline. So, the Fire District changes could not go into effect before January 1, 2016.

At 4:40 p.m., the Boar recessed until the 6:35 p.m. session.
 
CITY OF LAWRENCE 07-30-14

Diane Stoddard, Assistant City Manager, asked the Board of County Commissioners to consider two (2) Neighborhood Revitalization Act (NRA) projects, with consideration of property tax rebates.

1106 Rhode Island Street

Britt Crum-Cano, Economic Development Coordinator, made a request for economic development support for development for property located at 1106 Rhode Island Street. Hernly Associates, Inc., applicant, plans to purchase the property for $90,000 and is asking for a 10-year, 95% NRA rebate of incremental real property tax revenues generated by the property with participation from the City of Lawrence, Douglas County and School District USD 497. The current property occupies two lots with a house, barn, garage and shed. The property is vacant, dilapidated and presents safety, health, environmental and economic concerns. The existing house, large barn and a garage are contributing structures to the North Rhode Island Street Historic Residential District, National Register of Historic Places and the Historic Resources Commission (HRC) who determined these three structures should be rehabilitated. The City of Lawrence and the School District USD 497 have separately approved the NRA with a 10-year, 85% rebate level.

Stan Hernly, Hernly Associates, Inc., stated the City purchased the property through eminent domain. If the tax rebate is approved, Hernly plans to develop two residential properties and one office on site. Hernly stated a development group is putting money into the project but can only borrow about 55% toward the improvements because the revitalization is more than the appraised value. Once rehabilitated, the group will have to start paying back the mortgage and the short-term financing. Without the NRA there is a negative return for six years.

Thellman stated the project seems to depend on receiving grants. She asked if Hernly has a Plan B. Hernly stated the City Commission discussed a $26,000 grant for infrastructure. The state and federal tax credits are programs that only require thoroughly completing the process. He is predicting about $32,000 in preservation funding. If that is not achieved, the project will need to be reduced.

Gaughan asked if the NRA is approved and the project d s not move forward, what happens. Stoddard replied “nothing.”

Flory stated his support for the project.

Thellman opened the item for public comment. No comment was received.

Gaughan moved to approve the request for NRA based upon staff’s recommendation with a 10-year, 85% rebate of the incremental tax revenue for rehabilitation of three historic structures and redeveloping the property at 1106 Rhode Island Street to productive use as office and rental-residential space; and authorized the County Administrator to execute a Cooperative Agreement between the City of Lawrence, Douglas County and the School District USD 497. Motion was seconded by Thellman and carried 3-0.

1101/1115 Indiana Street

Britt Crum-Cano, Economic Development Coordinator, made a request for economic development support for property located at 1101 and 1115 Indiana Street. The applicant proposed to redevelop this property into upscale, mixed-use, commercial and student housing, asking for a 12-year, 95% NRA for tax rebate.

The Commissioners made the following disclosure statements regarding the applicant:

Thellman stated she had a meeting with James Heffernan, applicant, prior to tonight’s meeting. Gaughan stated he serves on the PIRC Board and heard most of the presentation at that meeting and he also met with Mr. Heffernan prior to this meeting. Flory said he also met with the applicant on Monday, August 4.

James Heffernan, HERE Enterprises, LLC, presented an overview of the project. The complex will be located south of 11th Street between Mississippi and Indiana Street, and sits on 2.5 acres immediately across the street from Memorial Stadium. The complex would be LEED certified, one of the largest of its kind in Lawrence, with 237 apartment units with a proposed green roof, and robotic parking. The project will not require additional city expenditures such as water or sewer. Heffernan said the robotic parking constitutes the largest percentage of the project due to the Oread Neighborhood Plan and city ordinance calling for a 1:1 ratio for parking availability per occupant. He has never encountered that before which creates a difficult situation. Not every student at KU has a car, so they may have excess capacity in the garage. The green part of the robotic parking is space efficiency. The plan proposes 577 stalls in the parking garage which will represent the largest, private parking structure in Lawrence. Heffernan said the beauty of the structure is that it is not visible. The plan also calls the site to be a mixed-use district, introducing 107 public parking stalls on Mississippi and Indiana Streets with six foot sidewalks. The pedestrian experience will be good along this block. There will be one entrance for occupants to enhance security.

Britt Crum-Cano, Economic Development Coordinator, stated the applicant applied for a 12-year, 95% NRA and asked the city for industrial revenue bonds to get the sales tax exemption on the construction material. Staff feels the project, except the fact it is not downtown, meets city and state criteria for NRA eligibility. It was also eligible for an IRB. The cost benefits assumption capital investment is very substantial at $75,500,000. The project will add 17 full-time jobs. IRB sales tax savings was about $2.4 million. The base property taxes on the two properties as they stand, generates about $46,300. No retail sales opportunities were included in the analysis.  According to the cost benefit results the property is eligible for a 10-year, 85% NRA, which was approved by the City Commission and the School District for USD 497.
 
