Danville commission passes intent to issue bonds for retail development
City approves zone change for East Main housing
Published 6:00 pm Thursday, August 25, 2022
The Danville city commission passed a resolution expressing its intent to issue bonds for a mixed use commercial development project at their meeting on Monday.
Jim Parsons, a lawyer with Keating Muething & Klekamp, is representing the city for this project, and he gave a presentation about the details of the bonds.
The project proposed by Team Leader, LLC is a $40 million project that would build a 100-room hotel, two retail stores and two restaurants next to the Lowe’s on the Danville bypass. The city would issue industrial revenue bonds for the development.
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Parsons explained that industrial revenue bonds are really private activity bonds that are issued by local governments for private development projects. The city is acting as a conduit bond issuer, and all finances are the responsibility of the developer. So their debt is not the city’s debt.
“The benefit of industrial revenue bonds is that when the project moves forward, not only are you issuing the bonds, but the title of the project will be in the name of the City of Danville, and then leased back to the developer for the term of the bonds,” Parsons said. “And we’re looking at a 30-year term.”
The property would be exempt from real estate taxes, but not any other taxes like insurance premium tax or payroll tax.
To compensate for lost revenue from real estate tax, the city would have a PILOT agreement, where certain local taxing districts, including the school districts, would receive a payment in lieu of taxes (PILOT) during the term of the bonds.
Parsons said the current draft PILOT agreement would provide a 100% payment to the city and local taxing districts based on the current value of the property. Then the local taxing districts would receive a PILOT payment of 20% of whatever the PVA value is created by the project, and the school district would receive 50%.
When the commission asked about potential risk for the city, Parsons said, “There is simply no financial risk for the city at all.”
Parsons said even if the developer went bankrupt and the property was foreclosed, even though the city is the legal title holder, they would have no responsibility for any payment.
The city will need to get approval from the schools and the county for the PILOT agreement, and then have a hearing in Frankfort to get permission to issue the bonds.
City Attorney Stephen Dexter said he reviewed the proposal with Boyle Schools Superintendent Mike Lafavers, who said he would recommend approval of the agreement at their next board meeting.
The commission passed a zone change recommendation for a property at 0 E. Main St. The project will be for multi-family residential buildings on 10 acres.
National Housing Associates requested that the zoning be changed from RM2 to RM3, which adds higher density to the multi-family residential lot. In the Planning and Zoning meeting on July 27, National Housing Associates President Wayne Kohler said the property will be mainly for seniors 55 years or older, with some units reserved for at-risk individuals.
He said the property will likely have six buildings of six units per building, and one building with four units, a total of 40 units.
Whereas other apartment buildings around it are two story townhouse-style units, this project would be garden-style one-story units. The buildings will be made from hardy materials like brick.
The site would have a community building with the site manager’s office. The development would extend East Main Street to the edge of the new property, and the developer will install sidewalks.
“It’s a good development for some much-needed senior affordable housing,” Planning and Zoning Chair Jeff Baird said.
Another zone change is for three acres at 1695 Lancaster Road for the Luca Mariano Distillery. The company is in the process of building a distillery on the property, but realized they needed a slightly different placement of the distillery than originally planned.
Due to the topography of the land, Luca Mariano needs those three additional acres zoned for the distillery to be placed on a hill rather than a valley. The new placement would be closer to a historic stone house on the property, which is on the National Register of Historic Places. The house, however, is in very bad shape.
Baird said the planning commission passed a motion to add a condition that the distillery construction could not harm the house or cause it to be demolished.
Dexter said however, their motion is not binding, and the condition would need to be added to the developer’s contract. The city commission asked that they add that language to the agreement.
In other business, the commission:
• Passed the second reading of Ordinance #1998 to establish property tax rates for the 2023 fiscal year.
• Passed a resolution to add the city of Danville to the opioid settlement abatement.
• Approved a contract for Kentucky School for the Deaf (KSD) to use Danville police officers for school resource officers (SROs) on campus. The 10-month contract will be for $31,000 and the school will reimburse the city. This year is the first that KSD is using Danville Police as SROs. Officers will be taking a sign language class at the school.
• Since the city got a new streetsweeper, the commission passed a motion to declare the old streetsweeper as surplus. They agreed to sell it to the city of Stanford for $2,000 at Stanford’s request.