Victorian Square exploring its options

New owner asks more of children's museum while trying to fill space

bfortune@herald-leader.comJanuary 12, 2013 

Victorian Square opened in 1985 with its developers, investors and city officials hoping that it would help spark a full-fledged revival of downtown Lexington.

More than 25 years later, the iconic downtown district of Victorian storefronts is still searching for its identity. New owners could be looking to replace one of the major tenants, the Explorium, a children's museum.

The atrium mall at Main Street and Broadway has struggled, as have many other venues nationwide that have tried to revive downtown retail. In the 1970s and 1980s, suburban shopping malls like Fayette Mall permanently changed shopping habits, putting shopping experiences close to where people lived.

"Few examples of a downtown (retail) mall the size of Victorian Square have been successful in any city," said Jeff Fugate, president of the Downtown Development Authority.

A mall needs one or more large anchor stores, which Victorian Square did not have, to draw people in off the street, and stores that open onto the street tend to be more successful than interior shops, Fugate said.

Just a few years into its struggle, city officials pitched an idea for what would be considered Victorian Square's anchor: the Lexington Children's Museum, later to be known as the Explorium.

The museum soon became a grassroots community effort, spearheaded by then-mayor Scotty Baesler and Pam Miller, who was a council member at the time and would later be mayor.

"Mayor Baesler became convinced it was a good thing. We got it through council. This whole effort took two years," Miller said. The museum opened in October 1990.

Fast-forward to August 2012, when Jeffrey R. Anderson Real Estate and The Webb Companies bought Victorian Square from longtime owners Alex Campbell and W.T. Young. Anderson and Webb paid $1.7 million for the restored block of 19th century buildings across from Triangle Park and Lexington Center.

Last week, Dudley Webb put the Explorium on notice that the museum would have to sign a long-term lease and pay more of its fair share of utilities and maintenance costs to remain there. The museum appears to be the only tenant in that situation.

"Nobody's approached us about what the future holds. I think the new owners are still trying to figure that out," said Jeffrey Miller, owner of Howard and Miller, a men's clothing store that has been in Victorian Square since 1986.

"I think in the next few months we will begin to see what's happening," Miller said.

Bryan Flynn, a co-owner of four small shops in Victorian Square including Good Scents Home and Body Shop, has not talked to the owners about the future of his businesses. His newest, the Soup Bowl, has a month-to-month lease. "The new owners wanted month-to-month because they want flexibility to maybe make changes in the mall. That suits us," Flynn said, adding, "We want to stay here. I hope everybody gets to stay and add to the tenants we have."

Dudley Webb, chairman of The Webb Companies, said Cincinnati-based Jeffrey R. Anderson Real Estate is working to line up new tenants.

As downtown becomes reinvigorated and takes on a new identity as an arts and entertainment area, Webb hinted that a large restaurant might be one of the additions. As of last week, future plans have not been revealed.

Webb has said he wanted to work out a deal with the Explorium.

The Explorium's previous director Michael Gilmore, who was fired by the Explorium board in February, refused to sign a long-term lease. For the past five years, the museum has been renting about 23,000 square feet on a month-to-month basis.

Webb said Gilmore had told people the museum was looking for a new location. Webb added that the new owners were under the impression the Explorium was not planning to stay in Victorian Square long-term, and they have been actively shopping the space for new tenants.

On Thursday, the Explorium's interim director, Lee Ellen Martin, and board chairman, Tim Davis, met with Jennifer Yacks, representing Jeffery R. Anderson Real Estate, and Dudley and Woodford Webb. Martin briefed Yacks and the Webbs about the Explorium, the rent it has been paying, and its future plans and space requirements.

Martin told the owners the Explorium wanted to sign a long-term lease and to stay in its current location. She came away both "hopeful and anxious" about the children's museum remaining in the space it has occupied for more than 20 years.

"They gave us some terms, in writing. We have 10 days to respond," Martin told the Herald-Leader on Friday.

The Explorium pays $6.11 per square foot. "That's what we've have always been asked to pay ... We pay promptly every month. We are not behind in our rent," Martin said.

The proposed new lease would increase the museum's rent to $18 a square foot, and the Explorium would need to sign a one- to five-year lease. After five years, rent would increase 10 percent, board chairman Davis said.

The rate for other tenants occupying first-floor, street-frontage shops is $18 per square foot, Flynn said.

