Fayette County

From Nov. 17: Major tenant of CentrePointe office tower pulls out of downtown Lexington development

The CentrePointe development will be on the downtown Lexington block bounded by Main, Vine and Upper streets, and South Limestone.
The CentrePointe development will be on the downtown Lexington block bounded by Main, Vine and Upper streets, and South Limestone. Rabun Rasche Rector Reece and CMMI

An expected major tenant of the 10-story office tower in the long-delayed CentrePointe development has pulled out of the downtown Lexington project.

A spokeswoman for Stantec, an engineering firm, said Monday that the international company no longer was a potential tenant because the office tower wouldn't be completed next spring as originally expected.

Stantec had planned to combine its two Lexington offices and move its almost 200 employees to CentrePointe. Stantec was going to occupy 21/2 floors of the 10-story tower.

The leases at Stantec's two offices in Lexington are up at the same time. The offices need to have a place to move to, said Tiffanie Reynolds, a spokeswoman for Stantec. The office tower originally was scheduled to be completed by March. Because of delays in releasing bonds for construction of the underground parking garage below the office tower, the tower is not likely to be completed until late 2015, said Dudley Webb of The Webb Companies, the project's developer.

The parking garage must be completed before construction can begin on the office tower.

"It's not a setback and it's not a surprise at all," Webb said of Stantec's decision to leave the project. "They have had the right to do this all along. We are hoping that we will have the office tower completed late next year and they will still be interested."

Webb maintained Monday that The Webb Companies have other tenants interested in the office tower.

It took longer than expected to line up bond financing for the three-story underground parking garage, he said. That has pushed back the timetable for construction of the project, he said.

"We also lost a tenant who wanted two floors in May because of delays with the bonds," Webb said.

The Webb Companies had first asked state economic development authorities to issue as much as $30 million in bonds for the garage. But the state declined, saying it was up to the city to issue the bonds. Eventually, the Kentucky League of Cities, through a new nonprofit arm dedicated to economic development, agreed to issue the bonds. New tax revenue generated from the project is to be used to pay off the bonds.

The city will not have to repay the bonds if the project does not materialize or the tax revenue falls below expectations.

Webb said the bonds were set to be sold Dec. 4 — although that date could change. "We have been told by our underwriters that there will be interest in the bonds," he said.

Webb said that a tower crane — to be used to construct the garage — probably would be delivered the second week in December. Webb has said the crane is needed to continue construction on the parking garage.

He said he originally thought a section of Main Street would have to be closed to bring in the crane, but Webb said he heard Monday from the contractor that it probably wouldn't be necessary.

Plans for the CentrePointe project include a hotel, an apartment building, an office tower, and retail and restaurant space.

The development has been controversial since 2008, when an entire block of buildings was razed. The CentrePointe site takes up the block bordered by Main, Vine and Upper streets, and South Limestone.

Construction on the underground parking garage began this year.

Reynolds said Stantec remained committed to Lexington and finding a space to combine its offices on Vine Street and Forbes Road.

"It's unfortunate," Reynolds said of not being able to occupy the CentrePointe tower. "We are absolutely still committed to Fayette County."

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