Lexington won’t be getting a new city government center any time soon.
The Lexington-Fayette Urban County Council voted 7 to 5 Thursday not to move forward with negotiations with CRM Companies, which had proposed renovating and expanding the four-story Lexington Herald-Leader building at the corner of Midland Avenue and Main Street.
Vice Mayor Steve Kay, who had previously supported the CRM Companies’ proposal, shocked the council prior to the vote by saying it was clear that there was not a consensus on the council and said he would not support moving ahead with negotiations. After the meeting, Kay said that even if the proposal got 8 votes Thursday night, he wasn’t confident it would get 8 votes on a final contract.
Mayor Jim Gray also said he felt that it was wrong to move forward with negotiations when there were only four months left in his term. Gray leaves office after two terms in December. Gray and Kay also said they felt that they needed more than eight votes to move forward on such an important project.
Gray said during his nearly eight-year term the city has been able to do a lot. But those projects were largely accomplished because the majority of the council had agreed to it.
“It became apparent after Tuesday’s work session that we did not have that consensus,” Gray said.
The about-face by Kay and Gray drew criticism from some on the Lexington council.
Councilman Kevin Stinnett, who supported the proposal, said the city owed it to the public to enter into final negotiations with CRM Companies. Until those negotiations are completed, no one will know how much it will cost.
“It’s going to put us back 10 years,” Stinnett said. “We need to move forward.”
Councilman Fred Brown said he, too, had reservations, but thought the city should enter into negotiations.
“I’m disappointed in the vice mayor because he has been lobbying for this for the past two months,” Brown said. “It’s time for us to get a city hall.”
The proposal would have cost the city approximately $5.1 million a year over 35 years. It included moving city employees from five downtown buildings to the Herald-Leader building, which CRM Companies has an option to buy. A police station would have been added to the back of the building, along with an 800-space parking garage.
CRM Companies said it would guarantee $3.1 million a year for maintenance and operating costs.
The council had been divided on the issue. Some members have said the city can no longer afford its five downtown buildings because deferred maintenance over decades means the city will soon have to spend millions of dollars to keep the buildings running. Other council members expressed reservations because the $5.1 million a year lease is an additional $2.6 million over the city’s current operating costs of about $2.4 million.
Councilwoman Peggy Henson said Thursday she did not support the CRM Companies’ proposal because of the price tag.
“That’s $178 million” Henson said of the total cost over the 35 years.
People who spoke in favor during the council meeting said the city could not afford to wait.
Former Vice Mayor Isabel Yates said that the Herald-Leader site is one of the few sites downtown with enough available land to suit the city’s needs.
“It has been on the table for 20 years,” Yates said trying to find a new home. “It will be a stimulus for economic development on the east side of town.”
But others said that it would cost too much over time.
“This is a crime,” said Don Pratt. “We shouldn’t put this on our kids.”
Stinnett has said if the city were to build its own city government center on the site where the county clerk and police station is currently located on Main Street, it would likely cost at least $6.9 million a year in debt payments. The city would have to temporarily lease space for the county clerk and the police station, hire an architect and then build a building of a similar size to the one CRM Companies has proposed, he said in an interview prior to the Thursday meeting.
That would take at least two years, and interest rates are rising, he said.
“That cost ($6.9 million) also does not include the maintenance and operating costs; that’s just the debt service,” Stinnett said. The city would not have to borrow money for the lease payment, he said.
Currently, the amount the city pays in debt payments is a little more than 11 percent of its total general fund budget. The city’s goal is to keep those debt payments to under 10 percent of its budget.
At the same time, the city’s five downtown buildings have at least $22 million in deferred maintenance.
Councilman Richard Moloney said during a Tuesday council work session that the selection of CRM Companies “does not meet the smell test.” Moloney also said that anyone who has received campaign donations from CRM Companies, whose president and CEO is Craig Turner, should not vote on the proposal.
Kay, Stinnett and Gray have received donations from Turner and other employees of CRM Companies, according to the Kentucky Registry of Election Finance. During Tuesday’s meeting, Kay and Gray pushed back against the idea that there was something untoward about the selection of CRM Companies.
A committee of city employees scored the four proposals the city received. CRM Companies scored the highest. Kay said no member of council was put on the selection committee to avoid the appearance of impropriety.
“I believe the repeated raising of questions that have been answered before and the repeated baseless innuendo that we have heard from Council member Moloney are entirely inappropriate,” Kay said during that Tuesday work session. “If he doesn’t like the way things smell, and he has some specifics he’d like to raise, we’d like to hear them.”
Kay and Moloney are both running in the at-large council race on Nov. 6. The top vote getter becomes the vice mayor.
Campaign finance records show that Moloney has received donations from lawyers with the McBrayer law firm, which represents Cowgill Partners, one of the three other companies that submit proposals for a new city hall. Cowgill’s lawyers have previously sent a letter to the city saying Cowgill would challenge the selection of CRM Companies for the city hall project.
After the vote failed, Councilwoman Susan Lamb suggested putting a new city government building on city property on Main Street. But many council members said they were not prepared to vote on it. Instead, Lamb put it into a council committee.
“I would like to see us move forward with a site,” Lamb said.
Councilwoman Jennifer Mossotti also sponsored a resolution that would require the city to come up with a plan for its five downtown buildings if it moves into a new building. That motion failed.
Those who voted to start negotiations with CRM Companies: Amanda Bledsoe, Fred Brown, Bill Farmer Jr.,Kevin Stinnett, James Brown.
Those who opposed it: Steve Kay, Jake Gibbs, Peggy Henson,Susan Lamb, Richard Moloney, Jennifer Mossotti and Joseph Smith.
Three council members recused thesmelves from the city hall vote: Kathy Plomin, Angela Evans and Preston Worley.