Tuesday, November 5
Lawrence Business Magazine LLC
Lawrence Business Magazine LLC
2013 Summer - Real Estate Issue

NORTH & DOWNTOWN LAWRENCE

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North & Downtown Lawrence
| 2013 Summer | story by ANNE BROCKHOFF | photos by STEVEN HERTZOG |

relays2The word ‘development’ conjures images of open spaces easily graded, fitted with infrastructure and built out. It doesn’t bring to mind a place like downtown Lawrence, and it’s easy to see why.

The word ‘development’ conjures images of open spaces easily graded, fitted with infrastructure and built out. It doesn’t bring to mind a place like downtown Lawrence, and it’s easy to see why.

Massachusetts Street is already thick with stores, commercial businesses, restaurants and entertainment venues. It’s hemmed in by parks, the Kansas River and street after street of homes. There are few open lots, and many champions ready to defend it against threats to its distinctive character.

Among them are a handful of business owners who see downtown ripe not for development, but for expansion. There is a group that has spotted opportunities in the nearby Warehouse Arts District and North Lawrence that will bring more shoppers and jobs to the area, and who believe expanding downtown’s footprint is essential to its long-term appeal.

“I think at some point we’re not going to look at downtown as Massachusetts Street, but as the core nucleus of Lawrence which extends to the Warehouse Arts District to hopefully sometime in the future north across the bridge, to Vermont Street down to 12th and 14th Street,” says Jeff Hatfield of Larry A. Hatfield Appraisals, who’s involved with the North Massachusetts project on the river’s north shore.

PohlerWhile that development is on something of a slow burn, the Warehouse Arts District, a few blocks east of Massachusetts Street, is gaining momentum. Until recently, the streets around Eighth and Pennsylvania had a neglected feel, thanks to the aging buildings, railroad tracks and proximity to a concrete plant and other industry.

Krause Dining, which Robert and Molly Krause operated out of their home at Ninth and Delaware for years until closing in 2010, drew some to the area, as did a handful of other creative and business outposts.

ciderhouseScott Trettel bought 846 Pennsylvania to house his Trettel Design + Build firm in 2011; the renovation included a new loft home for the neighborhood’s Invisible Hand Gallery. But many of the street’s other buildings remained in disrepair. Among them was the Poehler Grocery Mercantile Warehouse, a crumbling red brick structure built in 1904.

Tony Krsnich, a Kansas City developer who specializes in renovating historic buildings, recalls his now-business partner Mike Hodges telling him about it during a round of golf. Once Krsnich saw 619 E. Eighth Street, he wanted it.

“I fell in love with the Poehler building,” Krsnich says. “Although the roof had caved in and a couple walls were somewhat questionable, I knew with the right funding package we would be able to redevelop it.”

So Krsnich and Hodges invested $9.5 million and reopened it as the Poehler Loft Apartments in July 2012. The building, now rimmed with neat landscaping and freshly paved parking lots, leased all 49 apartments in less than 12 hours, Krsnich says.

It’s labeled mixed-income, so 43 of the units are rent restricted, he says. The city of Lawrence has designated the surrounding blocks as a 95% Neighborhood Revitalization Area (NRA), allowing for up to $500,000 in property tax to be rebated to the development team over a period of 10 years, according to the 2012 Lawrence & Douglas County Economic Development Progress Report.

The city also spent $1.3 million resurfacing streets, alleys and parking lots; burying electrical lines; adding curbs and lighting and otherwise improving the streetscape, the report said.

The Poehler building wasn’t just a one-off, though. Krsnich and his partners also completed a $2 million renovation of the Cider Gallery, a 1890s warehouse at 810 Pennsylvania.

The main floor’s art gallery is sister to the Weinberger Fine Art Gallery in the Crossroads Arts District of Kansas City, Mo., while the upper level includes an entrepreneurial office hub with cubicle and office memberships. There’s also 5,000 square feet of event space.
Krsnich admits that tax credits and incentives played a key role in his ability to invest in the project, but he’s quick to point out the return on such public support.

He estimates some 150 workers contributed to the Poehler renovation. The smaller Cider project generated jobs for architects, engineers, construction workers and others, too. The opening of both created about 10 permanent jobs, Krsnich says.

That’s in line with the results of a 2012 report on the economic impact of historic tax credits by the Center for Urban Policy Research at Rutgers, the State University of New Jersey. The study showed that a $1 million investment in historic rehabilitation in Kansas creates 16.4 in-state jobs, more than highway construction.

