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The Lex at UrbanUp by Sherman Cahal

The Lex

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Shelburne Plaza, a mixed-use development first proposed in August 2005, was a mixed-use retail and residential project proposed by Guy J. Totino, Bloomington Group LLC and Polaris Real Estate Equities on the site of the Shelburne Tobacco Warehouse along South Broadway near Pine Street.(1)(7) The original plan failed to gain financial backing, and the project was released to Buckingham Companies, originally a minority equity partner, and the development re-originated as The Lex.(6)(7)

Shelburne Plaza

First proposed in 2005 as a $70 million development consisting of 80,000 square-feet of retail space, including a supermarket, and 220 two- to four-bedroom apartments designed to appeal towards University of Kentucky students and young professionals,(1)(8) it was the first project proposed under Lexington's new mixed-use community zoning law that regulates large developments near residential areas. The three-building complex proposed would be connected with glass-enclosed walkways, while the building's exterior would be clad in brick and limestone, and feature at least 150 street-level parking spaces and 600 within an underground two-level parking structure.(1)(2) The structures would have ranged in height from four stories along Pine Street to eight stories at the proposed terminus for the Newtown Pike extension due to the natural change in ground elevation.(1)

On November 17, 2005, the Urban County Planning Commission approved a zone change for the Shelbourne Plaza project, where there was no opposition to the project;(2) it also approved a height variance. Under the current zoning plat, the maximum height allowed was 65 feet, a height that was not viable economically for the five acre development. The commission approved of an 89-foot variance for the southern end of the development, where the ground is 22 feet lower than the northern end. In the revision, the number of apartments had decreased to 212 while the parking spaces increased to 766.

In mid October 2006, Totino announced that he was in discussion with two grocery store chains, and that one had signed a letter of intent.(1) Several factors made the development prime for a supermarket, such as the high traffic count along South Broadway and its proximity to the university and the hospital. Another key factor was the two-way accessibility of South Broadway; with two-way streets, the probability of locating a grocery store is much higher than with a one-way street.(1) Totino also announced that the number of apartments had increased to 230.

Facing a rising cost of construction, the developers of the mixed-use project requested the assistance of the city of Lexington. One of the reasons stems from the underground parking garage -- a one-level underground parking garage with 350 spaces would cost $13 million alone, or $30,000 per parking space. In a suburb, that cost is typically $2,000 to $4,000 per space.(4) On May 1, 2007, the developers requested the Urban County Planning Commission to issue industrial revenue bonds, issued by cities to aid in downtown redevelopment projects that are paid back by the developer.(4) They also requested that the city provide a 90% property tax break on the development over the next 30 years. The council gave an unanimous nod of approval to a resolution that would provide bonding power and a tax break. Currently, the city collects just $17,300 per year from the vacant property; with the tax break, it would pay $30,000 per year for 30 years before increasing to $300,000 per year. Even with the extensive tax break, the city would collect more on the property than if it remained vacant.(4) The development also grew in size to 320 apartments, and price, increasing to $85 to $90 million.(4) The underground parking structure also decreased in size to 350-spaces, with an estimated price tag of $13 million.(5)

On June 5, the city of Lexington gave tentative approval to provide developers with a 50% property tax break over the next 22 years.(5) The tax break amounted to more than $3 million, which is half of what the city would collect in property taxes if the property remained vacant. In addition, the city announced that it will be issuing industrial revenue bonds on behalf of the project. The incentive and financing package was lauded as a model for future development in downtown; the city has already received inquiries by two or three developers interested in using the industrial revenue bonds for financing on their projects.(5) The agreement included a tiered payment structure so that the developers would receive more tax relief in the first few years of the project. In the first three years, the payment to the city will be $17,281 -- what the property owner would pay on the current assessed value of the property. In years five to eight, the payment will be 10% of the property's assessed value once the project is completed. In year 20, the developers will pay 95% of the assessed value of the land.(5)

Construction was expected to begin in spring 2007 and be complete by 2008,(1) but by October 2006, the completion date had been pushed back to early 2009.(3) By May 1, 2007, the completion date was pushed even further back to July 2009.(4)

The Lex

In April 2008, as Shelbourne Plaza failed to attract financial backing to develop the project, the property was released to the Buckingham Companies, originally a minority equity partner, who announced The Lex, a mixed-use development targeted to college students and young professionals.(6)(7)(8) Polaris remained a partner. By then, demolition of the former tobacco warehouses and freight depot were complete.(8)

The Lex would be the city's largest mixed-use apartment and retail development, and contain four four- and five-story buildings containing 266 apartments and townhouses on an eight-acre site.(6)(8) The development would also contain 27,000 square-feet of retail space, and contain a grocery store. Amenities would include an outdoor pool, plaza, basketball court, fitness center and a student lounge.

Buckingham is aiming for LEED certification with The Lex.(6) Financing is entirely private and require no public monies.(7)

On June 2, 2008, groundbreaking was held for the Lex. Phase one is scheduled to be completed by August 2009, with phase two to be completed one year later.(6)

Further reading

1. The Lex

Sources

1. Jordan, Jim. "Developers' plan calls for retail space and apartments; city's approval needed." Herald-Leader (Lexington) 26 Aug. 2005. 20 July 2007.
2. Jordan, Jim. "Rezoning is sent to Urban County Council." Herald-Leader (Lexington), 18 Nov. 2005. 20 July 2007.
3. Fortune, Beverly and Mark Cornelison. "Grocers might return to downtown." Herald-Leader (Lexington) 12 Oct. 2006. 21 July 2007.
4. Ku, Michelle. "Shelbourne project might get city help." Herald-Leader (Lexington) 2 May 2007. 21 July 2007.
5. Ku, Michelle. "$3 million tax break planned for plaza." Herald-Leader (Lexington) 6 June 2007. 21 July 2007.
6. Fortune, Beverly. "Ground broken for mixed-use infill project." Herald-Leader (Lexington) 3 June 2008. 8 Oct. 2008.
7. Fortune, Beverly. "Ground broken for big infill project." Herald-Leader (Lexington) 4 June 2008. 8 Oct. 2008.
8. Fortune, Beverly. "Broadway development now 'The Lex'." Herald-Leader (Lexington) 24 April 2008. 9 Oct. 2008.