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Centrepointe Vertical, LLC

250 West Main Street, Suite 3000


Lexington, Kentucky 40507
Tel: (859) 253-0000
Fax: (859) 281-5687

STATEMENTTOTHEPUBLIC
FORIMMEDIATERELEASE
March2,2016

CONTACT:R.DudleyWebb
Chairman
(859)2530000

STATUSOFTHECENTREPOINTEPROJECT

Forthelastseveralmonths,theownersoftheCentrepointeProjecthavepatientlyremainedsilentwhile
speculationabouttheprojectbecamealmosteverydayfodderinthepressandsocialmedia.Muchof
theinformationdisseminatedinbothwasinaccurateandtheeventsleadinguptothenowabandoned
effortsbytheCollinsInvestmentGroupweremischaracterized.Wechosenottoweighinonthedebate
becausewewantedtogivethatgrouptheopportunitytoworkwiththeCitytoseeifanalternativetoour
approvedprojectwaspossible.Unfortunately,thatpossibilitydidnotoccur.Wehave,therefore,decided
tocontinuetomovetheprojectforwardourselves.Wehaveresumedconstructionofthemultilevel
undergroundparkingstructurethatunderpinstheentireprojectandprovidesparkingtheCitydesperately
needstofosterfurtherdevelopmentandredevelopmentintheCitysbusinesscore.Ourcontractorsand
arenowonthesiteperformingconstructionworktowardcompletingtheParkingGarage.

Thissiteisstillprivatelyownedanditisnotforsale.Thesitewillnotbereturnedtoafencedpaddock.It
willnothaveaparkoranamphitheaterthatwillneithercreatejobsnorgeneratetaxesfortheCityof
Lexington.Weintendtomoveforwardwithouroriginalplanofthemultiuseprojectthatwepreviously
presented, modified at the Citys request, and which the City approved. The premise behind the
CentrepointeProjecthasalwaysbeenoneofinfillandredevelopment,topromotedowntowndensity,
andreduceadditionalsuburbansprawlinanefforttopreserveBluegrassgreenspace.Wefeelconfident
thatmostLexingtonianswouldagreewiththisidealforourCity.Hopefully,aftersomeenlightenment,
theywillalsoappreciatehowdifficultithasbeenforprivateinvestorstoimplementsuchaplandowntown
whentheruleskeepchanging.Thisislargelywhynomajorprivateprojectshavebeenundertakenin
downtown Lexington since the mid1980s, when The Webb Companies developed the Radisson, now
HiltonHotel,theVineCenter,theFinancialCenter,VictorianSquare(twice),WestMainPlace,theYour
CommunityBank,CommunityTrustandKentuckyBankBuildings,theCommerceLexingtonHeadquarters
andtheWoodlands.

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Centrepointe Vertical, LLC


250 West Main Street, Suite 3000
Lexington, Kentucky 40507
Tel: (859) 253-0000
Fax: (859) 281-5687

ThecornerstoneoftheCollinsproposalinvolvedconstructionofanewCityHallthatwouldhavebeen
leasedtotheCity.WhiletheideaofanewCityHallonthesitecertainlyhasmerit,itbecameobviousthat
delayingourprojecttotrytonegotiateanacceptablearrangementwiththeCitywithoutaconsensus
wouldonlyfurthertestthepatienceofthepublic.Thisisespeciallytruegiventhefactthatthecurrent
projecthasalreadyreceivedalloftheapprovalsnecessarytomoveforward.Webelievetheprincipal
reasontheCollinsproposaldidnotgaintractionwasthefactthattheCitywantedtoownitsbuilding
ratherthanlease,althoughwewerenotpartofthosenowendednegotiations.NoonefromtheCityhas
everapproachedusabouttheCitybeingpartofthisProjectorapartnerinadevelopmentthatwould
includeaCityHallownedbytheCity.Instead,wemerelyreceivedthreatsfromtheCitysthirdparty
attorney,typicallyaftertheyhadalreadybeendeliveredtothepressorourcontractors.

While the idea of a City Hall might have had merit, it also contained potential pitfalls with respect to
meetingtheeconomicgoalsmandatedbytheexistingTaxIncrementFinancingapprovedfortheProject.
The benchmark for a TIF project is creation of new jobs and tax revenues in the TIF district. We are
concernedthatmerelyrelocatingcityemployeestothesitewillnotaccomplishthatgoal.Itwillnotcreate
new jobs, as the new regional office of Stantec, several Lexington law firms, a new Jeff Rubys and a
financialinstitutionwouldhave.CertainlyabuildingorgarageownedatitscompletionbytheCitywill
not.Instead,thatwilldecreasethetaxbaseintheTIFdistrict.However,westillremainopentodirect
discussionswiththeMayorandtheCouncil,unimpededbyselfdescribed,unelectedgatekeeperswho
appeartobemoreinterestedinissuingedictsandpressreleases,andpreventingtheadministrationand
theCouncilfromhearingunfilteredinformationontheproject.

