Amenities for the city like improvements to Phoenix Park, public art, fountains. a giant outdoor movie screen and improved streetscape will be eliminated from the CentrePointe project if the developer nixes the idea of working with the city on financing.
Developer Dudley Webb surprised city officials Wednesday when he announced that his $250 million downtown hotel and condominium project can be built without $70 million in tax increment financing. ”We can do it privately, without TIF,“ he said as the project got approval to proceed.
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He says he has been bothered by the controversy surrounding CentrePointe and said city officials were using the possibility of TIF financing as a way to change the design of the project.
Tax increment financing is a tool for redeveloping urban areas. Money is borrowed through a bond sale to pay for public infrastructure such as streets, parks, parking and sidewalks. Property-tax money from the development is then used to pay off the bonds.
If he does not use TIF money, ”We will scale back all the public infrastructure improvements outside the block,“ Webb said.
That includes underground parking beneath Phoenix Park and improvements above ground such as a giant movie screen, a fountain and statue of the racehorse John Henry for the park.
”We were including these public amenities in the project for the good of the city,“ Webb said Thursday. ”We met with city officials, people from the arts community in January and February. These were things on their wish list.“
He estimated an underground parking garage for the 35-story hotel would cost $18 million and a subterranean garage in Phoenix Park $6 million. These, he said, would be public garages operated by the city's Parking Authority.
The remaining TIF money would be used for additional city improvements, considered public infrastructure. ”Things the city couldn't afford to do,“ he said.
”TIF money cannot be used to subsidize the private part of a development. It's only for public infrastructure,“ said Nancy Yelton, attorney with Kentucky League of Cities.
Building CentrePointe requires clearing a prominent downtown block of 14 historic structures that house restaurants, bars, music clubs — a strategy that has been criticized by many.
”Nobody is opposed to redevelopment of this block,“ downtown resident Carl Leonard said. There has been criticism of the project's overall design and size, including the 445-foot tower, with opponents saying it is too large for Lexington's midsize downtown. But the project was given the green light to continue on a unanimous vote Wednesday by the Courthouse Area Design Review Board.
Now, Webb said, ”the community and the Urban County Council need to tell us, do they want us to go ahead with the TIF application?“
Vice Mayor Jim Gray has objected to the design and offered to underwrite part of the cost of an architectural competition for a new design incorporating some of the historic buildings.
On Thursday, he said his relations with Webb ”are still cordial and channels are still open.“
The vice mayor said he favored TIF as a financing tool of urban projects. ”This is a very big project,“ Gray said of CentrePointe. Gray is president and chief executive officer of Gray Construction, an international engineering, design and construction firm.
Gray and councilman Dick DeCamp said they were unclear what the city stands to gain in improvements if TIF money is used in CentrePointe. ”It is our responsibility as elected officials to ask a lot of questions,“ Gray said.
”What I heard in yesterday's meeting was that the Webbs don't want or need public financing,“ Gray said. ”If they change their minds and want $70 million of public funding, they need to give people real input into the project.“
”We need to sit down and figure out if there is a TIF, what would be the benefits to the city,“ DeCamp said. ”If there isn't a TIF, what will the city be responsible for.“
Harold Tate, president and CEO of the Downtown Development Authority, urged patience on both sides, saying the TIF process was lengthy.
CentrePointe had to first get permission from the Courthouse Area Design Review Board to demolish the buildings and construct the hotel.
There is now a 30-day period during which Preserve Lexington, which opposed the demolition, can appeal to the Planning Commission. The loser could then file a lawsuit in Fayette Circuit Court.
To get TIF money, Webb is required by state statute to take his CentrePointe proposal before the Urban County Council for a public hearing and answer questions on how the money would be used. A financial analysis by an outside consultant is required to show that the project would generate enough money to pay off the TIF bonds.