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Lawrence City Commission approves tax breaks for 5-story downtown condo project

Former City Commissioner Bob Schumm has filed plans to build a five-story building on a pair of vacant lots in the 800 block of Vermont Street.

The Lawrence City Commission narrowly approved granting more than $1 million in tax breaks to a mixed-use condominium project in downtown Lawrence.

At its meeting Tuesday, the commission voted, 3-2, to approve the tax incentives, with Mayor Leslie Soden and Commissioner Matthew Herbert voting against the request.

In making the decision, Vice Mayor Stuart Boley said he thinks the commission should consider the process, cost to the community and community benefit. Boley said the process has been exhaustive and transparent and the costs and benefits are favorable to the city.

“The cost to the community is the rebate of some property taxes,” Boley said. “Property taxes at the current level are very minimal. It’s been vacant for a long time, and that’s what we’ve been getting.”

Plans call for a five-story building with retail space, offices and 12 condos to be built in the 800 block of Vermont Street, where two vacant lots currently exist. The building would have an underground parking garage, and a one-bedroom condo would be permanently designated as affordable housing. The approximately 600-square-foot affordable unit is expected to sell for $95,000.

The cost benefit for the city will be 1.82, meaning that for every $1 in public incentives, $1.82 of benefit value will be returned. The city’s policy is that the cost benefit be at least 1.25.

The developer, former City Commissioner Bob Schumm, requested a 10-year, 75 percent property tax rebate through the Neighborhood Revitalization Act, as well as a sales tax exemption on construction materials. The two incentives have a combined value of $1.3 million.

Boley said that the building having owner-occupied properties is also important.

“Downtown vitality and stability will be enhanced by owner-occupied property,” Boley said. “I can’t tell you how much I like to see new owner-occupied opportunities downtown.”

The incentives request is a reconsideration of a request the commission denied in December, and has been modified in response to concerns regarding Schumm’s plan to live in one of the condos. Schumm resubmitted the request and proposed removing the personal residence from the property tax breaks, which city-contracted financial advisers said eliminated about $110,500 from the incentives amount.

Commissioner Mike Amyx said he thought the concerns had been addressed, and that the project is in line with the city’s goal of increasing infill development.

Herbert, however, listed several concerns he had with supporting such a project. Those included the city spending more than $1 million in incentives and only creating one affordable housing unit and no full-time jobs. Herbert also said he thinks it is “wholly inappropriate” for a former commissioner and mayor to request tax incentives from the city.

“In our roles as city commissioners, we are called public servants,” Herbert said. “In this capacity, we make some personal sacrifices, some familial sacrifices, some occupational sacrifices and, obviously, some financial sacrifices to be here.”

Soden said she is against the idea of increasing property taxes on residents while at the same time giving tax breaks to developers. In addition to supporting the city, Soden also noted that property tax revenue goes to support the school district.

On the other side of the debate, Commissioner Lisa Larsen said she thinks the project has several benefits. Larsen agreed that the project enhances the vitality of downtown, and also said the project is sustainable in that it adds density, calls for environmental building standards and uses existing city infrastructure. Additionally, Larsen said, it would cost the city more if the project didn’t move forward as proposed.

“It broadens our tax base,” Larsen said. “The numbers just don’t lie.”


In other business:

• Commissioners unanimously approved a $257,000 settlement agreement regarding invoices the city failed to send to the Riverfront Plaza. City staff said the settlement fully covers all payments due. The unsent invoices led to an outside audit of the city’s billing procedures, which is ongoing.

• Soden called for a moment of silence for the victims of the Lawrence and Las Vegas shootings. Soden said that the commission will be working with the new police chief to discuss public safety downtown and what more can be done to prevent such crimes.

• Soden proclaimed October as Domestic Violence Awareness Month. The proclamation states that throughout the month, the Willow Domestic Violence Center and its partners will promote awareness of domestic violence and the locally available shelters and community programs.

Comments

Travis Robinett

Part 1:

11 out of the 12 units will be for the wealthy only (look at condo prices on New Hampshire street for comparison, 650k for a two-bedroom), while 1 unit (a one-bedroom tiny condo) will be "affordable" at $95,000. Infill development is usually good, building up is good, but it should be development that actually benefits the community that's here now, not building housing for the rich that will just raise costs all around it.

