The Urban County Council probably will decide next week whether to back an application by CentrePointe developers for $30 million in state bonds.
On Wednesday, the city's Economic Development Investment Board, which oversees economic development programs in Lexington, recommended that the council pass a resolution supporting CentrePointe's application to the Kentucky Economic Development Finance Authority for state-issued bonds to pay for a three-story, 700-space underground parking garage at the downtown development. The garage is under construction.
The city must pass a resolution supporting the application before it is filed with the state board that oversees economic incentive programs in Kentucky.
After the board's unanimous recommendation Wednesday, Dudley Webb, of the Webb Companies, said the city or the state would not be on the hook for debt payments on the $30 million bond. Additional tax revenue generated from the underground parking garage would be used to pay off the bond.
Darby Turner, a lawyer for the Webb Companies, told the board that when the city approved the original 2008 tax increment financing agreement, it included language that would allow CentrePointe to seek state bond money for construction of the garage.
"Neither the local government or the state will be at risk," Turner said of the $30 million.
The Urban County Council probably will be asked to expedite the resolution so the bond application can be heard Aug. 28 at the next meeting of the Kentucky Economic Development Finance Authority. The council has a work session Tuesday and a meeting Aug. 14, so it's possible the council could give the resolution two readings, which are required for passage, by next week.
Kevin Atkins, the city's chief development officer and chairman of the Economic Development Investment Authority, said the $30 million in bonds was not part of the finance package for the underground parking garage originally. But Atkins said there has always been the option for the Webb Companies to seek state bond money.
There is no risk to the city, he said.
"What we want to see is a completed project," Atkins said. Having the state issue the bonds cuts the financing costs, he said. There are several confirmed tenants in the project's 10-story office tower, and the city wants to make sure those businesses can move operations downtown, Atkins said. One of the tenants, Stantec engineering, would like to be in the building by May 2015. Stantec is combining several offices to move its headquarters downtown.
The price tag for the entire CentrePointe project, bounded by South Limestone, West Vine, West Main and South Upper streets, is estimated at $393.9 million, including financing costs. The project has been controversial since 2008, when an entire block of historic buildings was razed. Construction did not begin until late December because of difficulty with financing and other problems with the development.
Plans for the CentrePointe project include a 12-story apartment building, an 18-floor Marriott hotel and a 10-story office tower, and retail and restaurant space.