The Urban County Council gave its blessing Tuesday for CentrePointe developers to seek up to $30 million in bond funding through the Kentucky League of Cities.
After more than 30 minutes of discussion, the council voted unanimously to allow the financing mechanism to go forward.
Temple Juett, chief operating officer and general counsel of the Kentucky League of Cities, said the CentrePointe bonds would be issued through a new nonprofit under the League of Cities that focuses on economic development projects.
The city and state previously created a tax increment financing district for the CentrePointe development. It can use new taxes generated from the project to pay for infrastructure and other costs.
The city's only obligation is pledging the new tax revenue from the project to pay the debt, Juett said. If the development is not successful, the city and the League of Cities will not be responsible for paying off the bonds. All the risk is on the buyer of the bonds.
"It does not place any financial liability on the city of Lexington for the repayment of these bonds," Juett said.
A second city must sign the interlocal agreement to start the nonprofit that will issue the bonds, Juett explained after Tuesday's meeting. The second city is expected to be Midway.
Midway officials will vote Friday morning whether to join the agreement. Midway is considering a tax increment financing project that could use bond funding, he said.
Lexington might be the first city to take advantage of the new program, but it probably won't be the last, Juett said. As long as a city signs the interlocal agreement, it may take advantage of the program.
The interlocal agreements must be approved before the Kentucky League of Cities can start the nonprofit to issue the bonds. But Juett said he hoped to have the nonprofit started and the bonds issued soon.
Up to $30 million in bond funding will be used to build a three-story, 700-space underground garage. When completed, CentrePointe will include an office tower, a hotel, apartment building, retail and restaurant space.
The project has been controversial since 2008, when an entire block of historic buildings was razed in downtown Lexington, but construction did not begin until last year.