Mr. Schumm said he's not concerned about gentrification because his building won't be next to any other residential buildings along Vermont Street, therefore there's nothing to gentrify. But gentrification is not contained to one street, Mr. Schumm. It affects the value of the whole area. Gentrification also affects businesses and their rent prices and property values, and it effects everyone who visits downtown Lawrence when the price of food and drinks go up to pay the higher rent, and eventually the small businesses start to dry up.

These developments don't help the people who are already living in the area. I saw that much in Austin when the condos invaded South Lamar and South Congress and housing became insane. You had to know someone who was cool and wanted to control rent prices if you wanted to live around there. I saw when shacks on Ceasar Chavez just east of downtown were going for $600k+, pushing out the hispanic families who had lived there for generations. The East 11th neighborhoods are pretty much gone too, and they got "pushed out" to Manor and other areas isolated from the urban core and several key services people need and had relied on for 60+ years. Very sad they had to leave their generational housing and sacrifice quality of life because their neighborhood became unaffordable.

I see the seeds being planted for a similar story here in Lawrence. It's not contained to one street, gentrification keeps on going faster and faster down a slippery slope, until all the working class and low-income renters who live anywhere near downtown are gone.

And three commissioners just voted to subsidize luxury condos and speed up the process. Does the city really have to subsidize it's own gentrification? What was the need here? What was the real cost-benefit?

Mr Schumm said himself that he'd build the commercial 2-story part of the building anyway, but wouldn't build the condos without the tax incentives. So already we'd get the economic gain in jobs, expand the property tax base, and utilize infill development. And it's no longer an empty lot, so no need to make that comparison at all. The no action alternative for the City, is Mr. Schumm builds what he wants to anyway. No need to subsidize the luxury condos, which are the bigger threat to low-income residents anyway.

2 months, 1 week ago

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Travis Robinett

Part 2:

And as far as cost-benefit to the city goes with these luxury condos, that to me was greatly exaggerated at the meeting and in this article. According to Schumm's people's numbers, the City would (over a 50-year timeframe) receive only about $6 million more in taxes in than it would if the project were built without the condos and without incentives. That's $120k a year. In comparison, the Kasold rebuild for seven blocks will cost $3.7 million dollars. That's $0.12 million a year, a drop in the bucket compared to how much we spend.

Another benefit touted tonight was that it would be mixed income housing. That's not mixed income housing, that's 11 high class condos and 1 middle class bedroom. And indirectly in the long run, it hurts people in the area who are hurting financially and wouldn't be able to afford the inevitable quick rise in value and rent that these places always bring with them to the area.

This happens everywhere luxury condos are built, there's really no exception to that rule. Just google "luxury condos gentrification" and you will see the results, the working class lose out everywhere it happens.

So we're just barely growing the tax base, all to invite more wealthy people to live downtown and continue the process of pricing the rest out. Half the country lives paycheck to paycheck and has little safety netting for sudden expenditures, let alone the ability to buy a condo in one of these places, even the "affordable" one. Lots of people in Lawrence work in the service industry downtown, or other low paying jobs, and struggle to make it work. Lots of them pay rent in East Lawrence and Old West Lawrence neighborhoods. This hurts those people in the long run.

So what's the need here? Why are condos with only 8% "affordable housing" getting any breaks from the city? I thought we were done with the development incentives after the Rock Chalk Park and HERE fiascos along with the election of a new commission. In fact that's a big reason why the new commissioners were elected. It's tiring to see it happen again.

2 months, 1 week ago

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David Holroyd

The commissioners expect us to vote for an increase in sales tax. Why then would they agree to give an exemption to Schumm for sales tax on goods, which most likely won't even be bought in Lawrence.

There is simply a NO VOTE on the sales tax issue coming up.

2 months, 1 week ago

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Cindy Bell

It's not a sales tax increase. This is false information. It is a continuation of an existing tax. Also, the commissioners don't expect anyone to vote yes or no.

2 months, 1 week ago

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David Holroyd

The commissioners are hypocritical in their thought process. btw,,,Will Mr. Boley move downtown..since he thinks it is so good to have owner occupied.

