Tuesday, May 29, 2018

EDA wants Station's residential zone to go industrial; developer wants to keep options open, issues statement

Dennis Anderson (2014 photo)
This story has been updated. See below.

With a big deadline a year and a half away, officials of the Woodford County Economic Development Authority and Midway Station developer Dennis Anderson of Lexington aren't seeing exactly eye to eye.

Anderson has maintained an option on the property by paying its monthly debt service, which EDA Chair John Soper says is down to $6,300 a month from $11,000 a month, thanks to recent sales for industrial and commercial development. The remaining debt on the property, $2.638 million, is owed jointly by the county and the City of Midway.

The county and city developed the property as an industrial park, but after many years of little activity, optioned it to Anderson for residential and commercial development in 2008. The Great Recession hit, thwarting development, and as the recovery accelerated, the property and adjoining tracts became attractive to major employers: first American Howa, an auto-parts company, and then Lakeshore Learning Materials, which built a huge distribution center.

Soper said Friday, after the EDA board failed to get a quorum for its monthly meeting, that it would like to rezone as industrial the 35 or so acres now zoned for housing, because the zoning, and the prospective need for rezoning, is a disincentive for industrial buyers. "In our experience, if it's not zoned, the consultants who advise these businesses move on down the road," Soper said.

"Dennis ... thinks that if he gets a serious user, he can get it zoned, and he probably can, but our experience, and what we've been told by the state, is that a lot of 'em won't even talk to you a second time if it's not already zoned," Soper said, adding later, "He wants to maintain his flexibility, and that's his right." Rezoning by the Versailles-Midway-Woodford County Planning Commission would need Anderson's approval because he has a legally defined interest in the property.

Anderson said in a telephone interview Tuesday, "It's general practice in the industry that you wait until you have a prospect before you go and rezone a property. We've had good success with the Planning Commission … and feel like they would support it if the opportunity arose."

Anderson said he has "worked a dozen different leads" on parcels of up to 5 acres in the current residential zone that could be sold for industry, but hasn't found one "with the ability to write a check . . . and that’s the second least expensive land in Central Kentucky” for industrial development. He said he didn't know why.

"Industrial development isn’t what I do, and when they put Lakeshore in there, I asked them to to look at how it was going to impact the rest of the land," Anderson said, adding that he has been ''laying back to see" if Lakeshore would generate demand for nearby residential development from workers at the plant.

The plant is supposed to have a payroll of 262 in a year and a half to two years. In December 2019, a year and a half from now, Anderson's option on the property will expire, and the bond issue used to buy and develop the property will come due. If Anderson exercises the option, his purchase price would be $2.936 million, about $300,000 more than the outstanding debt on the property.

Hotel prospects discussed

In the interviews, Anderson and Soper also discussed prospects for a hotel in the Green Gables development Anderson owns across Interstate 64 from Midway Station. Anderson said he is hoping that the industrial development will increase demand for a hotel.

Anderson said he has showed the property to three hotel groups, two of whom he has done business with. Speaking of one, he said, "I'm quoting land in Lexington at twice the price, and he still wants Lexington."

Midway Mayor Grayson Vandegrift has said Anderson wants too much for the land. Soper said Anderson told him that the price is $350,000 per acre, not the originally quoted price of $450,000 an acre. The lot platted for a hotel is 1.9 acres.

Anderson said the owners of the Holiday Inn Express nearing completion in Versailles are among the prospects for Midway, but "They want to make sure Versailles is up and producing before they take another step." 

Soper said that if the Versailles hotel does well, it will improve the prospect for one in Midway, which is hurt by the proximity of hotels on the interstate in Frankfort. He said he recently showed the property to Wyndham Hotels and a company that operates hotels under several brand names, and "Both of them think that it's close."

Anderson issues statement

Following publication of this story, Dennis Anderson issued the following statement:


Anderson Communities continues to work with the City of Midway, Woodford County and the Economic Development Authority. Since 2008, Anderson Communities has held an option on the Midway Station property. We have paid 100% of the debt service on a pre-existing bond issue through the Recession. The combined total of debt service that has been paid by Anderson Communities and land purchases exceeds $1.3 million, along with more than $2 million in land purchases. Our payments have taken that burden off the tax payers of Midway and Woodford County.

We have fully cooperated with the Economic Development Authority in locating new industries in Midway Station. The jury is still out on whether other industrial prospects will want to locate there, or whether the property should be developed as a mixed use residential and commercial area to complement the industry. There can be arguments made for both approaches. If new prospects come forward, we are confident that Anderson Communities and all local agencies involved can quickly respond to such a request.

It is important to understand, however, that public speculation about land pricing makes it more difficult to market property. Land pricing depends on a number of factors including proposed use, location within the development, size of the tract, special needs of the buyer, and a myriad of other issues. We work diligently to find a price point that works for all parties. Public discussion of potential selling prices can quickly kill a deal. That is why state law allows public agencies to discuss real estate deals in closed session.

We have found that our pricing policy has never been a deterrent for serious prospects in Midway Station. To be effective, however, that discussion must be confidential. We deal with each prospect diligently, fairly and honestly.

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