CentrePointe developers resume work on parking garage

Developers of the long-stalled CentrePointe development in downtown Lexington are resuming construction on a three-story underground parking garage, according to a written statement released Wednesday.

Several trucks and an excavator were at the site, where two large construction cranes have stood idle since early 2015.

In a six-page statement, the Webb Cos. said they are moving forward with the project, but they also blasted the city for laying blame for delays on the developers.

“We have resumed construction of the multilevel underground parking structure that underpins the entire project and provides parking the city desperately needs to foster further development and redevelopment in the city’s business core,” the statement said. “Our contractors are now on the site performing construction work toward completing the parking garage.”

The statement doesn’t say how the Webb Cos. are paying for the work on the parking garage. In an interview, Dudley Webb said he could not comment on the financing plan but may have further details in coming weeks.

The statement also says that despite speculation about the future of the site, it is privately owned.

“This site is still privately owned and it is not for sale,” the statement read. “The site will not be returned to a fenced paddock. It will not have a park or an amphitheater that will neither create jobs nor generate taxes for the city of Lexington. We intend to move forward with our original plan of the multi-use project that we previously presented, modified at the city’s request and which the city approved.”

A spokeswoman for the city said Wednesday the city will continue to monitor progress on the site.

“If real progress is occurring, then it would represent a major turn of events,” said Susan Straub, a spokeswoman for the city. “Hopefully this isn’t more of the same that we have experienced for eight years. Our responsibility is to continue to protect taxpayer dollars.”

The city of Lexington and the Webb Cos. have been at loggerheads over the development that was supposed to include the garage, hotel, apartment building, office tower and restaurant and retail space. The city has said that an order demanding the site be filled in will be enforced on March 30.

Lexington issued the order in April 2015 after the city said no work had occurred on the site for 60 days, a charge the Webb Cos. denied. That order was set aside several times when a new development group including Matt Collins of Lexington and Bridgeton Holdings of New York announced in August its intent to take over the project.

But the Collins group backed out of the project last month after the city and the developers couldn’t come to an agreement on moving a new government center to the site. A lawyer for the city then sent a letter to the owner of two tower cranes on the site, warning the company that the city intends to enforce the order that the site must be filled in.

Attorney Mason Miller sent the letter Feb. 19 to Maxim Crane Works in Bridgeville, Pa., warning that the extensions on the fill-in order run out on March 30, and the “LFUCG intends to exercise its right to complete the restoration work, fill the site and return the property to its pre-excavation condition.”

The site — bordered by Main, Vine, Limestone and Upper streets — was excavated for the underground garage more than a year ago. The Webb Cos. said they were issuing bonds for the garage at the time the Collins group announced interest in taking over the project. The Webb Cos. said at the time the city issued the April 2015 order that work had been done on the site in the previous 60 days, which the city disputed. The block was cleared of all buildings in 2008. Movement on the project stopped after a still-undisclosed foreign investor died.

In the six-page statement, the Webb Cos. said the city refused to issue bonds for the parking garage in May 2014. The company claims that the city agreed to issue the bonds when it negotiated the first tax increment financing agreement with the city in 2008. After the city refused to issue the bonds, the construction of the parking garage was delayed.

Those delays caused two major tenants to back out of the proposed office tower, the Webb Cos. claim.

The city, however, released documents relating to the 2008 and 2013 and 2014 agreements between the Webb Cos. and the city. The 2014 agreement says the project will be “financed with private financing and equity provided by the developer and its affiliates, subject to the pledge of the state and LFUCG incremental revenues to reimburse the developer for the cost of the parking garage.”

Tax increment financing uses taxes generated from a project to pay for infrastructure costs. In this case, new taxes generated from the project would pay debt service on the garage. There is no language in the current agreements that says the city will issue the bonds. The 2008 agreement, however, defines bonds as “increment bonds or notes issued by the LFUCG to finance projects within the development area.” However, the 2013 and 2014 agreements do not define the bonds and instead say the project would be financed by using private investment. The Webb Cos. signed the 2013 and 2014 agreements.

But the Webb Cos. countered in their statement that Larry Hayes, then-secretary of the Economic Development Cabinet, had even sent the city a letter saying it was the city’s responsibility —not the state’s responsibility — to issue the bonds. The city had directed the developers to ask the state to issue the bonds in May 2014.

The Webb Cos. then entered an agreement with the Kentucky League of Cities to issue bonds for the garage in September 2014. Those bonds were never issued.

Jonathan Steiner, executive director of the League of Cities, said Wednesday the Webb Cos. have not approached the nonprofit to re-issue the bonds.

“We stand ready to sell them if needed,” Steiner said. “I think it’s premature without seeing the financing plan. It’s pretty hard to market a bond without seeing the financing plan.”

Wednesday’s statement was the first time since the Collins group announced they were backing out of the project that the Webb Cos. have commented on the future of the site.

The statement also claims the city has held the Webb Cos. to a different standard than other developers — including the 21c Museum Hotel, which opened on Monday across Main Street from the proposed development. That project was financed through more than $15 million in state and federal historic tax credits and a nearly $1 million direct loan from the city. In addition, the city agreed to use $6 million in U.S. Department of Housing and Urban Development grants to back a loan to the developers.

The city has not given a direct allocation to the CentrePointe development. It has spent money — more than $75,000 — on legal fees associated with delays in the development.

“While our project was being treated this way, the city appears to have given every accommodation to a neighboring and competing private project to induce it to happen, including tens of millions of dollars of public money,” the statement said. “We should all think about the ramifications of this kind of conduct by a government entity, not only on us, but as to others who seek to develop downtown projects on their own property anywhere else in the community.”

The Webb Cos. said they were forced to sign the restoration agreement in December 2014 by Miller before the company could get their excavation permits. “No such request had ever before been imposed on a developer and most likely would never be imposed in the future.”

The Webbs said they understand the community’s frustration but to lay blame solely on the Webb Cos. is misguided.

“The bottom line is that we have waited patiently, listened carefully, and hoped that we could get the same cooperation and assistance that the city has given to others, but it never came,” the statement said. “As a result, we have now decided it is best to move forward with the project on our own, just as we originally planned and to seek justice later.”

“Every project is treated fairly and responsibly,” Straub responded.

This story was originally published March 2, 2016 at 12:10 PM with the headline "CentrePointe developers resume work on parking garage."