LEXINGTON, Ky. (Herald-Leader) — Phil Holoubek’s downtown Lexington projects have included Main & Rose and the Nunn Lofts. He is now leading an effort to redevelop the eastern end of downtown along Midland Avenue from Vine to Third Streets. Phil and Kevin Smith, president and CEO of the Community Ventures Corporation, joined Tom Martin for a conversation about the project. Smith’s organization is a major property owner in the district, and as such, a member of a Tax-Increment Financing (TIF) partnership that is rounded up by Holoubek and property owners Mike Scanlon and Missy Scanlon.
Tom Martin: Phil, please describe the vision of a transformed Midland Avenue.
Phil Holoubek: Midland Avenue is one of the greatest opportunities we have as a community to transform a gateway into our downtown. Midland Avenue brings together several different neighborhoods, which include low income, higher income, and the downtown core all in one area. When you picture Midland Avenue right now, you might picture racing cars that are trying to get out of downtown from the downtown core out to Winchester Road without having to slow down or stop. When you picture Midland Avenue a few years from now, you might envision multistory, mixed use projects and a very pedestrian-friendly environment that includes a grassy median, bike lanes, and sidewalks with people walking and hanging outside of cafes.
Martin: What are you thinking about in terms of the affordability of the apartments or the condominiums that will be in the area?
Holoubek: Affordability is absolutely key. To have great neighborhoods, you really need to have home ownership and business ownership. And a key component to home ownership is making sure that it’s affordable.
Martin: Kevin, how does this project fit the mission of the Community Ventures Corporation?
Kevin Smith: Community Ventures Corporation was started to help people get into home ownership and business ownership especially in our lower-income neighborhoods. And the thing that the TIF will do for us, by being reimbursed for some of our development costs, we will be able to keep the rents for the businesses and keep the cost of the housing down.
Martin: In addition to Midland Avenue the project includes four parcels on Third Street. What’s envisioned for them?
Holoubek: Several years ago, the city completed the East End Small Area Plan and one of the most important components of that plan was that Third Street was envisioned as a commercial corridor. In order to make that vision a reality, we must recruit not just national tenants to these sites, which may happen more on Midland Avenue, but really local entrepreneurs who are looking to start a small business in a retail space. This TIF allows us to lower rents enough to help reward them for their risk taking.
Martin: Phil, thinking about Lexington’s downtown district on the whole, most of the energy is now concentrated west of Limestone. Do you see your East End Project as balancing?
Holoubek: We need that critical mass and density on both sides of downtown. We really need people living downtown. Any vibrant downtown has not just people working downtown, but it has people eating, and playing and living downtown. And in order to get that successful retail, you have to have those people living downtown as well.
Martin: TIF — tax-increment financing — was created to encourage redevelopment of blighted or underused areas of a town by providing a way for them to recapture a portion of any new tax revenues generated by the project. How would designation as a TIF district work for this particular project?
Holoubek: I really think this Midland Avenue project is exactly what TIF was created for in the first place. Parts of this district are blighted. It’s a lower-income neighborhood that really has not been generating a great deal of tax revenues. To give you a little more background on how this TIF or tax-increment financing works, the incremental tax dollars that are generated are what can be put back into these projects and allows developers to recoup their costs. So, for example, imagine if this district was currently generating $1 a year in tax revenues and then imagine that after the projects were completed it was generating $11 of tax revenue per year or $10 of incremental revenue. Eight of those 10 dollars could be put back into the project and the other $2 would go back to the public sector. So, before anything was done, the public sector was receiving $1 a year. Now, they’re receiving $3 a year. On top of that, 80 percent of those additional or incremental dollars, were used to create great public sector improvements whether that’s a sewer line, or parking garages, or improved public art or parks. There’s all sorts of possibilities.
Martin: These TIF revenues have to apply to public amenities. Correct?
Holoubek: That’s right. This isn’t a free hand-out for developers. It doesn’t go into the private sector project. It really improves quality of life for residents and it’s specifically for projects in areas that wouldn’t be able to take place if it wasn’t for the TIF. It’s also important to know that the city and the public sector aren’t on the hook for any dollars. This is not something that we are asking the city or the state to bond. We are paying for these improvements and then we will get reimbursed if and when the projects generate enough incremental tax revenue to pay us back.
Martin: Kevin, when this opportunity came along, what went through your mind, in particular as it relates to the East End neighborhood?
Smith: Projects like this don’t come along very often for organizations like ours. And we’ve got an opportunity with the East End neighborhood to showcase what a jewel of a neighborhood it is. I think in many parts of Lexington the East End has a reputation of high crime, unsafe, and it does have its issues. However, it’s full of history, both African-American history as well as some of our racing industry began there. And with the TIF, we have a chance to pull that history out, elevate it to a very prominent site on Midland Avenue, and get much of that paid for with the TIF. So, it’s gonna allow us to do things that we never thought we could do.
Martin: So, this has tentacles running in a lot of different directions, into a whole bunch of different demographics.
Smith: I would agree with that. I was President of the Bell Court Neighborhood Association 20 years ago and our world stopped at Midland. The world is gonna get much larger and everybody is gonna be much better for it, I think, in the future.
Martin: Okay. Let’s come all the way back down Midland Avenue now to Thoroughbred Park and across the street in that triangle of land at Vine and Main that you have held for quite awhile, Phil. What’s the status of that?
Holoubek: The Main and Vine project just couldn’t happen without TIF. For years, we’ve wanted to put something great on that site, but because of the complexity of the site — there’s all sorts of utilities running through it, the land prices, and so on, there’s just was no economic way to put a project there that we could be proud of. And so, this TIF will allow us to create a project that not only can I be proud of, but when my kids drive by in 20 years, they can be proud of their dad putting it in place.
Martin: You’re now thinking of a structure that would be mixed use, with businesses on the ground level, correct? And importantly, there’s a parking component to that.
Holoubek: That’s right. It’s a four-story building that’s envisioned with first floor retail and three stories of residential above. There will be some surface parking in front for ease of access to the retail and then a parking garage that would be in place as well. One of the key things to note is mixed use is by far the #1 type of real estate development for property tax generation for the public sector. The #1 property tax generator in downtown Lexington is our Main & Rose project. When you take a building and chop it up into small pieces as in condos, and retail, and other types of uses, it generates far more tax revenue than any other type of development. The reason that’s critical for any city, but especially a city like Lexington where we wanna protect our farmland, is the city only has a finite amount of acreage. And so, if they need to create enough tax revenue to provide all the services that our citizens deserve, they need to maximize the number of tax dollars that they’re generating per acre per year; and mixed use does that better than any other type of development.
Martin: What is your timeline for construction?
Holoubek: There are four different parcels in this TIF district and four different property owners. I think it would be safe to say that two out of those four projects will break ground during 2015.
Smith: And I would say with Community Ventures Properties, the first that you’ll begin to see are the buildings at 30 Midland coming down and that is certainly an eligible expense under the TIF. So, you can probably begin to see buildings come down in April.
This article appeared first in the Herald-Leader by Tom Martin. You can read the original article here.