Davis said he considers the Explorium to be the anchor of Victorian Square. He would like to see Webb and Anderson build the mall around them with some family-friendly businesses, such as The Cheesecake Factory, mixed with bars that draw light crowds.

Davis said he sees a tremendous amount of potential and wants things to work. The Explorium's board is reviewing the proposal, but the increase is difficult for them to swallow. They plan to draw up a counter-proposal.

"An increase like this is very, very difficult with our budget," he said.

In the beginning

The block of 16 buildings that make up Victorian Square was brought together under one roof by The Webb Companies with restaurants, specialty shops and office space. Lexington Children's Theatre is in the block of buildings but is not part of Victorian Square.

Victorian Square investors were Don and Dudley Webb, who owned 20 percent; banker Elmer T. Whitaker, Xalapa Farm owner Lillie Webb and businessmen Alex Campbell and Bill Young Jr., who each owned 20 percent.

Almost from the beginning, the specialty retail shops struggled, and one by one many quietly closed.

When the city rented space in Victorian Square for the children's museum, it was criticized by some people who said it was a bailout for the Webb brothers and the struggling project.

Former mayor Baesler denied the charge at the time, as he did again last week.

"The decision to put the museum in Victorian Square had nothing to do with the Webbs. It was the best location we could find. It was downtown. It was in Victorian Square, which everybody hoped would have been a little more successful," he said. "But it had nothing to do with the Webbs, absolutely nothing."

The city came up with the idea for the Children's Museum and put up the money to build it.

Altogether, the city put up about $1.4 million, according to Herald-Leader archives, in capital improvements to renovate 20,000 square feet in Victorian Square to become exhibit and public space.

Pam Miller and others raised an additional $200,000 from private donors for exhibits.

Operating costs were projected near $400,000 annually. Baesler said during the planning stages that he thought the city should be prepared the first two or three years "to bite a $200,000 to $300,000 deficit."

In a worst-case scenario, with no private-sector donations, the city might have to subsidize the operating expenses of about $350,000 annually for several years, he said.

The figures did not include the cost of leasing space in Victorian Square for about $64,000 annually, Baesler said.

Miller said she did not know how successful the Explorium had been in recent years. In its early years, "It was the most popular facility we had in Lexington. More than 200,000 people a year were going there," she said.

"It's been a great resource, and I would hate to see it fall on hard times, or fall apart. That would be terrible," she said.

"Good people running a good organization"

Even today, city support remains important to the economic stability of the Explorium, which is a partner-agency with the city.

The city contributes $169,000 annually from its general fund budget.

For many years, Lexington Fayette Urban County Government paid the museum's bills and provided some other support services. When the city converted to the PeopleSoft computer program, it was discovered that the city had paid more of the bills than the museum had money to reimburse the city, spokeswoman Susan Straub said Tuesday. The museum owed the city $197,000.

The Explorium has been working off what it owes through in-kind services such as participating in children's activities with the Parks Department and offering free admisson to the public, Straub said.

Straub said it was premature for Mayor Jim Gray to weigh in on the Explorium's current situation.

The museum's budget is $639,000 for fiscal year 2013. In addition to the city's contribution, revenue includes $343,000 from admissions, birthday parties, classes and activities. The Kentucky Arts Council gives $23,000 for programming. The museum raises $86,000 in contributions.

Explorium attendance dropped in recent years to 51,000 in fiscal year 2011; an additional 10,000 attended to off-site activities conducted by museum staff. Staff was cut to one full-time employee and a handful of part-time people.

But in the first six months of fiscal year 2013 (July 1 to Dec. 31), museum operations have turned a corner, Martin said.

Attendance has increased 25 percent, and earned revenue is up 16 percent, and expenses have been kept in check, Martin said. "We've been turning people away for birthday parties — not the case a year ago," she said. Martin did say contributions are down, but she did not provide specifics.

Complaints that the museum looked dirty and exhibits were broken have been addressed. "We have aware of those complaints. We are working very hard to address them," Martin said.

The museum was cleaned and repainted. Exhibits are monitored several times a day. Two new exhibits will open in the next three months. Staff has been increased to five full-time and six part-time workers.

Martin said she was hopeful about the museum's future.

Dudley Webb said on Friday, "Everybody is trying to make it work. They are good people running a good organization. I think it is a worthy cause."

Beverly Fortune: (859) 231-3251.Twitter: @BFortune2010

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