Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
CC:	Diane Stoddard, Assistant City Manger Cynthia Wagner, Assistant City Manger
FROM:	Britt Crum-Cano, Economic Development Coordinator
DATE:	July 8, 2014
RE:	Hernly Associates request for 1106 Rhode Island Street

Please place the following item on the July 8 City Commission agenda:

Receive recommendation from the Public Incentive Advisory Committee and receive request from Hernly Associates for a Neighborhood Revitalization Area (NRA), to purchase City property at 1106 Rhode Island and a development grant for a multi-use historic preservation project.

Hold a public hearing on the establishment of a Neighborhood Revitalization Area (NRA) at 1106 Rhode Island Street. After the public hearing, consider first reading of Ordinance 9022 establishing the revitalization area and approving the NRA plan. Consider applicant’s purchase offer of $90,000 for 1106 Rhode Island Street and a city-provided development grant for up to $26,100.

Overview

The City has received a request letter and application from Hernly Associates, Inc., which includes a suggested purchase price and incentives request for the property at 1106 Rhode Island Street, Lawrence, Kansas. Specifically, the company is requesting:

Property purchase price of $90,000

10-year, 85% NRA rebate of the incremental real property tax revenues generated by the property. The company is requesting NRA participation of the City of Lawrence, Douglas County and School District USD 497.

Development Grant totaling up to $26,100

Located at the southeast corner of 11^th St. and Rhode Island St., two blocks east of Lawrence’s historic downtown district, the property occupies two lots with built structures including a house, a barn, a garage and shed. Currently the property is vacant, dilapidated, and blighted, presenting safety, health, environmental, and economic concerns. However, the existing house, large barn, and garage are contributing structures to the North Rhode Island Street Historic Residential District, National Register of Historic Places and the Historic Resources Commission (HRC) determined these three structures maintain sufficient integrity and should be rehabilitated.

The company intends to rehab the three historic structures and redevelop the property to productive use as office and rental residential space.

This request was received by the City Commission at its June 17, 2014 meeting and was considered by the Public Incentives Review Committee for review and recommendation on June 24, 2014.

The City, County, and School District will individually decide their participation in the NRA and each will conduct a public meeting to consider this request. Information on this request has been forwarded to both the County and School District.

Policy & Eligibility

The City of Lawrence adopted an updated NRA policy in the fall of 2011. 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.

Staff’s technical memo summarizes the policy issues as it relates to this request. It appears that the request would meet the parameters of the NRA policy.

Analysis

City Staff has completed a cost-benefit and “but for” analysis of the proposal, in accordance with City policy. Analysis indicates that the project could meet required thresholds for all of the taxing jurisdictions with a 10-year, 85% NRA rebate.

Draft Neighborhood Revitalization Plan

Staff has prepared a draft Neighborhood Revitalization Plan, which is required by State statute, which mirrors the applicant’s 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 $100 annually as an administrative fee for the duration of the rebate program.

Next Steps/Calendar

A draft calendar has been prepared to consider items related to this request. The City Commission will conduct a public hearing to consider the request at their July 8, 2014 meeting. After the public hearing, the School Board and County Commission will also consider their participation regarding the project. The meeting with the School Board is scheduled for July 28^th and the meeting with the County is scheduled for July 30^th. The City Commission would take final action once School District and County participation is known (tentatively scheduled for the August 5^th City Commission meeting).

Staff Recommendation

Staff recommended a property purchase price of $90,000, up to $21,600 in development grant assistance, and approval of a 10-Year, 85% NRA.

PIRC Recommendation

At the 6-24-2014 PIRC meeting, the committee voted unanimously to recommend:

A purchase price of $90,000
The establishment of a 10-Year, 85% NRA
To provide up to $26,100 in development grant assistance

Draft minutes of the June 24, 2014 PIRC meeting are attached.

Requested Action