The Alcove at Russell represents a new standard and much-needed addition to Lexington’s affordable housing market. During a ribbon-cutting ceremony on June 20, Mayor Linda Gorton expressed her satisfaction with the development, emphasizing the pressing need for affordable housing in the city.
Located on Russell Cave Road in the Winburn area, the 202-unit apartment complex was developed by Louisville-based LDG Development. The project received financing of $46 million from R4 Capital, R4 Capital Funding, and the Kentucky Housing Corporation. The Lexington Affordable Housing Fund also provided $1.25 million in gap financing.
“We were founded on the belief that everyone deserves a quality place to live,” said Christi Lanier-Robinson, with LDG Development. Anyone visiting the Alcove, she said, would find the quality of the apartments on par with the quality of market-rate housing.”
The Alcove at Russell, a new community from Louisville-based LDG Development, recently began leasing units in the Winburn neighborhood. The project aims to set a higher standard for affordably priced housing.
Founded by Mark Lechner and Chris Kissinger in the 1990s, LDG Development initially focused on affordable single-family housing in the Louisville market. Over time, they expanded into multifamily housing and have since completed more than 100 developments, comprising nearly 23,000 units across several states, including Texas, Louisiana, Tennessee, and Kentucky. The company also has plans to expand into other states. “Any state that has experienced strong economic growth, we know has a need for affordable housing,” said Lanier-Robinson.”
A 2023 study conducted by the National Low-Income Housing Coalition revealed a shortage of 7.3 million affordable and available rental homes across the United States for low-income individuals. Lanier-Robinson noted that Lexington faces similar challenges, struggling to keep up with the demand for affordable housing.
Tours of the Alcove development have been in high demand, Lanier-Robinson said. The first lease was signed in March and more than 30% of the total units are currently occupied. Construction of the remaining units is projected to be completed later this year.
LDG has also implemented a pilot program to study rental assistance structures that can help struggling tenants catch up on payments and remain in their homes during challenging circumstances. Additionally, after achieving high occupancy in a new development, LDG conducts a community needs assessment. Based on the outcomes of the assessment, various community support programs may be introduced, such as food pantries, academic and recreational summer camps, mobile medical clinics, and tuition-free preschools in partnership with Bezos Academy.
Lexington’s commitment to affordable housing has likewise seen significant growth and a revamped approach in recent years. In 2014, the city commissioned the CZB report, which documented rising prosperity in Lexington due to a substantial increase in high-paying jobs. That boom was accompanied by a “shortfall of affordable housing for low-income workers as rents and housing costs rose. The report stated that about 15,000 low-income families were in need of housing assistance in Lexington. A lack of assistance programs left 6,000 households without quality affordable housing options.
In response, the city established the Affordable Housing Fund (AHF), funded by the city’s general fund. Since then, more than $25 million has been allocated to the AHF, with an additional $13.1 million from the American Rescue Plan Act (ARPA) funding. This has resulted in constructing or preserving 3,171 affordable housing units in Lexington, with the ongoing construction of more units.
The city council recently passed a resolution to increase funding for the Affordable Housing Fund from $2 million to approximately $4.7 million annually in the next budget. This increased funding will lead to a substantial rise in the number of affordable units available in the coming years.
"This is a really big year for us in terms of affordable housing. We have over 800 units opening this year, which will be our biggest year since Lexington's Affordable Housing Fund was started." —Charlie Lanter
“This is a really big year for us in terms of affordable housing,” said Charlie Lanter, Lexington’s Commissioner of Housing Advocacy and Community Development. “We have over 800 units opening this year, which will be our biggest year since Lexington’s Affordable Housing Fund was started.”
The AHF is governed by a board of directors comprised of 11 members who have backgrounds in working with homelessness or emergency services, affordable housing management, grant writing or philanthropy, real estate management, and/or capital management, along with two members from the LFUCG Council.
“They have the final say on all these developments as to what is funded,” said Rick McQuady, LFUCG Affordable Housing Manager. “They have the same commitment that I do, to ensure that we fund developments that will work and are good quality, to enhance the lives of lower-income people in Fayette County. And that’s what we’re here to do.”
McQuady said that he and Lanter are working on a request for proposal for a study to determine Lexington’s current need for affordable housing. “All the market studies we review, as well as the fact that all of our funded developments lease up quickly, demonstrates a tremendous need for development,” McQuady said.
Section 42 of the Internal Revenue Code requires that affordable housing units be built for households with incomes below 60% of an area’s median income. For example, in Lexington, a family of four with an annual household income not exceeding $53,580 qualifies for affordable housing.
To support low-income earners with rent, the U.S. Department of Housing and Urban Development offers Section 8 vouchers, but the demand exceeds the limited supply of 3,600 federal vouchers available in Lexington. The program occasionally opens a waiting list, with the most recent opening receiving 3,600 requests for inclusion in just five days.
A lack of affordable housing is often linked to homelessness. Each year in January, Lanter and a team count unhoused people throughout Lexington. During Lanter’s tenure as director of Lexington’s Office of Homelessness Prevention and Intervention, from 2014 to 2017, the population of unhoused people in Lexington declined by 400 people, or 27%. Chronic homelessness — defined by Lanter as anyone who has either been homeless for at least a year or who has three or more episodes of homelessness over two years — fell by half. The count for 2023 found 850 people unhoused, including individuals and families with children.
“We need a good base of not just affordable housing, but also permanent supportive housing to help them get on their feet,” Lanter said. “Supportive housing provides case management with support services to help those dealing with mental illness, physical disabilities, and other conditions.”
“Whether we’re redeveloping infill or building new construction on vacant land, it’s always a challenge to find property to do these developments,” Lanter said.
The Lexington-Fayette Urban County Council recently voted to expand the city’s urban service boundary by as much as 5,000 acres, with several members expressing a desire to include more affordable housing as part of the expansion. The Urban County Planning Commission has until December 1, 2024, to identify areas of expansion and develop a master plan.
In a statement to Business Lexington, Mayor Gorton said: “The last time the urban service boundary was expanded in 1996, very little affordable housing was built. That needs to change with this current expansion. That was the message I gave to the Council, and it adopted language requiring an affordable housing plan from the planning staff,” she said. “Meanwhile, we have dramatically increased funding for affordable housing projects and have hundreds of additional units coming online in the next year.”