The best thing city officials have done so far in the CentrePointe fiasco is to begin studying how tax increment financing could be used to help downtown.
The Urban County Council created a task force, which includes seven council members and Mayor Jim Newberry. It could be a valuable forum for them and the public to ask questions and make decisions that will shape Lexington for decades.
Tax increment financing, known as TIF, is a great tool. It allows cities to use a portion of local and state taxes generated by a major private development for up to 30 years to pay for public improvements needed to make that development possible.
There are three big questions that need answering soon: Can CentrePointe qualify as a TIF project? If so, is it the right project for the TIF tool? And, if so, what downtown improvements should be bought with that tax money – improvements that will be in Lexington’s best interests, and not just in the best interests of CentrePointe’s developers?
State law requires that TIF financing be essential to a project, which could be an problem with CentrePointe. That’s because developers Dudley and Woodford Webb say they will build no matter what. Can Lexington convince the state that CentrePointe qualifies for TIF?
“It’s a challenge,” acknowledged Jim Parsons, a Newport attorney hired by the task force to be its TIF consultant. “I’ve never seen a TIF like this.”
The key, Parsons said, could be how the project is presented to state officials: Is the project just CentrePointe, or is it a downtown revitalization plan of which CentrePointe is a key part?
Lexington officials also need to decide if CentrePointe is the right project for raising the money they want for downtown improvements. Whatever portion of downtown is included in a CentrePointe TIF district will essentially be locked up, precluding any other TIF projects there for 30 years.
If bonds were issued to pay for the improvements, they could generate between $35 and $70 million, officials estimate. Newberry raised an intriguing idea at the TIF task force’s meeting Tuesday: If the city used tax revenues gradually to pay for public improvements rather than issuing bonds, it could, by the CentrePointe developers’ estimates, have as much as $190 million to work with.
One problem with that approach, though, is it shifts the risk from bondholders to the city. If CentrePointe’s four-star hotel, shops, offices and luxury condos are wildly successful, the city could get even more money. If they’re not, the city could get far less.
Is CentrePointe a viable project? There are many skeptics, including other hoteliers who see little demand for a new luxury hotel and people who see lots of vacant retail space downtown.
Vice Mayor Jim Gray and Councilman Tom Blues, who are skeptical, sought proof Tuesday that the Webbs have the more than $200 million needed to build CentrePointe. They asked for letters from the investors promising that the money has been pledged.
“Is the financing committed?” Gray asked. “Is the project real? I’ve learned over time that all that glitters is not gold.”
The Webbs’ attorney, Darby Turner, refused to provide any proof of funding or identify the investors. Based on previous comments by Dudley Webb, the investors are foreign.
“We’re going to build the project,” Turner said. “The financing is in place. Do you all want to come along or not?”
Turner said CentrePointe’s investors want their business to stay private, adding that might pose a problem with underwriters if the city seeks to issue TIF bonds.
In other words, Lexington just has to trust the Webbs. And that trust must extend well beyond the next couple of years, when CentrePointe either will or won’t be built.
As Gray noted, most of the revenue the city would use for improvements would come from state sales taxes – and that money won’t come unless CentrePointe’s hotel and shops succeed long-term.
Assuming Lexington does a CentrePointe TIF project, everyone should take a close look at how that future tax money is used. An initial list of possible projects prepared by the mayor’s office and given to task force members Tuesday raised concerns.
The proposal – and it is just a proposal – listed $48 million in projects, including some great ideas: $2 million CORRECTION: $14 million for renovating the old courthouse, which houses the Lexington History Museum; $2 million for renovating the old courthouse plaza; $1.5 million for a permanent Farmer’s Market facility; $2.5 million for public art; and $3 million for downtown entertainment venues.
There also was money for improvements to Phoenix Park, utilities, sewer and streetscape improvements.
However, the list also included projects that bear close scrutiny. There’s a $1 million outdoor Jumbotron that could be used during the Alltech FEI World Equestrian Games in 2010 and for things like Friday night movies. OK, that’s worth discussing.
