Bourbon County

Lexington's up while the rest of the region shows housing permit decline

Residential building permits, a key economic indicator, fell dramatically in each of Lexington's surrounding counties during the first quarter, a stark contrast to the more than 40 percent increase that Lexington experienced.

It's such a quirk that the president of a group that tracks building permits questioned whether Lexington truly is seeing the beginning of the economic turnaround that Mayor Jim Newberry hoped for in his pitch of the city's upcoming budget.

Noting the residential building permits increase in Lexington, Newberry said there's "legitimate optimism" for the upcoming year as he offered a budget that increases city spending by 1.5 percent. He cautioned, though, that the city recognizes "the economic uncertainty of the time in which we live" and plans to maintain a "significant cash cushion in the event our revenues fail to meet our expectations."

Residential building permits increased 41 percent in Lexington in the first quarter to 194, from 138 in the same time period a year ago, according to information service The Market Edge.

But for the eight counties measured — Fayette, adjoining counties and Franklin — the number of residential permits fell 26 percent year-over-year.

Dale Akins, president of The Market Edge, said Lexington's increase might have primarily been a statistical boost benefiting from its "really, really low" performance in the first quarter of 2008.

He said the numbers in the second quarter of 2008 — when residential permits jumped 97 percent compared to the first quarter — shows that there was some "pent-up kind of inactivity in the first quarter and then people started building again." The city then saw a more than 20 percent decline between the second and third quarters of 2008 as things evened out.

Without that strange spread in permits, any jump in the first quarter year-over-year would have been less or perhaps not even been a jump at all.

One surprise, he said, is that Lexington surpassed Louisville in residential building permits this past quarter, with Louisville issuing just 161.

To put in more general terms, that's 2.05 permits for every thousand people in Lexington and 0.6 for every thousand in Louisville.

"Louisville continues to decline," Akins said, noting it's the first time Lexington has surpassed Louisville since he began following the cities in 2004. "The trend is just negative, negative, negative all the way."

Dewey Crowe, Lexington's director of building inspection, compared Akins' analysis about Lexington to speculation and emphasized the city's increase in the most recent quarter. So far in April, the city has issued around 45 residential building permits, he noted.

"It looks like a good trend," he said. "We don't know if it will hold or not, but we're optimistic that we're looking at a turnaround. As we move further into the year, the numbers will tell."

There appears to be less reason for optimism in the counties surrounding Lexington.

"It's slow," said Greg Smith, building inspector with the Georgetown-Scott County Building Inspection Department. "There's nothing really out there."

In Scott County, residential building permits fell 31 percent from 81 a year ago to 56 in the first quarter.

Behind Scott County in total residential permits was Madison, where the number fell 61 percent to 39.

Amy Ferguson, permit technician with the Madison County Planning and Development Office, attributed the decline to "the economy overall and the loss of jobs."

With everywhere else struggling, Akins said he understands how Lexington officials could draw hope from its 41 percent increase, but cautioned that "you're talking small numbers."

"It's hard to draw anything from it," he said. "Nine months from now, if it's still positive, you might say there's a trend coming ... If you need to stretch and make that hope, that works just as well as anything."

Bill O'Mara, director of revenue for the city, said that while Lexington officials are hopeful for the local economy, they're working to end the fiscal year in June with a surplus to accommodate any future revenue declines.

"We're acknowledging that the economy is very unpredictable right now," O'Mara said.