Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
CC:	Diane Stoddard, Assistant City Manger Casey Toomay, Assistant City Manger
FROM:	Britt Crum-Cano, Economic Development Coordinator
DATE:	March 19, 2015 – Updated 03/23/15
RE:	Final City Commission consideration of NRA for 705 Massachusetts Street

The City, County, and School District have received and considered the request from the Eldridge Hotel LLC for public assistance related to the 705 Massachusetts Street Property. Specifically, the company requested the participation of the City, County, and School District in a 15-year, 95% NRA rebate of the incremental real property tax revenues generated by the property.

This request was received by the City Commission at its January 20, 2015 meeting and referred to the Public Incentives Review Committee for review and recommendation.

PIRC Recommendation

During the February 13, 2015 Public Incentive Review Committee (PIRC) meeting:

A motion was made to recommend authorizing Industrial Revenue Bond Financing (IRB) for the project to access a sales tax exemption on construction materials. Motion passed 5-0.
A motion was made to recommend a 15-year, 95% NRA with conditions outlined by staff. Motion passed 4-1.

Draft minutes of the PIRC meeting are attached.

City Commission Actions (1^st NRA Ordinance Reading)

At their February 17 2015 meeting:

The City Commission voted to authorize City participation in the NRA at the 15 year, 95% rebate level. Approved 3-1.

A motion was made to adopt Resolution No. 7104, authorizing Industrial Revenue Bond financing for the purpose of accessing a sales tax exemption on project construction materials. Motion passed 4-0.

County Commission Actions

On February 18, 2015, the Douglas County Commission considered the NRA request and approved participation in a 15 year, 85% NRA. Authorized 3-0.

County Meeting Recap

At the 2-18-2015 County Commission meeting, the Commission received a request from Eldridge Hotel, LLC to establish a 15 year, 95% NRA for the purpose of expanding the existing hotel (located at 701 Massachusetts Street) onto the vacant parcel next to the hotel (located at 705 Massachusetts Street). During discussions, one member of the commission voiced support for participation at the 15-year, 95% rebate level. Another member voiced support for participation at the 15-year, 75% rebate level, primarily due to cost-benefit ratios shown for the County under a 15 year evaluation period (see attached at end of memo). The third commissioner suggested they meet in the middle at the 15-year, 85% rebate level. The 15-year, 85% rebate level was authorized by the Commission on a 3-0 vote for approval. As part of the motion, the County also voted that NRA documents clarify that rebates are authorized only for the expansion portion of the project, and not the existing hotel, should ownership change or the parcels ever be combined in the future.

At the end of the meeting, the County had discussions related to specific NRA language that defined the tax increment and how it was calculated. County staff was interpreting the language to mean the dollar amount of rebate is held constant for each year of the rebate (“set it and forget it” approach, which minimizes administrative processing on the part of the County), while the City is assuming the percentage of the rebate is held constant for each year of the rebate (i.e. The dollar amount of rebate fluctuates with the annual change in the property’s incremental increase in property value).

The County voted that the language for the Eldridge request specify that the rebate percentage is held constant, with rebate dollar amounts fluctuating according to the property’s incremental increase in property value. However, for future NRAs, the County voiced they prefer the dollar amount be set so annual rebated amounts are the same for each year of the NRA. City staff is in discussions on clarifying language for the Eldridge NRA as well as any clarifications needed for past approved NRAs. Regarding future NRAs, the City may wish to decide which method to pursue for defining the tax increment and calculation.

School Board Actions

On March 9, 2015, USD 497 School Board considered participation in the NRA and unanimously approved participation in a 15 year, 95% NRA. Approved on consent agenda with no discussion.

Next Steps

Staff has attached a revised performance agreement, which is subject to review by the applicant and a revised NRA plan - updated 03/23/15, which is subject to review by the County.

The City Commission will have final vote through the second reading of the Ordinance authorizing the NRA. This meeting is scheduled March 24, 2015.

Requested City Commission Actions

Consider City participation in a 15-year, 95% NRA for 705 Massachusetts Street via second reading of Ordinance No. 9086.

If NRA participation is approved, authorize the City Manager to execute a:

o Cooperative agreement between the City, County and School District on NRA administration.

o Performance agreement between the City and Applicant.

List of Attachments: 705 Massachusetts Street NRA

1. Technical Report and Analysis

Request Letter and Application
City NRA Policy (Resolution 6954)
City IRB Policy (Ordinance 8253)

2. Supplemental Data

3. Neighborhood Revitalization Plan (draft)

4. NRA Calendar of Events

5. PIRC Meeting Minutes: February 3, 2015 (draft))

6. Ordinance 9086 establishing the revitalization area and approving the NRA plan

7. City, County, and School District Cooperative Agreement

8. Performance Agreement (draft)