Fayette County

City officials, developers to discuss future of Lexington's Distillery District

A view toward downtown along the proposed Distillery District on Manchester Street in Lexington on Wednesday, April 24, 2013. Photo by Charles Bertram | Staff
A view toward downtown along the proposed Distillery District on Manchester Street in Lexington on Wednesday, April 24, 2013. Photo by Charles Bertram | Staff Herald-Leader

City officials told the Urban County Council Tuesday that they will meet with developers in the Distillery District this week to talk about the future of the proposed entertainment district.

"We are developing a plan on how to move forward," said Derek Paulsen, the commissioner of planning, preservation and development. "We know what it is lacking, it's lacking water and sewer."

Last month, the city pulled its application with state economic development leaders for tax increment financing or TIF, for the Distillery District. The district was initially proposed as an entertainment district in 2007. Developers had proposed using tax increment financing, which uses tax dollars generated from the project to pay for major infrastructure projects, to stimulate development. But the project stalled as the city and developers bickered over who was responsible for what projects. Originally approved by the Kentucky Economic Development Authority in 2009, the project had to start two years after it was approved. Kentucky Economic Development Authority had granted a two-year extension in 2011 but denied another extension in 2013.

Paulsen told the council during a work session on Tuesday that the city opted to pull the application rather than let it go forward and possibly fall into noncompliance. Being in noncompliance could jeopardize the city's chances of receiving approval for other TIF projects, Paulsen said.

Council members quizzed city officials over the next steps for the project. Councilwoman Shevawn Akers, who was not on the council in 2009, questioned why the project was allowed to move forward when there was no agreement between the city and the developers of the project.

The Distillery District was one of the city's first TIF projects. The city's other TIF projects now have development agreements between the city and the developers, Paulsen said.

The city and the Distillery District developers will talk about signing a development plan, Paulsen said.

The city borrowed $2.2 million in 2009 to make improvements in the district, but much of that money has gone unspent. Earlier this year, the city spent $500,000 on a feasibility study and recently agreed to spend another $500,000 for a flood plain study.

The feasibility study found that $14 million to $23 million in public infrastructure improvements, including water, sewer and electrical upgrades, are needed

Paulsen said that the feasibility study will guide a plan for the development of the area that used to be Lexington's main distillery district.

Once the city and developers have a plan, it can go back to state economic development officials with another proposal, Paulsen said. CentrePointe, another development using TIF financing, had to withdraw its TIF proposal and go back and re-apply after that project was delayed, Paulsen said.

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