But there are a couple of things I’m very skeptical of. The first is a proposed two- or three-level parking garage below Phoenix Park, with as many as 331 parking spaces costing $30,000 each.That could cost $10 million, plus a few million more to put Phoenix Park back together.
The garage would be good for CentrePointe, but is it a wise investment for the city?
Street parking downtown is popular and limited. But there already seems to be plenty of available space in downtown parking structures. In general, people don’t like parking structures, and they like underground parking even less. Before city officials invest millions in this costliest form of new parking space, they should do a thorough study of downtown’s parking inventory and anticipated needs.
It’s also worth asking whether those millions might be better spent on downtown public transportation. Trolleys? Streetcars?
But the thing I’m most skeptical of is a proposal for $3 million worth of “pedways,” also known as skywalks, to connect CentrePointe to the proposed parking garage and the garage at the Webbs’ Financial Center (”the big blue building”) across Upper Street.
If CentrePointe’s design looks like something out of the 1980s, skywalks are an idea from the 1960s that have been widely discredited since then. Why? Because they take human activity off the street.
(READ MORE about other cities’ experiences with skywalks here and here and here.)
One of the biggest complaints many people have about CentrePointe’s design is that it isn’t friendly to street activity. Pedways would make it even less so.
The first public hearing about a CentrePointe TIF was held after Tuesday’s task force meeting. It was lightly attended, and only a handful of citizens spoke. Maybe that was because it’s early in the process, and people have little information to react to.
Our elected city officials have provided a great forum for discussing these issues. They, and Lexington citizens, should make the most of it - and soon.
August 7, 2008 at 9:31 am |
I’ve never thought of it, but can agree with your pedways points. Get the traffic to the street level. But wouldn’t trolleys or streetcars do the exact same thing? Lexington’s downtown is not that big that you can’t find parking within walking distance of your final destination.
The jumbotron has me conflicted. I think Friday night flicks downtown would be a great thing in the summers. But it would compete directly with the Kentucky Theatre unfairly. A million dollars is a lot and it wouldn’t last the 30 years the bonds would take to pay it, so I’d probably vote no on that one. Get a high powered projector for the limited sporting uses it might have.
$2.5 million for public art seems like a lot unless we see a plan. Something like Thoroughbred Park might cost that much. But a couple abstract sculptures shouldn’t. Let’s see a plan before we blanket that with a “great idea” vote. Let’s coordinate that with UK for a design contest.
August 7, 2008 at 10:13 am |
You may finally be on to something. Should CentrePointe be a TIF project or should Lexington follow Columbus Ohio’s lead and create a TIF district without a designated project? As you probably already know, they(Columbus) recently declared all of their downtown area, 734 acres worth, a TIF district for the funding of downtown infrastructure improvements. One of these is a streetcar system and enhanced mass transit. If the mayor is correct about the $190 million(just from CentrePointe) how much of a streetcar system could we build? Transit oriented development(TOD) has proven to increase revenues in other cities, so what could they provide to Lexington? Without a streetcar system we’ll never know.
Your comments on pedways is right on the money but the ones about parking garages just show that Lexingtonians need to grow up. (if we had a streetcar system we wouldn’t need so much parking)
The Webb’s have not asked for and have said that they can and will build CentrePointe without a TIF. Will our leaders get on board with what this and whatever else CentrePointe creates in our downtown. Our next fear is that the Council will see this TIF district as a cash cow and not as an “endowment fund”
August 7, 2008 at 7:40 pm |
Im personally not a big user of the skywalks, but many people use them and like them. They are heavily used during UK Basketball games and Rupp Events. Also many people I know really appreciate them during inclement weather and in the winter because its warmer and protects from the wind (which does a number on that perfectly manicured coif).
The courthouse project is a huge benefit to downtown. I am also really surprised that Jim Gray and Company did not really give a big hurrah for the proposed entertainment district that can be developed with the TIF. I guess that excuse to oppose Centrepoint to begin with is no longer useful to those that want to make this a personal vendetta.
