Lexington, KY -
UK Hospital Expansion
2008: In March of 2008, Business Lexington did an in-depth interview with Dr. Michael Karpf, Executive Vice President for Health Affairs at the University of Kentucky. Dr. Karpf spoke about the new hospital facility at UK, his efforts to recruit talent for that medical center to the Lexington community, as well as worries about budget shortfalls disrupting UK's momentum toward becoming a Top 20 public research institute by 2020. In July, Dr. Karpf spoke with us about the growth of the hospital, including an unanticipated growth in patient discharges, as well as the creation of 2,000 jobs between the hospital and the College of Medicine and a projected goal to soon become a $1.5-2 billion organization.
2009: Dr. Karpf's office reports that UK Health Care has remained financially sound, in spite of world-wide economic uncertainties, with July, August and September proving to be UK Health Care's strongest quarter yet. The construction of the new UK Chandler Hospital is well underway, with plans to top out the steel on the building toward the end of 2009, as well as construction of the new Radiosurgery Center and the new Kentucky Neurosciences Institute. According to Courtney Higdon, chief of staff to Dr. Karpf, "Not only is our clinical activity growing, but we are also experiencing record research grant awards from the National Institutes of Health and expect significant growth to continue in 2009."
State of the Local Banks
2008: Two local banks - American Founders Bank and Bank of the Bluegrass - saw themselves under Cease and Desist orders from federal and state regulators much of the year as others fought with the escalating financial crisis. In the October 16 Business Lexington, local National City President Harry Richart said "our prospects are very, very good three weeks, three months (down the road) and it'll look better in three years than it does in the short run." A week after the article was published and days after reporting a $729 million quarterly loss, Pittsburgh-based PNC Bank purchased National City for $2.23 a share, more than $.50 cheaper than the bank's stock at that day's bell.
2009: While National City and PNC both have strong a presence in the Louisville and Northern Kentucky markets, PNC's share of the Lexington market is relatively small compared to National City, which should mean good things for jobs in the area as the merger goes through. AFB and Bank of the Bluegrass will continue working to meet the requirements of the Cease and Desist orders they are currently operating under. Central Bank President and CEO Luther Deaton has said his bank and other locally operated banks should be on solid ground as the housing market and loan defaults haven't hit Lexington as hard as many areas.
CentrePointe Construction
2008: Throughout the early spring months of 2008, much of downtown's attention was directed toward a single project: CentrePointe, the proposed 35-storey mixed use development to be erected in the center-most block downtown. Despite efforts of local preservationists intent on saving the already-existing buildings, and a lengthy Courthouse Overlay review and appeal process - which developers The Webb Companies report caused them approximately six months - the buildings on the affectionately-termed "Dame block" started coming down in in the summer, and in November, "tentative" approval for TIF financing was awarded to the project by the Urban County Council. Developers expect demolition to be completed by the end of the year.
2009: Dudley Webb, Chairman of the Board of Directors of The Webb Companies, said construction of CentrePointe should begin immediately following demolition, with the project to be completed in approximately 30 months. Negotiations with five major tenants are progressing and should be finalized by the end of the year, and the hotel will be a 250 room four-star, J. W. Marriott. Current plans call for three restaurants and 30,000 square feet of retail shops for the block as well as a 6,000 square foot entertainment venue at the corner of Vine and Upper. 900 jobs have been generated with construction, with 1,000 to be expected thereafter.
Private Funding for Arena
2008: At the end of 2007 Lexington was looking into the possibility of using Tax Increment Financing to replace the aging Rupp Arena and to secure downtown as the long-term home of UK Wildcat basketball. As 2008 developed, so did a new plan to replace the 33-year-old Rupp as UK, the Lexington Center Corporation (owners of Rupp Arena) and IMG College, an affiliate of Host Communications' parent IMG Worldwide, teamed up to find a totally private financing model for a new Rupp in the Lexington Center's High Street parking lot, as well as a renovated Commonwealth Stadium. The plan would convert what is now Rupp Arena into a 2,500 seat performing arts center and add needed convention space to the Lexington Center complex.
2009: A feasibility study should be completed early in the new year to determine a measure of the consumer appetite for premium services at the facilities and considerations of what prices the market will bear. Under this model, which was used to replace the famed Wembley Stadium in London, the new facility and improvements to the existing Commonwealth Stadium would be paid for with revenues generated by sales of premium seating, hospitality suites and advertising. The parties involved said they don't intend to follow through with the plan if they feel the extra costs that attendees would have to accept under this plan would be economically unfeasible.
