Category: Neighborhood

Chaos: South Limestone Closure Lawsuit Details

Rob Morris 1 Comment Business, Community, Neighborhood, Predictions, Rants

When we initiated LexMobs to help businesses on South Limestone on Wednesday, we noted that the closure of the street seemed hasty and poorly-planned.  Well, now we’ve obtained the Fayette Circuit Court filing from a lawsuit intended to stop the work on South Limestone (first reported by Jake at Page One Kentucky).

And that filing reveals just how chaotic the closure process actually was.

Filed by the owners of several businesses and properties lining the route, the lawsuit seeks an immediate injunction to halt the roadwork and to reopen South Limestone to traffic.  It also seeks damages for the interruptions to business operations along the street.  The suit names the Mayor, LFUCG Urban County Council, and ATS Construction (the firm contracted to renovate SoLime) as defendants. 

And the filing tells a story of a poorly-communicated, hastily-assembled, highly-inconsistent project with an escalating price tag:

  • Communication.  Initial letters from the LFUCG Public Works Commissioner to the affected businesses invited them to a open house to discuss “a streetscape design” and “utility needs”, but didn’t indicate a complete road closure was immanent. The actual details of the project (and of the changes to the project) were usually disclosed to owners through rumors or media accounts.
  • Timing.  Owners had six days’ notice before the first open house (May 18th), and there was no mention of a road closure.  A second “utility needs” meeting was held on June 3rd, and the full closure of South Limestone was disclosed.  But some owners didn’t learn of the possibility of closing SoLime until the day before; The letter announcing that meeting didn’t mention closing the street.
  • Consistency.  In June 3rd discussions, South Limestone was to be closed from Euclid to High.  After voicing opposition, property owners were told on July 10th that SoLime would initially be closed from Euclid to Maxwell, opening up a full block between Maxwell and High Streets.  On July 21st – the day before the project began – owners learned from media accounts that SoLime was now to be closed all the way to High Street again.  That day, owners met with the Mayor and others from LFUCG to learn that ATS and LFUCG won’t know what they’re dealing with until they dig up the street.
  • Price.  The “Downtown Streetscape Master Plan” proposed improvements to South Limestone costing more than $5.2 million.  The LFUCG council approved the streetscape plan in August 2008.  On July 7th, 2009, the council approved the $13.1 million contract with ATS.  Two weeks later, media accounts put the total at $17 million.

The patterns emerging from this (admittedly one-sided) account of the closure of South Limestone parallels with what we’ve seen recently from LFUCG on urban development projects:

  • Projects languish for years, then are suddenly initiated.
  • Decisionmakers seem to have little sense of the full scope or true impacts of their decisions.
  • The true impacts of the project are only understood, if ever, after it is long underway.
  • Communication with citizens is unclear, intermittent, and/or non-existent.
  • The project changes direction suddenly.
  • It is unclear who is accountable for the success or failure of such projects
  • Because they are so committed to the (frequently noble) idea of the project, decisionmakers accept a series of concessions which cause the project’s price to balloon to multiples of original estimates.

We’ve seen some or all of these elements in numerous recent urban development projects: CentrePointe, Tax Increment Financing (TIF), the Lyric Theatre, the Newtown Pike extension and, now, the South Limestone Streetscape.  

What results is chaos.

Business owners on South Limestone had 2 months to prepare to lose customers for 12 months.  Many owners had one day to figure out how to get customers and suppliers to their door.  The cost of the project is 3 times what was initially approved. 

And the results of the chaos are easy to predict.  Confused commuters and shoppers stay away from “the mess” downtown.  Downtown businesses die.  And, after fits and starts, Lexington ends up with a beautiful street.  To nowhere.

Chaos is no way to run a business.  And chaos is no way to run the business of our city.

LowellsSquare

LexMobs on South Limestone?

Rob Morris 1 Comment Business, Community, Fun Stuff, Ideas, LexMob, Lowell's, Neighborhood

The South Limestone streetscape project gets underway this morning.  Using Twitter, Lexington’s Mayor announced that the closure will result in traffic delays of up to 45 minutes. 

From a public point of view, the closure seems hastily and poorly planned, although the promised streetscapes look wonderful.  The project stems from a noble goal: to better connect the University of Kentucky campus with downtown Lexington. 

But businesses lining South Limestone (SoLime) had little time to adapt to the closure, and I wonder how many can survive being starved of traffic for so long.  When Lexingtonians realize that there is a “mess” surrounding SoLime, they will stay away in droves.  (With a business just off of North Limestone, I’m concerned about the disruptions to our southside Lexington customers making it in to Lowell’s.) 

There are a lot of great businesses along SoLime that would be a shame to lose: Sav’s, Pazzo’s, Tolly Ho, Failte, Sqecial Media, and many, many others.  Some (maybe all) of these are Lexington institutions.

How long could they operate without significant customer patronage?  How long could they retain employees?  How long can they make debt / rent payments?  How long can they pay bills?  How long can they survive?

So, here’s a challenge for our readers: Let’s go out of our way to demonstrate that we care about those businesses.

Beginning today, and continuing through the next month, let’s pick one or two businesses to “flash mob” each day.  Let’s get together to show, with our feet and our wallets, that we want those businesses to survive.  Let’s show up.  And eat.  Or buy.  Or drink.  Let’s refuse to let these businesses fail.

If our LexMobs get too big, that’s OK – I’m sure that the plentiful nearby businesses would also love some of our overflow business.

Will this effort be well-organized and well-thought-out in advance?  Not a chance.  Will it be messy?  Yes.  Will it be chaotic?  Absolutely.  Will it be inconvenient?  Certainly.  Will you be too busy to interrupt your day?  Undoubtedly.

