State economic development officials gave preliminary approval Thursday for state tax incentives for an overhaul of Turfland Mall, Lexington's oldest enclosed shopping space.
The Kentucky Economic Development Financial Authority voted unanimously to give initial approval for the project as a tax increment financing district. A tax increment financing district or TIF uses tax dollars such as sales taxes generated by the project to pay off infrastructure improvements.
Plans submitted to the board call for a mixed use development that would include office, retail and restaurant space. One plan submitted to the board is for a $115 million development with $81 million funded by private investors. Roughly $34.7 million of the project could be paid for through the TIF program, according to the proposal.
That plan includes 328,000 square feet of office space, 48,000 square feet of restaurant and retail space, and 88 residential units to be located above the restaurant and retail space.
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The second option submitted to the board is a much smaller project but includes a senior center. The projected cost would be $83.5 million with $51 million in private investment and $32.2 million in infrastructure improvements that would be paid for through the TIF program.
That plan calls for a mix of retail, office and restaurant space but does not include any residential units.
Susan Straub, a spokeswoman for Mayor Jim Gray, said that a Harrodsburg Road location for a senior center was considered at one point but the city has decided to go with another location in the Idle Hour neighborhood.
Turf Development, a company owned by Lexington businessman and accountant Ron Switzer, purchased the mall for $6 million in 2012 after the mall had fallen into disrepair. The mall, which opened in 1966, had closed in 2008 but had been a weak retail center for years. Switzer said in 2012 that he planned on razing the enclosed mall but would keep some of the retailers, such as Staples.
Switzer did not immediately return phone messages on Thursday. It's not clear if the senior citizens center would still be included in the project proposal.
Thursday's preliminary approval is just the first step in the process. State economic development officials will further study the project to determine if it meets criteria for receiving tax increment financing, including whether the project would generate additional tax revenues for the state. An outside consultant will also look at the project's private financing and will determine whether the project can generate the tax revenues needed to pay off the infrastructure improvements.
If the project qualifies, the state will then determine how much in state tax dollars generated by the project will be used to pay for the infrastructure improvements. That process can take six to nine months and could take longer with this project because it involves two proposals, said Shawn Rogers, of the Kentucky Cabinet for Economic Development.
There is no guarantee that if the project is approved for TIF financing that it will receive the full amount in tax incentives.