The Lexington council moved forward with a new program designed to help developers fund new projects in underutilized areas inside the city’s urban service boundary.
The Lexington-Fayette Urban County Council gave its first vote to approve the outline for the new infrastructure program. A final vote on the program is expected Dec. 6.
The council agreed earlier this year to set aside $3 million for an infrastructure investment fund. The idea was originally proposed by Mayor Linda Gorton in the current-year budget.
Developers can apply for up to $500,000 maximum or 10% of the total project cost. For example, if the entire development cost $1 million, a developer would only be eligible for a maximum of $100,000.
It’s a zero-percent loan that must be repaid after 10 years.
However, there are several parameters applicants have to qualify for to get the funding.
There is a $500 application fee. The money can only be spent on public infrastructure such as sewer lines, stormwater management, public sidewalks, public parking or improvements to shared-use trails or Lextran bus stops.
The money cannot be used for private parking, utility relocation, street lights on private property or soft costs — such as design, engineering or lawyer fees, said Kevin Atkins, chief development officer for the city, during a council Budget, Finance and Economic Committee meeting Tuesday.
Priority will be given to projects that are investing in underutilized areas inside the city’s growth boundary that lead to job creation.
“We also wanted projects that have economic benefit,” said Atkins.
The program will be reimbursement only. The city will not give money for up-front costs.
“It’s intended to be last money in,” Atkins said. “Typically what we call gap financing.”
Applicants have to show the city that they have financing to complete the project and they must be able to complete the project within two years after approval. Successful applicants must provide proof to the city of the eligible expenses. Those developers must sign an agreement with the city to receive the funds.
Projects that are abandoned or are not successful must repay the loans with interest, Atkins said.
“We want projects that are ready to go,” Atkins said. “I anticipate the $3 million will go quickly.”