College Hill Redevelopment
The Problem - Blight
In December, 2005, the Topeka City Council established the College Hill area northeast of the Washburn University campus as a redevelopment district, eligible for $5.0 million in TIF bonds for land acquisition and business relocation expenses. It was determined that this was a "blighted area" as defined by K.S.A. 12-1770a.
Owner Occupied. The area consists of both commercial and residential properties. The owner-occupied buildings have been maintained and businesses in these owner-occupied buildings are operating successfully. One owner reported having spent over $50,000 to remodel her business. An apartment at the north end of the redevelopment district sports a large "newly remodeled" sign on its front railing. Pride of ownership is evident in the care of these properties.
Speculative Investors. However, many properties in this area have been acquired by speculative investors over the past several years. Businesses in these buildings have subsequently closed and the residences have become vacant and fallen into disrepair. So, it appears that the proposed development may have actually contributed to the blight currently found in the area. Clearly, some of the buildings in this area are cause for concern. But, creating a redevelopment district effectively punishes the responsible landowners, and in this case, will most likely disproportionately benefit the negligent landowners.
The Promised Solution - Economic Development
Developers hired a consultant to develop a feasibility plan to take to City Council, proposing to fix the blight problem, caused in part by them.
Using this feasibility study, City Council has determined that the welfare of this community is well served with an investment of $1.5 million in city improvements to the area and $5.0 million in Tax Increment Financing (TIF) bonds of the City of Topeka. This $5.0 loan is secured with approximately $2.0 million in land and $3.0 million in hopes and dreams. The funds for the bond repayments are projected to be provided by the additional sales tax and increased property taxes generated by the development.
Additional annual sales taxes of $57,500 will be generated by the proposed retail uses that include goods and services, such as a liquor store, restaurants and a bar, a dry cleaner, hair, nail and tanning salons, and photo copy and mailing services. Property taxes are expected to increase $330,000 annually.
Washburn University's Role
Concerns About the Neighborhood
Washburn University owns two properties in the redevelopment district.
The vacant property on the NW corner of 17th Street and Washburn Avenue is included in the plan. The plan's building summary provides for construction on this vacant land of a 22,500 sq. ft. building that includes 15 apartments and 4,000 sq. ft. of retail space.
The Washburn University maintenance shop housed at 1518 Washburn Avenue is also included in the redevelopment plan. The proposed plan budgeted an amount not to exceed of $20,000 for relocation costs of the maintenance shop.
Washburn University has publicly supported the redevelopment plan, stating that the area has been a source of concern for the University and students for a number of years. It's interesting to note, that when it came time to purchase land for the new Washburn Endowment Association (WEA) office space, the administration purchased land on MacVicar Drive rather than purchasing more land in this "blighted" area. The $2.0 million WEA renovation budget could have made some significant improvements in this neighborhood without displacing the current owners who reside and work there. In addition to providing a real local investment in the neighborhood, the university would have been spared the disruption of relocating the maintenance personnel for the second time in less than five years.
Dependence on Washburn University Student Population
Residential demand for the 169 proposed apartment units is based upon projected growth of 1,500 Washburn University students over the next three to five years. This fact alone should give the taxpayers some serious cause for concern, since Washburn University's headcount only increased by 10 in the Fall, 2005.
The College Hill redevelopment project is expected to serve the Phase III housing needs of the Washburn University residential students. Phase III provides housing for upper level and post-graduate students. Phase I was the opening of the Living Learning Center, to bring freshman residential students to the campus. Phase II was the opening of Washburn Village, a multi-family complex on campus.
The study doesn't take into account that Fall, 2005 occupancy of the new Living Learning Center residence hall at Washburn University was only 88%, falling 4% short of the projected 92% occupancy rate. Nor does the study take into account that the School of Law projected an decrease of more than 10% in semester credit hours for the 2005-06 academic year.
There are a significant number of vacant apartments currently surrounding Washburn University. The current rental rate for a one bedroom apartment is around $400 a month. The proposed apartment complex will charge $595 for a one bedroom unit.
It is unclear who is targeted for the purchase of the 26 two bedroom condominiums at a cost of $175,000 per unit in the plan. It appears that garages will be available for only 8 of those units.
Redevelopment Project NOT Feasible
The proposed College Hill Redevelopment Project currently under consideration is simply not feasible for the funding requested of the Topeka and Shawnee County taxpayers. The risk associated with the bond repayments is too high. The economic benefits to the developers far exceed the public benefit being put forth by the plan.
In a community that has been assessed additional sales tax dollars to support economic development, serious questions should be asked as to why additional taxpayer funds are to be used for a project that negatively impacts small business owners in the neighborhood. The project plan specifically states that revenues from the retail space will be maximized by "attracting regional or national tenants to replace local retailers."
College Hill Redevelopment - Round 2
On Thursday, January 5, 2006, the Shawnee County Board of Commissioners determined that this redevelopment project would have an adverse effect on the county, based in part upon questions prompted by correspondence received prior to the meeting. So, the TIF District was abolished by the Topeka City Council and the entire process began again.
On Tuesday, February 14, 2006, the Topeka City Council re-established the College Hill Redevelopment District eligible for $4.0 million of tax increment financing (TIF) guaranteed by the City of Topeka. This public welfare program will assist the Lawrence based developer to build mixed residential and retail improvements on this "blighted" space. Reasons to oppose the establishment of the TIF district are contained in a recent letter to the editor published in full by the Topeka Metro News and in the Counterpoint published in the Washburn Review.
It is possible that this proposed solution to a very real problem, might actually create a bigger problem in this area. There is no evidence that the City has independently verified any of the promises made by the developers in their feasibility report. The 375 bed project is projected to generate over $1.5 million in rental income that will go to the Lawrence developers, while the Topeka taxpayers remain liable for almost $0.5 million of debt service payments over the next 20 years. The proposed retail space is expected to generate an additional $4.5 million in annual sales, mostly by regional and national retailers, since the local retailers are not targeted for this new space.
Washburn University officials have been meeting with developers to create off-campus housing to replace the married student housing torn down over 5 years ago. Yet the feasibility study specifically states that "the proposed rental rates for three and four bedrooms are above the market for families."
Concern for the problems that exist in this area are legitimate, but it is probable that this project could actually bring a new and larger set of problems. The predominance of defective or inadequate street layout in the area (one of the factors used to determine blight) will not be improved with the current plan. The increase in pedestrian and motor traffic in this dense area will likely add to the traffic problems already found at the intersection of 17th and Washburn.
It appears that the City Council members have been swayed by the students and neighbors who are admittedly in love with this project, rather than an independent analysis of whether or not this is a good project for this mid-town neighborhood.