Construction is expected to start soon on a 12-story office tower in the long-delayed CentrePointe project after developers announced Wednesday that new investors are backing the high-profile development in the center of downtown Lexington.
The Webb Companies said Lexington-based Greer Companies have joined the more than $200 million project, which includes a 700-space underground parking garage, a 231-room Marriott hotel, a 120-suite Residence Inn and a 12-story office tower.
“We are delighted to have the Greer Companies as a partner in the CentrePointe project,” said Dudley Webb. “I have known Phil Greer and his family for over 50 years and we are excited to get to work with him and his team.”
The Greer Companies have operated more than 60 restaurants and have franchise agreements with several hotel chains, including Marriott.
Webb said Wednesday he has received a building permit for the 12-story office tower and expects to get permits for the 12-story hotel and eight-floor extended stay hotel soon.
Meanwhile, the city is mulling whether it should terminate a 2013 agreement it had with Webb that required the company to fill in the site if a three-story underground parking garage was never built. The garage is now virtually completed, with workers finishing the top floor, Webb said.
Webb said the Greers want assurances there are no outstanding liabilities against the project.
“They are coming into this project and they wanted to make sure there is nothing controversial out there,” Webb said. “It’s a formality with the city.”
Phil Greer declined to say how much his company is investing in the development.
“The total amount of equity is somewhere north of $70 million,” Greer said, noting that the figure includes money invested by the Greers and the Webbs. “That’s $70 million into a $200 million project. Normally it’s 20 percent. We want to be safe on this thing.”
Greer and Webb said interest from potential tenants in the office tower has been overwhelming. Nearly 70 percent of the space is spoken for, they said. The top three floors of the office tower will be residential condominiums.
Greer said a planned expansion of the Lexington Convention Center — slated to begin next year — will drive up demand for hotel space.
“I love Lexington and I’m a Kentucky guy,” Greer said. “I think CentrePointe is going to be a great addition to Lexington. The hotels will be a grand addition to the convention center. You have 230 rooms a short distance from the convention center. When you are booking conventions, people want a first-class place to stay. This will also put an infusion of $200 million into the economy of Lexington.”
Webb said Wednesday that steel for the office tower will arrive in four to five weeks.
“They will start going vertical with that building in the next five weeks,” Webb said. “They should top out in early spring.”
The hotels — both Marriott properties — will be built using precast concrete. That means parts of the building will be built off-site and brought in. The current plan is to build all three buildings at the same time.
“All the towers on the site will be closed in and completed by the end of the year (2018),” Webb said of the time line. The buildings might not be open though until early 2019, he said.
Meanwhile, Lexington Councilman Kevin Stinnett made a motion during a council work session Tuesday to terminate the conditional restoration agreement signed by the city and CentrePointe developers in December 2013. Since construction on the garage is complete, the agreement should be terminated, Stinnett said.
According to that agreement, developers would restore the surface of the site to pre-disturbance condition if no work was done toward completion of the garage for 60 consecutive days. They also agreed to reimburse the city any cost it incurred, up to $4.4 million, to fill in the hole. The city was granted what’s called a “first priority” mortgage on the property as security.
The agreement can be terminated “once the construction of the parking garage has been completed and the closing of the construction loan for the office building component of the project has been achieved,” the document says.
The city and the Webbs nearly ended up in court over the agreement in 2015. The city issued a stop work order in April 2015, alleging no work had occurred on the site for 60 days, a charge the Webbs denied. But the issue was set aside when new investors for the project asked the city to stay the order to fill in the site while they explored taking over the development. That group eventually backed out and work eventually re-started on the garage.
Greer and Webb said the 2013 agreement is viewed as a lien on the property by banks, making it more difficult to get financing.
Some council members said during Tuesday’s meeting they were uneasy with undoing the agreement that has given the city leverage over Webb in past years as the construction site lay dormant. Other council members questioned why the city would have to terminate the agreement if its conditions are being met.
The council ultimately voted 8-7 to direct the city’s law department to draw up a resolution that would terminate the agreement.
No date has been set for the council to vote on the resolution. Lexington Law Commissioner Janet Graham said during Tuesday’s work session the council could discuss some of the legal aspects of terminating the agreement in a closed session after the resolution was drafted. The council is allowed to go into closed session to discuss potential litigation.
“I think the city is being very cooperative and we are working with them,” Greer said Wednesday.