FCPS inks deal with developer for $9M overhaul of Lexington senior apartments
AI-generated summary reviewed by our newsroom.
- The Fayette County Board approved a PILOT for Related Affordable to remake Rose Tower.
- Related Affordable plans a $9.4 million overhaul of the 168-unit Rose Tower building.
- Midland Station PILOT died for lack of support
The Fayette County Board of Education voted Monday to approve a new incentive for a New York developer who wants to remodel a downtown senior affordable apartment complex.
The board voted 3 to 2 to approve the incentives — called payments in lieu of taxes or PILOT — which would allow Related Affordable to make payments instead of taxes as part of a local and state initiative to boost affordable and working-class and affordable housing.
The board did not approve a second PILOT program for Midland Station, a 258-unit apartment complex planned for Midland Avenue.
It’s not clear if the PILOT for Midland Station is dead.
Board member Penny Christian said she would like to get more information from school and Midland Station developers before making a final decision.
New York-based Related Affordable has an option to purchase the 1960s-era Rose Tower at 137 Rose St. The plans include an overhaul for the 168-unit building, installing a new generator and making other safety upgrades to the affordable housing complex that city leaders say has been riddled with problems for years.
But to finance the $9.4 million overhaul, the developer wants to use an industrial revenue bond, which allows the developer to use Lexington-Fayette Urban County Government bonds to finance the project. Those bonds are typically at a lower interest rate than what a developer can obtain on the market.
The property would be turned over to the merged government over the 15-year period and then leased to Related Affordable. That means Rose Towers will be taken off property tax rolls. Governments do not pay property taxes.
As part of a new program that allows affordable and workforce housing developers to use industrial revenue bonds, developers must get payments in lieu of tax agreements with other taxing districts. Fayette County Public Schools is the largest taxing district in Fayette County. Developers must also ink agreements with other taxing districts, including Lextran and the Lexington Public Library.
Those agreements must be in place prior to the developers applying to the city for the industrial revenue bond.
The board had delayed action on the PILOT agreements for Rose Tower and Midland Station for weeks.
Some Fayette County board members said they were still unsure about the payments and if the proposals by Related Affordable and Midland Station developers was a good deal for taxpayers and the cash-strapped district.
Under the terms of the Related Affordable project, the board will receive $1.4 million over 15 years. At the end of the agreement, if it is determined Related Affordable did not pay enough in taxes, the developer will make up the difference.
Developers for Rose Tower have said they also plan to seek city affordable housing funds. Related Affordable still must get agreements with the library, Lextran and other taxing districts before it can apply to the city for an industrial revenue bond.
Board members Amanda Ferguson and Monica Mundy voted against the PILOT payments for Rose Tower. Ferguson said she still felt the board had not had enough time to review all the financial information. Mundy said the school’s finances are still an unknown.
“There is so much we don’t know regarding our budget,” said Mundy.
The district is in the process of undergoing multiple audits after it discovered earlier this year its books have been misstated for decades. It’s tentative $711 million general fund budget includes the elimination of 120 positions and the cutting of staff work days.
Board Chair Tyler Murphy, Amy Green and Penny Christian voted in favor of the PILOT.
Board members still question Midland Station PILOT
The Midland Station project is expected to have retail on the first floor and 258 apartments in the upper floors over two buildings. Those apartments are geared toward workforce housing, which is 80-to-120% of the average median income. A family of one would have to make less than $70,000, or 120% of average median income, to qualify.
The developers will set aside some of those apartments for teachers and FCPS employees who meet those income guidelines, said Scott Shapiro, one of the developers. For workforce housing, the industrial revenue bond is only for 10 years. Only 20% of the project has to be set aside for workforce housing to qualify for the incentive.
The group originally proposed paying $732,216 to the school system over the 10-year period. After questions from the board, the group upped its PILOT payment plan to $1.1 million over the 10-year period.
Michael George of Compass Municipal Advisors, one of the district’s financial advisors, said the increased PILOT payments would make the district whole.
Shapiro and his partners have said the Midland Station project will not move forward with the industrial revenue bond.
