Category: Neighborhood

The UnTower Manifesto: 3. Beyond UnTower

Rob Morris 0 Comment 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 final piece of the UnTower puzzle is what to do with the pit now that the historic buildings are gone and the promised tower cannot be built. 

Up front, let me declare that I don't have all of the answers regarding what needs to be done with the block.

But I do have some general principles which we might start to apply to the site.

  • Create a vibrant destination which attracts in-town residents, weekday workers, other folks from throughout the Bluegrass, and tourists.
  • Make that destination a distinctive place which no other city has (and this doesn't need to be a towering monument to ego)
  • Create public and private spaces within the destination which allow the community to create shared experiences while also providing a much needed economic boost
  • Balance the types of uses within the development to include an attractive mix of retail, nightlife, dining, and lodging options
  • Ensure local businesses have significant presence within the development to help supercharge the local economy
  • Ensure that the space is well-integrated with the surrounding community and that its design promotes circulation throughout surrounding businesses and public spaces
  • Build it soon.  Remove the eyesore that the UnTower scandal left behind.

So lets look at these principles in more detail.

Destination.  If we want the UnTower block to directly feed the local economy, we need it to function as a destination for both our visitors and our community.  The previous imposing design did not encourage local residents to participate in the space.

Distinctive Place.  The new development should, to the extent possible, function as a signature place for Lexington.  Much like Keeneland and our horse farms showcase Lexington as a city like no other, the new development should showcase our city, our region, and our people.  Portland, Austin, Miami, Chattanooga, Denver, and even Louisville have these memorable and distinctive signature places.  Lexington should, too.  A distinctive place will draw people (and dollars) into our community; A forgettable one will not.

Public and Private Spaces.  The most effective places (like those in the cities above) combine public spaces with private enterprise.  Thus, memorable shared experiences can also feed the local economy.

Balanced Use.  Others have proposed using the block for a single kind of use – say, a new basketball arena.  Such dedicated uses of the property would be counterproductive to our economic engine.  To get the biggest economic bang for the buck, we should encourage a unique and balanced mix of stores, restaurants, attractions, clubs, and perhaps a unique 'boutique' hotel.  (My best-ever customer experience was at a Kimpton Hotel, which made for a hugely positive impression of Portland in general.  What if Lexington could wow its visitors like that instead of giving them a bland cookie-cutter hotel?)

Local Businesses.  To supercharge the impacts of the dollars spent within the new development, we should try to ensure that many of the businesses located there (30%? 50%?) are local businesses.  This will yield two big benefits.  First, it would contribute to the distinctive character of the place.  Second, it would keep a significant portion of that money in Lexington.

Integration.  When CentrePointe was proposed, many derided the design as too fortress-like and too disconnected from the city fabric.  The UnTower scandal offers an opportunity to correct that mistake.  The new development could more thoroughly integrate with several aspects of downtown development.  The site borders Phoenix Park, Courthouse Plaza, and the History Museum / old Courthouse / Cheapside complex.  An 'open' design would promote circulation through those spaces (and into surrounding businesses) and would better integrate with our other urban initiatives (such as our street improvement plans).

Build Soon.  Regardless of the type of development we ultimately put on the UnTower block, we probably have missed our window for using it to improve our city's appearance for the World Equestrian Games in 2010.  Nonetheless, we cannot allow the crater left by UnTower to remain. 

Is this list comprehensive enough (or even correct)?  Probably not.  Feel free to point out what I got wrong or what I missed.

In any case, this is the kind of civic discussion that the citizens of Lexington must engage in if we are to build a better community – and if we are to heal the scar in the middle of our city.

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

Why CentrePointe will fail

Rob Morris 3 Comments CentrePointe, Community, Neighborhood, Predictions, UnTower

CentrePit A few months back, I openly wondered about the viability of the CentrePointe project, which thus far has only managed to crater an entire city block of historical buildings.

Since our post (which came long after the controversy started), there has been a continued flurry of discussion around CentrePointe in the community.  But nothing has happened on the construction site. 

In all of this turmoil, one fact has become crystal clear: CentrePointe will fail.

The project will fail in one of two ways:

  1. The project will fail to be constructed, or
  2. The project will be constructed, and then fail financially

I say this not out of emotion or disgust aimed at the project, the developers, the mayor, or their conduct (although all may be worthy of disgust) – but because the justifications for the project fail to stand up to basic business logic.

Instead of acknowledging the flaws in their business plans, CentrePointe's developers have continually invoked wishful thinking to rationalize their actions. 

I've seen this kind of fatal optimism in business many times before.  Business executives often think they can make a project succeed by just wanting it badly enough.  (Unfortunately, optimism isn't a viable business strategy.)  In their blind pursuit of their goal, they disregard the facts. 

