Spurring economic vitality and new business development in Lexington, KY
Community Ventures' President & CEO Kevin Smith said he will never forget the feeling when he called NeighborWorks Capitalabout their latest loan request, a $3.4 New Markets Tax Credit (NMTC) leverage participation loan for The MET, CV’s $21 million mixed-use development in Lexington, KY.
After 15 years of discussing, planning, and developing The MET, a bank pulled out of the project at the 11th hour, putting the whole development in jeopardy. Smith called NC’s Chief Lending Officer, Stephen Peelor.
“They rose to the occasion,” Smith said. “The value of NC became very apparent while putting this deal together. Not just the capital, but the way they understand and work with the needs of their partners.”
NC worked quickly to provide the loan participation, include a partial subordination, which allowed the other banks to be part of the deal and helped CV close the significant funding gap. NC’s participation is split into two tranches, and will help CV secure NMTC equity.
“NC has proved its value over and over because of its flexibility and the fact that they are community-based. NC asks what you want and what’s best for a community, then they work very hard to help craft their assistance in a way that works and makes them user-friendly. That resource becomes very valuable to people who do the work we do,” Smith said.
To help attract jobs to the neighborhood, CV is targeting entrepreneurs and offering affordable housing at The MET. The subsidies from NMTC are vital to offering the lower rates for this type of mixed-use project, Smith said.
The MET will create 20,500 square feet of new commercial space and 44 apartments in an area of significant poverty and historic under-investment, enhancing the economic vitality of the neighborhood and encouraging new business development. The project will build a new 3-story 65,000 square foot building with two residential floors over retail and incubator space, and add an additional 3,000 square feet to an existing two-story commercial building already owned by CV. It will feature 44 one- and two-bedroom apartments, with seven for families of four earning up to $37,250 (50% AMI), and 37 at market rate.
This high-impact project in Lexington’s East End will provide quality apartments, medical services, a grocery store, and a restaurantthat hires and trains people in addiction recovery in order to give them a second chance.
The development was born out of CV’s ongoing discussions with community leaders and residents to find new ways to help East Lexington, which was once a vibrant neighborhood but has suffered from redlining and other discriminatory practices leading to a decline in pockets of the community. Essential services that provide healthy food or medical care left as a result, and the neighborhood has the lowest rate of vehicle ownership in the city.
The mixed-use development is intended to create jobs and create a commercial hub for East End residents, bring revenue to an area that is on the upswing, and ultimately fight displacement.
“We hope this will be a huge jolt to that progress,” said Jonah Brown, CV’s Marketing Manager.
Ground broke May 6thand the ceremony was attended by Rep. Andy Barr of the 6thCongressional District; Mayor Linda Gorton; Vice Mayor Steve Kay; Community Historian, Advocate and Leader Yvonne Giles; Councilmember James Brown; and Stephen Peelor of NeighborWorks Capital.
To help address the scarcity of local retail services and a federally recognized “food desert,” The MET will feature the Good Foods Co-op grocery store, a medical clinic, and restaurant. The restaurant operator, DV8 Kitchen, specializes in providing employment opportunities for those recovering from addiction. HealthFirst Bluegrass provides a full-range of medical, dental, and mental health services.
“Healthy food, restaurants, groceries, health care within walking distance – a lot was missing for awhile,” Brown said. “Before we go after more significant offerings, we want to first meet the essential basic needs of the community. Done properly, it helps us meet multiple needs: business owners will stay in the community, create jobs, bring money back to the community, and offer fresh food. This helps attract and keep people as well.”
The neighborhood around The MET is a mix of low-rise commercial/light industrial properties on the main roads, surrounded by single-family homes. It is next to , a Nationally Recognized Historic Place. Local retail services are scarce, a sign of long-term underinvestment and little directed investment historically.
Lexington is the second-largest city in Kentucky. Its major employers are the University of Kentucky, Toyota, Amazon and Lexmark International as well as the Kentucky state government. One of Smucker’s plants is 0.5 miles from The MET.
NC had one prior $260,000 acquisition loan with CV, for the commercial building being integrated into The MET, which was repaid in 2008.
Founded in 1982, has evolved in capacity and knowledge, but its mission has stayed the same—to strengthen its communities by empowering individuals. It is focused on the areas of greatest need, where they can make the most impact. They offer a range of products and services from financial counseling to large scale neighborhood revitalization.