But that is precisely the point: to go out of our way to demonstrate we care for these businesses.

So… Let’s LexMob South Limestone.  Look for more details on Twitter with the hashtags #LexMob and #SoLime.  See you there!

Update: The inaugural LexMob will be Wednesday, July 22nd @ Pazzo’s Pizza Pub at 11:30 AM near Euclid on SoLime.  Can’t make it?  We’ll try for other times and places with future LexMobs!

LowellsSquare

Toward a Better Lexington

Rob Morris 0 Comment Better Lexington, Community, Ideas, Neighborhood, Rants

"It has taken five years on Council to understand what we can and cannot control."
Lexington-Fayette Urban County Council Member Kevin Stinnett, 7/2/2009

How do we make Lexington a better city?  Really better?  I have some ideas, but first we need to understand some of Lexington's fatal flaws in order to design something better…

A Broken City
As a relative newcomer to the inner machinery of our city (but a lifelong resident), I have spent a few months trying to figure out how Lexington 'works'.  As a downtown business owner, my focus has been on how we craft a functioning, vibrant, and livable city: How do we create a better Lexington?  And it has been a maddening exercise.  The more I delve into how decisions are made in Lexington – the more I understand what is actually going on – the more perplexed I become.  I am forced to conclude that our city is deeply, systemically, and utterly broken.

Lexington is an uncoordinated tangle of overlapping agencies, boards, task forces, committees, departments, rules, and processes.  Within this messy system, each organization is charged with its own distinctive – but often overlapping or conflicting – mission, mandate, authority, ability, accountability, and expertise.  Some of the organizations consist of long-term government administrators, some of elected officials, some of volunteers, others are quasi-governmental public/private agencies, and still others are fusions of all of these.

This highly fragmented machinery yields a city which fosters turf battles, redundant effort, convoluted processes, secrecy, uncertainty, and, as we have seen most recently, corruption.

The ultimate result is a profoundly inefficient city with an effectively paralyzed government. 

Scandalous
Lately, our local news has been rife with scandals and poorly-conceived,
-designed, and -executed projects:

  • Out of control spending sprees at
    the Airport, the Library, the Kentucky League of Cities, and the Kentucky
    Association of Counties.
  • The scar of CentrePointe's failure with its phantom
    financier, phantom tower, phantom business model, and phantom jobs.
  • The seemingly hasty and disorganized pending closure of South Limestone.

All of these scandals fit a disturbingly regular pattern: Inadequate
oversight which leads to lax controls which permits gross mismanagement
and/or outright waste of taxpayer dollars. 

Behind this pattern of scandal and appalling inefficiency lies Lexington's deeply flawed governing apparatus.  And when we observe that apparatus in action, we can begin to understand the root of the scandals.

Laurel and Hardy
Many Urban County Council meetings bear an astounding and troubling resemblance to a Laurel and Hardy "Who's on First?"
sketch.  A prime example of this was last Thursday's Economic
Development Task Force meeting (See Ace Weekly's wonderful reality-show spoof here for further examples).  A central question of last week's meeting was "Who is (really) responsible for economic development in Lexington?" 

At the outset, one councilmember stated, "It has taken five years on Council to understand what we can and cannot control."  Re-read that statement, because it is a profound indictment of our city's overcomplicated decisionmaking infrastructure.  Five years.  It takes five years for a councilmember to "get it" when they are steeped in it day-to-day?  How long will it take for an ordinary citizen? 

And by the way, despite the councilmember's assertion, I don't think the Council yet understands what they can and cannot control, as the ensuing conversation demonstrated.

The Task Force (Consisting of Urban County Council members) debated the Council's role in economic development relative to Commerce Lexington ("CLex", Lexington's semi-private chamber of commerce) and the Downtown Development Authority ("DDA", a corporation commissioned by the city and charged with helping redevelop downtown).  Both CLex and DDA have a board of directors and a staff of professionals.

What emerged from the discussion (chronicled best by Debbie Hildreth on her new blog about acclimating back to Lexington) is that the councilmembers have little clarity and little agreement on the respective roles, responsibilities, plans, and accountability of the Council, CLex, DDA, and the CLex and DDA boards.  Reading through Debbie's transcript, the councilmembers' statements are filled with stale bromides, helpless complaints, quick answers and utter confusion.  It all becomes tragically comic when you see how our elected officials are not even remotely on the same page.

And it is no wonder that our Council is befuddled.  The situation is actually far more complicated than just the Council, CLex, and DDA.  Within the Council itself, there are a bewildering array of committees and task forces, all of which could lay legitimate claim to economic development.  There is, of course, the Economic Development Task Force.  But there is also the Infill and Redevelopment Task Force.  There is the Planning Committee.  But there is also the Budget and Finance Committee.  And the Outside Agency Oversight Committee.  And the Corridors Committee.  (But wait, there's more!)  There are staff professionals within Lexington's Division of Planning.  There are volunteers who serve on the Planning Commission.  And with CentrePointe, there is the Courthouse Area Design Review Board, which issues the building permits for the site.

Within this ridiculous balkanization of our government, who has the jurisdiction, the responsibility, and the accountability for building a better Lexington?  Everyone and no one at once.  And therein lies the problem.

All of these organizations can claim they spearhead Lexington's development into a better city.  All of them "own" a piece.  But ultimately, none appear truly accountable for actual on-the-ground progress. 

The Lyric
With a noble project like the restoration of the Lyric Theater, who is in charge?  Who takes the lead on coordinating and executing the Lyric's redevelopment?

