Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Diane Stoddard, Assistant City Manager
Date: CC:	January 15, 2013 Cynthia Wagner, Assistant City Manager
RE:	Resolution of Intent to issue Industrial Revenue Bonds for the Kansas Athletic facilities at Rock Chalk Park

Please add the following item to the January 22, 2013 City Commission agenda:

Adopt Resolution No. 7002, indicating the intent to issue up to $40 million in industrial revenue bonds for the Kansas Athletic facilities at Rock Chalk Park, if appropriate.

Background:

As the City Commission is aware, the October 2, 2012 letter from KU Endowment regarding Rock Chalk Park requested the issuance of industrial revenue bonds for the project to construct KU’s new track and field, softball and soccer facilities.  There are other requests indicated in the letter, including the waiver of permits and fee waivers.  Additionally, city staff understands that the applicant intends to pursue a property tax abatement in conjunction with the industrial revenue bond issuance.  Our understanding is that current Kansas Athletic facilities enjoy a property tax abatement.  However, the proposed structure of construction and lease of the new Kansas Athletic facilities at Rock Chalk Park may not carry an automatic property tax exemption. 

There are two main benefits to industrial revenue bonds in this instance: (1) a sales tax exemption on materials used in construction, and (2) a property tax exemption for 10 years.  The property tax exemption request requires a cost-benefit analysis, notice to the county and school district and a public hearing.  Staff is currently working with the applicant to gather information to prepare the cost-benefit analysis.  Once that information is prepared, it will be considered by the Public Incentive Review Committee (PIRC) and then notice will be sent to the school district and county and the public hearing will be held by the City Commission to consider the property tax abatement request. 

Discussion:

Developers of the Rock Chalk Park have indicated that they plan to proceed with the construction of the Kansas Athletic facilities very soon.  In order to enjoy the sales tax exemption that comes from industrial revenue bonds, a resolution of intent to issue the bonds must be approved by the City Commission and then the City can apply for the sales tax exemption certificate for the project.  In order to process the IRB request in a fashion that accommodates the timeframe of the construction, staff recommends that the City Commission consider the Resolution of Intent to issue the bonds at this time.  The current resolution does not include reference to a property tax abatement.  However, staff intends to work with the applicant and bring the property tax abatement request forward as the cost-benefit analysis is completed, following the regular process.  The City Commission would need to consider the property tax abatement at a future meeting.  Thus, authorizing this Resolution would have the direct effect of indicating a willingness to issue the bonds in the future and enable the sales tax exemption certificate to be issued for the construction of the Kansas Athletic facilities. 

Recommendation/Suggested Action:

Adopt Resolution No. 7002, indicating the intent to issue up to $40 million in industrial revenue bonds for the Kansas Athletic facilities at Rock Chalk Park.