Monday, March 23, 2009

Midway Station developer gets a Dec. 1 deadline

By Al Cross
Director, Institute for Rural Journalism and Community Issues
University of Kentucky School of Journalism and Telecommunications

The developer who signed a contract to turn Midway Station from a failed industrial park into a housing and commercial development will have until Dec. 1 to close the deal or forfeit some extra money he has put on the table in uncertain economic times.

The Woodford County Economic Development Authority, which owns the property, signed a deal in January 2008 to sell the property to Anderson Communities once it was rezoned and its initial construction plans were approved. The city council rezoned it last fall, but Anderson has not filed his construction plans with the county zoning office, leaving the city and county each on the hook for annual interest payments of more than $185,000 a year for a project that has created almost no jobs.

EDA Chair Michael Duckworth told the council last night that with the help of a mediator, EDA and Anderson have reached an agreement that calls for him to advance the authority $250,000 and sign a note for $100,000, payable on the new, proposed closing date of Dec. 1. If the deal does not close, Anderson will lose the money, as well as the $100,000 deposit he paid last year when he first agreed to buy the property.

If the deal does close, and the property changes hands, the $450,000 will be applied to the purchase price of about $6 million. Of that amount, $1 million would not be due until Dec. 1, 2014, as opposed to two years after the closing date, as called for in the original agreement. The $1 million deferred payment is intended to help the city and county recoup their interest and other costs incurred since buying the property in 2000.

That proposed delay drew no objections at the council meeting. Rather, city officials seemed more interested in when EDA would start using Anderson's money to take over the interest payments, which are costing the city $511 a day. "I think it's very important those interest payments are paid, for us," Mayor Tom Bozarth said.

Duckworth said that if the EDA board approves the agreement at its next meeting Friday, it would make the semi-annual interest payment due in June. He said the negotiations with Anderson effectively made the deadline to close the deal six months earlier. "Certainly, it's not as quick as any of us had anticipated," he said, but added that the negotiations showed the good faith of all parties.

"I think you represented us well," Council Member Charlann Wombles told Duckworth.

In addition to the $450,000 Anderson now has on the table, he is also on the hook for $280,000 worth of engineering work to develop the construction plans, which the new agreement requires him to file by Oct. 15, EDA attorney Jim Rouse told the council. The new deal, unlike the old one, is not dependent on approval of the plans by zoning office staff, Rouse said.

While it is a had time for many developers, Rouse and Duckworth said in an interview that Anderson has never used poor economic conditions as an excuse for his lack of progress on the project. Asked if they think Anderson will develop Midway Station, Rouse asked if the questioner knew what the Dow Jones industrial stock average, a key economic barometer, will be on Dec. 1. But "The more investment he has," Rouse said, the more likely the developer is to close the deal.

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