Legacy Projects
2008: Building on a grant awarded by the Knight Foundation in late 2007, the Legacy Center made strides in 2008. After considering hundreds of suggestions for a project that would benefit Lexington for the 2010 World Equestrian Games, while maintaining a lasting impact for the community, two major projects rose to the forefront: revitalizing the Third Street corridor, including the creation of a public art garden in memorial of Lexington jockey Isaac Murphy; and building a mixed-use bike/pedestrian trail that would travel from downtown through the East End to the Kentucky Horse Park. The Community Ventures Corporation and LFUCG have joined forces with the East End revitalization efforts to create the East End Small Area Plan steering committee, and a team has collaborated to implement plans for the Legacy Trail. In 2008, the Legacy Trail raised $3 million of the projected $8-$10 million budget. They also hired Strand Associates, Engineers, Inc. as consultants for the trail, and held the "Legacy Trail Big Week" in October, during which the center worked closely with city and community leaders, stakeholders, and the public to generate ideas for the trail. The East End steering committee held a series of rallies and events to listen to citizens' ideas about the area.
2009: Initial design concepts for the Legacy Trail will be brought to public view in mid-January 2009. Construction for the Legacy Trail is set to begin in spring or summer of '09; the trail is slated to be completed in time for the 2010 World Equestrian Games. The Legacy Center will continue fundraising efforts, including sponsorships. The East End project is awaiting results of a feasibility study conducted by EHI Consultants, who are "developing a set of planning strategies that can serve as the catalyst that is needed for the revitalization [of the neighborhood]." Focus in 2009 will be on the Isaac Murphy Memorial Garden and on making use of the Lyric Theatre.
Education Budget Cuts
2008: Budget cuts began to squeeze both K-12 and higher education in 2008. Kentucky's public schools lost about $30 million; Fayette County took a $1 million hit. But left unscathed was the state's SEEK program, which provides $3 billion out of the total state K-12 budget. Money became more scarce on the state university and community college campuses, after they had to cope with a 6 percent budget cut. This led to a host of job cuts, frozen positions and reduced or eliminated programs. Affordability was a huge issue, and the state Council on Postsecondary Education, in a bitter fight, reined in what had been a string of double-digit tuition increases in recent years. The National Report Card on Higher Education said Kentucky was improving in many areas; however, Kentucky and 48 other states got a grade of "F" in affordability.
2009: Money is going to be more scarce this year, for both K-12 and higher education. The state has asked the schools and universities to prepare for a 2 percent cut. State education commission Jon Draud said the estimated $132 million in cuts would have "devastating short- and long-term effects," leading to staff cuts, reduced maintenance spending and deferred purchases of major equipment and technology. A 4 percent cut would cause the state universities and community colleges to lose a total of $41.1 million; the University of Kentucky would be cut by $12.7 million. UK President Lee T. Todd Jr., watching the budget cuts imperil UK's goal of becoming a Top 20 public research university, said of the combined effect of several years of reduced budgets: "We are paying a price right now for 100 years of not investing in education."
EPA Stormwater Fines
2008: A federal judge put a hold on LFUCG's settlement with the EPA for Clean Water Act violations citing concerns about the extent of a $425,000 fine to go along with hundreds of millions in required upgrades to the city's sewer system. Despite the hold up on the 2007 agreement with federal environmental authorities, Mayor Jim Newberry told Business Lexington that his office will continue operating under terms of the agreement to meet deadlines agreed upon for system upgrades, as that part of the Consent Decree has not come into question.
2009: The $4.16 a month Equivalent Residential Unit fee will go into effect for all Lexington residences in April, and businesses will have to shoulder the same $4.16 fee for every 2,500 square feet of impervious surface (rooftop, sidewalks, driveways and parking lots) they have on their property. With around 5 million square feet of impervious surface on its campus, Lexmark is facing a nearly $100,000 a year increase due to the new fee, which, unlike taxes, will also be collected from the University of Kentucky, government land and churches. Construction will also be underway on the other aspects of the Consent Decree to replace the sewer system.
Lexington First Initiative
2008: Mayor Jim Newberry sought to boost Lexington's stature as a high-tech city by proposing Lexington First, a $500,000 scholarship program to help pay unmet college costs for students from Fayette County who want to major in the STEM fields of science, technology, engineering, and mathematics. The initiative, which seeks to address a major national and state shortage of students and teachers in these fields, is an innovation rare for a mayor in the United States. It was met with little support in the Urban County Council during 2008.
2009: Newberry still believes in his idea, but admits he must focus now on a big shortfall facing the city, a shortfall that may limit the program's options this year. The economy's meltdown makes it far less likely that businesses will have money for contributions. However, Alan Stein, president and CEO of the Lexington Legends, a big backer of the plan, believes businesses will match whatever the city can spend on Newberry's proposal. Meanwhile, a statewide STEM task force is close to finishing a second report on this issue for the General Assembly, including proposals for funding.
Manchester Distillery District
2008: The plan for development of the Lexington Distillery District on Manchester Street was met with very little opposition in 2008. A study by C.H. Johnson Consulting found the project eligible for Tax Increment Financing (TIF); TIF eligibility was later approved by the Urban County Council. As Business Lexington reported in October, "According to an impact analysis and TIF revenue projection compiled by C.H. Johnson Consulting ... the Distillery District is estimated to generate a total of $126.8 million, $48.1 million, and $23.8 million respectively in state and local tax revenues over the three phases of a 20-year TIF program." This year, developer Barry McNees spoke with residents of the neighborhoods surrounding the district to ensure them that he did not intend to displace anyone with the proposed district. TIF approval now lies in the hands of the state.
