Herald-Leader Editorial

Distillery District revival important to Lexington; new, improved TIF needed

November 14, 2013 

It's hard to imagine an area better fitted to the original purpose of TIFs than the Distillery District.

A TIF — tax increment financing — is a device to capture some of the tax revenue that comes from upgrading a blighted area to pay for some of the upgrades.

We understand why the city decided to withdraw the state TIF application for the area that was approved in 2008. By the same token, we urge city planners to work hard and fast with the area's developers to create a new, better application to revitalize this important part of Lexington.

The district, just west of Rupp Arena, was home to a thriving distillery industry in the 19th century, which at its height housed over 180,000 barrels of bourbon.

Prohibition, of course, hit the area hard. By the second half of the 20th century, the commercial buildings had been all but abandoned and the surrounding residential areas were among the city's most impoverished.

Investors saw the potential in this abandoned area so close to downtown and the University of Kentucky, located along the Town Branch creek, and home to a unique collection of historic industrial buildings with the potential for a wide range of uses.

They purchased acreage and buildings but realized that investments in basic infrastructure — flood and storm water control, sidewalks and access to modern water, electric and sewer services — had also been neglected. That's why the TIF came into being.

Take your pick of reasons — the recession, insufficient capitalization, slumping city revenues, poor understanding about who was responsible for what — the TIF never became a reality.

There has been progress.

Visionary investors have kept the Distillery District alive and it is now home to a number of businesses, including a small distillery. But the massive restoration and redevelopment envisioned is hampered by the ancient or absent infrastructure.

The city has completed a feasibility study to get a handle on the missing infrastructure and will soon commission a study of the floodplain that drains through the district into Town Branch.

That may seem like a classic example of a lot of government studying and little action, but it's essential to planning a huge, complex project involving tens of millions of dollars.

City Planning Commissioner Derek Paulsen, who occupies a position that didn't even exist in 2008, is meeting with Distillery District representatives Friday to restart the process.

Paulsen told the Urban County Council Tuesday that Lexington has learned from its early TIF experiences. Now the city proposes a TIF to the state only after a development agreement has been negotiated, setting out precisely what the public and private sectors are responsible for, and a schedule for getting things done.

That provides assurance that public moneywon't be spent on sidewalks to nowhere and gives private developers a clear path forward.

It's important to create that path.

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