A resolution to move forward with a tax-increment financing project related to CentrePointe, a 35-story hotel, condominium and retail complex, was narrowly passed by Lexington city council members Tuesday. While the vote to officially adopt the resolution comes Thursday, much of the fighting was done at the Urban County Council work session.
In an 8-to-7 vote, council members agreed to place a resolution on their Thursday docket to direct the city to create a plan stating boundaries for the Phoenix Park/Courthouse Development Area, the projects to be included and their costs.
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Some questions about the CentrePointe development were answered Tuesday. J.W. Marriott will be the hotel in the CentrePointe complex, The Webb Companies attorney Darby Turner said. The reduction of office space in CentrePointe from 85,000 square feet to 50,000 was because Marriott wanted an additional 30,000 square feet for meeting space.
Turner said the builder will be Bovis construction company and to expect footers to be coming out of the ground in December for the parking garage.
Anger over process
Vice Mayor Jim Gray, who voted against the resolution, said the CentrePointe complex at West Main Street and South Limestone "defies all models of responsible urban planning."
It will create "a massive fortress against our citizens, against pedestrians" and against the city's $500,000 master plan that took years of citizen input to develop, he said. Gray charged that the city is still living with failed downtown projects from decades earlier, including Festival Market, built by The Webb Companies, also the developers for CentrePointe.
"If past performance is an indicator for future performance, what is the likelihood of this project's success?" Gray asked. "Shouldn't we study our history and review what went wrong with downtown development in the 1980s and what role was played by these developers then?"
Although all the public improvements the city has discussed for its TIF district are based on CentrePointe's money-making ability, the developers refuse to disclose their source of funding.
Gray questioned the market for $450-per-square-foot condominiums in Lexington and $300-a-night hotel rooms.
When developers Dudley and Woodford Webb announced their $250 million CentrePointe project in March, they said tax increment financing was critical to getting the project built.
After public opposition, the Webbs said they had secured private equity financing and TIF money was not needed. However, they agreed to work with the city and be part of a TIF district to create an economic boost for downtown.
At Tuesday's meeting, Turner, in an attempt to allay concerns about the project's financing, said the investors had signed an agreement to provide the funding. Also a major U.S. law firm has agreed to act as trustee for that money.
However, Turner refused to name the firm, saying "I am not at liberty."
Gray's response to that after the meeting was, "The shell game continues."
Tax increment financing is an incentive program to help revitalize economically depressed urban areas. It works by capturing new taxes generated by the redeveloped area to pay up-front costs for public improvements to support the area.
TIF could net $5 million
Tuesday's meeting was laced with financial concerns. "All of us have reservations about the finances, especially in light of the government takeover of Fannie Mae and Freddie Mac," said councilman-at-large Chuck Ellinger after the meeting. But Ellinger said that all Tuesday's action did was to move the TIF resolution to Thursday's docket. The council can stop the process at any time if it appears that CentrePointe will fail financially.
Councilman Don Blevins said he thought that if the city's project reaches the state TIF commission, "It will be rejected surgically and quickly."
State law says a project must show it cannot succeed "but for" TIF funding.
Blevins said CentrePointe is estimated to produce $5 million a year in TIF revenue, according to "unvetted" figures given by the developers.
"But say it's true, that's $5 million a year for 25 or 30 years," he said. "Let's do some math. That's less than 1 percent of our entire (city) budget."
If the proposed TIF projects were that crucial to the city, Blevins said, "We could find less than 1 percent of our budget to attack those problems."
Councilman Ed Lane said that, although he didn't agree with everything about CentrePointe, the Webbs had assembled the land on a blighted block and complied with all city ordinances. "This is a free country. It is their property. They have the right to develop it as they see fit," he said.
The latest list of public projects the city would like included in the PhoenixPark/Courthouse TIF district include a renovation of the old courthouse for the Lexington History Museum, street-scaping, a permanent home for the Lexington Farmers Market and an underground parking garage. The list carries a $53 million price tag.