The Lexington city council on Thursday voted unanimously to approve a $39 million industrial revenue bond for a six-story, 125-room new hotel and event space in Lexington’s booming Distillery District.
The city will issue the bonds for the project, but the developer, New Circle Investments, will be responsible for making payments on those bonds.
The title to the property will go to the city, which will lease the property back to New Circle Investments for 40 years. The city will not receive any property taxes during that time period.
The Lexington Public Library, Lextran, Fayette County Public Schools and the Lexington-Fayette County Health Department have worked out agreements to receive payments in lieu of taxes from the developer over that 40-year time frame.
The vote on the industrial revenue bond had been delayed so the Lexington Public Library could work out an agreement.
The city is not on the hook to repay the bonds if the project does not materialize, nor does the $39 million affect the city’s bond rating, lawyers for the city and the developers have said.
The hotel, which will include a restaurant, an event space, a rooftop bar and other amenities, will continue to pay other taxes, including occupational taxes, the main source of revenue for the city, city officials said.
This is the first time in decades the city has issued an industrial revenue bond for a private project.
The hotel will be located near the Oliver Lewis Way bridge on Manchester Street. Construction on the hotel will likely start later this summer, the developers have said.