SerpApi.Org
An effort by a Chicago-based developer to build private student housing on a block set to be razed has drawn criticism from historic preservation and affordable housing advocates.
Officials with Core Spaces, which has two HUB properties near the University of Kentucky, said July 17 it plans to build a new HUB apartment near the corner of Rose and Maxwell streets and on Lyndhurst Place and Kalmia Avenue.
That’s the same area where a previous effort by Core Spaces to build a private, high-rise apartment was denied by city officials.
The properties are zoned R-4, which allows medium density apartments. That means Core Spaces can build an apartment complex there without seeking a zone change. Under the R-4 regulations, the height of the building would be restricted to four stories, instead of the eight stories originally proposed.
“Core Spaces in partnership with the owners is pursuing a development project which will adhere to the current allowances under the zoning code in Lexington. Our proposal will be ‘by-right’, meaning there are no additional bonuses or variances requested to support the project,” said Austin Pagnotta, managing director of acquisitions at Core Spaces.
The Lexington-Fayette Urban County Council voted not to allow a zone change in November for a proposed 8-story Core Spaces HUB apartment complex at the corner of Rose and Maxwell Streets. The vote came after fierce opposition from neighbors and the Blue Grass Trust for Historic Preservation.
Two other high-rise apartments on Maxwell Street have already been approved and are under construction.
Still, questions remained about Core Spaces’ intentions after demolition permits were filed last month.
Those permits were filed June 5 and June 7 for 256, 264, 266 and 270 Lyndhurst Place, as well as 265 and 271 Kalmia Ave., by Wisconsin-based Findorff Construction, city records show.
At the time the June demolition permits were filed, Core Spaces did not respond to questions about whether the developer that specializes in private student housing was behind the effort to raze the properties.
“Core was transparent with the neighborhood in our initial development submittal,” Pagnotta said. “The conversation has always been about future density; it has not been a question of development versus no redevelopment of the site. To this end, the current owners have planned to demolish their properties because they are in poor condition and require significant investment for repairs and maintenance.“
No development plans have been filed with the city for East Maxwell or the Lyndhust Place and Kamalia Avenue properties. It’s not clear if Core Spaces’ plans include one or two buildings.
Still, the buildings set to be razed include multiple apartment buildings with affordable rents, said Councilman Tom Eblen, who represents the 3rd Council District, which includes the Maxwell Street corridor.
Eblen has heard from multiple tenants who live in those buildings who are now scrambling to find apartments with similar rents, which has proved elusive.
“Lexington needs more affordable housing,” Eblen said. “But evicting tenants from affordable housing in century-old neighborhoods and then demolishing it to build expensive, rent-by-the-bed student apartments is not the way to accomplish that.”
Zak Leonard, historic preservation manager for the Blue Grass Trust for Historic Preservation, which fought the original Core Spaces’ proposal, agreed.
“Core Spaces seemingly is on a quest to eradicate affordable, historic housing in Aylesford,” Leonard said. “Lurking in the shadows, it has been seeking to demolish two entire National Register-listed blocks without submitting any development plan, conducting community engagement, or facilitating resident relocation. This area is already densely settled and contains some of the city’s earliest multifamily housing, some of which was designed by prominent architects.”
Pagnotta said most of the buildings are in poor condition and are too costly for the owners to maintain. The buildings are not in a historic district, he said.
“We feel it is important to make clear the status of these buildings as they are not single-family homes and currently operate as rental housing,” he said. “These properties were excluded from the historic overlay, they are not designated as historically restricted by the city of Lexington, and they are not restricted affordable housing.”
Affordable housing until 2034?
However, one of the buildings, 266 Lyndhurst Place, which has operated as a sober living home by Shepherd’s House, a nonprofit substance abuse treatment provider, has a deed restriction that limits the use of the property to affordable housing until 2034, according to deeds filed with the Fayette County Clerk’s office.
Shepherd’s House used money from the Kentucky Housing Corporation’s affordable housing fund to purchase the property, according to the deed restriction. As part of that agreement, and a similar agreement with a federal home lender, a deed restriction limited the property’s use to people who were at or below 50% of the area median income. For one person, that’s someone who makes $35,850 or less.
Kentucky Housing Corporation officials said that deed restriction can be released if Shepherd’s House pays off the balance of the funding it received.
“Shepherd’s House has requested approval to repay the remaining balance of its Affordable Housing Trust Fund (AHTF) award,” said Brandalin Foster, a spokesperson for the Kentucky Housing Corporation, a state housing organization. “KHC has approved the request, contingent upon receipt of the outstanding balance of $42,500.”
The money was repaid Tuesday, Foster said.
Dan Rose, a lawyer for Shepherd’s House, released a statement for Shepherd’s House.
“Our decision to sell the property came about because of our mission needs along with the deteriorating condition of the building,” the statement said. “It became clear that our current building was outdated and no longer sufficient for the services we provide in the community.“
Shepherd’s House will be able to move those clients to a new facility that meets those clients needs, Rose said.
“This property was always going to be demolished,” he said.
Shepherd’s House will repay any outstanding balances owed to Kentucky Housing Corporation and affordable housing funds, according to the statement.
“The two deed restrictions will be paid back in full, and affordability restrictions will be lifted since funds from this transaction are being used to build a brand-new facility that will increase capacity for Shepherd’s House tenants and patients,” the statement said.
The tenants at 266 Lyndhurst Place have already been relocated, the statement said.
Some have claimed some of the tenants there will become homeless, Shepherd’s House statement said.
“That assertion is inaccurate, as relocations have been completed, and no tenants remain in the building,” according to Shepherd’s House.
But Leonard questioned why Kentucky House Corporation and others use deed restrictions if a private developer like Core Spaces can offer enough money to pay off those loans or grants, release the deed restriction and charge market rents.
“It seems like a very weak protection,” Leonard said.
Core Spaces has plans to build in other parts of Lexington
Core Spaces has more projects in the works in Fayette County.
In addition to its properties on South Limestone and Virginia Avenue, Core Spaces also has plans to build a third apartment at 532 South Broadway. The 7-story building would replace the Clean Sweep Car Wash that has operated at the property since the early 2000s.
The Core Spaces proposal features 278 units with 717 bedrooms. A separate parking garage with 750 spaces is proposed to be built at 300 Cedar Street, which is currently a surface parking lot.
The plan does not require a zone change, so it will not go before the Lexington council. The Urban County Planning Commission could vote on a development plan for the project as early as August.