The Lyric could plausibly fall under the auspices of the DDA.  Or CLex.  Or the Infill and Redevelopment Task Force.  Or the Economic Development Task Force.  Or the Planning Commission.  Or, even, the Corridors Committee.  Ultimately, though, responsibility fell to another shard in the splintered machine: the Lyric Theater Task Force (who, by the way, appeared to do a great job).

And while the Lyric task force optimized the project for the theater's redevelopment, it isn't at all clear where this project falls within the wide array of potential development opportunities in our city.  It isn't clear how the Lyric was connected to our other urban initiatives.  In a fiscally-strapped economic environment, was the Lyric the best possible allocation of public funds?  We can't really tell, because we haven't really prioritized such development projects by return on our public investment.

Destination 2040: Destined to Fail
Some councilmembers have pointed to the Destination 2040 report as a roadmap for Lexington to follow in its development endeavors.  Destination 2040 is an admirable vision of the future constructed by our citizens.  It is filled with interesting ideas and initiatives to help improve our city.  But it is most certainly not a roadmap. 

Destination 2040 lacks clear prioritization of the initiatives it proposes.  It fails to identify adequate operational details of how to fund, structure, and execute the components of the Destination 2040 vision.  And, most of all, it fails to address the profound structural inefficiencies within Lexington which have long hampered such well-intentioned visions.

::

Toward a Better Lexington

What kinds of structural changes are needed in Lexington?  I have a few ideas.  I hope that you will add more. 

Transparency
When I began to look at how our city works, I quickly joined the
chorus of advocates for greater transparency in how decisions get made
in Lexington and throughout Kentucky. 

And that advocacy has
begun to pay dividends (whether the results of our actions or not).  As
local officials take their first baby steps on Twitter, and as more of
our citizens engage in local decisionmaking through attending meetings
in person, watching them on public access television (GTV3), or
following vibrant discussions on Twitter, one fact has become
abundantly clear to me: Transparency is not enough.  Not nearly enough.

While
transparency has helped reveal the scandals and issues facing our city, transparency alone won't really solve them.  Don't get me wrong – we're now starting to see into the machine.  It's just that we're learning that the machine is completely dysfunctional.

Comprehensive Urban Development
Whatever 'system' we have in place today, it isn't one which promotes sustained urban development.  I use the term urban development purposefully here: It is more than mere city planning; It is more than simply promoting our city; It is more than just economic development.  Urban development looks at our city as a functioning engine of economic and social progress, and strategically deploys our city's 'fabric' – spaces, corridors, amenities, people, businesses, buildings – to maximize sustainable advancement in our economy, in our social lives, in our physical environment, and in our aesthetic surroundings.

In short, it looks at how we intentionally design a better-functioning, vibrant, and livable city.

Simplification
It is clear that the splintered approach to bettering our city is failing.  Our continuous scandals and perpetual lack of progress cement that conclusion, as does the bewildering overlap of dozens of separate well-intentioned but poorly-conceived organizations.

My proposal: Eliminate today's governmental tangle by collapsing the DDA, Planning Commission, the Division of Planning, and the LFUCG Economic Development Office (for starters) into a single, centralized, and well-staffed organization with the clear mandate, clear authority, and clear accountability for successfully implementing our city's urban development initiatives.  

Focus
Concentrating urban development authority in a single organization will only work if we provide them with crystal-clear priorities on what is important.  With dozens of possible initiatives, visions like the Destination 2040 report lack clear priorities.  In essence, it declares that everything is important.  And in trying to do everything, we'd fail to accomplish anything.

We need to provide such an organization with guiding principles on what's important (and what isn't).  Is the organization designed to maximize tax revenue, jobs, infill, downtown density, or something else? 

From out of these principles, we should set realistic and quantifiable goals: "3000 new jobs by the end of 2010"; "$30 million in new tax revenues by 2012"; "10% higher residential density in downtown by 2014"; etc. 

My initial thoughts are that the core principles and the goals attached to them should be outlined by the Urban County Council.  That said, I'd like to see a way to balance continuity and change: As a city, we probably don't want long-term initiatives derailed by short-term political changes.  But we also don't want to 'lock in' failing projects merely for the sake of continuity.

From these principles and goals, staff professionals should derive the best 4 or 5 initiatives for achieving the established goals.  Would the Lyric Theater have emerged as one of the 4 or 5 best possible urban development projects?  I don't know, but I have my doubts.  It doesn't appear to scale very well on "jobs" or "revenues" dimensions.  But, of course, neither does CentrePointe at present.  Would we risk destroying surrounding businesses to "beautify" South Limestone's streetscapes?  I don't know, but I have my doubts.

Accountability
When the Economic Development Task Force met last week, councilmembers bemoaned the $400,000 provided to Commerce Lexington to bring new business to the area.  To date, there's little proof that this 'investment' has paid dividends.  How much business?  How many jobs?  What new tax revenue?  CLex really isn't accountable to the Council, so there's no real penalty for not delivering.  Where'd the $400,000 go?  The Council would like to know, too…

When we make the transformation to a simplified and focused urban development authority, we must have accountability for progress on these development initiatives.  Do they adhere to our principles?  Are they meeting our goals?  Are they successful?  If so, who gets rewarded?  If not, who gets fired?

::

Do I expect my proposed system to be adopted?  Not really.  But I would like for our leaders to begin to discuss seriously reforming how our city's decisionmaking machinery functions.  And the system which emerges must be more transparent, more simplified, more focused, and more accountable. It must help us build a better Lexington.

