Memorandum

City of Lawrence

City Manager’s Office

TO:	Mayor and City Commission
FROM:	City Manager David L. Corliss

Date:	July 31, 2012
RE:	Sports Village Project Update

Background:

At the City Commission meeting on June 19, 2012, the City Commission heard an update regarding the proposed recreation center project, the project now referred to as the Sports Village Project. This memorandum provides an update on several items related to this project. At your August 7, 2012 meeting we anticipate the following briefings:

*Briefing from the project architects on proposed site plan and recreation center layout (updated 08/06/12)

*Briefing from representatives of Convention Sports & Leisure (CSL) International on their draft report on the economic impact of the proposed Sports Village

*Briefing from Parks and Recreation staff and advisory board member on proposed uses of the recreation center

*Briefing from Public Works Director on proposed infrastructure improvements for the Sports Village

*Briefing on potential Transportation Development District (TDD) sales taxes which could be generated at the Sports Village and Gateway Addition property

*Discussion on potential next steps for consideration of this project. Staff is recommending that the City Commission schedule the August 21 meeting as an opportunity to further consider this project and the necessary approval items.

Public Meetings:

Since the City Commission meeting on June 19, several meetings have been held with the general public and neighbors. On July 16, a meeting was held with neighbors to review the proposed site plan at the Indoor Aquatic Center. On July 23, a general public meeting was held at 6:30 p.m. at Free State High School.

Property Acquisition:

As previously discussed, Duane and Steve Schwada have offered the donation of approximately 50 acres, plus supporting rights-of-way, on the tract at the northwest corner of West 6^th and K-10. The City Commission has annexed approximately 208 acres which includes substantial public rights-of-way and the remaining property owned by the Schwadas (annexation effective June 4, 2012). The Planning Commission has provided positive recommendations on rezoning, comprehensive plan amendment, and text amendment for this entire tract. A protest petition has been filed concerning the rezoning. Staff has conducted meetings with the property owners on several occasions to discuss their concerns for the land use approvals and the proposed uses and to review site plan documents. A preliminary plat has been submitted for the property. Consideration of the Planning Commission recommendation on the comprehensive plan amendment, zoning text amendment and zoning changes is scheduled for the City Commission agenda of August 21, 2012.

Project Description:

Thomas Fritzel has proposed to construct a recreation center on the property. This would be integrated into a Sports Village which would include University of Kansas Athletics stadiums for track and field and also for soccer. Pursuant to the provisions of the donation of the property, the City would own the underlying property. The proposal from Fritzel is for the City to lease-purchase an approximate 180,000 square foot facility from Fritzel at the amount of $100,000 per month for 20 years (total amount of $24 million). At the end of the 20 years, the City would completely own the facility. This represents $1.2 million per year. If the City debt financed this amount today, Ed Mullins, our Finance Director estimates that we would receive approximately $16.5 million in debt proceeds.

The City has prepared twenty year budgets for the City share of the Douglas County 1% sales tax, with sales tax growth estimates of 3% (recent historical trend) and 2% growth. Additionally, the City has assumed that the new facility will require some level of on-going revenue support for operations (estimated at $350,000 per year). Under both the 3% and 2% growth rates for sales tax, the City’s sales tax reserve fund maintains a positive balance to support the $1.2 million annual lease purchase payment for the facility.

The recreation center project would include approximately 800 paved parking spaces, landscaping and berms for appropriate transition to neighboring property. A key issue in proceeding with this proposal is the development of detailed plans and specifications for the recreation center project. Staff recommends that the City retain the Gould Evans architect firm for the project design, specification, and construction inspection. This is the same firm that staff recommended for earlier recreation center work and the City has retained the firm for consulting work to-date on this concept. Gould Evans is also working on the KU facilities planned for the adjacent property. The City would not commit to proceeding with the lease-purchase until City Commission approval of the final design and specification of the facility and a cost estimate from the architect on its estimated cost. Staff is also working on an operations budget for this facility estimating that it would require approximately $350,000 per year in sales tax revenue support to operate.

Building Use Recommendations:

Park and Recreation staff has drafted a memorandum outlining potential uses for the recreation center. The center is seen as an opportunity to serve both the recreational needs of the community, as well as serving as a state-of-the-art facility for various regional tournaments and sporting events.

