Firm to provide update on Lexington's Distillery District

bfortune@herald-leader.comFebruary 12, 2013 

The former Pepper Distillery warehouse on Manchester Street is in the Lexington Distillery District, a fledgling arts and entertainment district. A new study is expected to highlight public improvements, such as sidewalks, needed in the area. Photo by Pablo Alcala | Staff

A long-awaited feasibility study for the Distillery District, due for release next month, will give the city a better idea of what infrastructure improvements need to be tackled on Manchester Street to support the fledgling arts and entertainment district.

Planning Commissioner Derek Paulsen told the Lexington Urban County Council's Environmental Quality Committee on Tuesday that the study would look at needed infrastructure upgrades such as new sanitary and storm sewers, flood-plain issues and construction plans for the Town Branch trailhead.

The Environmental Quality Committee asked Paulsen and Distillery Developer Barry McNeese for an update on the project.

Paulsen said the city approved a $2.189 million bond for a Distillery District in 2009, and part of that was to pay for a feasibility study. There is $1.687 million left in the bond fund. "Once the feasibility study is completed, we will have decisions to make, " Paulsen said.

Strand Associates received the contract to conduct the study.

McNeese told council members that "slow and incremental progress is being made in the Distillery District." Since the recession hit, it has been nearly impossible to get funding to rehab commercial property in a blighted area.

McNeese said 30 investors in six private partnerships have invested $11 million in the Distillery District.

"Improvements have advanced one tenant, one condo, and one building at a time through private funding," he said.

About 15 shops and businesses have opened in the Distillery District, including Buster's, Deluge, the Hair Factory; M.S. Rezny Studio Gallery and Barrel House Events. Ironhorse Forge moved from West Third Street to Manchester Street, and there is a proposal that includes an indoor soccer training center.

The development has been slowed by poor public infrastructure, McNeese said.

The Lexington Distillery District was proposed in 2007 as one of the city's first two tax increment financing projects. The idea behind TIF is that new development in a district will generate more tax revenue than if development did not occur. In TIF districts, that additional new tax revenue pays for public amenities.

Two economic feasibility studies at the time said that improvements in sewers, sidewalks, street lights and flood-plain protection were crucial for the success of the proposed arts and entertainment district.

"To date, the requested improvements remain undone," McNeese told the committee.

Historically, Manchester Street was the bourbon distilling corridor of Lexington, starting in the 1860s. Distillers were drawn to the area because of the Town Branch creek and the abundance of springs that provide the fresh water needed for making bourbon.

Environmental Quality chairman Kevin Stinnett expressed his support for the Distillery District project. He said that after the feasibility study is complete, the city can identify what needs to be done and cost out the improvements.

But Stinnett emphasized that there will have to be agreements between the city and the developers spelling out what the city will do and what the private partners will do.

For the city to put the Distillery District improvements on its priority list of projects, "We need to know what's coming from the private sector," Stinnett said. "This needs to be done before we spend another dime of that bond money."

Vice Mayor Linda Gorton wanted to know whether the Distillery District, on the west end of downtown, could eventually be tied into the Town Branch Commons and the Rupp Arena, Arts and Entertainment District.

Jeff Fugate, president of the Downtown Development Authority, said the "nuts and bolts" have not been worked out on how to make that happen, but the Distillery District is part of the vision for downtown.

"The feasibility study is going to drive everything that is done down there," Gorton said after the meeting. "It will give a lot of information to let us know whether we can go forward on certain things with the Distillery District — what is feasible down there," she said.

"It's all fairly nebulous right now," Gorton said. To get the project moving again, the city needs those answers.

"This update was good," Gorton said, and she looked forward to seeing the feasibility study. "I envision it telling us what is needed to make this a feasible project."

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

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