CentrePointe, the seemingly snakebitten development that so far has produced little more than widespread bad feelings and a 30-foot-deep city block-wide pit in the heart of Lexington's downtown, is back to square one after a brief dance with new developers abruptly ended.
The city says the site owners have until March 30 to get the work done or again face the possibility that the city will seek to enforce a fill-in order or even foreclose on the property. Emphasizing its stance, the Lexington-Fayette Urban County Government on Feb. 19 sent a letter to Maxim Crane Works of Bridgeville, Pennsylvania, informing the company of the deadline and the inherent risk to its property.
“We are writing to advise you that should the Developers ... fail to honor their obligations and complete the work they are required to perform ... by March 30, 2016, LFUCG intends to exercise its right to complete the Restoration Work, fill the site, and return the property to its pre-excavation condition,” the letter reads. “Accordingly, we wanted to provide you sufficient notice to protect your interest in the cranes in such manner as you deem appropriate.”
The CentrePointe site has been vacant since 2008, when buildings on the property, bounded by Main, Vine, Limestone and Upper streets, were demolished. The property is owned by businessman Joe Rosenberg and a company affiliated with The Webb Cos.
The latest turn of the screw in this long-running drama featured new developers hoping to add a new government center to the project. Lexington investor Matt Collins and New York development company Bridgeton Holdings emerged late last summer with plans to develop the site with a new city hall as the main tenant. But by Feb. 10, Collins and Bridgeton Holdings bailed on the project.
“The proposal simply asked too much from taxpayers,” Mayor Jim Gray said in a statement. “While everyone wants to see progress, it shouldn’t come at a premium to citizens.”
Pressure and planning
Last year the city said a 2013 Conditional Restoration Agreement allowed them to make the developers fi ll in the hole if no work was conducted at the site for 60 days. In late April it sent notice to the Webb Cos. invoking this clause. While the Webb Cos. have not agreed that no work had been done at the site, by August the new developers had emerged with plans to take over the moribund project.
The main component of the new developers’ plan was to have a new city government center as the main tenant. And while a new city hall has been on the council’s wish list for years, merging that plan with CentrePointe’s mixed-use project added a level of complexity to the already troubled development that proved untenable.
Indeed, the developers’ decision to drop out came only one day after consultants hired by the city to investigate possible sites for a new city hall delivered their report to council members in both open and closed-door meetings.
The study by Cincinnati-based Jones Lang LaSalle, for which the city paid nearly $200,000, actually placed CentrePointe as a leading candidate for a new city hall. However, it identified several factors that it said needed to be addressed. Among the issues flagged by the study were space considerations (no ground floor presence, small tower footprints that would have required use of multiple floors) and no option for the city to own the site, only rent it.
Several council members also were critical of the CentrePointe plan for a city hall.
“CentrePointe was not viable in any way, shape or form,” said Shevawn Akers, 2nd District council member. “We’re not going to lease a building in perpetuity. It doesn’t make any sense for a government entity to pay hundreds of millions of dollars over (the building’s) lifetime.”
Akers also noted that the developers offered the city only 150,000 square feet of space for the city hall, when the city has said all along it needs at least 180,000 square feet.
No room to negotiate
The reply was swift once the city balked at accepting the plan without major changes: Collins and Bridgeton Holdings were out.
“You have informed us today that you no longer have interest in the broader project, but would prefer to build and own a stand-alone city hall,” a lawyer representing Collins and Bridgeton Holdings wrote Feb. 10 in a letter addressed to Gray. The letter went on to say the developers wanted to build a “world-class mixed-use development. Therefore, we will no longer pursue this particular project.”
Gray, who had cautioned at the outset of the new developers’ involvement that any project that included a city hall would face tough scrutiny, said the plans didn’t add up.
“The developers were unwilling to consider the boundaries Council felt were necessary to continue negotiations,” he said.
In a response to the developers, Mason Miller, an attorney for the city, said their proposal “was simply uneconomic.” He said the proposal required the city to subsidize “the private development of expensive condominiums and hotels” by requiring the city to pay more than twice the rent of alternative options. In addition, Miller said city consultants estimated the proposal would cost the city $5.5 million per year, while other options would cost less than half that amount annually.