Tangled Webb

Rob Morris 3 Comments Business, CentrePointe, Community, Neighborhood, Rants

At the Lexington Forum last week, CentrePointe’s developer spun a dazzling and dizzying tale about the history and the future of the pit in the middle of our city. 

His presentation resonated with the receptive Forum audience.  Looking around the room, filled with many of Lexington’s other business and civic leaders, I was a bit confounded.  While many in the audience seemed familiar with the ongoing controversy of CentrePointe, few seemed knowledgeable about the actual details.

I then began to realize the scope of the challenge for CentrePointe critics: How do we effectively demonstrate the full extent of our skepticism and concern to the uninitiated or uninvolved (in other words, to the majority of our citizens)?  CentrePointe is an elaborate project with an equally elaborate backstory.  It is a complex web which is difficult for newcomers to disentangle.

Even so, there are at least 5 distinct patterns which lie within the web: 1) Secrecy, 2) Runaway Optimism, 3) Loss of Credibility, 4) Contingency, and 5) Victimhood.  These patterns form the basis of our critique of the project, and should raise important questions about CentrePointe for any public official, business associate, or concerned citizen.  

Secrecy.  From the beginning, CentrePointe was shrouded in secrecy, and the developers have been hostile to reasonable inquiry into the details of the project.  While seeking public commitments for tax increment financing (TIF), they refused to disclose the name of their secret financier.  They failed to disclose that their financier had been dead for six months.  On Thursday, the developer announced two new financial backers, but wouldn’t disclose their names either.

The developer claims that private property rights let him maintain secrecy, even as he publicly sought specialized TIF tax status.  The premise of tax increment financing is that today’s public debt would be paid for by future tax increases (the “tax increment”) which arise from property improvements (increased property values, increased commercial activity, etc.).  While the developer maintains his right to secrecy, the special status which the public granted to his property should require him to be more forthright and more detailed about the project’s timing, financing, and business model.  Or, the special TIF status should be removed.

Runaway Optimism.  The few details which have emerged have shown that the developers frequently engage in runaway optimism.  They bank on the flimsiest of commitments, and lean on them to demonstrate the viability of the project.  They are willing to mislead people to believe these commitments are real.  

In last week’s presentation, the developer stated that one of the first calls he got upon announcing the project was from Hard Rock Cafe, who wanted to locate in CentrePointe.  This was met with murmurs of approval from his audience.  

Trouble is, it wasn’t Hard Rock.  And they didn’t initiate contact with the developers.  And they aren’t coming to CentrePointe.  As Dr. Nick Kouns chronicles, Kouns initiated contact with House of Blues, who felt that Lexington wasn’t a sufficient market for their brand, but met with the developers out of courtesy.  So the ‘commitment’ was never much more than an exploratory discussion.

Alas, such optimism pervades CentrePointe.  On Thursday, the developer announced that he had 65 ‘almost-certain’ prospects for his 91 condominiums which will sell for an average price of $1.2 million.  Trouble is, only 10 million-dollar properties sold in all of Fayette County in all of 2008.  In today’s even-more-depressed market, what would enable the developers to attract 6 times more luxury property commitments, just for an unbuilt CentrePointe alone?  Runaway optimism.

Loss of Credibility.  The trouble with runaway optimism is that, eventually, reality sets in.  And as the developer’s gossamer threads of optimism unravel, they reveal his profound credibility problem.  

For the better part of a year now, the developer has continually decommitted from prior public statements.  These decommitments have been on videotape, in print, and to the Urban County Council, and have touched on all major dimensions of the project: its financing, its business model, and its timing.  The pattern which emerges is one in which the developer continually bends facts (and history) in the attempt to prop up his faltering story.

The developer rushed to create the pit in the center of our city last July, and was scheduled to begin construction on CentrePointe in 60 to 90 days.  As the months dragged on, he claimed that the permitting process was holding him back from doing anything else with the property, but that he expected the permitting issue to be resolved in 60 to 90 days.  Only later was it revealed that, even as he made such statements, he knew that his primary financier was dead.  But even though the financier was dead, the developer told the Urban County Council he was certain that construction would begin in 60 to 90 days.  Last week – some 60 days after he announced the death of his financier – the developer expected the financing to be resolved in 60 to 90 days.  

Contingency.  CentrePointe is a complex $250 million development with several intertwined components: over $100 million from 91 condos, a $100 million 250-room hotel, and some $50 million from retail and office functions in lower floors.  There has been a year-long delay in securing financing.  Construction has been delayed many times.  Every piece is contingent on the others, and it all has to come together flawlessly for CentrePointe’s business model to ‘work’.  And there are enough doubts about every single component that public officials, business associates, and concerned citizens should be worried.

As outlined above, the condo plans seem over-ambitious.  While Marriott has expressed interest in and support for the hotel, they aren’t actually financing it, and the higher-than-average occupancy at higher-than-average room rates assumptions used in the CentrePointe business model are far from viable. The fact that the developer is willing to mislead a prominent audience about a major retail tenant raises questions about the rest of the project’s business model.  The continual delays in securing financing and beginning construction – coupled with the secrecy of every major aspect of the project – have contributed to the mounting skepticism about whether CentrePointe is truly viable.

Victimhood.  In his public addresses, the developer often adopts a persecuted posture, which often positions him as a blameless victim of the sinister agendas of press, of bloggers, and of ambitious politicians.  He claims not to understand all of the fuss.  He just “wants to shut these people up”.  