Infrastructure:

Staff has developed estimates for the necessary infrastructure to support this project and the property. The necessary infrastructure includes: improvements to Highway 40 (6^th Street), including traffic signalization at a main north-south road aligning with the church entrance to the south; a north-south road from 6^th Street providing main access to the property to be owned by the City; a curb cut on improved 6^th Street providing right-in/right-out access which will provide a secondary access to the site; improvements to the existing frontage road connecting to the interior road network; stormwater improvements, and water and sanitary sewer improvements to the site. Additionally, the property owners have conceptually agreed to the placement of an appropriate Transportation Development District (TDD) sales tax of 1% on the entire tract (City and Schwada ownership) the proceeds of which can be used to finance the above infrastructure.

The City has worked with Landplan Engineering to provide a survey of the site to better develop costs for the Gateway Development. Briefly the improvements include:

• Streets: (Sports Centre Boulevard, Decathlon Avenue, Runners Way, and Sprint Lane). The main road, Sports Centre Boulevard will include a multiuse path, landscaped medians, turn lanes, a conduit for fiber, and pedestrian lighting.

• Stormwater: The drainage basin includes 380 acres. A regional detention facility will be constructed. A main drainage way bisects the 50 acre site. There are several design decisions that will need to be made, including a wet versus dry bottom detention area and whether or not to enclose the main drainage channel. These decisions will affect estimates.

• City Utilities: Water will be extended from the south and along Highway 40. Sewer will extend from the northeast and under K-10.

• Other Utilities: Staff has had preliminary discussions with Westar and Atmos Energy (gas).

• Highway 40 / W. 6th Street: On Friday, August 27th, Staff met with KDOT to discuss improvements needed to Highway 40. The City has requested that KDOT fund the improvements to Highway 40 as well as Runners Way and Sprint Lane (these streets are necessary to relocate where County Road E900 ties into Highway 40). While receptive to further discussions, KDOT is developing estimates and a schedule before committing to making the improvements and when those improvements could be completed. KDOT should have estimates and a schedule completed in the next few weeks, which would include any City participation in those improvements.

INFRASTRUCTURE (INCLUDING ENGINEERING)	ESTIMATE	FUNDING
Streets (not including Runners Way/Sprint Lane)	$2,900,000	GO Bonds
Storm Sewer	$1,600,000	GO Bonds
City Utilities (Water/Sewer)	$1,850,000	Utility Fund
Westar	$50,000	City
Atmos	$50,000	City

Estimated total infrastructure costs for the Sports Village project is $6,450,000. The City’s 2013 debt budget includes $3,000,000 in debt authority and the 2014 debt budget includes an additional $1,000,000 in debt authority (total $4,000,000) designated to pay the initial costs of this project. Earlier discussions on this project included funding the City’s water and sanitary sewer infrastructure with increased water and sanitary sewer rates. Another mechanism could be to use fund balance from the water and wastewater fund for these costs and reimbursing the fund with Transportation Development District proceeds.

The TDD revenue estimate for this site indicates that moderate to aggressive retail build out of the site can provide sufficient revenue to reimburse the City for these estimated costs.

Economic Impact potential:

Both the CSL report and staff analysis indicates that this proposed development will have a strong positive economic impact for the community. Representatives from CSL along with City staff will make presentations at the August 7 meeting.

Next Steps and Recommended Actions:

Staff believes that this project is a tremendous opportunity for the Lawrence community. We have the opportunity to locate a sports village with a regional recreation center and University of Kansas athletics facilities at one of the gateways to our community. All efforts are being made to ensure a high-quality project with attention to the City fiscal consequences. The $1.2 million per year for the facility is the amount of money that was previously discussed for an 80,000 square foot project at the Overland Drive site. The source is the City share of County sales tax which was devoted, in part, to parks and recreation facilities and operations. We are mindful of potential infrastructure costs as well seeking additional partners: KDOT and TDD sales tax. We have examined the potential benefits to the community: substantial recreation and athletics upgrades for Lawrence residents of all ages – and economic benefits from attracting regional and national tournaments and events at both the recreation center and KU facilities, plus the economic growth which can come from development on adjacent property.