MIDWAY — Woodford County officials hope to jump-start a stalled industrial park in Midway by taking a portion of state and local tax revenue to pay for public improvements like new streets and storm sewers for a new residential-retail-office project.
On Tuesday, Woodford Fiscal Court will hold a workshop to discuss the proposed use of tax-increment financing to assist the development of Midway Station, a 180-acre park off Interstate 64's Exit 65 for Ky. 341. A vote isn't expected until a later date.
The Midway City Council approved the plan in December but county magistrates need to give the nod as well. The Kentucky Economic Development Finance Administration also would have to approve the plan.
Midway Station is owned by the Woodford County Economic Development Authority, the county's chief recruiter for new jobs. Lexington developer Dennis Anderson has had an option to buy the property since 2011; last year that option was extended until September.
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The option "is somewhat contingent" on approval of the tax-increment financing, said EDA Chairman John Soper.
If the TIF doesn't get approved, Anderson can withdraw the purchase option, Soper said.
As long as the option is in place, Anderson is responsible for the interest payments on the $4.7 million in remaining debt on Midway Station, Soper said. If he were not paying that interest, Midway City Council and Woodford Fiscal Court would have to use taxpayer dollars to make those payments of about $68,400 every six months, Soper said.
Anderson is best known for Townley Center on Leestown Road in Lexington. The development has a mix of private homes, apartments, retail stores, restaurants and a hotel. Anderson would like to do a similar project at Midway Station; he anticipates construction of 221 single-family homes and 139 townhouse units over a 20-year period, plus additional retail, office and industrial space.
The site could be a success, given its proximity to the interstate, by reworking the site for use by restaurants and retail stores, according to Commonwealth Economics, a Lexington consulting firm for Anderson. The prospect of office space or nearby industries "will help drive the attractiveness" of the site for retailers and restaurants, the consultants' report says.
Anderson also developed the property on the south side of I-64, across from Midway Station, that brought a McDonald's restaurant and a Shell station to Midway.
The Woodford development authority installed streets, some sewers, utilities, gutters and sidewalks at Midway Station in the late 1990s in order to attract business owners interested in "shovel ready" lots.
In 2006-07, Lexington's Blue Grass Stockyards explored the idea of building the largest stockyard east of the Mississippi River on the site. But the company withdrew its plan when opposition arose.
Three businesses in Midway Station employ less than 20 people, and the park has failed to attract larger industries.
A description of conditions that make the park eligible for tax-increment financing were included in the Midway City Council ordinance: "The property remains undeveloped in large part because community sentiment, economics and local land-use plans now agree that a mix of uses rather than a major intensive, industrial use is more appropriate."
"It is highly unlikely that any uses other than a balanced mix of residential, retail (and) office ... would locate there," the ordinance says.
Midway Station is currently zoned for a mix of industrial, retail/commercial, office and residential uses. In 2008, the site was approved as a mixed-use development, but that coincided with the recession, so there was little activity or interest.
But, the park lacks public parking, sanitary and storm sewers, and electric utility lines suitable for non-industrial uses, according to Commonwealth Economics, the consulting firm.
That means "the entire site must be re-graded and new infrastructure installed before any new development can occur," according to a development plan. "The cost to make all the necessary public improvements is prohibitive without the funding mechanism that the TIF program offers.
"Without such TIF assistance, development of the site is unlikely to occur."
It is estimated that about $75.1 million in local and state "incremental" revenues are expected to be generated over 20 years to pay for the $31 million in improvements.
Tax-increment financing is a tool used by local governments to jump-start improvements in blighted areas. In this case, the city and county pledge to take a portion of new occupational and property taxes generated by a redeveloped Midway Station to reimburse Anderson for upfront costs of the public improvements, said Casey Bolton with Commonwealth Economics. The increased tax revenues are referred to as the "tax increment."
Anderson can't get any of that money until $20 million in new investment is put into Midway Station.
Local and state governments do not actually pay anything out of pocket. The tax increment is taken from money the city, county and state wouldn't have had, but for the project. Tax money earmarked for schools and various taxing districts would still go to those entities.
"This is what it is going to take to get Midway Station off-center and be something productive versus what it is right now," Soper said. "Right now, there are no property taxes being generated at all because the EDA owns it and we're essentially a government body, so we don't pay property taxes on it."
Soper said EDA is comfortable with Anderson because "we know what he builds. He's done everything he said he would do for us. This is another way of helping him and to achieve our goals into turning" Midway Station into a successful development.