In this condo development of Schumm's is their language in the HOA that prohibits rentals?
Surely they have that provision. They must have an HOA. After all who keeps up the exterior or they just wait until it is decrepit and take a collection?

2 months, 1 week ago

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Bob Smith

BOHICA fellow taxpayers.

2 months, 1 week ago

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Matthew Herbert

(1/2)
I’m not one to typically take votes personally and I understand that different commissioners bring differing perspectives and political ideologies to the table. As a member of a 5-person panel I respect those differing perspectives and am fully accustomed to sometimes being on the losing end of votes. Last night was no different. As the votes were cast I found myself on the “2” side of a 3-2. That has happened to me more than I can count over the past two years. For some reason though, I can’t get past this vote. There are six reasons why I fundamentally disagree with what happened and I feel compelled (particularly for those of you not in attendance) to explain my reasoning.

First, this city commission spent several months coming up with a brand new economic incentives policy that makes it very clear that all projects that receive taxpayer incentives are to provide, AT A MINIMUM, 10% affordable housing units. In our first ever opportunity to make use of this policy we approved a project that provided 1 unit of affordable housing in a 12-unit complex. 1/12 while “close” does not meet our 10% minimum standard. What good is a policy if in the first opportunity to do so you violate your own established guidelines?

Secondly, this city commission just gave out an incentive package worth $1,019,888 if Mr.Schumm resides in the structure, all the way up to $1,130,000 if he doesn’t in order to provide one single bedroom, NOT JUST ONE UNIT BUT ONE BEDROOM, of affordable housing in Lawrence. Do we really believe a single bedroom of affordable housing is worth over $1,000,000 in incentives?

Thirdly, with the vote tonight, this city commission just sent a message that we believe a $95,000 price tag on a 590 square foot single bedroom home is an example of “affordable housing”. I’m uncertain of what problem we are solving by creating $95,000 single bedroom homes for sale. A quick search of the MLS reveals the current real estate market bears more than a handful of homes currently for sale in Lawrence that come with more square footage for a lesser price tag (and no HOA fees in perpetuity).

2 months, 1 week ago

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Matthew Herbert

(2/2)
Fourth, with the vote tonight, this city commission provided over $1,000,000 in incentives to a project that our own internal reviews stated likely created 0 full-time jobs. The only mention of job creation came via the commercial side of the project - a side of the project the applicant admitted was happening with or without incentives.

Fifth, with the vote tonight, this city commission just stated that we are comfortable basing the parking plan off of a parking elevator scheme of which we have been told 22 spaces cannot exist without. Specifically, when asked what his game plan would be if the parking elevator plan were to not work out, the applicant stated that he had no plan B. All five of us lived through the HERE apartments parking fiasco. I sincerely hope that we will not get to revisit that experience.

Finally, and perhaps most importantly to me personally, I am not comfortable with the ethical gray area behind a city commission providing a sizable, seven-digit economic incentive to a former city commissioner and mayor. Because I know and respect my fellow colleagues on the commission, I can state with certainty that this wasn’t a ‘dirty’ vote. Let me be clear, I am NOT saying I think it was, but the public perception associated with a former local politician receiving a seven digit incentive package from the very first commission that he is not part of, isn’t good. “It doesn’t pass the smell test” as former commissioner Schumm used to say. In our role as city commissioners, we are called public servants. In this capacity we make some personal sacrifices, some familial sacrifices, some occupational sacrifices and some financial sacrifices. Understanding that by serving the community in this capacity you are removing yourself from future million dollar tax payer incentive handouts should be one of those financial “sacrifices”. I may be in the minority on this viewpoint, as I clearly was last night, but I would suggest that a former mayor making a financial incentives request of a commission is inappropriate.

2 months, 1 week ago

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Richard Heckler

My big disagreement with this project and any other large for profit project that comes in asking for tax dollar assistance is the tax dollar assistance requested. If a project IS NOT viable without taxpayer assistance then perhaps the developer(s) should take a course in how to do so without taxpayer help.

The city likely has no idea how many projects that have received TAXPAYER ASSISTANCE are paying back the community.