Let’s take a look at the explanations the developer has provided for us:

  • The financier was secret because he feared public backlash.  When he died, that was kept secret because it wasn’t going to affect financing.  But when the financier’s heirs wanted to know whether he had sufficient assets to cover obligations like CentrePointe, the assets were tied up in numbered Swiss bank accounts.  They couldn’t get access to the accounts unless they also took on the obligations, which creates a Catch-22: the heirs can’t see the assets without accepting the obligations, but won’t accept the obligations without seeing the assets.  But even though the heirs can’t be certain of the dead financier’s assets, the developer somehow is…
  • Last week, the developer introduced two new financing sources.  But both sources – an individual and an investment bank – also demanded anonymity.
  • Even though the developer has always claimed the financing was rock-solid, last week he introduced three additional contingency plans.
  • When challenged on the viability of CentrePointe’s condominium assumptions, he claims that 65 of the 91 condos are ‘spoken for’ through undocumentable ‘handshake deals’.  He also names vague tenants for the properties – horse farms in Ireland and Dubai and vintners in Napa Valley.
  • He claims that people are lining up for the retail and restaurant spaces, but the one deal he has detailed to the public was both wrong and unconsummated.
  • Every time he provides an update on the project, the projected start date is 60 to 90 days hence.  Unfortunately, ’60 days from now’ never arrives. 

To the extent he is a victim, he is the victim of his own machinations.  If he really wanted to shut these people up, he would simply provide some proof that his critics are wrong.  But the proof which would silence his growing list of critics never arrives.  

* * *

Looking through the tangle of explanations and the patterns outlined above, one is forced to make one of two conclusions about the developer’s ability to silence his critics:

  1. That he is the unluckiest man alive (every opportunity to exonerate himself is confounded by another unfortunate twist in his story);
  2. That he is simply lying (every opportunity to exonerate himself is confounded by another convenient twist in his story).

Until we get a full and clear accounting for CentrePointe’s real-world status, I, for one, choose not to be silenced.

An update on CentrePointe

Rob Morris 1 Comment Business, CentrePointe, Community, Neighborhood

At the Lexington Forum this morning, CentrePointe's developer updated the public on the status of the faltering project in the center of our city.  As he has done in other venues, he laid much of the blame for any CentrePointe controversy at the feet of bloggers and the media.

In his presentation, he revealed a few new details about the secretive project, along with several layers of backup plans.  In this post, I'll outline some of my notes and some questions which arise from the developer's presentation.  In a future post, I'll share more of my thoughts on the development in the wake of this morning's presentation.

Plan A

  • The dead financier (call him Mystery Investor 'A' – or MIA, for short) was introduced to the developers by a pre-eminent, distinguished American
    who was heavily involved in the Justice Department.
  • MIA was committed to 5 such projects around the world involving some $800 million, including 3 in the US worth some $550 million.
  • He went into some detail on the reason that MIA's estate was held
    up.  He characterized it as a chicken-and-egg problem.  The
    heirs aren't sure they wanted access to the 'numbered Swiss bank accounts'
    until they knew whether those accounts had enough to cover the estate's
    liabilities (like CentrePointe).  The accounts and the liabilities seem to be a package
    deal, but the heirs are blind to the numbered accounts: They can't know what the actual assets of the estate are unless they also accept the liabilities.
  • Question: If MIA's heirs don't have confidence that MIA had enough assets to cover these deals, then what makes CentrePointe's developers so confident that the money is there?

Plan A Minus

  • If the developer's 'Plan A' falls through, he has an intermediate plan ('Plan A Minus'?).  In the last couple of
    days, he has talked with someone who happens to have 20 to 30 thousand cubic
    yards of dirt for free, so filling in the site is an option if the current plans
    fall through.  He also mentioned that he had talked with someone who
    hydroseeded strip mine sites who might be willing to help seed the
    place.
  • The developer claimed "It is not our intent to embarrass the community" for the World Equestrian Games.  He hates to do it, but is tempted to backfill the pit and plant seed "even for 60 to 90 days, just to shut those people up".  The friendly crowd roared with laughter.  Later he said he thought about "putting in a liner and turning it into a lake".  More laughter.

Plan B

  • CentrePointe now has a 'Plan B', complete with a Mystery Investor 'B' (MIB) who has recently come forward to
    express interest in the project (should 'Plan A' with MIA's estate fall through). They are "ready to go" if 'Plan A' does fall
    apart.
  • Question: If MIB is so "ready to go", then why not relieve the heirs of MIA's estate of their burden and allow MIB to take over financing for the deal? 

Plan C

  • Even though MIB is ready to go, there is also CentrePointe 'Plan C'
    involving a Mystery Investment Bank 'C' (MIC) who will put up $30 million, and
    the developer briefly mentioned some sort of 'bond arrangement' to finance the rest of it.
  • Question: If Plans A and B are really viable, then why does CentrePointe need a Plan C?
  • Question:
    What kind of bond issue supplies the other $220 million needed to build the project, if the investment bank is only ponying up $30 million?

Other notes

  • If one of the financing options lines up today, CentrePointe would begin construction in the fall.  15 months after the initial demolition began.
  • The developer claimed that 65 of the 91 condominiums at the top of CentrePointe had been committed to by many people, including horse farms in Ireland and Dubai.  (He didn't mention Napa Valley wineries this time.)
  • He took pains to correct Herald-Leader writer Beverly Fortune for
    reporting that the 91 units had an average price of $1.2
    million.  "That's just the average… The units will start at $600,000
    and go up from there."
  • "Hard Rock Café was one of the first to call us" when they heard about the project, strongly implying that they were lined up.  (Since the meeting, I have learned that the developer really talked with 'House of Blues' – not Hard Rock – and that they are anything but 'lined up'.)

