New 125-room boutique hotel coming to Lexington’s booming Distillery District
A six-story, 125-room boutique hotel with a restaurant and rooftop bar in Lexington’s Distillery District could start construction as early as this summer.
The nearly $40 million hotel and event space would be located at 903-914 Manchester Street, at the east and less developed end of the Distillery District. It would be within walking distance of Central Bank Center, which is currently being expanded.
“A sizable boutique hotel, like the one we are building, is integral to the success of Central Bank Center’s expansion,” said Nik Feldman, a partner with New Circle Investments, which would build the yet-to-be-named hotel. “Not only is there currently an undersupply of hotel rooms within walkable distance of the CBC, but there is also a lack of elevated product in general — a leading reason for why event organizers have historically chosen other host cities.”
Earlier this month, the Lexington Economic Development Investment Board agreed to approve $39 million in industrial revenue bonds for the new hotel. The Lexington-Fayette Urban County Council will first vote on the proposed funding in the next few weeks.
David Barberie, a lawyer for the city, said there is no financial liability for the city or taxpayers. The program allows New Circle Investments to issue bonds at the city’s interest rate. Cities traditionally offer industrial revenue bonds to other nonprofits and government agencies. In the past, it has issued similar bonds for Transylvania University to finance new dorms.
Barberie said the proposal would allow the government to own the property and lease it back for 40 years. That means the hotel would not have to pay local and state property taxes for 40 years.
“It will continue to pay occupational and other taxes,” Barberie said. The hotel would also pay Fayette County Public School taxes.
The hotel would have to repay the bonds. The city is not obligated to do so if the hotel goes belly up, Barberie said.
Feldman said the hotel, restaurant, rooftop bar and event space are expected to hire nearly 100 people. The operation is projected to generate $5.6 million in occupational taxes and more than $38.2 million in hotel taxes over 40 years.
“(Industrial Revenue Bonds) do not create any legal liability for the government, have no impact on its bonding capacity or financial rating, nor require any offset contributions from other local businesses,” Feldman said. Industrial revenue bonds “are utilized only to provide partial property tax relief.”
Feldman said if the council signs off on the $39 million, construction would start soon.
“If approved by council, the project would commence almost immediately so that the hotel can open ahead of spring 2023, the season currently with the largest backlog of events being hosted by the Central Bank Center in its first full calendar year of operation,” Feldman said.
The expansion of the Central Bank Center, which includes the convention center and Rupp Arena, is expected to be completed in the first quarter of 2021.
The hotel would front the soon-to-be-completed Town Branch Trail along Manchester Street, close to the proposed Town Branch Park, a nearly 10-acre park between Oliver Lewis Way Bridge and Central Bank Center. Construction on the privately-funded park is expected to begin after the completion of the Central Bank Center expansion.
Feldman said the Manchester Street location was ideal for the hotel. The project has already received the necessary sign-offs from the city’s planning department, including approval of a final development plan.
“Over the past three years particularly, the neighborhood has quickly evolved into Lexington’s most vibrant arts and entertainment destination, Feldman said. “Spanning a half-mile stretch of Manchester Street, the Distillery District serves as a prime example of a strategically designed and masterfully executed urban development plan made possible by collaborative public-private effort and compelling vision.”
This story was originally published May 19, 2021 at 9:05 AM.
