News Column

EDITORIAL: Past time to air project's financing; CentrePointe's bond request unnerving

August 8, 2014

Lexington Herald-Leader



Aug. 08--Oddly enough, it was eight years ago this week when the CentrePointe developers and their representatives said in public that they had the money to build the project but refused to identify the source.

The secrecy bothered Tom Blues, who was then on the Urban County Council. "How sure are we at this point that the project will be built? Don't we have to know how it's going to be financed, and shouldn't the city have to have that answered?" he asked

They were good questions then and they are good questions now.

The Urban County Council and the Kentucky Economic Development Finance Authority should both ask those questions and insist that the answers be public as they consider the developer's recent request for $30 million in bonds under the state's authority for the project.

There is not time enough or space to review the CenterPointe saga. Suffice it to say, that a group of important historic buildings in the center of this city were demolished eight years ago, that for most of the time since a full city block has sat vacant.

The city was more demanding when the project was revived recently, insisting on evidence of financing before agreeing to Tax Increment Financing to subsidize some of the infrastructure costs.

The evidence was provided but not for public view, the city vetted it and agreed that there was a credible agreement for financing the $393 million project.

One final proviso was that before excavation began for the three-story subterranean parking garage the developers had to set aside $4.4 million to refill the hole if the project stumbled again.

With all these assurances in place, blasting began in March, and in May developer Dudley Webb predicted the garage would be completed by late summer.

He predicted that Stantec, the engineering firm that has agreed to lease 2 1/2 floors of the office building, would be able to move there in May of next year. Marriott hotel, Jeff Ruby's Steakhouse and Republic Bank & Trust Co. have also committed to CentrePointe.

So it came as quite a surprise when this new twist in the proposed CentrePointe financing arose in the last few days.

The time for surprises is over.

The public must be told where the rest of the money is coming from before another commitment of public resources is made to this project.

Even though the developers, not the city or the state, would be on the hook to repay these bonds, any tax exemption is a public subsidy.

Webb and others insist there is money to move forward with or without these bonds, that this approach would simply reduce the cost of capital and so save the project money.

If that's so then it's perfectly reasonable for the public to insist on full disclosure and let developers decide whether it's more valuable to save the money or maintain secrecy.

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(c)2014 the Lexington Herald-Leader (Lexington, Ky.)

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Source: Lexington Herald-Leader (KY)


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