The plethora of mystery investors and backup plans might have been intended to reassure his audience.  But they actually raise troubling questions about the future of the project, the developers' ability to obtain financing, and the financial viability of the development's business model.

A modest proposal to end blight

Rob Morris 1 Comment Better Lexington, Business, CentrePointe, Community, Ideas, Lowell's, Neighborhood, Rants

Comp Care Lot
Comprehensive Care Parking Lot

Every morning when I walk into work at Lowell's, I see 8-foot-tall tree-weeds growing through unkempt hedges and spilling over into the public sidewalk.  I see a planter adjoining our building, burgeoning with weeds and grass and the massive stump of a long-dead tree.  I see a pitted, crumbling parking lot with clogged drainage.

Many customers assume it is our lot.  It does adjoin our building.  And they can't see the sign declaring "Comprehensive Care Center Parking Only".

IMG_2483
116 Mechanic Street

Across the street I see a tiny old shotgun house with a gigantic half-rotted tree looming ominously over both the house and the main Lowell's parking lot.  After the ice storm and other storms this spring, downed branches lay in the asphalt front yard of the house.  For over two months.

Absentee owners neglect both properties.  Neighboring businesses have conducted the most of the maintenance on the properties over the past couple of years.  In effect, they are abandoned.

As a business owner, I worry about the effect it has on Lowell's famously loyal customers.  Even if they cherish us and the service we provide, I'm genuinely concerned about the ability of such eyesores to repel visitors to the shop.

I often talk with nearby business owners, who share my concern for the negative effects of these properties on our neighborhood.

* * *

Many folks have wondered why I have been so vocal on the CentrePointe mess.  There are many reasons, but one of the biggest is that the abandoned properties surrounding Lowell's have given me firsthand experience the negative effects of blight like the CentrePointe scar.

There are many such highly-visible, blighted, non-productive and apparently abandoned properties in Lexington: CentrePointe in Downtown, Lexington Mall on Richmond Road, and Continental Inn on New Circle at Winchester are some of the most apparent.  But there are numerous smaller examples littering our city.

Just like the properties surrounding our shop, the absentee owners seek to avoid any and all expenses.  They avoid capital gains taxes by refusing to sell their properties.  They avoid maintenance expenses by refusing to invest to make their properties economic contributors to the community.  They avoid property taxes by refusing to improve their decrepit real estate.

Such abandoned properties generate near-zero direct contributions to the economy.  Moreover, they generate negative economic effects for surrounding properties and businesses: They drive away business and drive down property values.

* * *

It is time for such neglect to end.  It is time to make sure that lazy landowners are motivated 1) to improve their holdings and 2) to transform their properties into contributors to our community's economic engine.

My modest proposal: Implement a 'blight tax'.  Lexington landownders whose property qualifies as 'blighted' would have to pay a moderately severe annual blight tax.

The definition of 'blighted' would need to be worked out, but should include an assessment of the property condition, as well as proof of substantial progress on needed improvements.  We could start with Division of Code Enforcement standards.

To overcome their avoidance of maintenance expenses, property taxes, and/or capital gains taxes, I'd propose that the blight tax have some teeth: Say, 35% to 50% of assessed property value per year.

In the CentrePointe case, the blight tax would generate $8 to $12 million per year of revenue to the city until the developers improve their land.  When historical buildings were demolished to make way for CentrePointe, many rationalized that the old buildings were greater eyesores than the pit which remains today.  I disagree.  But a blight tax may also have helped prevent the demolition-by-neglect which occurred on that block over the years.

I would imagine the former Lexington Mall and Continental Inn properties would generate amounts similar to CentrePointe, given their sizes and their locations on busy thoroughfares.

Such tax revenue could be specifically allocated to offsetting the effects of blight: community improvements to sidewalks, bike paths, streetscapes, parks, community centers, business incubators, community ventures, and the like.  If property owners avoid the blight tax by making their properties more valuable (i.e., by improving them), then all the better.

To create a vibrant city, we need to ensure that Lexington doesn't have the economic scars that blight leaves behind: dead spots which contribute little (or which actually destroy) monetary value in our community.

My proposal is the blight tax.  What's yours?

Unfortunately. Private.

Rob Morris 3 Comments Business, CentrePointe, Community, Neighborhood, Rants

There were two common refrains at Tuesday's Urban County Council confrontation between our vice mayor and the developers of CentrePointe. 

One was the word "Unfortunately" continuously invoked by the developers.  While "unfortunately" led some 6 sentences in the developers' prepared statement, it also led nearly every response from the developers to difficult questions from the Council.  Unfortunately, the developers didn't foresee the economic downturn.  Unfortunately, things change in projects like these.  Unfortunately, bloggers and the press and rumor-mongers have pointed out immense and inconvenient flaws in our business case.  Unfortunately, it is apparently their free-speech right to do so.  Unfortunately, people die.

Well, um, unfortunately, REAL businesspeople are supposed to anticipate and overcome such circumstances (not be paralyzed by them).  Anything less amounts to sheer speculation.  Which is what Lexington has encountered with CentrePointe.

The second refrain was actually more worrisome and more puzzling.  It came from members of the Council who acted as apologists for the developers (developers whose actions can only be characterized as bumbling).  These same councilmembers – Lane, Stinnett, Myers, McChord, and Beard – felt compelled to offer apologies for forcing the developers to account for their continuous inaction.

The refrain they used was "private".  Councilmember Myers asserted that this is private property assembled by private developers with private funds, that the developers could do whatever they wish with it, and that the council had no business forcing CentrePointe's developers to explain their incompetence.

Balderdash.

