Developers outline IRB pilot plans for Rose Tower and Midland Station; board asked to support pilot agreements

Two development teams asked the Fayette County Board of Education on May 11 to support pilot agreements under a recently expanded industrial revenue bond program that can be used for affordable or workforce housing.

Related Affordable — Rose Tower: Tracy Bruno introduced Sam Sjoberg of Related Affordable, who said the firm is seeking to acquire and comprehensively renovate the 168-unit Rose Tower in downtown Lexington and preserve affordability for every unit. Sjoberg said ongoing project-based Section 8 currently subsidizes 120 units for seniors and residents with disabilities; the developer proposes KHC financing and a HUD 20-year renewal of project-based rental assistance while applying affordability restrictions to the remaining 48 market units. Sjoberg described a proposed structure with an upfront impact fee of $195,000, year-one pilot payments beginning at $65,000 and annual increases of 3%, and a 15-year leaseback that would revert to market assessment at term end. “We are proposing ... to preserve affordability for 100% of the units in the property,” Sjoberg said.

Midland Station — workforce housing and tax pilot: Scott Shapiro and Andrew Ganahl presented Midland Station, a roughly 258-unit mixed-use workforce housing project near Midland and Winchester that would reserve at least 20% of units for households earning 80–120% of area median income. Developers said city IRB approval is required for feasibility and that the pilot would deliver a higher upfront payment for the school district than the site's current tax yield and then trend upward during the pilot years before reverting to full taxes. Shapiro said consultants estimated a rise from current payments (~$20,000/year) to roughly $45,000 in year one of the pilot with growth over the pilot term and full taxes after the pilot ends.

Board questions and conditions: Board members asked developers to provide copies of proposed pilot agreements already negotiated with other taxing jurisdictions (LexTran, library, etc.) and to confirm which agreements are pending versus approved. Sjoberg said the library and health department had approved the proposed pilot structure; other agreements were pending. Developers emphasized community benefits such as job creation, downtown affordability preservation, and options to reserve units for early-career teachers.

Why it matters: Under a leaseback/IRB pilot, a property may be temporarily removed from the regular tax roll, with the developer making negotiated pilot payments to taxing jurisdictions; boards must weigh near-term increases in pilot revenues and long-term effects when pilots end. The district was asked to consider pilot agreements as part of the city and county IRB process.

Next steps: Board Member Green requested developers provide copies of pilot agreements already made with other taxing jurisdictions to inform deliberations. The items will appear on the board's May action meeting agenda for further consideration.