Lawrence commission accepts Q39 incentive application, defers final IRB vote pending CID analysis

The Lawrence City Commission on Feb. 11 received an incentive application from RKM KU LLC to support redevelopment of a portion of the former Lawrence Journal-World production facility at 639 New Hampshire Street and authorized the city manager to sign a funding agreement; the commission deferred final action on the $5 million industrial revenue bond (IRB) resolution pending a third-party analysis of a proposed community improvement district (CID).

The application requests an IRB for eligible construction costs with a principal amount of $5,000,000 and a single-property CID that would levy a 2% sales tax for up to 22 years to reimburse developer costs. Assistant City Manager Brandon McGuire presented the item and asked the commission to accept the application and refer the CID and IRB matters to staff for analysis. Vice Mayor Finkle Dye moved to receive the application, authorize the city manager to execute a funding agreement with RKM KU LLC, and defer consideration of Resolution No. 7573 (the IRB resolution) until CID analysis is complete; the motion passed 4-0.

Why it matters: The project is framed by the applicant and supporters as an anchor reuse in a 70,000-square-foot former industrial printing plant that has been underused for more than a decade. The developers say the restaurant tenant, Q39 Barbecue, would create roughly the equivalent of one restaurant’s staffing footprint (the applicant mentioned about 88 jobs in the staff report) and that constructing 8,000 square feet of usable commercial space would catalyze additional redevelopment of the larger Journal-World building.

What the city would provide and what is next: The CID as proposed would collect a 2% sales tax on retail sales within the district, returned to reimburse the developer; the City’s direct construction-related sales tax on materials was estimated in the staff presentation at about $30,000 (city share) and third‑party costs for bond and CID analysis would be paid by the developer under a funding agreement. Bond counsel Kevin Whitby and city staff explained that state law requires a valid petition signed by at least 55% of property owners to form or expand a CID, and that expanding a single-property CID later would require repeating statutory notice and hearing steps. The commission asked staff to perform the CID “but for” and financial analyses and return with results before the commission acts on the IRB ordinance.

Key developer and public comments: Patrick Watkins, attorney for the applicant, described the building as “the elephant in Downtown Lawrence,” citing prior failed deals and the high costs of making the printing plant usable. Watkins said the city’s economic development policy (adopted February 2019) supports downtown infill and that “this project qualifies for incentives because it’s a major investment in a dilapidated downtown building.” Kelly McGee, the owner of Q39 and RKM KU LLC, said she is investing personally and framed the request as necessary to make the complex redevelopment financially feasible: “I’m asking… I’m willing to make this substantial investment personally.”

Supporters and opponents at public comment: Downtown Lawrence Inc. Executive Director Andrew Holt said the proposal would address a “vacant building and dead spots” problem and serve as a catalyst for further downtown investment. Several commenters opposed public subsidies for the restaurant use: resident Percy Weichmann wrote that the project “doesn’t align very well” with some strategic-plan economic targets and questioned wage and subsidy assumptions; candidate Steve Jacob called tax abatements “corporate welfare.” Vince Bryant of 3 D Development, who earlier worked on a broader redevelopment, said the site is “very challenging” and described the restaurant as an accretive sales-tax generator.

Financial and technical clarifications raised at the meeting: Staff and the development team outlined utility and site work needs (sewer tie-ins, a 2-inch water service with a $52,491 system development charge listed in staff comments, electrical easement negotiation and new transformers, and onsite grease interceptors). The commission also discussed that many of the site‑specific infrastructure studies (electrical, sanitary sewer, stormwater) have been performed or are planned and that work done now could benefit future parcels in the same building complex.

What the commission decided: The commission voted 4-0 to receive the incentive application, authorize the city manager to sign a funding agreement with RKM KU LLC to reimburse city third-party review costs, and defer resolution consideration for the IRB until staff returns with the CID analysis and the third‑party review. Commissioners indicated differing comfort levels with taking the IRB vote before the CID analysis was complete; one commissioner said they would not support the IRB tonight but would not object to continuing the CID review.

Next steps: Staff will complete a third‑party CID financial analysis and the customary “but‑for” review, return with details on the CID structure and the proposed funding agreement, and schedule the IRB ordinance for a future hearing after that analysis. The commission’s deferral leaves the application accepted and under review but does not approve final incentives or levy the CID sales tax.

Ending: Commissioners and applicants said they hope the additional analysis will be completed “in a very short period of time,” after which the commission will consider the IRB and any CID ordinances at a future public meeting.