So, lets explore the facts around CentrePointe ('CP' from now on), which really can't be ignored any longer.  (Read more from the Herald-Leader here, here, and here.)

  • CP has had an unnamed international financier who committed $250 million to the project.  This week, we learned that the mystery investor died.  Without a will.  The project certainly won't commence until a) the financier's estate goes through probate court, and b) the heirs agree to continue support for CP.  Odds the financier ever existed: Iffy.  Odds heirs will support CP: Doubtful.
  • CP is supposed to house a J.W. Marriott luxury hotel.  Meanwhile, Marriott's CFO (who is their soon-to-be CEO President and COO [correction]) has repeatedly announced that even the best projects – a group that CP cannot possibly belong to (see more below) – are stopped in their tracks.  Odds Marriott will end up in CP: Doubtful.
  • The Marriott would have 250 rooms going at $190 per night.  The price is 50% higher than competing hotels, yet the developers' analysts estimate occupancy rates at startup which are better than those (less expensive, more established) hotels.  Odds of getting higher occupancy at a much higher price: Very slim.
  • There are 91 luxury condos at the top of CP, which would sell for $1.2 million each and which would generate over $100 million for the project.  The analysts estimated that 45 of those would sell before construction starts.  And all 91 condos would be sold in 3 years.  In all of Lexington, there were 31 million-dollar properties on the market at the end of 2008, and only 10 such properties sold during the entire year.  So… CP's developers would flood the market with luxury properties — essentially quadrupling the number that are on the market — and expect to sell them faster than historical rates.  Odds that Lexington could absorb a 300% increase in ultra-luxury properties in only 3 years: Zero.
  • CP's developers have to sell 4.5 years (45 condos at 10 condos per year) worth of luxury property inventory before construction starts.  And that assumes that every million-dollar prospect would prefer to live in a 2700-foot high-rise condo instead of a country estate. Odds that CP's developers can sell 45 million-dollar condos before construction starts: Zero.  (Note: This week, CP's developer claimed that 61 of the 91 condos were 'spoken for'.  This is patently false, and reveals a worrisome desperation from the developers.  Unless 'spoken for' means that someone said "I wish that I could live in a place like that…"  Which is also worrisome.)
  • CP's analysts assumed that the $1.2 million condo buyers would have an average income of $220,000.  That's an incredibly aggressive price-to-income ratio of nearly 6, which ranks with inflated San Francisco, New York, San Diego, and Los Angeles averages – before the real estate bubble burst.  Snakebitten banks are much more critical of an applicant's ability to pay in this economic environment.  Lexington's average price-to-income ratio: 2.35 – indicating an income of over $500,000 to afford the condos and drastically limiting the pool of eligible buyers.  Odds of finding enough eligible prospects in Lexington: Very slim.

So what are we to conclude about CentrePointe from these facts?

  1. The developers' tendency toward secrecy and intrigue are unacceptable in light of the public investments in and public impacts from this project.  We deserve transparency.
  2. The project is not financially viable.
  3. The primary financing (if it even exists) is shaky at best.
  4. The analysts' projections are unrealistic and misleading.
  5. The project cannot generate the promised tax revenues.
  6. The developers are prone to either fantasy and/or outright deception; either case bodes poorly for the feasibility of the project.
  7. CentrePointe will fail.  Miserably.

Lexington must now accept the failure of CentrePointe and begin to move beyond the CentrePointe fallacy.  We must hold accountable those who recklessly ramrodded the flimsy development through our city council.  We must prevent future irresponsible allocations of our common wealth.  And our community and our public officials must begin carefully contemplating what's next for the block that CentrePointe obliterated.

Update 4/13: Crossposted to Ace Weekly as "Optimism is Not a Business Strategy"

Update 4/14: Tom Eblen did an excellent parody of the CentrePointe situation here.  Very cool.

Update 4/17: OK.  Let's just get the whole story out on the table.  The UnTower Manifesto: What went wrong, what to do about it, and what to do about the scar it left on our city.

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

A scar upon our city?

Rob Morris 1 Comment CentrePointe, Community, Neighborhood, Rants, UnTower

I have to admit I wasn't engaged in the discussions surrounding "the Dame block" and the CentrePointe development in downtown Lexington last year.  I didn't frequent the places on the block, and I didn't follow the day-to-day developments as the debate raged about what to do with the block.  I don't have a sentimental attachment to the issue.

But, today, two aspects of the CentrePointe project have struck me:

  1. The rapidity with which the the Webb Companies razed the buildings, leaving behind a crater of rubble.
  2. The complete lack of any visible activity since.

