Deal inked for new development across from Rupp Arena. Here’s the possible timeline
Developers and the Lexington Center Corporation have inked a deal to turn a key downtown parking lot into a multi-use development that will likely include a hotel, apartments, retail and a long-awaited downtown grocery store.
The deal, approved at Thursday’s Lexington Center Corporation board meeting, means work on the long-discussed redevelopment of the West High Street lot can now begin.
The board that oversees Central Bank Center picked local developer The Webb Companies and Dallas-based Lincoln Property Company to redevelop a 17-acre parking lot across from the newly renovated Central Bank Center and Rupp Arena on West High Street in May 2022.
Lexington Center Corp. and the Lincoln-Webb group have been negotiating for more than a year on the terms of the agreement to build on the High Street lot, which is part of a tax increment financing district, commonly called a TIF, and owned by Lexington Center Corp.
The Lincoln-Webb LLC proposal was picked after Lexington Center Corp. sent a request for proposals to developers. Other proposals for the High Street lot included a Top Golf and a minor league baseball stadium.
The initial plans called for a large multi-use development that includes apartments, retail, a hotel, grocery store and five parking garages. A key part of the agreement is that the developers replace and add additional parking to the High Street parking lot, the main parking lot for Central Bank Center.
The initial plans call for 3,600 parking spaces in five garages. That’s roughly 1,600 spaces more than the current parking lot.
Lincoln-Webb group officials said they were not ready to disclose specifics about the development, including possible tenants.
“We are truly honored to have this opportunity,” said Tyler Jones, executive vice president of Lincoln Property Company. “The High Street mixed-use development is an extraordinary opportunity to provide a vibrant, community-centric environment unlike any that exist in Lexington today, a place for Lexingtonians to live, work, and play for years to come.”
The Lincoln-Webb group will have 180 days to do due diligence for financing. The developers will have 16 months, with a possible six month extension, to get necessary permits and approvals for the property, according to details released during Thursday’s board meeting.
A zone change for the 17 acres will likely not be needed, said Dudley Webb, of the Webb Companies.
The project will be built in phases. Board members were told Thursday Central Bank Center will be able to use parking during construction.
According to information provided to the board Thursday, the Lincoln-Webb group will pay $1.6 million per year while the property is being developed.
Those payments could start as soon as 2024 if the permitting process is completed. It will take two to three years to complete all phases of the project, Webb said.
“This project will be a gamechanger for our great city,” Webb said. The mixed-use development will add to an already thriving area that has seen millions of dollars in public money spent on the renovation and expansion of Central Bank Center, which was completed last year, he said. The long-awaited Town Branch Park, a privately-funded park next to the center, is expected to start construction soon.
Once the project is completed, the annual lease payments will increase to $2 million. That $2 million annual payment will increase per year over the course of the 99-year-lease, according to information provided to the board Thursday.
The Lexington Herald-Leader requested a copy of the lease agreement. That agreement has not yet been provided.
Those payments will help Central Bank Center pay off millions of dollars in loans needed for a $310 million expansion of the convention center and remodel of Rupp Arena.
Developers can re-coup costs for infrastructure — including parking garages — from new tax revenues generated from the project. The 17-acre parcel is part of a TIF project. The Lexington Center TIF project qualified for $41 million in state tax rebates over 30 years.
To start receiving state taxes, developers have to spend more than $200 million. The only qualifying infrastructure costs to recoup those taxes are parking garages, according to the deal approved by state economic development officials in 2019.
The Webb Companies are long-time Lexington real estate developers and recently celebrated its 50th anniversary. Most recently, the Webbs developed City Center, a downtown development that includes hotels, an office tower and restaurants.
Lincoln Property Company currently manages more than $94 billion in commercial property assets. Since 2018, Lincoln has developed more than $22 billion in commercial properties.