Before more libertarian readers resort to labeling me a socialist, let me assert my firm belief in property rights.  Unlike some of my more radical friends, I believe that property and capital and money have driven the vast majority of improvements in our living conditions and overall social well-being.  To be sure (and as we have seen quite clearly of late), capitalism often has an ugly downside driven by unrestrained greed.  But the long term gains have far outweighed that downside.

The crater created by CenterPointe's developers is certainly private property.  It belongs to them. 

But here's where the stalwart defenders of property rights are wrong: Private property always comes with civic responsibility.  Owners of private property cannot use their property in ways which destroy value for surrounding properties or surrounding businesses.

Let me illustrate this principle with a recent and vivid example:  A year and a half ago, in the Andover neighborhood, there was a private home that was infested with rats.  The community and the Health Department mobilized to eradicate the rats and eradicate the problem.  Nearby property owners (including yours truly) were rightly concerned for both our safety and our property values. 

Apparently, these same councilmembers would claim that the rat-infested house was private property, and, thus, the community had no right to defend their health or their property values.  Would councilmember Myers sit on his hands if a rat-infested house was next door to his house?  Apparently so.  Would councilmember Lane approve of a neighbor's right to spread pig manure (and noxious fumes) to fertilize their lawn in his Hartland Gardens?  Apparently so.  After all, it is their property, and they can do what they wish with it.  Right?

Of course not.  Private property comes with civic responsibility. 

* * *

With CentrePointe, we have a rathole downtown.  The rats, while not physical, are more insidious and more destructive:

  • There's the bulldozer rat that razed buildings, jobs, businesses, and revenue last July.  The rathole has produced no jobs, no revenue, no businesses, and no buildings.
  • There's the ugly-city rat that an out-of-town visitor takes back to their home as tourism dollars and tourists mysteriously disappear from downtown.  I suspect there will be many of this breed of rats available for the World Equestrian Games next year.
  • There's the blight rat which drains surrounding property values and sucks patrons out of surrounding businesses.  
  • And, finally, there's the developer rat, who repeatedly fails to deliver on public statements about CentrePointe's timing, funding, and business model. 

Councilmembers Stinnett, McChord, Myers, Lane, and Beard appear to sympathize with both the rats and with the rathole.

I do not.  And I don't appreciate our representatives who do.  And I'm not alone.

Private property comes with civic responsibility.  We need leaders who recognize that fact.

Sayre presents Kilowatt Ours at the Kentucky Theatre

Rob Morris 0 Comment Better Lexington, Community, Neighborhood

Our friends and neighbors on Sayre School's Green Council are presenting a free showing of the documentary Kilowatt Ours: A Plan to Re-Energize America at the Kentucky Theatre at Noon on Wednesday 22 April.  The film is open to the public, runs at about 55 minutes, and there will be a question-and-answer session with Jeff Barrie, the film's director, afterward.

Find out more about Wednesday's showing here, and see a short preview on the film's website here.

So bring your lunch down to the Kentucky, and see Kilowatt Ours with us on Wednesday.

[where: 214 E Main St, Lexington, KY 40507]

The UnTower Manifesto: 1. Truth

Rob Morris 0 Comment Business, CentrePointe, Community, Customer Service, Ideas, Neighborhood, Rants, UnTower

[Note: The UnTower Manifesto is a three-part series about responding to the failure of CentrePointe.  You can read the full story of that failure here.]

As the CentrePointe project becomes the UnTower scandal, a general consensus has developed which agrees that CentrePointe will never be built on the crater that its developers rushed to create. 

A critical question, then, is this: If CentrePointe will not be successfully constructed, how should Lexington move forward in the wake of the UnTower scandal?

There is the obvious question of how to proceed with the colossal scar in the middle of our city.  But there is also the less obvious – but, ultimately, more important – issue of changing how Lexington works in order to prevent the next UnTower catastrophe.  Let me start there, and we'll return to the issue of what to do with the site.

Toward a Better Lexington
The details of how UnTower happened have slooowly trickled out from the developers.  Their secrecy, lack of candor, intimidation, outright deception, and possible fraud have sharpened questions about how decisions have been made throughout the project's approval process.  UnTower has exposed how opaque and how ill-informed our mayor's and our Urban County Council's decision-making processes have been.  And, if you look closely enough, the scandal shows us how Lexington should improve.

So, how did this fiasco happen?  The details have been covered many times from many, many, many quarters, so I'll simply summarize the key themes:

  • Throughout UnTower, the developers have maintained great secrecy about the financing and the business model behind their development.  As details have emerged, neither looks viable.
  • The developers claim their project is 'private', but have pressured the public to provide approvals and special Tax Increment Financing (TIF) for the project, with much of the TIF dependent upon a vibrant long-term business model which they don't have.
  • The developers, the mayor, and some council members have not shared how and when they learned about key elements of and issues with UnTower which led to its ultimate demise.
  • The developers, the mayor, and much of the council have responded to pointed and informed questions about the project with vague, non-responsive answers.  Often, they refused to respond at all.
  • While there was public discussion about the decisions our government was making, the conversation was muffled by their timing and format.

In the end, the whole affair had a distinct 'backroom deal' flavor to it which left more questions than answers: How were these decisions made?  What information went into the decisions?  What information was withheld?  What information was fabricated? Who talked with whom about the project?  When did they talk? 

All of the questions have raised a bigger question: How is it possible that our community doesn't have absolute clarity into how decisions are made by our elected representatives?

In my business, if we failed to clearly explain how a vehicle was repaired, we'd lose customers.  If we came across as less-than-honest, our loyal customers would fire us.  If we refused to meet with a customer to address their complaints, they would tell their friends and family.  If we didn't make things right when we screwed up (and, yes, that does happen occasionally), our reputation would suffer.  In the end, our business would fail.