Diane Stoddard, Assistant City Manager, stated there are several unique aspects of this project. The City received several questions about the project including, Why would the City be supportive of a rebate for an apartment complex; How d s it differ from another apartment project and; and How many apartment developers are going to be requesting this type of incentive in the future" The base taxes will remain unchanged. Because of the tremendous impact and growth of valuation associated with the property, even with an 85% NRA, the taxes collected on the property will double the current levels. The City feels this project worthy of a tax rebate. Without the redevelopment and with the condition of the properties as they are, the property will continue to decline.

Gaughan asked for clarification that our revenue will double.

Stoddard replied the statement that the revenue will double “is correct” even with the approval of the 85% NRA. This property is somewhat difficult to assemble. There are unique issues from a topographical standpoint and challenges to putting a development on that site. If the project isn’t able to get additional density or value, Stoddard said we may not see a growth on that value in the future. This truly is a redevelopment project of which the City d s not get a lot of these types of opportunities. This is coming into the core of the community and redoing part of an area we would look at placing density for student living. Also the scale of the property is unique. It would be one of the largest, if not the largest project, in terms of its budget of the $75 million.

Flory asked if the doubling of taxes is over the 10-year period. Stoddard replied it would occur during the very first year. Right now the base value collected on these two properties is about $46,000. In the first year, after the project is completed in 2017, it would generate $97,000 in property tax revenue, which is just the base plus 15%, with the 85% NRA. Flory added the tax increase will be significantly higher every year over the 10-year period.

Thellman asked if there has always been a need to a tax rebate on this project or did the City’s code and the Oread Plan of 1:1 ratio on the parking of car to student trigger the need for the incentive. Heffernan said the 12-year, 95% request is not new. It was discussed early on in the project.

Thellman asked if we are unique or if this is a typical way to administer an NRA. The NRA tool in a lot of communities is used in a boundary area or large area where a criterion is set for who might be eligible. Thellman stated we seem to apply this project by project. Stoddard said it is used in the manner as Thellman stated in many areas. The NRA program is extremely flexible. The law allows the incentive to be used per project or for a whole area. Some communities do it for a multi-block area. The terms are set by the discretion of the governing bodies.

Thellman asked if an entire area of a community with low economic housing, like identified in North Lawrence, could be zoned to have regular home owners take advantage of tax abatement if they improve their homes. Stoddard responded “yes.” One has to be careful when putting money into the home as the tax base must increase. The improvements have to raise the value of the property to increase property taxes. Thellman added she would like to explore using this tool to help regular citizens. She feels the public perceives us as only wanting to give advantage to wealthy developers.

Thellman added she’d like to know on a yearly basis how much abatement is granted for projects. Stoddard replied the City’s Economic Development Coordinator puts together an annual economic development report where she summarizes the current status of all incentives the City has, property tax abatements, industrial revenue bonds, what jobs are created and reports back on performance with every project.

Flory commented there is a misunderstanding when the public hears tax incentives. They think when we approve a tax incentive, the developer d sn’t have to pay tax for a period of 10 years. Not only do they pay the same taxes and we get the same revenue from that piece of property that we would not have gotten otherwise, but we also get 15% for 10 years of the increased value. If that property d sn’t increase in value, they get no benefit. We get the base taxes and do not lose a single dollar. The only thing we lose is a portion of what that developer increases in value. But at the end of 10 years, you have a $75 million project that g s on the tax rolls at 100% which is a tremendous boost. Flory added on this project, we would be doubling the revenue we take in on this property the first year of completion. This is a mixed situation because the County d s not create the policy, the City of Lawrence d s. We only come in on the issue of willingness to rebate our portion of the taxes.

Crum-Cano gave a short summery of the major projects going on in Lawrence that have incentives, and in short, estimated these projects will bring $109 million to the community from private investments.

Flory clarified that the analysis did not include rental displacement. Crum-Cano said that is correct.

There was discussion that the analysis provided did not include retail or rental development impacts on the market. Crum-Cano stated additional studies would be needed and they are expensive. She questioned who would be required to pay from the studies, the City, the County or the developer. The latest study done was on convention development. Primarily, her summery consists of property tax, job creation and the effects on the local economy.
 
Gaughan stated the County is being asked to make decisions on projects that are less than complete. He stated as the NRAs become increasingly more utilized and we consider more mixed-use development, the City and County should consider the policy issue and look at investing in a study to help make decisions. Stoddard said if we do require a lot of analysis on a small project like the Cider Building or the Hernly Project, it might have an unintended consequence of having them not be eligible to access the tool. Gaughan added he likes looking at using the NRA tool as a district.

