Midway Station developer cancels his option, leaving city and county again responsible for debt payments

Dennis Anderson  (2014 photo)

Lexington real-estate developer Dennis Anderson has terminated his option to buy the unsold portion of Midway Station, putting the industrial park and its debt back in the hands of the city and Woodford County.

In a Feb. 7 termination letter to the county Economic Development Authority, which owns the property, Anderson said he and EDA have "two conflicting visions for its future," industrial and mixed-use development.

The city and county developed Midway Station as an industrial park in the early 1990s, but it was largely a failure, leaving the two governments saddled with debt payments on the $6 million borrowed to buy and develop the land. In 2008, Anderson proposed making most if it residential and commercial, and they optioned it to him in return for payment of the interest on the debt.

The Great Recession precluded development, and as the economy improved, industrial buyers emerged: first American Howa Kentucky, a Toyota supplier, then Lakeshore Learning Materials, which build a huge distribution center. Local officials soured on the idea of residential development on the property, and Anderson grudgingly went along last summer. He sold two more industrial tracts recently, but apparently never warmed up to being an industrial developer.

"I think he always saw this as a mixed-use development," Midway Mayor Grayson Vandegrift said Friday. "He's big on residential; that’s where he makes his money." He said it boiled down to conflicting interests of a "a private developer and a public entity," so ending the relationship "is in everybody's best interests."

Vandegrift said he had expected Anderson to terminate the option. That, the mayor said, was one reason he told the City Council this week that it might have to resume making monthly interest payments of almost $3,000 each, and that whatever Anderson decided about his option, which was set to expire Dec. 31, 2019, Midway Station was likely "entering a new phase."

Anderson said in his letter that his company, Anderson Communities, had "taken a substantial loss on Midway Station" and paid about $1.4 million in interest on its debt. "This is money that otherwise would have had to be paid by the taxpayers of Midway and Woodford County." Anderson, who was a pharmacist in Midway before becoming a developer, said he had "fully cooperated" with the industrial development and "I do not want to stand in the way of the EDA's vision."

Vandegrift, asked via email how much he thought Anderson had lost on the deal, said "I think he's been made whole." Counting estimated legal, engineering and other expenses, "I think he has about $2 million in, but I would argue he made that back. He made $800,000 on Lakeshore, $700,000 on the convenience store (the one that hasn’t been built yet), $100,000 on the stair company, and close to that on a few other small lots he sold."