Business

Long-delayed condo project showing signs of life in west side of downtown

Exterior taken on Tuesday, Jan. 17, 2012 of Phase 2 of 500's on Main in Lexington, Ky.  The Phase 2 building is closest to the camera (center of photo).  The MCNB Banks Inc., has taken ownership of Phase 2 of the 500's on Main condo/retail project. Bank wants to find a developer to either partner with, or to sell the project to, and have it finished. In the short term, the bank is finishing the exterior, putting in the windows, etc. so it looks presentable. Condos in Phase 1 are all sold. Photo by David Perry | Staff
Exterior taken on Tuesday, Jan. 17, 2012 of Phase 2 of 500's on Main in Lexington, Ky. The Phase 2 building is closest to the camera (center of photo). The MCNB Banks Inc., has taken ownership of Phase 2 of the 500's on Main condo/retail project. Bank wants to find a developer to either partner with, or to sell the project to, and have it finished. In the short term, the bank is finishing the exterior, putting in the windows, etc. so it looks presentable. Condos in Phase 1 are all sold. Photo by David Perry | Staff HERALD-LEADER

A long-stalled condominium project is being revived — one more sign of major change that's under way on the west side of downtown Lexington. As the city studies the future of Lexington Center and Rupp Arena, nearby areas already are evolving:

■ Work has started to finish the exterior of phase two of The 500's on Main condominium project — at the corner of Algonquin Street and West Main — a first step to finding a developer to take over and finish the 16 condos.

■ Triangle Park is undergoing a major makeover including the addition of an ice skating rink that turned into a downtown winter attraction. A café, outdoor tables and chairs and summertime movies on Friday nights also are planned for this year.

■ Victorian Square is for sale, raising the possibility of enhanced use for the handsome block of restored 19th century buildings across the street from Lexington Center and Rupp Arena.

■ West Short Street continues to emerge as restaurant row with owners of Shakespeare & Co. working on the building where it will open this spring. The building housing the upscale Metropol restaurant, recently closed when the owner retired, has been bought and will be turned into the Village Idiot pub.

MCNB Banks Inc., a West Virginia banking corporation, took over the stalled portion of The 500's on Main condo project from Citizens National Bank of Paintsville in November with plans to get it finished, the 16 condos sold and retail space rented.

This building was the second phase of the much-heralded 500's on Main project that opened in 2007 with 42 loft condominiums and first-floor commercial space. The Penguin Dueling Piano Bar is in a portion of that street-level commercial space. The rest remains vacant.

Work on phase two began in 2007, but stalled when the developer went bankrupt.

"First thing, our client wants to seal the building so there are not vandals, animals, homeless people in there. That is going to give it more curb appeal so it looks nice rather than being an eyesore," said Jon Gay, Lexington attorney for MCNB Banks in Welch, W.Va.

Windows have been installed throughout.

On Wednesday, a work crew was removing large sheets of plywood that have covered window openings in the first-floor retail space. Work on the exterior is expected to be completed in six weeks, Gay said.

"The only reason the building wasn't finished was it was tied up in bankruptcy and there were so many liens against it. It's taken two years to get all that cleaned up," said John Stuart, president of the The 500's on Main Council of Owners, made up of owners of the 42 loft condos in the adjoining building.

In a lawsuit filed in Fayette Circuit Court in 2010, Citizens National Bank of Paintsville said it was owed about $1.3 million for phase two of the project developed by Edward "Butch" Schneider and Schneider Designs.

MCNB Banks owned a share of the original $5.2 million mortgage, Gay said. Citizens National took back the property in 2010. In November 2011, MCNB took title from Citizens National for The 500's.

All legal issues on phase two have been resolved and the property has clear title, Gay said.

Meanwhile, MCNB Banks "would welcome any proposal of what to do with the building," Gay said. The bank wants to find a developer who will complete the building with 16 condos — including four luxury penthouses — a 32-space parking garage and retail space.

"Our client is willing to work with a developer and would agree to a delayed payment if somebody came in and completed the project at their cost," Gay said.

Or the bank will sell the property outright. Asking price for phase two of The 500's on Main is $3 million. That's below the appraised value of $3.5 million, Gay said.

All 42 condos — ranging in size from 1,000 to 1,800 square feet — in the large 500's on Main building next door have been sold.

"Our homeowners association is financially strong. We have been making improvements on the building and will continue to make improvements," Stuart said. Starting in the spring, all the exterior metal structure on the building will be painted.

Two first floor retail spaces — on both sides of Penguin Bar — remain unfinished. But not for lack of interest, Stuart said.

With the uptick in nightlife downtown, "There are people who look at those spaces every day," he said.

"Our big concern is what to do with the food waste and smell if a restaurant goes in. With a bar, we want to limit the hours," Stuart said. "The Penguin is open until 2 or 3 o'clock in the morning. The noise goes through the building. People can't sleep."

When The 500's on Main was first announced, the developer said the space would be rented to a grocery.

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