Thellman opened the item for public comment.

Josh Montgomery, Wicked Broadband, stated the City of Lawrence has lost almost 900 jobs in the past ten years despite $900,000 in spending on economic development, which he calculated on a 10-year time frame is $9 million. He feels the project proposed d s not meet the City’s stated Economic Development goals such bio sciences. Retail and apartment complexes are not included. He feels this complex will not bring additional residents to the community nor will the retail attract outsiders. He was concerned his tax dollars are going to fund this development.

Flory replied as far as taxes are concerned, the County is not giving up anything we were not getting to begin with. The developer brings in the $75 million to build the project and he’s asking that while he improves the value of the property he’ll pay the taxes on the property as is and a portion of it for 10 years, but eventually he will pay taxes on the entire value of the property. Douglas County is not paying one penny of cash contributions to have a fancy garage.

Heffernan responded by reading one criterion under the NRA statue which said “it is the opportunity to attract unique retail and/or mixed use development which will enhance the economic climate of the city and diversify the economy base.” He said if you read the complete NRA resolution, the Commission would find this project meets every criterion, more than any other project the City/County has ever approved.

Gaughan stated he believes this project meets the criteria for an NRA and he appreciates the effort to make this a green building which will resonate in our Community and in the Oread. The bottom line is we will continue to see these revitalization act projects come forward. He would on a policy level, like to look at what we can do to make this process easier to navigate. When looking at the revenue numbers this project is expected to generate to Douglas County over a period of 10 years, this project makes sense. We are doubling the revenue, it’s a mixed use development, it’s a LEED certified building, and it’s an infill development in a neighborhood that can use that. Gaughan said looking at this in a more district based use is a good direction to go. The bottom line is this $75 million project 10 years out, is going to bring in a lot of revenue, and in the mean time double the current returns.

Flory commented this is not pure economic development. It’s the Neighborhood Revitalization Act with a number of proposals involved that deal with blighted or under developed areas. This project meets the statutory criteria and policy guidelines which were established by the City of Lawrence.

Flory agreed with Commissioner Gaughan that this is a super infill in a questionable area, with mixed use, consistent with the Horizon 2020 and the Oread Neighborhood Plan. Flory said most people do not understand that the tax revenue will actually increase as the value increases. And in 10 years from now, it will increase dramatically. It’s consistent with the policies on the books. Policy is not law, but if you don’t like the policy, you don’t hold it against the applicant before us, you change the policy. He sees a long-term tremendous benefit and short-term increase in tax revenue to Douglas County. Flory stated under the policies as they exist, this application is consistent and deserving of our support.

Thellman said the City and County won’t bear any infrastructure costs for this project because it’s already there and we get the benefit of an infill development project. It’s rare that we have true infill. On top of that, this infill development in the Oread neighborhood, meets virtually every aspect of their plan. In addition, no one from the Oread neighborhood is here to oppose this project, which speaks volumes. Thellman said we are not losing dollars on this project. We are gaining base plus 15%, then substantially more tax benefit down the road. Thellman said she feels it is important to understand this is not a giveaway; it’s an increase in our revenue with more to come later on. As a parent who just had a college graduate and two kids in college, she said she appreciates the building density close to campus and she said she appreciates it’s not KU dollars building this density with state funding. KU will have the benefit of fine, secure, student housing close to campus built by someone else. While searching for student housing with her family in Madison, Boulder, Austin and Aims, she found all these institutes have this type of residential housing. This is not new. It’s us catching up with other communities. We may be smaller but it will benefit our university and it really adds to the communal feeling of the campus, the walk ability, and assets that pull people into the university. Regarding economic development efforts, she d sn’t feel this is an “either/or” thing; that if we don’t do this project then we’ll do other things.  The County provides GAPP funding for small business development in our rural communities and spends as much as we can when good projects come along, participating generously to try and bring primary jobs into the community. This is not the incentive the developers asked for and Thellman added she is not sure they will stay. The 10-year, 85% NRA is what the City asked for. Thellman stated she is in support of the project.

Gaughan moved to approve the County portion of the neighborhood revitalization act for a 10-year, 85% rebate for the incremental tax revenue for the properties at 1101/1115 Indiana Street to redevelop the property into an upscale, 7-story, mixed-use, commercial/student housing community and execute an agreement between the City, County and School District USD 497. Motion was seconded by Flory and carried 3-0.

Thellman moved to adjourn the meeting; Flory seconded and the motion carried 3-0.

Nancy Thellman, Chair

Jim Flory, Vice-Chair

ATTEST:

Jamie Shew, County Clerk

Mike Gaughan, Member