How many have left town once the preferential tax assistance has expired? How many times has taxpayer assistance been granted again on a same property?

Where is the hard evidence demonstrating developers will not build IF TAXPAYERS ARE NOT FORCED TO SHELL OUT TAX DOLLAR ASSISTANCE? Our community has not one example.

Granting Free Lunch tax dollar assistance tells taxpayers the community does not need more tax dollars in our cookie jars so where are the annual tax dollar refunds instead?

Tax abatements do not attract firms or retain business. The enforcement of tax abatements in Lawrence is shameful with the majority of abated firms failing to perform as promised and the City doing nothing.

Lawrence Taxpaying Voters should be weeding out the city hall “Free Lunch” program:

Bill Moyers http://www.pbs.org/moyers/journal/011...
http://www.sierraclub.org/sprawl/repo...

http://www.democracynow.org/2008/1/18...

http://www.nytimes.com/2012/12/02/us/...

As for parking garage elevators I have never been forced to use one not to mention I have never seen one.

2 months, 1 week ago

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Francis Hunt

"Herbert also said he thinks it is “wholly inappropriate” for a former commissioner and mayor to request tax incentives from the city." The key word here is "former" Mr. Schumm is a tax-paying citizen in the city of Lawrence, he is no longer an elected official and is entitled to the same rights and privileges as any other citizen/developer. Mr. Herbert needs to realize elected officials aren't gods just because they are a public servant. They are just normal citizens who for a period of time served their community.

2 months, 1 week ago

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Calvin Anders

As was pointed out above in the comments, city commissioners want to incentivize gentrification with tax rebates while asking for a tax increase to subsidize affordable housing. It is a ridiculous contradiction. I'm willing to subsidize affordable housing if I believe the city commission is really working on a plan to make/keep housing affordable. I can't vote for sales tax increases if it's so obvious city commissioners care more about handouts to the politically well connected than they care about a coherent housing strategy. And I will vote against keeping commissioners in office who are obviously so corrupt. Tax breaks to support gentrification might increase the tax base, but that doesn't mean it's good for our community.

2 months, 1 week ago

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Joe Herynk

In my opinion, this was a very poor decision for the following reasons: 1.) The vacant lots have been indirectly subsidized by taxpayers for years, if not decades, by agriculture rezoning at the request of the owner. While this is perfectly legal, it reduces the tax base. 2.) There will be no permeant jobs created to increase the tax base. 3.) There will be no construction police to monitor what building materials are purchased for "affordable" housing or which building materials are for the owner's penthouse.

It is hypocritical to discuss the merits of affordable housing as long as our elected officials continue to subsidize millionaires at the expense of working class taxpayers. This is not a formula for growth and prosperity.

2 months, 1 week ago

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Bob Forer

Thank you Matt. Thank you Leslie. You will have my continued support. I cant say the same thing for ms larsen or mr. Boley.

2 months, 1 week ago

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David Klamet

The nature of downtown is changing.

That is unavoidable, but the pace of the gentrification is unwarranted and unwanted. Higher density housing is one thing, this is something far different. Providing upscale housing for the few is not in the spirit of the Lawrence I remember...the Lawrence I've returned to each time I've left.

2 months, 1 week ago

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Theodore Calvin

So we're giving away money today, for the prospect of money in the future? That is assuming a lot of things stay the same, and this property actually lives up to all of the future calculations of the planning committee. I was always taught in business school that cash in hand today is better than the prospects of future monies. Now "borrowers" can always tempt the lender with potential gains on those monies in the form of an interest rate the lender thinks compensates them for their risk of foregoing ownership of their money right now, but we all know that nothing is guaranteed. At least write the contracts with some due diligence, using your former agreements as learning experiences. Make sure we can enforce the agreement if it's violated, or recoup any funds that are misused, misappropriated, etc.

2 months, 1 week ago

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David Klamet

What is most insulting is the 10% affordable housing. That is a token gesture to attempt to satisfy guilt (I don't know whose guilt, or even if there is any), or to make it seem more palatable to the public.

Would you want to be one of the affordable housing tenants in a building with 90% rich people?

There are so many things wrong about this it is monotonous to list them all.

