It would be simpler if the only question facing the Urban County Council about the request by CentrePointe's developers for the city to issue $30 million in tax-free bonds to complete an underground parking garage was this: Where will the money come from to repay that debt?
One of the few things all sides seem to agree on is that revenue from the Tax Increment Financing, or TIF, district — not Lexington taxpayers — would be obligated to pay off the bonds.
TIFs were created to offset some of the costly infrastructure often necessary before redevelopment can happen. The idea is that some of the increased tax revenue — as a result of more business activity, more employee salaries, higher property values — can be returned to offset those infrastructure costs.
When CentrePointe was first proposed in 2008, Lexington approved a TIF, but construction never moved forward. Last year, the TIF was renegotiated when the project was revived.
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Under that agreement, much of the TIF revenue generated from CentrePointe would be used to reimburse the cost of the underground parking garage.
Now, the developers have asked that, rather than reimburse those costs, the city issue tax-free bonds to pay for the garage, and then use the TIF revenue to pay for the bonds.
This might be a good idea. No doubt, it's beneficial to the developer. Tax-free bonds carry lower interest rates and so reduce the cost of the project. The question the council must ask is whether it's also a good idea for Lexington.
That discussion will move forward Tuesday at an informational session at which the council will learn more about this idea, even though the developers have not made a detailed proposal about the terms of the bonds.
Still, there are important points that can, and should, be raised.
The council must be assured there is adequate financing to complete this long-delayed, shape-shifting project, and that calculations based on reasonable assumptions give it a significant chance at success. And all of this information must be made public. The time for secrecy about the rest of the financing is past.
Lexington's risk is not just whether it would be on the hook to repay the bonds, or even if it would suffer a black eye with bond-rating agencies if a problem arises. The biggest risk, by far, for our community is a failed or severely under-performing development on this critical block at the center of our downtown.
Some council members worried at a recent meeting that there was also a risk in further delay and public debate. "We look like we can't make up our mind," lamented councilman Bill Farmer.
It's understandable that Farmer, like others, wants to see CentrePointe built.
But the council can't, and shouldn't, make up its mind on this latest proposal without a thorough understanding of the potential risks and rewards.
That won't be easy. "This is a very complex transaction that requires a substantial amount of due diligence to do right," Mason Miller, the attorney the city hired to negotiate the terms of any bonds with CentrePointe's developers, told the council.
It's been six years since a group of historic structures, including some of the oldest commercial buildings in Lexington, was destroyed to make way for CentrePointe.
It's important to take the time to get this right.