TIF financing a long-term bet, not a free ride
If Tuesday’s public hearing had been at Keeneland instead of the Urban County Council chambers, here’s how I would have handicapped it:
The Lexington Distillery District project was the clear favorite. Everyone spoke of its good breeding and conformation, and they thought it was a great bet with the promise of a big payoff.
The CentrePointe development was a more complicated wager. Many speakers thought it was a beautiful horse, a sure thing. A few were skeptical, criticizing it as too big, ugly and lame to be a winner. Most, though, were willing to take the gamble, because the potential payoff seemed worth the risk.
Of course, horse races are over within two minutes. This one will last three decades.
What the Urban County Council and state officials must decide before the end of the year is whether Lexington can and should use tax-increment financing for these projects — two of the biggest developments proposed for downtown Lexington in a generation.
Tax-increment financing, or TIF, would allow Lexington to use 80 percent of new tax revenues generated by a huge private development in a blighted area over 30 years to pay for the infrastructure needed to make the development possible.
TIF will be a great deal for Lexington if the private developments succeed. Not only will the city get the developments, but it will get to keep tax revenues that would otherwise be shared statewide.
The Lexington Distillery District project is a textbook example of why the TIF law was created. The project would rehabilitate two former distillery complexes on Manchester Street and convert 28 of the most neglected acres in Fayette County into an entertainment, arts and multi-use neighborhood. Similar projects have worked wonders elsewhere.
The Distillery District’s developers are seeking $80 million in future tax revenues for such things as streets, sidewalks, utilities and parking. The developers plan $110 million in private investment.
The Webb Companies plans to spend more than $200 million in private financing to build Centre Pointe, a 35-story tower that would have a four-star Marriott hotel, 70 luxury condominiums, offices and restaurants.
Mayor Jim Newberry is working with the Webbs to use CentrePointe as the focus for a 14.25-acre, $48 million downtown redevelopment project that would include such popular amenities as improved streetscapes, a $16 million renovation of the old courthouse that houses the Lexington History Museum and a permanent home for the Lexington Farmers Market.
It also would include a lot of money for amenities that would directly benefit CentrePointe, such as an adjacent $10 million underground parking garage and two $1.5 million pedestrian walkways.
Architects have criticized CentrePointe’s design and size, preservationists opposed its destruction of historic buildings, and others have questioned its economic viability and secretive private financing. But most of the speakers at Tuesday’s hearing praised CentrePointe as a needed shot in the arm for downtown.
Unlike a horse race, these projects aren’t competing with each other so much as with global economic forces that have shifted dramatically since they were proposed.
As Lexington places its bets, we should keep this in mind: The payoff will come only if these projects can go the distance. There’s no such thing as a free ride, either in horse racing or in tax-increment financing.
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October 22nd, 2008 at 10:07 am
The proposals for improved streetscapes, renovations for the old courthouse and a permanent home for the farmer’s market all seem reasonable, but why doesn’t the city fund that like everything else? Why should we circumvent the normal budgetary process for deciding to how to spend the cities tax dollars?
Really what this proposal comes down to is the Webb’s trying to find a way for the city to pick up the tab for the parking lot for their new building. They admitted that they didn’t need the TIF money to build Centre Pointe, and by doing so undermined their case for their original TIF proposal. What they are doing now is trying to buy up support by attaching all this other stuff to the proposal for their parking lot. This is analogous to the way legislators attach tons of earmarks to unpopular bills to buy up support.
The pedway idea is ridiculous. Judging from the pictures of CentrePointe that I have seen the pedways they want are gerbil tunnels like they have coming into the fifth third building. I really struggle to find words to express how stupid and wasteful of an idea this is. Pedways are anathema to the vibrant streetscape that makes downtown a fun an exciting place.
October 29th, 2008 at 1:30 pm
“Pedways are anathema to the vibrant streetscape that makes downtown a fun an exciting place.”
Not to mention they seem contrary to the idea of spending more money to “beautify” the street scapes…..