A mixed-use residential and commercial building long planned for a lot at the corner of Main and Vine streets remains up in the air because of rising construction costs, one of the project developers said this week.
Phil Holoubek, a developer of the proposed five-story building with first-floor retail and apartments on the upper floors, said this week that he is waiting to hear whether the project will get tax credits to help offset costs.
“The key expense is the parking garage,” Holoubek said. “Construction costs have continued to go up, but (downtown) rents have not. Construction costs are the same here as they are in Atlanta, but the rents there are much higher.”
Holoubek said they will know sometime in the next few months whether the development will receive a type of tax credit that encourages developers to spend money in low-income areas. Meanwhile, they are working with their construction team to lower the cost of the project.
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The proposed building is at a key entrance to downtown Lexington. Skimping too much on good design is not an option, he said.
“I feel an obligation to put together a building that is high quality and something that the community will like.”
In May 2016, Old National Bank announced that it would lease more than 7,000 square feet on the first floor of the proposed building. At that time, construction was set to begin last fall. When that didn’t happen, the Evansville-based bank, which has offices in Lexington, opted to lease space in another downtown Lexington building, Holoubek said.
“Old National needed to move more quickly,” he said. “That’s fine. We wish them the best. I’m not worried. I think it’s still the best bank location in town.”
The fate of the corner lot has been in doubt for more than seven years. The empty site was once the home of Integra Bank, Heritage Antiques and The Button Hole. A plan to put a retail pharmacy on the site was scrapped. At one point, LexPark, the public parking authority, was in discussions to build a parking garage on the site, but the culvert for the now-buried Town Branch runs underneath the property, creating an engineering challenge that made the garage too expensive.
Plans also call for the proposed Town Branch Commons trail to go through the Main and Vine development. Holoubek said he is working with the city to determine where that trail will cross the property. “We may or may not swap land,” he said. “We want to make sure (that) what the city needs for the park is accommodated.”
The Main and Vine development is part of a much larger tax increment financing district that includes portions of Main and Vine, property along Midland Avenue, and property on Third and Race streets. Tax increment financing uses taxes generated from new development to pay for infrastructure improvements.
Developers don’t get to recoup any of those taxes to pay for infrastructure costs unless they spend a minimum amount. State officials gave final approval for the TIF district last January.
Holoubek and Community Ventures, a nonprofit, have proposed two additional buildings: a retail and affordable housing complex on Midland Avenue and another development on Third street. Holoubek said they also are waiting on word about tax credits before construction begins on those two buildings.
Carson’s Food and Drink, a restaurant near the corner of Main and Vine that opened in November 2016, is part of the TIF district. Gus’s World Famous Hot Chicken, which is to be in the same building as Carson’s and faces Vine Street, is set to open in coming months.