A group of investors that includes a New York real estate firm plans to take over the CentrePointe development in downtown Lexington and probably will make key changes in the long-delayed project.
The group wants the Lexington government to move into a new city hall in the multiuse project, which is likely to get a new name and a redesign.
The new development plan calls for $166 million to complete the project in addition to what has been spent, according to a news release from the city.
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The Webb Companies, the original developer, will become a minority partner in the project, said Matt Collins, one of the new investors. Bridgeton Holdings, a real estate investment company with headquarters in New York City, and Collins will be the developers.
Bridgeton Holdings CEO Atit Jariwala said the project probably still will include a hotel and apartments, but instead of the proposed office tower, the group wants to build a "landmark" city hall with the Urban County Government as its main tenant.
The group has hired architects, and a redesign of the project — which already has gone through six designs — is likely, Jariwala said.
The group has been working for more than six months to analyze the project to determine whether it was viable, Collins said.
"We see this project as a necessary catalyst to the revitalization of Lexington," he said. A landmark project could spur further development and more interest in the city Collins now calls home, he said. The developers said they planned to be involved in the project long-term.
Mayor Jim Gray said he thought Tuesday's announcement "was a positive development that I hope leads to good jobs and a project that will have an economic impact beyond the physical borders, for the entire city."
Yet, Gray said, the city was being cautious.
"We don't want to be overly optimistic, because there is a lot of work to be done to pull this together, but what we do know is that this development team brings real cash and enormous experience to the table," Gray said.
At-large Urban County Council member Kevin Stinnett, who has been on the council for a decade, said that he, too, was cautiously optimistic that the new development group had the experience to get the project moving.
"It's always critical to see the details," Stinnett said. "But I'm confident that they have the resources and experience to make this project work."
The new developers
Collins and Jariwala, who met with the Herald-Leader on Tuesday, said they took the unusual step of contacting the media early because they understood that there has been a long history of distrust surrounding the project and its financing.
Collins, a graduate of Princeton and Georgetown universities, worked for JP Morgan Chase in London, England, and held other positions in international development before moving to Lexington two years ago to attend the University of Kentucky law school.
Collins, son of Tim Collins, CEO of Ripplewood Holdings, a New York private equity firm, said his ties to Kentucky and Lexington run deep. Tim Collins was born in Frankfort and attended elementary school in Lexington.
Ripplewood Holdings and the elder Collins will not be part of the development.
Matt Collins and his two brothers will be investors in the project.
Bridgeton Holdings will act as the developer. It has more than 60 real estate projects in 12 states, including 11 in development. Most are in urban settings in downtowns and include residential, hotel and office space, according to Bridgeton Holdings' website.
Jariwala is a native of St. Louis and a graduate of Yale and Stanford. He said he grew up in an Econo Lodge that his family owned. "I've been in the real estate business my whole life," he said.
Jariwala said the type of hotel that would be included in the Lexington project was still being discussed. It could be a four-or five-star hotel, the top two classifications in terms of services, amenities and price.
The group has an agreement in principle with The Webb Companies, but a more detailed agreement must be signed. Matt Collins said The Webb Companies no longer would be making decisions about the project and would be a minority stakeholder.
Dudley Webb of The Webb Companies said the company had no comment on the new agreement.
In addition to asking the city to become a long-term tenant, the developers might ask the city to guarantee a loan to help build a three-story underground parking garage. The Webb Companies had proposed using money from tax increment financing — or new taxes generated from the project — to pay off a $25 million bond. The bonds were never sold.
The new developers said they were trying to determine whether a city guarantee — which means the city would be on the hook if the developer could not make payments on the bond — would be needed.
The project might be scaled back if the city doesn't agree to the new city hall.
"We will be exploring any possibility of getting this project done. That being said, it's going to be difficult to get this done without their involvement," Collins said.
Jariwala said the group did not have a deadline for the city to make a decision.
No commitment on moving city hall
A new city hall has long been on the city's to-do list. It issued a request for proposals nearly two years ago for a private developer to propose building a city hall. Those plans were placed on hold as the city focused on other projects, including a proposed renovation of the former downtown courthouse on Main Street.
Gray said Tuesday there has been no commitment on the part of the city to move city hall from its current location in the former Lafayette Hotel building.
"While the developer may want the city to move city hall, there has been no commitment to do that or anything else on that property unless it's in the best interest of taxpayers," Gray said.
Stinnett agreed and said any decision about city hall would be weighed very carefully by the council and would have to be vetted. The city has been debating what to do with its aging city hall since 2007, he said.
The project has a lot of moving parts, Jariwala said. But if all goes well, the developers are hoping Lexington will see work on the project start again in six to eight months.
Jariwala said they were trying to determine the total cost of the project and were looking at attracting financing from local banks in addition to private investment.
Luther Deaton, president and CEO of Central Bank, said he and representatives from several local banks attended a meeting with the new developers within the past several days. Deaton said that while it was early, he was optimistic about the group's plans.
"I think they have the ability to do the project," he said.
The downtown development has stalled several times during the past seven years. A block of buildings was razed for the development in 2008, but excavation for a three-story underground parking garage did not begin until late 2013.
Tower cranes have sat on the site for months. City officials sent The Webb Companies an order April 28 to fill in the pit after the city alleged no work had been done on the site for 60 days. The Webb Companies countered that work had occurred and provided the city with invoices from several contractors.
The two sides appeared headed to court to settle the dispute when the Collins and Bridgeton group stepped forward in May and expressed interest.
The city agreed to give the new development group 90 days to explore the project. At the time, city officials and The Webb Companies declined to name the third party.
Mason Miller, a lawyer for the city, said it was not clear what would happen to the city's demand to fill in the site now that new developers were taking over the project.