I’ve been skeptical of using tax-increment financing for a project related to Dudley Webb’s proposed CentrePointe development.
The more I hear about it, the more skeptical I become.
Here are my concerns: Is CentrePointe really an economically viable development? If the state approves a CentrePointe TIF project, will it be as good for Lexington as it is for Webb?
And, most of all, could a flawed CentrePointe TIF proposal poison the well for future projects that work the way the law intended — as an up-front partnership, rather than a tag-along grab for goodies?
At Tuesday’s work session, Urban County Council members will have their first chance to discuss a specific list of “public infrastructure” projects proposed as part of a CentrePointe TIF project. Let’s hope council members ask tough questions and demand good answers.
Tax-increment financing, known as TIF, is a great tool for redeveloping blighted urban areas and thus reducing suburban sprawl. TIF allows some of the new tax revenues generated by a big private development in a run-down neighborhood to be used for up to 30 years to pay for public infrastructure needed to make the development possible.
Louisville, Northern Kentucky and Bowling Green have begun projects since the TIF law was passed in 2007, but the CentrePointe proposal would be Lexington’s first.
Mayor Jim Newberry has been a strong supporter of Webb’s plan for CentrePointe, which calls for a four-star hotel, luxury condos, offices, restaurants and shops in a 35-story tower on the block bounded by Limestone and Main, Vine and Upper streets.
One of the most vocal of Webb’s many critics has been Vice Mayor Jim Gray, who is president of his family’s large construction company. He has questioned CentrePointe’s massive scale, its uninspired architecture, the demolition of the block’s historic buildings and the development’s economic viability. He thinks Lexington is being shortchanged by a development that embraces urban design principles two or three decades out of date.
Webb claims to have equity investors willing to put up more than $200 million to build CentrePointe, and he says he can do it without TIF financing. Nevertheless, he is going to a lot of trouble to help the city prepare a TIF proposal, which would include millions of dollars worth of “public” improvements to benefit CentrePointe.
Gray has repeatedly asked where Webb is getting the money for CentrePointe — and Webb has refused to say.
In essence, Webb is asking Lexington to trust him. But many people who have followed his career are reluctant to do that.
The community has a lot of questions about CentrePointe: Does Webb really have financing? Or does he need the TIF enhancements to attract investors? Will he scale back plans for his own costly parking facilities if the city builds a parking garage for him? Does he really have something else in mind for the block?
Against this backdrop, a task force of council members chaired by Newberry last week approved a preliminary list of projects that could be paid for with CentrePointe TIF revenues. Estimates of the money that could be available range from $35 million to $190 million over 30 years.
The task force’s project list includes some great downtown improvements such as new sewers and streetscapes, underground utilities, a park along Vine Street and public art for the new courthouse plaza.
Perhaps the best project on the list is a restoration of the old Fayette County Courthouse, which now houses the Lexington History Museum. When built a century ago, it was one of Lexington’s most beautiful buildings — and it could be again.
The list also includes a relocation plan for the displaced Farmers Market that is, at best, speculative. It would put the market in Cheapside Park and on the block behind the old courthouse — although there have been no discussions with the block’s owners.
The most questionable parts of the TIF project list are those of most interest to Webb: a city-owned parking garage beneath Phoenix Park and pedways connecting CentrePointe to that garage and the garage across Upper Street built by the state in the 1980s for Webb’s Lexington Financial Center.
Even if you think downtown needs another parking garage, it’s hard to imagine a more expensive way to build one. An underground garage costs at least one-third more than an above-ground one. This garage would cost nearly $10 million for 331 spaces, plus $4 million to rebuild and improve Phoenix Park once it’s finished. Plus, underground parking is a lot more popular with urban planners than with the public.
But the first things council members should question — and delete from the list — are the two pedways. Most cities stopped building pedways 20 years ago because they sucked life from the streets. These pedways would cost about $1.5 million each. Does anyone but Dudley Webb think that’s a good investment for Lexington?
But there’s a lot more at stake than this project.
Kentuckians like to think of their state as rural. But three of every four jobs are in a city. Lexington accounts for 10 percent of the state’s economic output. The metro areas of the so-called Golden Triangle — Lexington, Louisville and Northern Kentucky — account for 45 percent.
TIF is a vital tool for keeping Kentucky’s cities — and thus Kentucky — economically healthy.
A lot of improvements could be made in Lexington with smart, intentional urban revitalization projects that use TIF. The proposed Distillery District project on Manchester Street, whose developers will make their pitch for TIF financing to the task force next week, is a good example.
But some rural legislators resent TIF because it keeps tax money generated in cities from flowing to the rest of the state. They tried unsuccessfully last year to dramatically scale back the TIF law. There’s no reason to think they won’t try again.
Does Lexington want to risk giving TIF opponents in the General Assembly a big target to shoot at — a questionable project built around an unpopular development?
Do we really want to enter this race on a donkey instead of a Thoroughbred?