Distillery District projects get green light from state

FRANKFORT — A state board gave final approval Thursday to the Urban County Government's plan for $45.8 million in public infrastructure improvements for redevelopment of the Distillery District along Manchester Street.

The city plans several major improvements — new curbs, sidewalks, storm sewers and construction of the Town Branch Trail — for Lexington's historic bourbon corridor, west of downtown.

To gain state approval, the Distillery District had to demonstrate net new economic benefit to Kentucky.

With state approval, the city has two years to initiate the tax-increment financing projects — commonly called TIF — city spokeswoman Susan Straub said.

If the projects have not been started in two years, "the city can apply for an extension, up to two more years," she said.

The original plan for state TIF participation amounted to $61 million, but an independent financial consultant hired by the state recommended removing some of the proposed projects, said Brad Thomas, assistant director of the Program Servicing Division in the state Department of Financial Incentives.

The Distillery District is the first project approved by the Kentucky Economic Development Finance Authority under TIF guidelines for mixed-use redevelopment of a blighted area.

The idea behind a TIF project is for governments to invest in improving infrastructure, then pay for those improvements using new tax revenue generated from the overall projects. The $190 million Distillery District project — including infrastructure — is planned in three phases, developer Barry McNees said.

"So it's not a matter of having all the money at once. We're building on one success at a time, turning each success into the next step," McNees said. "In today's climate, I think that's the kind of project that stands the best chance of taking hold."

Several businesses have recently moved into the east end of the Distillery District, including Barrel House Distilling, maker of Pure Blue Vodka, and Buster's Billiards and Backroom music and entertainment venue.

Also new are the Rezny Fine Art Gallery, Manchester's jazz and R&B club, Dogtown doggie day care and boarding, and Screampark, set up to manufacture theatrical scenery and props after Halloween.

The Kentucky Distillers Association announced on Thursday that it is in discussions with Distillery District developers for an interactive bourbon center that would be a gateway to the Bourbon Trail.

The bourbon center would be at the former James E. Pepper Distillery.

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