2009: Following review by the Kentucky Economic Development Finance Authority in January, Distillery District TIF approval should be finalized in March, according to McNees. Manchester's, located on 903 Manchester, should be in full force as a jazz/R&B club in February. McNees said two other businesses have submitted letters of intent as well; a dance studio and a bar that he declined to name, only saying that it's one "downtown Lexington is familiar with." McNees is working on a plan for the former Pepper Distillery, to be redeveloped under the adaptive reuse text amendment, which allows abandoned, vacant or underutilized structures to be be used for new tourist-driven purposes.
Other related projects, the Town Branch Trail (a mixed-use 'greenway' trail) and the Newtown Pike Extension, both expect to make significant headway in 2009. Phase II of the Town Branch Trail is under construction and should be complete in 2009. The trail will eventually dovetail with the Manchester Street Distillery District in Phase V, which is currently in the feasibility study and conceptual design process. Utility work and construction for Phases I and IV of the Newtown Pike Extension as well as the Signature Bridge are slated to begin in the spring of '09, according to project manager Andrew Grunwald.
The State of Horse Racing
2008: For an industry that many predicted would be relatively immune to an economy in decline, the horse business has seen its share of tumult in 2008. The euthanizing of Eight Belles at the Kentucky Derby, followed by a series of suspicious performances by Big Brown calling attention to the use of steroids, caused onlookers to question ethical practices within the industry. Business Lexington articles on the horse industry in 2008 focused on the shift to off-track betting and the lack of centralized racing authority, topics that have weighed on the racing industry and to which our readers responded with fervor.
2009: Business Lexington horse industry columnist Rab Hagin predicts that "the overall equine industry will suffer from the economic downturn. Prices for all breeds of horses will decline, but some facets of the horse industry, like recreational trail riding, might grow in popularity. Participation in horse shows and other structured equine events will probably decline - though not precipitously." As for the Thoroughbred industry, Hagin predicts an overall decline in stud fees and sale prices, forcing "creative breeding arrangements" to become more commonplace. He also predicts we will see "continued horsemen's boycotts at various tracks over disputes about sharing advance deposit wagering (ADW) revenue, forcing some tracks to miss racing dates and subsequently reduce purses. ... Buyers from emerging markets like South Korea and Mexico will become more prominent in purchasing moderately-priced stock. There might be nascent movements towards real (as opposed to theoretical) consolidation of industry oversight and a national business model. The Thoroughbred industry - like the auto industry - might be forced, painfully, to acknowledge that its old state-by-state structures are woefully anachronistic."
2010 World Equestrian Games
2008: 2008 marked the "Halfway there" point for the 2010 FEI World Equestrian Games. It's a year that saw the resignation of Jack Kelly, chief executive officer of the World Games 2010 Foundation; the beginnings of millions of dollars in hotel renovations; and announcements of new sponsors (including Ariat and John Deere) and business partners (including Shorts Sports and Events, NBC Sports and United Way). Construction for a new indoor arena and outdoor stadium began at the Horse Park, and the city announced that a 16-day festival - Spotlight Lexington - will take place in downtown Lexington coinciding with the Games.
2009: According to Amy Walker, "We're only going to get busier as we progress toward 2010." Walker, the public relations manager for the World Games 2010 Foundation, said she's looking forward to 2009 as being the year when many aspects of the Games that WEG has been planning for the past two years will actually start to take shape.The city is planning on getting out entertainment applications for Spotlight Lexington in the first part of the year; according to Director of Special Events Penny Ebel, applications are open to street entertainers, bands and visual artists in Kentucky. At the Horse Park, the stadium and the indoor arena are both slated to be finished in spring of 2009, and WEG will begin test events, in the form of FEI competitions that will test various aspects of the facilities and overall functionality. General-public tickets for the WEG will go on sale on September 24.
New Town Pike Expansion
2008: Throughout the early spring months of 2008, much of downtown's attention was directed toward a single point: CentrePointe, the proposed 40-storey mixed use development to be erected in the center-most block downtown. Despite efforts of local preservationists intent on saving the already-existing buildings, and a lengthy Courthouse Overlay review and appeal process - which developers The Webb Companies report caused them approximately six months - the buildings on the affectionately-termed "Dame block" started coming down in in the summer, and in November, "tentative" approval for TIF financing was awarded to the project by the Urban County Council. Developers expect demolition to be completed by the end of the year.
2009: Dudley Webb, Chairman of the Board of Directors of The Webb Companies, said construction of CentrePointe should begin immediately following demolition, with the project to be completed in approximately 30 months. Negotiations with five major tenants are progressing and should be finalized by the end of the year, and the hotel will be a 250 room four-star, J.W. Marriott. Current plans call for three restaurants and 30,000 square feet of retail shops for the block. The current plans now call for a 6,000 square foot entertainment venue at the corner of Vine and Upper. 900 jobs have been generated for construction, with 1,000 to be expected thereafter.