City must not delay making reimbursable Distillery District investments

Traffic passed by the old Pepper warehouse in Lexington's proposed Distillery District on Manchester Street in April.
Traffic passed by the old Pepper warehouse in Lexington's proposed Distillery District on Manchester Street in April. Herald-Leader

It was a great day in 2008 when the Urban County Council showed courage and leadership in a unanimous vote for the creation of Tax Incremental Financing for the Lexington Distillery District. This area was designated as a TIF so that the substantial public investment required to attract private investment could be recouped once its latent economic potential was realized.

This 25-acre site anchors what will ultimately be the expansion of downtown to the west. With a growth boundary and historic neighborhoods encircling it, this is essentially the only direction downtown can grow. Immediately to the west of Newtown Pike and the Rupp District, this area contains the Pepper Distillery, the McConnell Houses (perhaps the oldest stone structures in the state), and the Town Branch of Elkhorn Creek, now a signature feature of the city's $300 million plans for the Rupp District and Town Branch Commons.

This historic industrial corridor is centrally located, but it lacks the basic infrastructure one would expect in the center of the city; sewers, sidewalks, curbs, gutters, flood control or utility capacity for anticipated growth. Add to that the repair of the city's most degraded creek, and you have a major package of deferred investment. The eventual price tag to bring this critical area up to city standards is comparable to the $17 million spent on South Limestone. The difference here is that this investment can be reimbursed with future tax receipts.

To this end, in 2009 despite dire financial circumstances, the council voted for an initial $2.2 million in bonding to perform a feasibility design, due diligence, and preliminary infrastructure work on the district and the Town Branch Trail. In defending this difficult vote, Councilwoman-at-large Linda Gorton showed real conviction, saying: "This is the purest form of economic development. This is the kind of project we are looking for, one that creates jobs."

Now we find ourselves three years later with the prospect that this initial investment will be stripped away before it can be made. Of the $2.2 million in bonding only $500,000 has been spent on preliminary design and feasibility work.

The remaining $1.7 million has been held up in large part due to reluctance to produce thoroughly updated FEMA flood data for this area.

Why does this matter and why is it so expensive?

The Distillery District lies at the bottom of a watershed created by the city's urban core. No one will borrow capital for purchase or development on land that is today erroneously depicted as under water, and FEMA will not accept cut-rate conjecture when the data could make it liable for future damages. Just ask New Orleans about reliable flood data.

Why should the public pay for this? Because these conditions were created over centuries by the city's development and this data (when properly executed) will be useful to future designs upstream for the Rupp District and Town Branch Commons.

The cost can be recouped if the necessary public infrastructure work is made with deliberate focus and speed. What cannot be recouped is lost time and opportunity.

Knowing that the city has had unprecedented challenges over the last two years, it is understandable that this long-forgotten urban district has had to wait a little longer to see its fortunes improve.

However, it is absolutely certain that if the city continues to delay investments, the people who live and work in the Manchester, Irishtown and Old Frankfort corridor will rightly feel betrayed. Many have taken great personal risk in the confidence that the city would fulfill its obligations in a timely manner.

For those unsure of which comes first, the horse (public investment) or the cart (private investment), consider this: Who in their right mind would invest tens of millions in private capital in an area the city has been unwilling to bring up to minimum urban standards?

The city must provide vision and infrastructure if it ever expects to see substantial private capital take root in this critical area. We not only need the remaining $1.7 million in bonding to be invested in a careful and timely way in the trail and distillery corridor, we also need a firm commitment from the city to find and deploy the funds necessary to make this district and trail corridor development-ready in the near future.

To see the years and opportunity costs pile up is frustrating. To see the promise of the TIF abandoned by our leadership before it can even begin is unacceptable. Dozens of jobs have already been created in this TIF area prior to city help.

Imagine what will be possible when our public obligations are fully realized.

At issue

: April 25 Herald-Leader article, "Concerns raised as costs mount; study estimates upgrades at $14M-$23M; council to review support for project"

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