The first development district on the east side of downtown Lexington received council approval Tuesday.
Developers of the tax increment financing district along Midland Avenue from Main Street to Third Street expect to seek state approval in January.
Tax increment financing, or TIF, districts allow developers to use new tax dollars generated from a project to pay for infrastructure and other costs.
Phil Holoubek, one of the developers of the new district, said he expects to have the application to the state by January. If the application receives preapproval, the Kentucky Economic Development Finance Authority will hire an independent consultant to estimate how much new tax money — from sales, property and occupational taxes — the proposed development would generate. Eighty percent of the proposed taxes will go to the TIF district.
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The Urban County Council voted unanimously Tuesday to approve the new district. No one spoke against the project during an Oct. 23 public hearing or at Tuesday's council meeting.
The district would include about $50 million in proposed development with $17 million in public infrastructure costs. A portion of the TIF district would include a planned Holoubek development at Main and Vine streets. Plans for the mixed-use development include first-floor retail and three floors of apartments.
The LexPark board has agreed to build a 160-space, three-story parking garage on that site at a cost of $2.8 million.
The amount of money a developer may use for infrastructure improvements is capped by the state. For example, if the state approves $17 million in infrastructure improvements, and the TIF district generates more than $17 million, the additional revenue can go to other projects in the district. The TIF district also includes city-owned property such as Thoroughbred Park and the Charles Young Center. Any additional tax dollars over the $17 million could be used for improvements to those properties, Holoubek has said.
Holoubek told council members previously that mixed-use developments that include both retail and residential, such as apartments and condos, generate the most tax dollars. For example, Holoubek's Main and Rose building generates more tax revenue in property, occupational and other taxes than large solely commercial buildings such as the Fifth Third Bank building, he said.
The other end of the proposed TIF district includes land owned by the nonprofit Community Ventures Corp. It has a building at East Third Street and Midland Avenue and other property in Lexington's East End neighborhood. The other owners of land in the TIF district are Mike Scanlon, a former vice mayor, and Missy Scanlon.
Holoubek said the Community Ventures property would become a mix of housing, retail and business space. The Main and Vine street property is the closest to development and will be the first building to be constructed if and when the state gives the group the OK.
Kevin Atkins, the city's chief development officer, has said that the city is not on the hook if the project does not generate enough tax dollars to pay for the infrastructure improvements.