Fayette County

Lexington apartment complex developer seeks TIF district to help pay for sewers

Vehicles went through high water on University Drive near Complex Drive on the University of Kentucky campus in Lexington, Ky., Wednesday March 4, 2015.
Vehicles went through high water on University Drive near Complex Drive on the University of Kentucky campus in Lexington, Ky., Wednesday March 4, 2015. Herald-Leader

A developer of a large apartment complex near the University of Kentucky wants to use new property taxes generated from the development to pay for stormwater and other infrastructure improvements.

Anderson Communities has several apartment buildings in the area between South Broadway and Limestone and is in the process of building more units and townhouses in the Simpson Avenue area. The development is called University Village.

Tax-increment financing uses taxes generated from a development to pay for infrastructure costs. In this case, Anderson is expecting to spend $23.6 million on the new development. Of that, approximately $4.8 million would be spent on stormwater, sanitary and sewer improvements, according to Anderson Communities’ application for tax increment financing with the city.

Kevin Atkins, chief development officer for Lexington, said local property taxes generated from the property over 20 years are expected to generate $978,000. Local and state property taxes would generate $1.59 million over 20 years. Anderson is asking that those taxes be remitted back to Anderson Communities to pay for the stormwater improvements.

The Urban County Council has scheduled a public hearing to discuss the tax increment financing application on March 3. The council won’t take a final vote until mid-March.

Anderson Communities had previously proposed using tax increment financing to build an underground pedestrian tunnel that would connect University Village to UK. The projected price tag for the project was $2.2 million.

Although the city and the state had pledged to contribute their respective portions of the taxes generated from the project other taxing districts including Lextran and the Lexington Public Library declined to participate.

Dennis Anderson, president of Anderson Communities, said he could not pay for the cost of the tunnel without those taxes and had to abandon the pedestrian tunnel. Anderson had proposed the tunnel because too many pedestrians had been hit by both trains and vehicles in the busy South Broadway area.

“We couldn’t get enough (taxing districts) to participate to pay for the tunnel,” Anderson said. But the stormwater improvements in the area were also substantial.

“We are going to have to build an underground stormwater storage basin underneath one of our parking lots,” Anderson said. The engineering cost just to develop an underground storage basin is substantial, Anderson said.

Councilman Jake Gibbs, who represents the University Village area, said he is interested in learning more about the proposal in coming weeks. Flooding is an ongoing problem in the University Village area, Gibbs said.

“There are times when the water just pours down those streets,” Gibbs said. “There definitely needs to be more stormwater controls in the entire area.”

The city and state have approved several tax increment financing districts in Lexington over the past several years. Those that have been approved include an area around the 21c Museum Hotel on Main Street, CentrePointe, the area around the former Turfland Mall, Midland, Third and Main streets, The Summit development on Nicholasville Road and the area around the Red Mile race track.

Another application for tax increment financing for Thistle Station — a mixed-use apartment complex off of Newtown Pike and Fourth Street — is slated to come before the council for final approval in coming weeks, Atkins said.

The Red Mile and CentrePointe are the activated tax increment financing districts. Developers have four years to active the district. Red Mile has met the minimum threshold that must be spent to start earning its tax dollars. CentrePointe’s tax increment financing district became active because of the four-year time limit.

Beth Musgrave: 859-231-3205, @HLCityhall