"In order for Lexington to be a vital, growing community, the focus needs to be on attracting more quality jobs, support existing businesses, utilizing the land at the highest and best use that provides the largest rate of return, and protecting the agricultural industry that is already a proven commodity. It is a delicate balancing act that depends heavily on the laws of supply and demand.
Determining supply and demand is the fundamental approach used in business and real estate undertaking a market analysis. This is a straightforward method, but the process can be difficult because so many elements factor into the situation. A number of economic indicators, such as income, cost of living, and unemployment rate, influence the demand for real estate. Changing demographic characteristics, including household formation and spending habits, also influence demand.
Supply is simply stated as the total amount of inventory for a property type. Because supply is constantly changing, a single point in time must be used to present an accurate account. The supply of land is certainly considered a factor of production. Excess income after expenses generated on the land can be attributed to the land. And of course, land based on its highest and best use generates the maximum demand. The interaction of both supply and demand are important in determining land value.
Why is this information significant? To date, the planning commission in Lexington has not made its official recommendation on whether to expand the Urban Service Boundary. Public hearings will be starting in January 2007 with the first scheduled for 1:30pm on the 18th. A second meeting is currently scheduled for the 22nd. These hearings will examine alternate supply use in the rural service area, known as the "reserve." This concept has been offered to the planning commission as an alternate option to either no expansion or some expansion. According to the planning staff, the potential reserve categories will run along two major corridors: Winchester Road and Richmond Road (Old Richmond Road-Delong). Those areas were specifically picked because of the sewer access for the portions of these areas located outside of the Urban Service Boundary. The total amount of acreage designated for growth according to the planning staff is about 7,600 acres, which is broken into many subsections. From the planners' perspective, the idea was suggested in order to have a "plan" that was consistent with the input from public forums over the past 18 months. This would provide the logical location for expansion if and when it is deemed necessary. According to the planning staff, Fayette County has about eight years of developable land, and the reserve will allow it to get to the 20-year timeframe.
Growth is inevitable, and there is little disagreement that the rural area is critically important to the community's identity and economic welfare. Leaving things to chance, being proactive, and underestimating the pressures of a growing community are among the reasons the planning staff names for planning a "reserve" category.
According to Chris King, director of planning for the LFUCG, "This land would be in the Rural Service Area and would be treated just like it is today. The Purchase of Development Rights program plan would be protected. The reserve concept would primarily state the intent that these should be the areas considered for expansion when consideration again occurs. Utilizing this concept sends the message that most areas of the RSA near the current boundary are off the table for the foreseeable future in any expansion discussion."
To begin analyzing a city's real estate demand, looking at employment and population trends are essential. Total population in Fayette County is estimated to be 268,060, with an annual growth rate of approximately 2.9 percent according to www.fedstats.gov. Total employment in Fayette County, regardless of place of residence, indicates that the number of jobs have decreased from 172,061 to 169,701 during the period of 2001-2005 (www.workforce.ky.gov). There are 13,086 housing units, or 10.25 percent of total housing stock in Fayette County, that are currently vacant.
Fayette County continues to be the regional trade and service center for Central Kentucky. Manufacturing has had a declining role in Fayette County's economy, but it is still a significant factor in the regional economy. Agriculture is ranked third in employment, supporting 8.4 percent of the regional workforce, following education and retail trade. Fayette County agriculture employed 8,542 people while generating $803 million in gross annual product. On a larger scale, Fayette County farms and their tourism activities have a $3 billion impact on the regional economy, and the Blue Grass Stockyard sold $169 million in cattle.
However, it is important to note that real estate demand is cyclical. Recession, recovery, expansion and oversupply are all phases in the real estate cycle. Predicting a city's position in the real estate cycle can result in opportunities; on the other hand, failure to know where the market is in the cycle can be disastrous.
So the question is: Is it necessary to have a "reserve?" The logical growth pattern is the southeast quadrant of the county. The Winchester Road corridor will be the new home to the Central Baptist medical facility, and the planning staff has received large acreage requests from landowners wanting to be added into the Urban Service Area. More than likely, options from the development community have been entertained years ago. In contrast, there were fewer submissions for parcels located on the Richmond Road corridor. The total application amount of both corridors for inclusion was approximately 6,500 acres. So, does the "reserve" exist to maintain equilibrium as a compromise between those who don't want any expansion and the development community that is wanting immediate expansion but is willing to wait? Or is it really an issue of supply?
A smart growth plan includes fixing serious preexisting infrastructure needs, developing a strong relationship with the University of Kentucky, improving our schools and public transportation, and protecting and promoting the region that makes us unique. We certainly don't want to be Anywhere, USA. The outcome of this decision is crucial. Compliance with the EPA order is the primary objective. The planning staff will need to reevaluate absorption rates, develop small area plans, infrastructure needs, and exaction programs for the reserve.
Don't miss the opportunity to make your voices heard on Thursday evening, January 18 through January 22, when the first of the public hearings will be held. Your opinions count. Happy New Year!
"