2 months, 1 week ago

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Carol Bowen

Living in the one bedroom condo would be awkward, for sure. Also, I was under the assumption that affordable housing was for families. I wonder if there is a provision to provide affordable housing elsewhere. Maybe, renovate and older family home?

2 months, 1 week ago

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Armen Kurdian

Even if the the gentrification was warranted, even if there's a need for affluent housing, it is very contradictory to give the developer a tax break. To what end does the city see an ROI on that 'investment'? If it were commercial property and businesses were coming in paying sales and income taxes, hiring people, then maybe...maybe.

This is not free market capitalism.

2 months, 1 week ago

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David Holroyd

Cindy Bell, if this helps..NO to an Existing Tax to be continued. How's that.?
Joe Herynyk,,,the public very few of the public ever knew about the scam Mr. Schumm pulled on his lot concerning taxes.

The Journal World had every opportunity to do a FULL story about the piddly amount he paid in taxes. And how to do it...what about the many lots in town that could qualify.

The Journal World never, as I recall, that even Mr. Fritzel who had the other 1/2 of the lot to be developed paid a much larger amount...can anyone believe that?:)

The two lots to be developed were owned by Fritzel and Schumm..I do believe.

And now Schumm wants a skywalk across the parking lot east? True?

2 months, 1 week ago

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David Holroyd

btw, where is Justice Matters getting the money to pay people to make phone calls about the vote,,,THE CONTINUATION of a sales tax as Cindy pointed out.

Flyers around that say Stop Homelessness $10 and hour and a number is proved for an interview it is Justice Matters.

If Justice Matters has money to hire folks to call they do not need a continuation of the sales tax.

At $10 an hour that's a good gig better then pushing legs and thighs at Popeyes.

2 months, 1 week ago

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Bob Forer

Huh???

2 months, 1 week ago

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Steve Vukelich

Apparently the city does not have a wish to renew the sales tax that will soon expire. Wish granted.

2 months, 1 week ago

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Carol Bowen

My concerns were:

1. Investing in residential development dictates that Lawrence will become more of a bedroom community than it is now. People will live in Lawrence, work outside the city, and request services and amenities like schools, more and wider streets, recreation, utilities, emergency services, ... that are usually funded by industrial and retail land use, but must be paid out of residential property taxes.

2. Housing developments do not provide permanent full time jobs.

3. We haven’t figured out affordable housing, yet.

In general, this commission is very representative. All the rationale is up front. It’s good that the commissioners speak up, and they are true to the voters who elected them. Discussions are civil. It’s over. The plan does dress up Vermont Street. Time to move on.

2 months, 1 week ago

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Calvin Anders

Carol, we can move on, but we need to remember this vote when we vote on taxes to support affordable housing initiatives. We need to remember that the majority of the city commission is not sincere in their interest in maintaining affordable housing in our city. We need to remember this vote when those who gave Schumm the million dollar handout come up for reelection. I agree that this specific vote is over, but it's important to keep in mind the corruption that this vote reveals. If we don't learn from history we are doomed to repeat it. And I don't agree with you that this monstrosity they have planned will "dress up Vermont Street". It looks like 5 stories of oppressive ugliness to me.

2 months, 1 week ago

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Carol Bowen

This election will be interesting.

2 months, 1 week ago

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Richard Heckler

Lawrence needs a mental health treatment center and more officers for night patrol downtown at certain venues.

How does local government justify tax breaks?

2 months, 1 week ago

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Richard Heckler

How does Lawrence get paid back if ever?

2 months, 1 week ago

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Richard Heckler

Sales Tax Rate in Lawrence: 9.05 percent Breakdown of sales tax State tax 6.50% County taxes 1.00% City taxes 1.55% Total tax rate 9.05%

http://www.ksrevenue.org/salesratecha....

The City sales tax for Lawrence is 1.55 cents. Of this, 1 cent of the sales tax supports general operations. Another .3 cents is used for streets and infrastructure, while the remaining .25 cents supports Lawrence Public Transit. These infrastructure and transit taxes will expire in the year 2019. The City also receives approximately .58 cents of the County sales tax. Together, these sources generated $38.9 million of revenue in 2016.

