Tuesday, Oct. 09 2012 6:29PM
Stanley tax abatement uncertain
LS council to take final vote at future meeting
By Russ Pulley
A $178,500 property-tax abatement requested for the new Stanley Event Space in downtown got mixed responses from the Lee’s Summit City Council.
The council, which earlier this year had approved construction of the project, on Oct. 4 heard a request from Stanley co-owner Bryan King for abatement on the increased value of the property, which is now a parking lot.
The council voted 4-2 to draft an ordinance approving the abatement. Once the council takes that step, passing the ordinance is often a formality. But with split opinions and two councilmembers absent Oct. 4, the outcome is more uncertain.
Councilmembers Rob Binney, Ed Cockrell, Allan Gray and Kathy Hofmann voted yes, while Bob Johnson and Brian Whitley voted no. Derek Holland and David Mosby were absent.
Whitley questioned what return the city would get for giving the project more incentive, while other councilmembers had various philosophical objections.
The Stanley plans a two-story, brick and stone building at 308 S.W. Douglas St., adding it next door to its current building. The expansion will match the early 20th Century style of downtown.
The $1.6 million project will include retail spaces and an upscale ballroom with wood floors and ceilings with chandeliers to replicate an early 1900 look. On the roof will be terrace with a pergola and water features for holding outdoor ceremonies.
“We’re trying to make it a centerpiece of downtown, a place people will enjoy coming to as well as a place the city will be proud of,” King said.
He said since the Stanley opened in 2010, the location has hosted 268 events bringing 26,000 visitors downtown, many of them for the first time to Lee’s Summit. Many of them shop or eat at Lee’s Summit businesses, he said.
The Land Clearance for Redevelopment Authority has recommended a five-year abatement, while the Stanley first asked for a 100-percent abatement on the increase of taxes for 10 years. The current tax on the parking lot is about $1,838 a year.
Council members praised the design of project and hoped for its success, but some were troubled that King is seeking the abatement after construction was approved and and started.
“I don’t want to see a precedent for this to start happening with other developments,” Hofmann said.
Johnson said abatement to make redevelopment competitive with a “green field” project was appropriate, but disagreed with the amount requested.
Cockrell questioned whether the Stanley should get a tax break to compete with other small businesses in “Old Town” Lee’s Summit, which is defined as the area between Interstate 470, U.S. 50 and Missouri 291.
Christine Bushyhead, a lawyer representing the Stanley, said the project is a family-owned business whose owners were willing to make an investment for a “marginal” return of about 8 percent because of their commitment to downtown.
The tax-abatement being recommended by the Land Clearance for Redevelopment Authority could make their return a “good” investment at 15 percent and mitigate risk during early years of the expansion’s operation, she said.
The LCRA was recommending abatement for the first five years because after that the Stanley’s financial projections show it will make a 15-percent return without aid.
Keith Asel, chairman of the LCRA and a banker, said its members carefully reviewed the Stanley’s financial projections. He said it was his opinion that it would be a much safer project, financially, with the abatement and “fairly risky” without the incentive, for its first years.
Chris Sally, of Development Initiatives, a consultant who does work for the LCRA, explained to the council that the Stanley was working on the abatement months before getting construction approval, but hadn’t mentioned it due to an “oversight.” The Stanley’s application for the abatement was stalled because of delays by the LCRA in setting up its downtown redevelopment district, which was beyond the Stanley’s control, Sally noted.
Sally said the project is a great example of the kind of redevelopment the city wants to encourage, with a $160,000 expense in upgraded materials.
Johnson said the upgrades are a business choice for the owner, but not something the city should help pay for. He said incentives should be used to offset expenses particular to redevelopment. At the Stanley they include removing an old fuel tank, improvements for storm water runoff and burying electrical utilities.
Johnson said he could support $50,000 in abatement.
Bushyhead urged the council to consider the Stanley’s side benefits of being an example of how the LCRA could work with property owners and encourage downtown development.
Binney said he supports the abatement.
“This is a great example of what the LCRA was envisioned doing,” Binney said. “Looking at that number is making a good compromise.”
Cockrell said he is concerned about giving incentives to one small business that would be head-on competition with another small Lee’s Summit business. The Emaline Ballroom is an event space about a mile west on Third Street.
Hofmann and Gray said the businesses would serve different niches.
Gray said it was not a huge amount of money overall, on the city’s scale, and the project was a good example of a businessman “going the extra mile,” so he would support the abatement.
Cockrell said the city has waited for 12 years to get higher design standards for downtown properties development codes, a step that’s nearing completion, so on that basis he would support the abatement because it might help jump-start redevelopment with those standards in mind.
“I’m willing to seed some money, Cockrell said, “So other property owners take notice.”