Only one thing is now missing from the CentrePointe development: Actual development…

CentrePitThe Webbs promised Lexington that CentrePointe construction was to begin in December.  Now, a month later, activity is yet to begin.

The company asserts that it is waiting for various state approvals in order to begin construction.  Apparently, some of that includes permission to begin blasting an even-deeper pit for the complex's parking garage.  (Blasting…  Sets a nice ambiance for downtown businesses like ours.)

This is an extremely poor economic and financial environment for initiating a major real
estate development project.  One has to wonder: As the financial system has crumbled faster than the Dame block was demolished, do the Webbs
really have the financial horsepower (or backing – they haven't named their "private backers") to pull off a project of this
magnitude?

One also has to wonder…  Why did they proceed with razing the block if they were (and are) awaiting basic approvals to begin construction?  Prudence would dictate waiting until approvals were in hand.

Finally, one wonders…  Who is accountable for this scar upon our city if, perchance, the unnamed Webb financers do back out?  CentrePit, indeed.

Update, 1/24:  CentrePointe is supposed to house a J.W. Marriott hotel.  This morning, this bit of sunshine from NPR, including the following:

Still, it's hard for many businesses and people who don't have the very best credit ratings to get loans.

Arne Sorenson is the chief financial officer of the hotel corporation Marriott International.

"There are clear signs of improvement, I think," he says, "not withstanding that there is an abhorrence of risk."

Sorenson
says it's still almost impossible to get funding for new hotels, even
for low-risk projects that he says make sense right now. He says banks
just aren't lending enough money. And that hurts the economy.

At
Marriott alone, he said, "there are thousands of jobs that are not
being created that normally would be created. And that's entirely due
to the lack of credit available to fund new hotel projects."

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

While you wait: Giacomo’s New York Deli

Rob Morris 0 Comment Neighborhood, While You Wait

Logo
A couple of blocks down Limestone from Lowell's — across from the new courthouse — is Giacomo's New York Deli, home to some of the biggest, tastiest sandwiches in Lexington.  They import their generous portions of corned beef and pastrami from the Carnegie Deli in New York City, and all of their ingredients are tasty and abundant.
DSCF0236
If you get to Lowell's early, you can try out breakfast at Giacomo's.  I like the Hit 'N Run (English muffin, egg, and sausage or ham) — served with Giacomo's trademark heaping helping of ingredients.

For lunch, try any of their huge sandwiches.  I recommend the Grand Cran (turkey, stuffing, and cranberry
sauce) — it's like Thanksgiving on a bun.  Be sure to get a Vernor's or Doc Brown's soda to drink with your sandwich, too (Vernor's is my favorite "ginger soda", which originated in Detroit after the Civil War.  Good stuff.)

[where: 133 N Limestone, Lexington, KY 40601]

While you wait: Mulberry and Lime

Rob Morris 0 Comment Neighborhood, While You Wait

Just across Limestone from Lowell's, tucked in between Sayre and Constitution Street, is a beautiful old house which houses Mulberry and Lime. 

If you are looking for a classy gift (for yourself or someone else) Mulberry and Lime is THE place to go to get the best linens, furnishings, and accents, and is a "must-shop" this holiday season.

While you wait for you car to get serviced at Lowell's, be sure to visit Mulberry and Lime.

[where: 216 N Limestone St, Lexington, KY 40507]

While you wait: Doodles

Rob Morris 0 Comment Neighborhood, While You Wait

With locally-produced organic food that tastes great in a unique building, Doodles is a great place to get breakfast and lunch.  On the corner of Third and Limestone, it is less than a block away from Lowell's.

I like the Johnny cakes (with sorghum molasses – reminds me of my grandfather) or the stratta – a very tasty egg casserole.

Doodles is open 7:30 to 2:30 Tuesday through Friday, and is open for brunch on Saturday and Sunday.

Try 'em next time you visit us at Lowell's!

[where: 262 N Limestone St, Lexington, KY 40507]

While you wait: Third Street Stuff

Rob Morris 0 Comment Neighborhood, While You Wait

Thirdst_bldFunky.  Fun.  Enthusiastic Service.  And, oh yeah… Right around the corner from Lowell's!  

Third Street Stuff is my favorite place for coffee or hot chocolate, plus they have great sandwiches and desserts.  I really like "The Hendrick" sandwich, which is very flavorful (I never thought I'd say that about a sandwich with just veggies), and just about anything chocolate for dessert. 

Cafe_3 In addition, Third Street has unique gifts, accessories, and art pieces next to the coffee shop.  All in all, a great place to relax and soak it all in…

While you wait for service at Lowell's, be sure to visit Third Street Stuff.

[where: 257 N Limestone St, Lexington, KY 40507]