Despite opposition voiced by real estate agents and land developers, the Hays City Commission Thursday night unanimously voted for an option to purchase land near 27th Street and Commerce Parkway.
The real estate agents and developers met with city commissioners Tuesday to express their concerns about the city purchasing the land for possible commercial development. Two of them spoke at Thursday’s city commission meeting.
Commissioners spoke about the need to “break the logjam” of development in town they believe is caused by high land prices.
The 91-acre tract is priced at $800,000. The city was offered an exclusive, irrevocable 18-month option to purchase the land for a $50,000 down payment. If the city chooses to buy the property, that amount will be credited toward the purchase price at a prorated amount.
City manager Toby Dougherty paid $15,000 toward the down payment to secure the land until commissioners could discuss making the purchase. Thursday’s vote authorizes the remaining $35,000 of the down payment. The money comes from the Commission Capital Reserve.
If the city chooses not to purchase the land, the $50,000 will not be refunded.
Real estate broker Doug Williams questioned the commission on why the city is getting into the speculation business.
“I don’t think this is the role the city government should be playing,” he said, adding he understands the city issuing incentives like Community Improvement Districts and Tax Increment Financing.
“But to speculate on a location that may or may not pan out and only give yourself 18 months really boxes you in a corner, I think,” Williams said.
Vice Mayor Henry Schwaller IV said being in the real estate business is nothing new for Hays. He cited as an example the city buying land on the west side of town in the 1960s and building a manufacturing plant that was leased to medical manufacturer Travenol Laboratories.
When the company closed the Hays plant in the 1980s, the city formed a plan that brought Enersys.
“If that wasn’t enough, we built a street, we created an industrial park, we created a nonprofit entity that developed land for a scaffolding company, a call center, which we bought and sold several times,” Schwaller said.
“We’ve been in the real estate business for 50-some years. This isn’t new,” he said.
“The city has had to go beyond what is considered traditional in order to grow this tiny little frontier town, and that’s what we’re trying to do,” Schwaller said.
“I don’t want the city in the business” of real estate, Schwaller said, “but there’s something that has to happen to break this logjam. And whether or not we exercise this option, we want to see action.”
Schwaller said when Collett, a North Carolina commercial real estate firm that has worked in Garden City and Lawrence, looked at Hays, they said prices were 40 percent higher than other places they have done business.
Mayor James Meier said he wouldn’t agree with the 40 percent figure, but information he has been given indicates Hays land prices are high.
“That’s what we get thrown in faces every single time” a potential development falls through, Commissioner Shaun Musil said. “We’ve done the studies. $50,000 is a small amount to see if that’s correct. I hope that we’re right. There’s a great chance that we’ll be wrong on this,” he said.
Commissioner Sandy Jacobs said the small risk is worth the opportunity to do what is right for Hays. She said she would like to see an additional exit off the interstate.
“I would like it to be like Salina where you have four exits and once you get off, they’re in the community,” she said.
She and Schwaller each noted the timing of the land being made available to the city is fortunate. The commission voted last month to hire Alabama retail recruiting firm Retail Strategies to help identify development opportunities and bring businesses to town.
“Those two things are hinged,” Schwaller said.
Commissioner Chris Dinkel said purchasing the land is an experiment to see if land prices are an obstacle to development.
“If land prices are truly the issues that are keeping us from developing, then this will develop. If this does not develop in 18 months … the land prices aren’t an issue and we need to start looking at another direction and another way to stimulate development,” he said.
Williams noted there is 100,000 to 150,000 square feet of empty retail space available in Hays that has a much better chance of attracting retail businesses.
“Why don’t try that first?” he said.
“But how long do we wait?” Musil asked.
Tami Norris of Advanced Real Estate, who said she represents developer Bill Lusk, disputed the claim of land prices fluctuating with interest. Lusk has land on the market at 22nd and Commerce Parkway that has infrastructure in place for most of it.
“The price on that land varies anywhere from $1.50 to $3.50 per square foot. I would welcome Collett to approach us. There is a fixed price out there as a list price,” she said.
Musil said representatives of Collett said they want nothing to do with property off Vine Street, to which Norris responded that would provide a challenge to the property the city is looking at buying.
Norris said Lusk recently had purchased more land in Hays, but said he might not have if he’d known the city might make the purchase because it’s in direct competition with his land.
“The city doesn’t need to make money off of it,” Dinkel said. “So if we can get it started on this corner, then we can develop Commerce Parkway throughout.”
Meier thanked the real estate agents and developers for bringing the discussion to the commission, but said the parties would just have to agree to disagree.
“We’re not going to see eye to eye on this one, but I think there’s a lot of things we do agree on,” he said.
“My hope and my plea to you would be to not let this one disagreement on this one piece of ground sour the waters and that you reach out to Retail Strategies so that we can get everything on the table and have good conversations,” Meier said.