Tony KrsnichRenovating the structures is minimally invasive to the environment as well, says Krsnich, who installed solar panels and an electric car charging station in the Poehler building.

“There’s nothing greener than saving an historic building from the landfill, and that’s where this entire block was going,” he says.

The results are garnering much attention from inside and outside Lawrence. Krsnich says the Cider Gallery’s event space hosted two weddings within a month of its opening in April. There are “dozens and dozens” more in the works, he says, and about a third of the inquiries he receives are from Kansas City and elsewhere.
“That’s a huge draw for Lawrence and a huge increase in the Lawrence tax base,” he says.

Krsnich’s group also owns other buildings and lots on the 800 block of Pennsylvania, including one used as a community garden by area residents. How will he develop those?
There’s no question that the land between Eighth and Ninth streets, west of Pennsylvania, will be something special some day, but I literally don’t have any plans for it now, Krsnich says.

Whatever happens, he’ll solicit input from residents, just as he did at the beginning of the Poehler renovation.

“It’s the best way to get support, especially when it’s not your own neighborhood,” he says. “Other people know their own backyard better than you do.”

What happens when your development site is in your backyard? Respect is perhaps then even more essential, says Rick Renfro, the owner of Johnny’s Tavern and a partner in the North Massachusetts Street project near the intersection of its namesake and North Second Street.

“I’ve been here so long that I don’t want to see it screwed up,” says Renfro, who purchased the original Johnny’s location in 1978 and now owns or partners in eight other locations. “There are a lot of things North Lawrence needs. Half my customers live here, and I talk to them on a daily basis.”

The group stresses communication with the North Lawrence Improvement Association. Plus, all of the partners are Kansas-based, and most live and work in North Lawrence, Hatfield says.
“We don’t consider ourselves developers,” Hatfield says. “We consider ourselves local business people that have a passion for Lawrence, Kansas.”

That passion in recent years has been directed toward the 19-acre site, which curves along the Kansas River’s north bank and is bordered by railroad tracks and a strip of shops that includes Johnny’s, The Gaslight Tavern, Lawrence Jiu-Jitsu and The Village Witch.

Otherwise, the property is mostly vacant, save for a defunct grain elevator and a trailer park. Still, it’s not an easy thing to build out.

“Redevelopments are always more of a challenge than going out into a green field,” says project architect Paul Werner.

The first challenge was acquiring the acreage, which initially was a patchwork with more than 15 owners. Hatfield bought his first half-acre in 1994; Renfro also owned Johnny’s and surrounding property. But neither had a clear idea of what to do with it until Jon Davis approached them.

Both credit Davis, a North Lawrence resident and business owner, with the idea of creating a mixed-use site with retail, services and housing. They and other investors slowly brought the land under their control, worked to get it all zoned for commercial use and then tackled their biggest asset—the river.

Building near the levee required approval from the U.S. Army Corps of Engineers, which this year ruled construction could come within 16 feet of the levee’s toe, Werner says.

Harfield-Jeff and Louie RiedererThat’s close enough to contemplate a boardwalk-style retail development with shops and restaurants. Residential construction, a grocery store and a hotel have also been discussed, Renfro says. Nothing has been decided yet, except one key aspect—creating an environment that compliments, rather than competes with, downtown.

A robust downtown is key to the North Massachusetts project’s success, Renfro and Hatfield say, while a new shopping area could bolster the city’s appeal with locals and out-of-towners alike.

“Instead of them driving over the bridge and heading north or going east or west, they’d go over the bridge and stop within our own local community and spend those tax dollars here,” says Hatfield.

For now, the group is focused on finalizing its preliminary plat and seeking city approval, Werner says. It’s also considering infrastructure needs such as the number and cost of pump stations and how many egress points are required, as well as what type of retail fits and how many housing units can be accommodated.

Sorting that puzzle requires creativity, compromise and patience, says Renfro.

“Unfortunately, this is not a mathematical problem. It’s not one plus one equals two,” he says. Configuring potential uses is “more of an art thing.”

For now, there’s no rush. The project is currently financially stable, and its partners are willing to wait until Lawrence’s economic climate improves and the right investor emerges.

“We need the right group of visionaries that have the money, the financial horsepower, to see the same vision we have and make it work financially for their development dollars,” Hatfield says.

Renfro agrees.

“The beauty of it is that we don’t need to move,” he says. “It’s not like we have to have it done in two years.” ■

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