Construction of the long-delayed CentrePointe project will likely start in the next 10 days, developers for the project said Tuesday.
The Urban County Council unanimously approved an agreement Tuesday that would require CentrePointe developers to set aside $4.4 million in case parts of the project were not completed and the site in downtown Lexington had to be restored.
Dudley Webb, the CentrePointe developer, said he expects to pick up permits for excavation this week. The project — which includes an office building, hotel, an apartment building and an underground parking garage — has been stalled since 2008. Excavation on the 700-space underground parking garage will begin in the next two weeks and likely won't be completed until early spring, Webb said. The office building will be completed first, because a major tenant needs to be in the office building by May 2015, Webb said. Webb has not named the tenant but has said it is a national engineering firm.
Including financing costs, the price tag for the entire CentrePointe project is estimated to be $393.9 million.
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Tuesday's agreement was the last hurdle Webb had to clear before being issued permits for the project. The project — which includes an entire downtown block — has been controversial after buildings were razed and financing for the project fell through. The empty block is now fenced-in green space.
Mayor Jim Gray said that the agreement signed Tuesday will give the city and the public assurances that if the project is not completed for any reason, there is money to restore the site.
"We are hopeful that the project will bring jobs to the city. That's important," Gray said. "My job is to encourage job creation on the one hand but also to protect the city." Gray said that if for whatever reason the project is not completed, the agreement provides security that the city will be able to restore the block to its current condition.
The state approved tax increment financing, or TIF, for the CentrePointe development last summer. Tax-increment financing will use tax revenues generated from the project to reimburse developers for the cost of the 700-space garage. The costs eligible for recovery include $31.9 million to be spent on a parking garage and $16.9 million from the financing of it.
But the Urban County Council approved stiff guidelines in July for the Webb Companies in order for the development to go forward as a TIF project. Key provisions in that agreement include: Webb must show city officials that he has financing for the project, submit to the city a geotechnical report on the feasibility for the underground garage, and certify that there is enough sewer capacity for the development.
All of those requirements have been met.
Finance Commissioner Bill O'Mara said the city has reviewed the financing for the parking garage and the office building, which also includes some retail space. "With this development, I think the city's interests are protected," O'Mara said of the agreement signed Tuesday.
Darby Turner, a lawyer for the Webb Companies, said that the U.S. Army Corps of Engineers has told Webb that a federal 404 permit, which is required if the development disturbs moving water, is not needed. The Town Branch is buried under Vine Street, which is near the development. Turner said that the developers had asked the Corps for a waiver for the 404 permit out of an abundance of caution.
"We should be putting up barriers probably the end of this week," Turner said, with excavation starting within the next week or two.
"The garage will take about four months to build. The office building will probably start before the garage is completely finished," Turner said.
Turner and Webb said they hoped to start on the office building, hotel and apartment buildings within the next six to 12 months.
Much of the discussion about the agreement during Tuesday's council meeting centered on whether this type of agreement would be required for all tax-increment financing projects. Planning Commissioner Derek Paulsen said that it would depend on the project, but it is likely that the city council would see more of these types of agreements in the future to protect the city and taxpayers on projects that include any type of public money.
Council member Diane Lawless, who made the motion to put the agreement on the council's agenda Tuesday, reminded the council that the city "has not spent a single dime on this TIF."