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A Q& A with the developer of Lexington’s proposed city hall

Craig Turner, Chairman of the Lexington Center Board of Directors, spoke during a groundbreaking ceremony held in front of Heritage Hall Thursday afternoon for the Lexington Convention Center Expansion. This highly-anticipated $241 million dollar construction project is slated to begin in August 2018 and be completed in November 2021. The 3-year project will be built in phases to allow Rupp Arena and much of the existing convention center to remain in operation during construction. In the background was University of Kentucky Finance and Administration Executive Vice President Eric Monday, left, and Lexington Mayor Jim Gray, middle.
Craig Turner, Chairman of the Lexington Center Board of Directors, spoke during a groundbreaking ceremony held in front of Heritage Hall Thursday afternoon for the Lexington Convention Center Expansion. This highly-anticipated $241 million dollar construction project is slated to begin in August 2018 and be completed in November 2021. The 3-year project will be built in phases to allow Rupp Arena and much of the existing convention center to remain in operation during construction. In the background was University of Kentucky Finance and Administration Executive Vice President Eric Monday, left, and Lexington Mayor Jim Gray, middle. cbertram@herald-leader.com

Discussions that began more than a decade ago under former Mayor Jim Newberry to relocate Lexington’s Government Center from the 100-year-old former Lafayette Hotel have reached another turning point.

Last year, the city sought proposals for the relocation of the government center. It received four. A committee of city employees was established to consider the proposals.

At a meeting at the Urban County Council in early June, the committee announced that it selected a proposal by CRM Companies. The firm already had an option to buy the building at Main Street and Midland Avenue that has housed the Lexington Herald-Leader since 1980, and that’s where it would locate a new city hall.

The public hearing on the CRM proposal is scheduled for 5 p.m., August 14 in the Council Chamber, 200 East Main Street.

Tom Martin discussed details of the proposal with CRM CEO Craig Turner.

Question: Last fall your firm signed a contract to purchase the Lexington Herald-Leader building at 100 Midland Avenue. Your initial renderings indicated a plan to house professional office spaces. Were you thinking at that time that the building also might make a good home for a new city hall?

Answer: It’s at the gateway of the city and something needs to happen down there that the city would have pride in, regardless of what it is. And our idea was that this office building would be something that would be iconic; something that the neighborhood would embrace; and something the city would be proud of.

The Lexington-Fayette Urban County Council considered a developer's proposal to move city hall to the offices of the Lexington Herald-Leader in 2018. CRM Companies had proposed gutting and expanding the building.

Q: What makes the firm a good candidate for building a civic institution?

A: There’s a new model out there particularly for government-type agencies called P3s — public-private partnerships. We have done the largest P3s in the state, two of those for the Commonwealth of Kentucky. I think our expertise in how we create what we call “neighborhood settings” within buildings, yet still provide private space for those that require it, resonated with the Commonwealth of Kentucky.

The financial structure that we used on those buildings is also the financial structure that we are bringing to the table for the city of Lexington on this project. Our particular method is done with tax exempt bonds. The benefit to the city is that they get a fixed rate over the term of the lease. So, they can keep an eye on their cost, know what escalation factors — in this case, there are none, would occur. We’ve already done a couple of these buildings. One of them is a little less than 400,000 square feet. The next one’s much closer to 400,000 square feet, and it’s accompanied by an 1100 car parking garage. So, we have all the tools and the experience to be able to put together a project like this for the City of Lexington.

Q: The 35-year lease would cost the city about $5.1 million a year. And after 35 years, the property would then be owned by the city. So, it’s a lease-purchase agreement.

A: That’s correct.

Q: Why would the city be better off with a lease-to-own deal instead of just building its own?

A: Our costs are the same as their costs. If the city elected to do this project themselves, they would issue bonds to do it. The way these are done, we get the same credit rating that the city gets because they are the beneficial occupant of the building. The real advantage is that it puts the onus, the responsibility to maintain those buildings on the private developer. All the dollars that we allocate for maintenance over that 35 years is escrowed with a financial institution. So, we, like everybody else, have to requisition that money when needed. It assures that the financial ability to maintain the building remains there at all times. And it gets rid of deferred maintenance issues for the city.

Q: And the city is at about $22 million in deferred maintenance right now?

A: That is correct.

Q: The city government now has its employees scattered across five different buildings downtown for a total of about 334,000 square feet. The Herald-Leader building, as proposed, would be about 213,000. What about that difference? How do you accommodate that many people with less space?

A: By doing primarily open spaces, you’re able to reduce that footprint that much.

Q: Are there still enough enclosed spaces for commission meetings, and hearings, and that sort of thing?

A: Absolutely. One of the most exciting things about our proposal is the council chamber. It’s big. It makes it accommodating for the public to have access to it, which is limited in our current facilities. It has the right kind of presence. It also showcases our city. The private spaces are programming issues that we really haven’t gotten into with the city yet.

Q: Your proposal suggests that the Government Center ought to reflect how Lexington sees itself. And increasingly, that’s as a place, especially downtown, that’s walkable from thing to thing. Right now, the area where the Herald Leader sits is more or less a dead zone. How would the street be activated?

A: The city building would be strictly for housing the city employees, but there is available property across the street that’s owned by Community Ventures. They have plans to re-energize that end of town. And the Town Branch Commons will create more pedestrian walking and so forth in that area of town. I think the whole East End will benefit from the development.

Q: Your proposal calls for several linked public plazas. Would these be green spaces?

A: The plazas themselves are going to be more hardscape type plazas. They will have greenscape elements to them. We actually remove part of the back of the building to create more green space. We’re going to take up the railroad tracks to create more green space. We’re going to do innovative things with a parking structure. Today, you literally grow vines on buildings to help soften the effect of a parking structure.

Q: Have you thought yet about access for public transit?

A: Yes. There’ll be a stop for Lextran. We also have a pull off for express delivery whether it’s UPS, FedEx, etc. We have a drop-off area that sits right at the intersection of Main, Midland and Vine.

Q: Any new government building ought to be built as efficiently as possible to limit ongoing utility costs and environmental impact. What needs to be added to this proposal in order to make the building LEED-certified (Leadership in Energy and Environmental Design) and what kind of impact do you think that might have on cost?

A: LEED-certified has a direct effect on the cost of facilities. Once you’re LEED-certified, there are different levels and each comes with more of those types of requirements, as well as costs. The buildings that we’ve done in Frankfort that are P3s have been LEED-certified buildings. Our intent here is that we’re going to have a LEED-certified building.

Q: The Herald-Leader building sits adjacent to the Bell Court neighborhood. Have you met with residents there and have you heard or responded to their concerns?

A: We did meet with Bell Court. Their main concern is traffic. We’re trying to remove any kind of possibility for the city traffic to have an impact on that neighborhood. We have cut off all access from Indiana Avenue for traffic to get through — you can’t get to our building by going through Bell Court neighborhood.

Q: The Urban-County Council hasn’t yet decided if it will award the bid to CRM Companies. But what happens in the event the council decides against moving forward at this time?

A: Obviously, that’s their prerogative. I think it would be disappointing. I’m not sure what would be achieved by starting over again because every year things cost more, and more and more.

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