It took more than a year to get a stop sign and crosswalk in place at the intersection of Pine and Manchester to slow traffic and ease the walk from parking to the Old Tarr Distillery. But the developer of the arts and entertainment district proposed for the blighted downtown corridor, Barry McNees, sees future improvements picking up the pace. McNees is on the verge of an official partnership with the city and state as his quest for Tax Increment Financing (TIF) moves closer to approval.
While the proposed Lexington Distillery District has been discussed publicly for more than two years, McNees is hoping the $190 million three-phase plan to turn an industrial stretch of road bordering downtown into an economic and cultural beacon will win preliminary state approval by year's end. That's a quick turnaround, considering how long McNees has toiled over plans and sought buy-in for revitalization of the Manchester Street district.
"It's really encouraging just to see folks coming out, and the people who are willing to speak up tonight represent a really interesting, diverse cross-section of Lexington," McNees said following a public hearing about the TIF in front of LFUCG's council on Oct. 21.
McNees's plans have met little opposition as he attempts to capture tax dollars that will be generated by his redevelopment and direct those revenues toward infrastructure improvements on the largely abandoned stretch of road that leads to the back of Rupp Arena from the scenic Old Frankfort Pike.
The 25-acre project is slated to incorporate 277 residences, 83,300 square feet of office space, 118,600 square feet of retail and restaurants, the first Boutique Bourbon Hotel with Spa and 125 rooms and 700 parking spaces in what is now abandoned or under-utilized industrial space.
According to an impact analysis and TIF revenue projection compiled by C.H. Johnson Consulting, under contract with McNees, 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. In contrast, were the district to remain unchanged, it could be expected to generate no more than an estimated the $4.7 million. In 2007 the area brought in just $160,089 in tax revenues. In all, under this analysis, McNees expects his project to return to the district $81 million that otherwise would have been distributed around the county and state.
Community tensions related to another proposed TIF district - - the 35-story mixed-use CentrePointe development - - has spilled into McNees's plans, manifested as one neighbor of the Distillery District expressed fears his land could be subject to eminent domain for being included as part of the project's "vision plan."
"Our concern is taking all that vacant land and unused buildings and doing something with them Ö we're not about displacing anybody," McNees told a group of concerned Irishtown residents following the public hearing.
"This is a new process for Lexington and so we're all kind of feeling our way through it. I think there's some concern about making sure that indeed this is really an economic development vehicle, and that the city and state are giving up something to really get something," he said. "It is a powerful tool, particularly when you've got a blighted area that's spent most of its life as a big zero, to have a chance to actually make it an economic part of the city again is pretty exciting, and people are responding to that."
While the developer and District 2 Councilman Tom Blues assured the residents that the city has no interest in removing them from their homes as a part of the project, a successful Distillery District would likely raise the value of properties around the development, and the amount of taxes those owners would have to pay.
"(The neighboring residents are) excited by this but they're also, as you heard, somewhat nervous about it," Blues said in an interview.
"There are mechanisms that we can explore to keep taxes at a reasonable rate for low income people," he said. "All in all, if the property value jumps they're a heck of a lot better served than if it doesn't."
Unlike the wide variety of opponents against the CentrePointe project, McNees has received support from a diverse group of Lexingtonians ranging from preservationists to educators.
"In a global world, communities are becoming more and more the same. Therefore, it is essential that we develop spaces that are authentic places," Lexington Convention and Visitors Bureau President David Lord wrote in a letter of support for the project. "The cookie-cutter approach to development no longer holds the interest of local citizens, nor visitors. People want to experience the uniqueness of a locale, and the real test of authenticity is that a development can stand on its own locally and also be attractive to tourists. I believe that the Distillery District is a model for smart, authentic development."
University of Kentucky's President Dr. Lee Todd, Jr. echoed Lord's sentiments saying the same thing that would attract tourists and help Lexington have its own identity would also help the city retain UK's top students. "The Distillery District can act as a major catalyst in accomplishing that goal. Telling an authentic Bluegrass story, and using it to create a deeper sense of this special place, will help build a vibrant and compelling environment for our creative class to live, work and relocate," Todd wrote.
While many preservation groups fought against the CentrePointe project, they are supporting McNees' adaptive reuse ethic. "The Distillery District proposal presents Lexington with a unique opportunity to redevelop the western part of downtown while maintaining and celebrating its historic fabric," wrote Blue Grass Trust Executive Director Julie Good in a letter addressed to Mayor Jim Newberry.
Architect and Town Branch Trail activist Van Meter Pettit said city and state support of the Distillery District can help rejuvenate one of Lexington's original industries. "Bourbon is one of the aspects for which Kentucky is world-renown. Fixing up an intact distillery anywhere in Fayette County for multi-use development makes great sense. It exploits one of our major cultural assets."
McNees has already secured one group to do just that: Barrel House Bourbon, Lexington's first bourbon in decades, is expected to reach market in 2012, and other spirits will be produced in the meantime from the barrel house of the former Pepper Distillery. A still from Portugal will arrive within a month to begin the bourbon making process.
"[The Distillery District] is not just a good idea, it is a real necessity," Councilman Blues said. "This is an economic boom to the area."