As for the money, Jim Gray has now found another way to try to cast a shadow on the project. Everything else he tried didn’t work so he will try to foil things by using Govt authority to extort private financing information. Not that the information isn’t out there. I understand Dudley is in China for financing…..er the Olympic Games and Don Webb is in Dubai, which is a wonderful city with a very agressive development plan. Hmmm…..Dubai? Keeping your ear to the ground renders lots of information. Tom, why don’t you try that instead of perpetuating a feud that the citizens really aren’t all that interested in?
August 7, 2008 at 11:11 pm |
Centre Point (if it is completed) will be a boon to Lexington. The block that was raized was nothing more than an eyesore. When I first moved to Lexington, I couldn’t believe that block was in the middle of downtown. While Lexington is nowhere near the size of Columbus,I think it will be greatly improved by this development. After all, Lex is almost 300,000 people and should have a vibrant downtown. The development in the downtown area has been very conservative, so far…and does not have a big-city feel. Other smaller cities (Little Rock-Ashville) offer much more in the way of entertainment, food and various commercial endeavors, but most have a riverfront. A lot was made of Austin Texas and its downtown development, but it has WATER. It’s very difficult to attract people to a downtown area where there is NO water. There is nothing to look at while sitting outside (”bistro” effect.) Also the Austin idea of open areas with music venues would scare some of these provincial Lexingtonians to death. Young people drinking, singing and dancing downtown? Why, we’ll all go to hell or worse…. The mindset here is not very cosmopolitan, let’s face it. I think we saw just how progressive our city fathers were when they threw such a fit about saving a bunch of rag-tag buildings that no one cared enough to refurbish in the first place.
Centre Point is a beginning, so let’s move on. If we want an entertainment district, then we definitely should have one…an upscale dining district, as well, but it will be like (as my grandmother used to say) like pulling teeth to get them.
August 8, 2008 at 2:33 am |
Ed has a good point about there being no water in downtown. HOWEVER, Lexington was actually founded on water. Town Branch Creek. Which ironically runs exactly parallel to the proposed CentrePoint. It was diverted underground in 1890. So even back then, town “leaders” and silent citizens were destroying the charm and beauty of Lexington’s magic.
And there was/is magic in your eyesore, Ed. Your eyes must indeed be sore for you not to see past the post-modern commercial facades of those buildings and understand the sacred geometry of their 19th century architecture. If you’d ever taken a moment to have walk into one those buildings your energy field would expand and you’d know it. I’m gonna miss that. But it still exists. Herman Rowe designed the Dame building, but he also designed the Carnegie Center in Gratz Park. It’s a center for literacy and that too might expand your Columbus mind.
August 9, 2008 at 1:54 am |
ElizaRosz,
Herman Rowe would have cried out like a banshee if he found out that his beloved building was used as a dumping ground for mediocre music and foul smelling patrons swilling the nastiest of beers and smoking clove cigs. I’ve been in some of those buildings including the Dame and Busters and the only energy I felt was the urgent need to shower off some of the stale beer, sweat and urine that accumulated in those dumps. I’m with Ed.
August 10, 2008 at 2:43 am |
Ed,
When you say mediocre music, if you are talking about the Whalers, Drive-By Truckers, Spearhead, Dar Williams, BR549, Andrew Bird, Goose Creek Symphony, Hank Williams III, Todd Snider, the Derailors, the Scissor Sisters and a myriad of other nationally acclaimed and world famous musicians then so be it.
As for Herman, I didn’t know the guy, but I did live in another one of his famous buildings at 431 W Second for a number of years. I’d speculate that he liked live music and enjoyed a glass of lager on occasion. And he would have found some of the finest in his dear old building.
All talks of smells and music aside, we’re talking infrastructure here – the bones of a building. And they are strong. You’ll see – it’ll take days for them to tear down the Dame building. She’s still a solid structure. Your short sighted comments represent the very ideas that led to yet another wrong turn in Lexington’s future.
August 10, 2008 at 8:20 am |
Tim,
It really sounds like you defnitely know what alot of people think…A. Herman Rowe…a dead guy…and the people of Lexington…a large group of living people.
I am truly amazed at your abilities. In these times of uncertainly you truly possess a wonderful gift. Would you be willing to publicly use it to further any void in civic leadership???:)