Mayor says city needs to invest regularly in water and sewer repairs, but in streets and sidewalks this year

Midway's financial outlook is strong, but the city needs to start investing regularly in replacement of its old water and sewer lines, while making sidewalks and streets this year's top priorities, Mayor Grayson Vandegrift told the city council Monday evening.

"We have to resist the urge of putting these projects off," Vandegrift said. "I think it’s appropriate that I use a train metaphor: let’s say every project we do is like a train going forward on the tracks, as each project is completed that train gets off at a spur and another train gets on and takes its place. We need to always make sure that there is a parallel track with a water and sewer line train running alongside it. It’s going to be a longer track but we can’t forget about the train that’s on it."

Mayor Grayson Vandegrift

Vandegrift's remarks were part of an annual report that all mayors in cities with the mayor-council form of government are required to make at least annually, according to a Kentucky law that is apparently little known. Vandegrift, who is starting his second year as mayor. said before the meeting that even if he were not required to do it, "It's a good organizing tool."

Vandegrift said the city's recent audit report made clear that it is in good financial condition, "and there is a lot of reason to believe it's going to get even stronger," with the coming of the American Howa Kentucky auto-parts factory that will employ 54 people. "AHK is likely to be the first of several light industrial clients at that site, and they are the perfect anchor for industrial development at Midway Station," the mayor said. "With all of this it is very possible that we will begin to experience a sea change in our revenue stream over the next several years."

The prospect of more development also poses challenges, Vandegrift said: "We are going to have to remain vigilant in making sure that all new development is sustainable and at a steady pace so that it never infringes upon what makes Midway special. We also still have water and sewer infrastructure that needs updating, sidewalks that need repair, and roads that need resurfacing."

The mayor said "the cost and difficulty" of replacing some water lines on Higgins Street showed that a "complete overhaul of Midway's oldest water and sewer lines is more than likely to take 10 to 20 years to complete. . . . But in the more immediate future, I think our primary focus this year needs to be on roads and sidewalks. We need to allocate money in the next fiscal year’s budget for paving more roads, with Northside Drive being the first priority. We also need to develop a comprehensive sidewalk plan, which a committee of the council has already begun work on. We need a clear policy on how we will encourage and/or assist property owners in repairing the sidewalks around the city that have become dangerous to public safety."

For Vandegrift's full report, click here.

Among other business, the council voted to waive certain requirements needed for sale of the 15 acres on which AHK will build, with the Woodford County Economic Development Authority posting a bond to be set by the Planning Commission. The tract does not have a final plat or sewer line, which the commission requires for sale of industrially zoned property.

The council also held first reading of an ordinance rezoning a lot at 327 Smith Street, which Vandegrift said had somehow not been properly zoned for decades. He said the property is being sold but the lender won't close until the zoning is residential, and the buyer is facing a possible increase in the mortgage interest rate, so the council agreed to hold a special meeting at 5:30 Thursday to give second reading and final approval to the ordinance.

Ordinance allowing Midway Station redevelopment with tax-increment financing passes; county action next

The Midway City Council gave final approval Monday morning to the ordinance that will allow redevelopment of Midway Station by paying for public infrastructure improvements with the increased tax revenue from the development.

Approval came quickly, as soon as city attorney Phil Moloney read the lengthy title of the complicated tax-increment financing ordinance. All five council members present voted for it; Sara Hicks was absent.

Council members raise hands to vote for TIF as attorney Moloney, Mayor Bozarth and City Clerk Phyllis Hudson look on.

The TIF ordinance authorizes 80 percent of the new property and payroll taxes generated at Midway Station (not including school and fire taxes) to be used to pay the estimated $31 million cost of redeveloping its public infrastructure: parking areas, streets, sidewalks, utilities and so on, as well as the associated costs of demolishing the existing infrastructure, which was designed for an industrial park.

The park has generated only about 10 jobs, leaving the city and Woodford County with $4.7 million remaining in debt from the $6 million in bonds issued for purchase of the property and its development.

Lexington developer Dennis Anderson is paying the $11,400 monthly interest on the bonds in return for an option to buy and develop the property as commercial and residential, under an agreement with the property owner, the Woodford County Economic Development Authority.

Some of the property, and an adjoining tract on which EDA has an option, was recently rezoned back to industrial to help attract one or more industrial prospects, such as a supplier plant for the Toyota Motor Manufacturing Corp. complex at Georgetown.

Optioned tract recently zoned industrial is white outlined in purple. Area earlier rezoned industrial for prospective factory is mainly yellow outlined in purple. Area in solid purple has been zoned industrial since original development of Midway Station.

