Lexington's Urban County Council voted Thursday night to move forward with a tax increment financing project related to CentrePointe, the controversial $250 million hotel, condo and retail complex on West Main Street.
The vote came after the developers agreed to pay $50,000 for a financial analysis that the city must submit to the state when applying for state TIF money. Tax increment financing allows state and local governments to fund public improvement projects and pay them back with the increased tax revenues that the development generates.
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In a 10-to-5 vote, council members passed the resolution directing the city to create a development plan for the Phoenix Park/Courthouse Development Area. The plan will define the borders of the area, the projects to be included such as pedways, and their costs.
"Why shouldn't we take advantage of this opportunity to see if we can do this?" said councilman Jay McChord.
"I'm tired of this defeatist attitude," he went on, referring to skepticism that some council members have expressed about the project.
That skepticism continued on Thursday as members questioned the project's financing.
"In 36 years in the construction business, I have never seen a situation where the financial investor's unwilling to be identified," said Vice Mayor Jim Gray. "Are they embarrassed about Lexington or this project? There are a lot of rumors that the money is coming from the Middle East. What is the big deal?"
Darby Turner, attorney for developer The Webb Companies, responded, "They don't want to be revealed..."
"We have a signed agreement with the investor," he said. "He is not just lending money, but he is putting money into the project for a percentage of ownership."
Since the public improvement projects being discussed are based on CentrePointe's money-making ability, some council members have worried that the funding source may back out and leave the city with an incomplete project.
Councilman Chuck Ellinger II asked Turner if the council could view the financial support agreement with the names of the investors blacked out.
"I don't want to mislead you," Turner said. "I don't think I can do that."
Opponents on the council have also questioned the potential for success after construction. They've asked if Lexington has a market for $450-per-square-foot condominiums in Lexington and $300-a-night hotel rooms.
The move by The Webb Companies to pay for the financial analysis assuaged some members of the council by removing some of the risk for the city.
That money will be recovered by the developers if the TIF application is approved by the state.
"We would take the risk of a loss if the TIF application is not approved," Turner said.
When the 35-story CentrePointe project was announced in March, developers Dudley and Woodford Webb said tax increment financing was essential in getting the project built.
But after public opposition surfaced, the Webbs said they had secured private equity financing and TIF money was no longer needed. However, they agreed to work with the city and be part of a TIF district to create an economic boost for downtown.
The latest list of public amenities the city would like includes sidewalks and streetscaping, renovation of the old courthouse for the Lexington History Museum, two pedways, an underground parking garage and a permanent facility for the Lexington Farmers Market.
Turner said on Thursday that another project on the list — the proposed Phoenix Park garage — does not have to be built in conjunction with CentrePointe.
In other action, the council also approved a resolution directing the city to prepare a development plan and set a public hearing on Oct. 21 for a TIF plan at the proposed Distillery District along Manchester Street.