City officials explore possibilities for new Government Center downtown

bmusgrave@herald-leader.comNovember 5, 2013 

The Urban County Government is again considering moving to a new building.

The city will ask potential developers Wednesday whether they are interested in formulating a plan to turn the Government Center, the nearby Switow building and the Phoenix building into a private development. In exchange, the city could build a multistory government center on top of one of two Lextran garages on Vine Street. The top of the other Lextran garage also could be available for private development.

Jeff Fugate, president of the Downtown Development Authority, said the request for qualifications will ask developers interested in the project to show a history of successful development. Those qualifications will be due in December. The city will select potential developers and then have them submit proposals.

"A public-private partnership just makes good business sense. We're looking to the private sector rather than asking taxpayers to foot the bill," said Mayor Jim Gray. "This can be a win for taxpayers and a win for our awakened downtown."

The city is spending $1.6 million annually to run the Government Center, the former Lafayette Hotel, and its other downtown buildings. A previous study showed that those costs are approximately $668,000 more than the national average.

Jamshid Baradaran, director of the division of facilities and fleet management, said it costs roughly $10 a square foot to operate the city's downtown campus. The benchmark is $6 to $6.50 a square foot. Baradaran said that because the former hotel is so old — it was built in 1920 — maintenance costs continue to go up and the return on investment goes down.

"For every $1 you spend, you get 10 cents back," Baradaran said. The city previously had discussed selling or leasing the old Government Center, which it purchased in 1982, and building a new center. But those plans were stalled in 2010 because of the recession. Gray, who was vice mayor at the time, asked that the plans be delayed in 2010 because of the costs and a dip in revenue.

"The city's budget tightened up and the focus was appropriately on basic services," Gray said. "Now, through strong financial management we've put the city's budget back on track, and it's time to consider creative solutions that will save money rather than cost more in the long run."

Fugate said the city monopolizes 200 feet of prime Main Street space that could be developed. By selling or leasing some of its buildings, it could greatly offset the cost of building a new government center that would cost less to operate, Fugate said.

An earlier study estimated the cost of a new government building at $45 million. However, Fugate said the city thinks it would cut those costs dramatically by forming a public-private partnership with a developer. Fugate pointed out that public-private partnerships have worked in the past. The new Eastern State Hospital at Coldstream Research Park was built because of a unique partnership between the city, the state, the University of Kentucky and Bluegrass Community and Technical College. That land swap meant Eastern State Hospital left its campus on Leestown Road and gave the property to BCTC. Bluegrass Community and Technical College will give its property on UK's campus to UK.

Fugate said the neighboring building that houses the police and county clerk's office was not part of the proposal but was not off the table.

Beth Musgrave: (859) 231-3205. Twitter: @HLCityhall.

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