With several commercial properties affected by the flooding last September and more under constant threat of rising waters, Manhattan city administrators want to develop a plan to buy out commercial properties in the community flood plain.
Since 2011, the city has paid $1.1 million in flood buyouts for six residential properties. Roughly 75%, or $829,000, has come from federal and state funds, with city stormwater funds making up the remaining $276,000. Every dollar spent on flood buyouts ultimately saves the city $6, assistant city manager Dennis Marstall told the city commission Tuesday.
But while federal funds are available for commercial property buyouts, those require state support, and Kansas does not allow state flood mitigation funds to be used on commercial properties. For that reason, city administrators want to develop a city plan for buying out commercial properties using just city funds, and a buyout of the Schwab-Eaton property at 1125 Garden Way could be a model for that plan.
Under the proposed buyout, the city would buy the property from the engineering and design firm for $290,000, then spend $17,000 to demolish the building. The city hired a private appraiser to evaluate the property, and that appraiser valued the property at $200,000. After Schwab-Eaton counter-proposed a $330,000 buyout, the city and company found middle ground at $290,000. That funding would come from the city’s wastewater fund and reserve fund.
The building currently sits empty after the company temporarily relocated to 4361 Dam Road. Flooding in 2011 damaged the building, and the company repaired the facility then. However, the company only did minimal repairs after the Labor Day flooding and does not intend to return to that location.
Instead, the company envisions finding a new site locally and building a new $1.25 million building at that site, which Marstall said could generate nearly $45,000 in new property taxes. The firm would also hope to hire 10 new employees at a new location.
With that buyout, Marstall said the city would establish a framework for commercial flood property buyouts based on ensuring businesses stay in the city limits, encouraging new investment in relocation properties and bringing new jobs to the city.
Specifically on the west end of the city, Marstall said that framework would also help secure right-of-way for any potential redevelopment of the intersection of Seth Child Road and Anderson Avenue.
Commissioner Wynn Butler said he would want to use economic development funding, instead of wastewater funding, for any commercial buyouts. Commissioner Jerred McKee said the city would first have to determine whether the city’s intent is to mitigate flood damage or to promote economic development with any commercial buyouts.
Commissioner Linda Morse said she wanted residential properties to take a higher priority for buyouts.
Mayor Mike Dodson said new property tax revenues from relocated businesses could cover the expenses of initial buyouts, but with any buyout program, he and commissioner Usha Reddi want to avoid incentivizing property owners not to buy flood insurance.
Before making a decision on a buyout, the commission instructed city administrators to bring back more data on commercial flood buyouts in other states.
In other business, the commission took action on two benefit districts. The first action was to amend a 2016 resolution establishing a sanitary sewer benefit district between Houston and Pierre streets near 17th Street. The amendment was necessary because project costs, originally estimated at $170,000 split between the city and the seven property owners, are now estimated to be $278,000. Brian Johnson, city engineer, said the project cost was higher because the city had to spend three years obtaining easements on the properties, and demand for construction crews is high in the area right now.
The commission voted 3 to 2 to accept the new project cost, but the city will cover the difference between the original and new estimates. Butler and Morse voted against the resolution, saying they wanted to keep the 50-50 split between the city and property owners in order to be consistent.
The second action was to establish a new drainage benefit district at Smith and Brockman streets. A drainage channel in the area has caused significant erosion in the area, and city administrators proposed another 50-50 split on $130,000 in costs to repair the channel with eight property owners in the area.
City administrators asked the commission to unilaterally create the district after a property owner petition fell just short of the majority required by state law to be valid. The commission unanimously approved the resolution.