With UnTower, our community's 'business' failed us.

Clarity.  Explanation.  Honesty.  Availability.  Accountability.  These are the pillars of a transparent business that customers can believe 'does things right'.  A healthy, vibrant business which grows and prospers.

We wouldn't accept anything less than these qualities from a business.  And we shouldn't accept anything less from Lexington.

In an age of websites, blogs, Twitter, and Facebook, every business has had to engage in conversations with customers on the customers' terms.  The ubiquity of the internet means that these tools are available to nearly everyone, nearly everywhere.  The latency of the internet means that the conversations don't have to happen at the same time – they can build over time.  The internet's ubiquity and latency forms the foundation of a new and better town hall.

Why should we all have to cram into a room at the same time?  Why should we have to play 'beat the clock' when talking about issues which are complex and nuanced?  Why should we have to forgo pressing business or personal matters to attend a meeting which is designed to be convenient for our representatives?

The internet provides the perfect public forum for every citizen to express his or her public policy views, ideas, and thinking.  Even better, our ideas can build on one another as we tinker with and improve the ideas of our neighbors.  Plus, conducting civic conversations on the internet can happen around the clock.  Citizens can participate in the public discussion when and where it is convenient for them, not for the elected representatives who serve them.  Isn't that the way it should be?

Further, every single representative should publish their conversations, thinking, dilemmas, trade-offs, beliefs and positions (and the transactions between them and other interested parties – like developers or investors or campaign contributors).  These records should be posted online for all citizens to see, comment on, debate, and improve.

The council members' emails are listed on the city's website, as are the mayor's newsletters.  But these are old, closed, one-way forms of communication.  They aren't vibrant community discussions.

So, do I want to see tweets that the mayor's advisor is picking up eggs?  Or a Facebook entry featuring the halloween costumes of the councilwoman's children?  Not particularly.  But we deserve to see real-time updates of their thinking on critical community issues.  We should know why they have changed their minds at the last minute.  They should tell us who they talked with and what they said.  After all, they are public officials.  We should see into a transparent civic machine which serves all of us.

What is clear is that a 19th-century civic apparatus has hamstrung our
21st-century community. The ancient contraption allows far too many
secrets to hide within.  Whether our representatives and our governments use blogs, Twitter, Facebook, or some other platform matters far less than whether they start participating in open conversations with the people they serve.

The technology already exists.  Millions of people already use it.  Thousands of your constituents use it every day.  It's easy.  It's free.  And it will make Lexington better.  What are you waiting for?

[Continued in: The UnTower Manifesto: 2. Consequences]

[where: E Main St & N Limestone St, Lexington, KY 40507]

The UnTower Manifesto: 2. Consequences

Rob Morris 2 Comments Business, CentrePointe, Community, Ideas, Neighborhood, Rants, UnTower

[Note: The UnTower Manifesto is a three-part series about responding to the failure of CentrePointe.  You can read the full story of that failure here.]

The consequences for UnTower should rest on the people who perpetrated the scandal: The mayor, some council members, and the developers.  Let's start with the mayor.

In other venues, I've seen the mayor talk with his skeptics with apparent openness and graciousness.  He was quite articulate.  He listened to their concerns and seemed to hear them.

But the last several months have shown a repeated abdication of his duties in the face of scandal.  This pattern first emerged with the airport staff's misappropriation of public funds in their credit-card-and-travel scandal, where the mayor displayed a perplexing tendency to drag his feet.  Now, as CentrePointe devolves into the UnTower scandal, the mayor has shown a similar lack of initiative to lead on his citizens' behalf.  Instead, he has resorted to 'happytalk' to defend what is clearly a failed project.

Meanwhile, the vice mayor has been active and vocal in challenging both scandals.  The effect: a grassroots effort to draft him to run for mayor in 2010, complete with its own Facebook fan page and glowing coverage in local media.  The current mayor seems to have no such dialog with the citizens he serves, and seems to have generated little enthusiasm for a 2010 run.

The mayor needs to begin to lead with candor, action, and transparency – beginning with complete clarity around what happened to create UnTower – or his constituency will chase him from office.

The same can be said for the members of the Urban County Council – especially those who rubber-stamped the UnTower project without adequate scrutiny or analysis.  They must assume a more actively transparent posture – including using the tools and technologies to have conversations with the people they serve – or they, too, will be removed from office by their increasingly-informed electorate. Their citizens will no longer tolerate the kinds of hijinks and misdirection that characterized UnTower.

Finally, there are UnTower's developers.  What should happen to them?

The scar in the middle of town is their property.  But the destruction of the block and the special tax status endowed on the block were public events, with public investments and public impacts.  If anyone doubts the public impacts, just talk with businesses bordering the UnTower eyesore about its effects as a customer-repellent.

So here's my modest proposal for penalizing their deception.

First, the council should explore all options for rescinding the block's special Tax Increment Financing (TIF) status.  TIF was granted under conditions which no longer seem to apply, and the developers no longer appear to have earned that special status.

Second, the council should – to the extent it is able – strictly re-define acceptable future uses of the property in light of the UnTower scandal.  Given that the developers contributed to the scandal with their hollow promises and continual lack of disclosure, I would hope that our council would be particularly stringent with requirements for how the property functions as part of our community and that they would set a strict timetable for the developers to act.

The developers misled us to gain advantage; now they should pay the price.

[Continued in: The UnTower Manifesto: 3. Beyond UnTower]

[where: E Main St & N Limestone St, Lexington, KY 40507]