Saturday, May 9, 2009

Reasons That I Like CentrePointe

Kate has brought up a good point, that is "Why should we want CentrePointe to continue?"

An extremely large percentage of the comments and blogs in opposition to CentrePointe make the claims that the Webb's have failed to build a successful project in Lexington. They go on to claim that the buildings sit half or mostly empty and cost the city money. This is simply not true.

The first projects the they built in downtown are office buildings and those are mostly leased out with possibly, some vacant space. This is standard with just about every other office building in the state. As the projects got bigger, like the Vine Center and Financial tower(5/3), the amount of vacant space grew larger but the percentage of the total remained about the same. Their residential project, The Woodlands, was built as condominiums and has not only sold out, but continues to retain their values.

The two most visible projects which have struggled, and which are pointed to as failures, are the Victorian Square and the Festival Market. Victorian Square is a project that used Federal funds to renovate a block of truly historic structures, they actually are on the National Register, into a revived commercial space. Here is where the Webb's learned first hand, the fragility and expense of working with historic buildings as, on two occasions, portions of the exterior walls collapsed and had to be rebuilt to much higher standards than before.

I feel that most of Mr. Webb's detractors are under the impression that he hand selected the tenants for these projects. That is just not how it is done. No developer pre-determines the tenants, just the tenant mix. Very similar to residential subdivisions, the developer creates the spaces and the buyers set the size and style and look of the houses, within certain guidelines.

Both Victorian Square and Festival Market attempted to follow a, then current trend, called festival marketplaces.
A festival marketplace is a concept of James W. Rouse and the Rouse Company in the United States to revitalize downtown areas in major cities in the late 20th century. Festival marketplaces were a leading downtown revitalization strategy in American cities during the 1970s and 1980s. Wikipedia
There is a long list of these marketplaces elsewhere, that failed for much the same reasons as ours. My opinion is that they were built as destinations of shopping and not as an auxiliary space for a current destination, as the successful ones were. It is clear that they were built to capitalize on the downtown executives and the event traffic of the Lexington Center/Rupp Arena and the merchants that were successful ended up having restaurants or bars. That is except for Festival Market, in this case the food court was placed on the third floor, which forced the patrons to pass the boutique shops both coming and going. This became a tiresome chore just to get lunch and the people quit doing it. Victorian Square's second floor "mall concept" has also been a source of leasing trouble. And lastly, the lack of permanent downtown residents has plagued both projects.

The Webb's did try to help remedy the resident situation when they built 40 condominiums atop the Raddison Hotel(soon to be a Hilton). These were quickly snatched up by horse farm owners and corporations as guest accommodations and entertainment spaces centering around Rupp Arena events. Quite an expense to go to in my opinion, for the corporations.

Today, Festival Market is fully leased although they are mostly offices and the food is on the first floor. One of Kentucky's largest public relation firms and a major software company employ several hundred high salary workers and bring in millions to the local economy. Victorian Square still has vacant spaces, but is slowly evolving into an entertainment center. Each of these projects have increased the tax base and are not a drain on the economy. In total, the Webb projects have added nearly a billion dollars to the assessed value of downtown, so I cannot agree that either should be demolished.

Now for Kate's request for a reason to want the CentrePointe project. If you can set aside your opinions on the Webb's and focus on the idea of something on this block, I will try to give you some reasons.

First, the now demolished buildings, though old, had not been determined to be "historic". During an application for National Register nomination several blocks of downtown property were reviewed and only the north side of the street was deemed appropriate for inclusion. This side of the street was left out on purpose. Several of the buildings were considered for renovation and found to be to costly to continue. They were demolished.

Secondly, of the businesses on the block in the year prior to the announcement, all occupied just the first floor of what we know were three and four story structures. These businesses could not have employed more than a hundred people, if that, and operated mostly in the evening and nighttime hours, leaving the mid-day hours a ghost land. Only Rosenberg's and the architectural graphics firm would have paid in excess of the minimum wage. The majority of this block, for its center of the city location, was basically, vastly underutilized.

Thirdly, this block was not going to be developed by the Rosenberg's, much less maintained in any reasonable fashion. If not the Webb's, it would be someone, possibly a national firm, that would come in and attempt to develop the block. I, for one, am glad that we are not proceeding along the path similar to Louisville and their association with the Cordish Group. Louisville took property by eminent domain and gave it to the developer, who has continually delayed their progress. In our case the developer has initiated the project and asked the city to bless and assist.

Fourth, my posts here and elsewhere have stated over and over, that the TIF will be a benefit to the city and not a "tax incentive" benefit for the developer. Quite the contrary, the developer will be the one paying the taxes, a portion of which will be diverted to the City for infrastructure improvements. This is a huge win situation for the downtown area.

Lastly, the situation that I don't want is for the block to become a public park/open space. Such an open space would require that the city purchase the block, either by contract or eminent domain, using funds that we don't have. In doing so we would remove the property from the tax roll and lose any revenue , thereby subtracting funds from the money that we don't have. Then the City would have to build the park/open space, once again using money that we don't have, and continue to maintain it on an annual basis, using(dare I say it again) money that we don't have. This option would put a tremendous burden on the City and deprive the downtown of the needed infrastructure repair and renovation. Currently the City owns the Cheapside/Courthouse and Phoenix Park properties, the State owns the new Courthouse Plaza and the Lexington Center owns the Triangle Park(if the PVA website can be believed, that is valued at $60 million, though they pay no taxes).

So Kate , there you have it. My reasons for wanting this to improve downtown. Like the Webb's or not, like the project or not, this in my opinion is the best for Lexington. As for my posting style, I may have the freedom of speech rights that you have but some of those in authority above me have shown a propensity for petty reprisals in the past. I will continue in this way until I think otherwise.

3 comments:

elric said...

I don't believe anyone really understands what TIF is. TIF does not create money out of thin air, folks. As I understand it, TIF is borrowing money to make capital improvements (roads, parking, etc.) now, and then planning to pay that money back using the additional property taxes you get from the thriving developments.

Some potential issues are: these taxes then go to pay for those improvements, not other things; depending on how it's done it may starve other taxing entities (school board, etc.) of the additional tax revenue; and if the development would have thrived without this 'help' anyway, the developer basically got the city to finance and pay for capital improvements like parking so that the developer didn't have to.

Chicago has considerable controversy over their TIF financing (http://www.commissionerquigley.com/library/taleoftwocities.pdf). Based on the complexity of that report, I don't think we, as a city, know what we're getting ourselves into.

TIF is probably a great idea in some cases (and might even be a great idea here) but it's being sold as a "free lunch" and everyone knows there ain't no such thing.

Kate said...

Thanks for the reply. I agree with a lot of what you say.

I think my point was that CenterPointe didn't seem to be designed in proportion to the reality of what downtown Lexington actually is (ie it is fairly small). Obviously some developement there is needed, but Webb-baiting aside, the design for CenterPointe specifically looks ill-conceived, ugly, and financially irresponsible.

On the other hand, I don't know anything about city planning and I have no real understanding of what people like (apparently many people enjoy gossip magazines and watching golf on TV). So how can I say CP looks like a bad idea?

Thanks again.

Nick said...

Just a quick correction....

The Dame never paid any of our employees minimum wage. The lowest paid employees were the door men, and they received between $8 and $17 an hour depending on what the sales were that evening. Obviously, the bartenders, sound engineers, publicist and managers were paid more. There's also the artists who were paid anywhere from $250 to $6,000 a night. Please don't just throw out your assumptions and pretend that they are facts.

By the way, I enjoy reading your blog despite our occasional differences.

Nick Sprouse

Talent Buyer
The Dame