Fayette County

Lexington may help developers cover costs, but some on council wary

A fund that Lexington developers can tap to help pay for parking, sewer and other infrastructure costs cleared a key hurdle Tuesday.

The Urban County Council’s Budget, Finance and Economic Development Committee gave tentative approval to the creation of the new economic development program. An ordinance that will create the new program and outline requirements for it will likely be presented at the October budget committee meeting.

The goal of the $750,000 fund is to provide limited money for infrastructure projects that will create jobs or provide public infrastructure, said Planning Commissioner Derek Paulsen.

The city will not be the sole funding source. The developer must show it has private funding.

“We view this as the last money in,” he said.

Projects that would qualify include parking, public roads, sidewalks, streetscape improvements, sanitary or stormwater improvements. The parking must allow for public use and can not be entirely private, Paulsen said.

The fund was started with $1 million taken from unspent bond funds for a project that never materialized. About $250,000 of the $1 million was set aside for sidewalks throughout Lexington. That leaves $750,000 in unspent funds.

To qualify, a development must either create jobs or have a direct capital investment. All projects must show that they are using private money and that the development’s plans are compatible with existing zoning and plans for the area.

“This isn’t for somebody who just wants to put in sidewalks,” Paulsen said. There must be new money going into the project.

Although the fund can be used for any development, priority will be given to infill projects, Paulsen said.

Projects that increase affordable housing, add new retail and residential units in infill areas, development of underutilized or vacant properties and projects that create jobs with a minimum salary of $18.50 an hour will be given preference.

Developers will be reimbursed only after the project is completed. Construction must begin within six months of approval or funding can be revoked. If there is a legitimate delay associated with the construction, developers can get an extension, he said.

Paulsen said developers who receive money through the city’s affordable housing fund or other city money could still apply.

“But the city does not want to pay for the entire project,” Paulsen said.

Some council members questioned if the fund was a duplication of other city programs. Others questioned if the program would cost too much in future years.

Councilman Fred Brown said he was concerned that bond funds were used to start the program. The city’s borrowing will only increase in coming years to pay for other major capital projects.

“I think bonding is very critical in the future,” Brown said. “I’m just not comfortable with this.”

Councilwoman Jennifer Scutchfield agreed. If the city doesn’t borrow the money to continue the program, it will have to take it from the city’s general fund. The general fund pays most of the city’s bills.

“I want to make sure that we aren’t creating duplicate funds,” Scutchfield said. “I am also concerned that this will be a fund that we have to fund out of the general fund every year.”

Other council members said they felt the fund was needed. Development downtown has unique challenges. It can also be expensive. The infrastructure is old and space is tight.

If the city wants to “remove pressure from the urban service boundary” then it needs to make it easier to build inside that boundary, said Councilman Bill Farmer Jr.

Paulsen said the development must be completed two years after the funds are requested. But Vice Mayor Steve Kay recommended possibly shortening the amount of time for the project to be completed to 18 months. Kay said instead of a minimum of $18.50 an hour, they may consider a median hourly wage of $18.50 an hour.

“We want good paying jobs,” Kay said. “But we also don’t want to exclude a project just because it may have someone who is making $14 an hour.”

Paulsen said they will look at that and other issues before he returns in October with an ordinance. If the committee approves the ordinance, it still must move to the full council for a vote. That means if the fund is approved by the council, the program likely won’t begin until 2017.

Beth Musgrave: 859-231-3205, @HLCityhall