Special Tax Districts

The Department of Revenue maintains an up-to-date list of all special taxing districts in Kansas at https://www.kssst.kdor.ks.gov/lookup.cfm.

In Lawrence, there are three areas where an additional sales tax is charged. A transportation development district (TDD) adds an additional sales tax to the base sales tax for the purpose of generating revenue to reimburse the project for certain transportation-related expenses associated with the development.

The City is not obligated to reimburse these expenses unless the revenue is generated. There is currently a 1-cent Transportation Development District sales tax in the following locations:

The Oread Hotel

Adjacent to the University of Kansas at 12th and Indiana, the City Commission approved a 22 year TDD for this project in April of 2008. This luxury hotel is 11 floors tall providing 99 rooms, multiple bars and restaurants, a day spa, and commanding views of the Wakarusa River Valley.

The TDD sales tax will be in place for 22 years and will be used to help pay for up to $11 million in developer-paid, transportation related public infrastructure expenses.

Bauer Farms

This project is located at the northeast corner of the intersection of 6th and Wakarusa Streets. Approved by the City Commission in October of 2008, Bauer Farms provides a variety of retail stores for residents of western Lawrence. The TDD sales tax will be in place for 22 years and will reimburse up to $6.8 million in developer-paid, transportation related public infrastructure expenses.

9th & New Hampshire

A 1% TDD sales tax was authorized in 2014 by the City Commission to support a new, mixed-use hotel with retail space and underground parking in the South Project Area (located within the southeast quadrant of the 9th & New Hampshire intersection) and a new, mixed-use apartment complex with commercial space and underground parking in the North Project Area (located within the northeast quadrant of the intersection).

The 22 year TDD will reimburse up to $3 million, with the first $850,000 used to pay back bonds on the public parking garage located in the 900 block of New Hampshire Street and the remainder to reimburse developer-paid, transportation related public infrastructure expenses.

2 months, 1 week ago

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Carol Bowen

Thanks for pulling all this information together! Very helpful.

2 months, 1 week ago

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Richard Heckler

Meanwhile ..... a revised November ballot by me.

=== 0.05%% to Public Transit is necessary for low income families, students, seniors who can no longer drive and for those who cannot afford to own a vehicle and for those who choose not to own a vehicle

=== .3% toAffordable Housing as it seems there is a huge need for such and would provide enough money to make a substantial impact. Who provides the best bang for the tax buck and tenants? Tenants to Homeowners

=== .2% to the following which improves the quality of life throughout Lawrence,Kansas and provides safe travel for a broad spectrum of the population.

== recreational path infrastructure/recreational trails and paths

== sidewalks/improvements to crosswalks and accessible ramps

== safe travel walk to school and back home

Why this is important:

Reduces travel costs

Promotes an active and healthy lifestyle

Expands mobility options for all in Lawrence,Kansas

Provides environmental benefits through reduced traffic congestion which in turn improves air quality.

The collection of such sales tax to commence on April 1, 2019 and shall terminate ten years after its commencement, all in accordance with the provisions of K.S.A. 2016 Supp. 12-187 et seq., and amendments thereto?”

2 months, 1 week ago

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Richard Heckler

In the meantime:

It seems to me the following were being addressed for many decades before a special tax was put before the taxpayers through budgets and such.

public streets

storm water facilities

traffic calming

residential curb and gutter replacement

reconstruction of roads and intersections

purchasing fire apparatus and related fire equipment including radios and personal protective equipment.

Where is the money? Where did it go?

Do taxpayers want to use tax dollars being held in reserve funds for some of this?

How about no sales tax or substantially reduced sales tax on groceries and health care related services/ products?

2 months, 1 week ago

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David Holroyd

I just want to know how much money came in from the sales of cemetery lots in the cul de sac beside the Mausoleum. And how many lots are left? And how much money has been collected to "open" the grave sites.

Would some commissioner inquire? And even Mr. Markus should know or Mr. Kidney. Are there records kept. or is the money received in cash and pocketed...surely not. Oh Mr. Farmer would know how to keep those records,but he is at Camp reading in the library , making his own bed, and arts and crafts. Affordable housing at the finest!

2 months, 1 week ago

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