County Judge-Executive John Coyle said recently that he expects the county fiscal court to join with the city in applying to the state for approval of the TIF district, which would funnel county taxes to it as well as city taxes and state property taxes.

Anderson has said he has secured private financing for what would be a $126 million project, with development lasting as long as 20 years, the maximum life of a TIF district. His consultants estimate that the project will generate $94 million in tax revenue over 20 years.

Under the ordinance, the mayor will be primarily responsible for overseeing the TIF district and its finances. Midway will get a new mayor on Jan. 1, one-term Council Member Grayson Vandegrift, replacing Mayor Tom Bozarth, who did not seek re-election to a third four-year term.

"Thank you very much," Bozarth said as he adjourned his last meeting as mayor. "It's been a pleasure and a joy. Hallelujah."

Council Member Bruce Southworth told Vandegrift after the ordinance passed, "Here's the ball; it's the handoff."

Vandegrift told reporters after the meeting that TIF appeared to be the only way to get Midway Station off dead center. He said he doubted that a developer would be available without such incentives.

"The only disagreement I heard from people about the TIF [district] was a philosophical disagreement as to whether taxpayer money should be used in this way," he said, adding that was a question for state legislators, who passed the law allowing it.

Asked if the city would have approved TIF if it were not on the hook for half of the bonded indebtedness, he said, "I'm sure it had something to do with it."

He added later, "The fear is, if we let this go down, it is just going to sit there for another 20 years. . . . I don't know of anybody who doesn't want Midway Station to do something . . . especially given the fact of how much money we owe."

Vandegrift concluded, "This whole Midway Station thing has been a long, really, nightmare. We've got a chance to get it moving. . . . This is going to be the kind of slow, sustainable growth that we're looking for."

Council gives first reading to tax-increment financing for redevelopment of Midway Station; passage set Monday

By Nicole Hennard
University of Kentucky School of Journalism and Telecommunications

The Midway City Council had a special meeting Wednesday morning to give first reading to the tax-increment financing ordinance for Midway Station, after delays in production of documents prevented action at Monday's regular meeting.

Attorney Doug Martin and his law partner, city attorney Phil Moloney, presented a package of documents, some of which are posted online with the proposed ordinance. They included a development area description and map; a development plan; a pending interlocal cooperation agreement with Woodford County, which is expected to participate in the TIF district; a Local Participation Agreement between the city and Anderson Communities Inc., the Lexington developer that is paying the $11,400 monthly interest on the $4.7 million in bonds still outstanding on the property in return for the option to buy it; a master development agreement between the city and the developer; and a report from Anderson's consultant, Commonwealth Economics, forecasting the progress of development and generation of tax revenue.

Eighty percent of the additional property- and payroll-tax revenue created by the development will be dedicated to reimbursing Anderson $31.5 million for development of public infrastructure and payment of fees to create the TIF district.

Martin said the investments in the project will total $126 million and are expected to take place over a 20-year period. The project is expected to support over 4,000 jobs annually and have $7 billion in statewide economic impact.

“Any new taxes that flow from the area will be allocated to infrastructure, administrative costs, and redevelopment assistance related to the development area,” Martin said. “The report estimates that over a 20-year period, the project will generate approximately $93.8 million in tax revenue.”

The documents make clear that the office of the mayor is the agency responsible for oversight, administration and implementation of the ordinance and special fund. The ordinance is being passed shortly before mayor elect Grayson Vandegrift’s term begins at the start of the new year.

The council scheduled a special meeting for Monday, Dec. 22, at 8:30 a.m. to give second reading and passage of the ordinance.

The ordinance was drafted after months of discussion with the Woodford County Economic Development Authority (the land owner) and developer Dennis Anderson, who is paying the interest on the bonds that financed development of the industrial park (which has largely failed).

Included in the ordinance is a requirement that the city receive 2 percent of the fund’s disbursements to cover administrative costs. The council questioned whether that would be enough to cover such expenses as legal and accounting fees. Martin said that if the 2 percent was not adequate, the city would be reimbursed from the special fund.

Council Member Sharon Turner questioned who would establish the special fund. Martin said the office of the mayor would be in charge.

Council Member Bruce Southworth questioned whether the engineering review costs would be considered administrative. Martin and Moloney agreed that it would.

The city council will be responsible for reviewing and analyzing the process of the development from year to year.

The meeting concluded with a statement from Mayor Tom Bozarth: “We’ll meet Monday and move this along.”