ThebottomlineisthatweremainopentoworkingcloselyanddirectlywithMayorGrayandtheLFUCG
Councilincontinuingtodevelopthisprivatepropertyintoarobustanddynamicelementofourcitycenter
andwouldwelcomeanewandmorecooperativeapproachbytheCitythatwouldfacilitatecompletion
ofthegaragethisCitysobadlyneeds.Wearetalkingaboutaprojectthatwillrivaltheonenowunderway
inLouisville,onethatwillgeneratesignificantrevenueandover1,200newjobsforourdowntown.

WecanallseewhatresultedfromcooperativeeffortsandopendiscussionsinLouisvilleawillingnessto
worktogetherthathasbroughtmanyprojectstoitsdowntown.TheOmniConventionHotelandtheYUM
Center serve as two of many examples of what can be accomplished when cooperation between the
publicandprivatesectorsoccurs.

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Centrepointe Vertical, LLC


250 West Main Street, Suite 3000
Lexington, Kentucky 40507
Tel: (859) 253-0000
Fax: (859) 281-5687

LikeLexington,downtownLouisvilledidnothaveenoughparkingtosustainamajorproject.ThatCity
andprivatedevelopersworkedcloselytogethertocreateanewdevelopmentthatwouldaddparking,
tourismandvibrancytotheirdowntown.AccordingtoWKYTTV,Louisvilleendedupgiftingthedeveloper
afullCityblockvaluedat$17milliondollars;anew820carParkingGarage;andalongwiththeState,
another$139millionintaxrebatemoney.Weresuchinducementsjustified?Absolutely,becauseboth
oftheseprojectswillbetransformativefortheirdowntownsandgeneratetourism,createthousandsof
newjobsandpayhugeamountsoftaxes.Likewiththatproject,CentrepointehasaTIFalreadyinplace
that is viable, approved and already activated according to the Citys TIF counsel as well as the TIF
consultantswhohaveworkedonbothprojects.

ThedifferencebetweenLouisvilleandLexington,however,isthatwhenwewerereadytoproceedwith
theconstructionofourprojectinMayof2014,ourdevelopmentcounsel,DarbyTurner,askedtheLFUCG
to comply with the signed TIF agreement and to approve the issuance of our bonds so that we could
proceedwithconstructionoftheGarageinaccordancewiththeTIFAgreementthatwehadexecutedwith
theCityandtheCommonwealthin2008.WhentheCityrefusedtodoso,Darbyrepeatedlyremindedthe
CityanditsoutsidecounselthatwehadawrittenagreementwiththeCityandtheCommonwealththat
theCitywouldissuethosebonds,butnotguaranteethem.Itwasthenpointedlyexplainedthatitwas
criticalthattheCityliveuptothatlegalobligationrightaway.Thisdemandwassimultaneouslyforwarded
toLarryHayes,thenSecretaryoftheKentuckyEconomicDevelopmentCabinet,whichwasalsoasignatory
tothe2008Agreement.SecretaryHayespromptlywrotetotheCityofficialsremindingthemoftheCitys
obligationtodoso.TheCityneverthelessrefusedtohonoritsobligationtoissuethebonds,evidentlyin
relianceontheadviceofthatsamethirdpartyspecialcounsel.Haditdoneso,wewouldnowbelooking
atacompletedgaragethatwewerethenreadytostartandtheotherelementsoftheprojectwouldbe
underway.

BecauseofthisunfortunateaboutfacebreachbytheCityatthatcriticalmoment,theprojectwasstalled
whileourconsultantslookedforanewpartytoissuetheTIFbonds.Thateffortprovedtobeuntimelyin
thatasadirectresultoftheCitysfailuretocomplywithitsagreementtoissuethebondsandthedelay
causedby thatfailure,wewereofficiallynotifiedshortlythereafterthatthetwomajoranchortenant
prospectsthatwouldhaveoccupiedmostofourofficebuildingcouldnolongerwaitfortheissuanceof
thebondsandthattheyweremakingotherarrangementstomeettheirspaceneeds.Infact,oneofthose
prospectsadvisedusinitsnoticethattheysenttousthatTheprotracteddelaysingettinganyfirm
answerfromLFUCGaboutyourbondstheentireblameforwhichIplaceonLFUCGsshouldersleft
usnochoicebuttotakethesafercourse.

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Centrepointe Vertical, LLC


250 West Main Street, Suite 3000
Lexington, Kentucky 40507
Tel: (859) 253-0000
Fax: (859) 281-5687

Thesewithdrawalsprovedtobeamajorblowtotheproject,itsothertenantsanditsowners,butfor
some strange reason, this breach was never reported to the public by the press. The financial
repercussionsofthisrefusalwerelikewisesignificantandstillare,becausewearecontinuingtofundthe
cost of the project to keep it and its TIF alive. Needless to say, that denial may still have major
ramificationsfortheindividualsthatwereresponsible,butthatremainstobedetermined.

The public is now very familiar with the Restoration Agreement, although it is not familiar with the
eventsleadinguptoitsexecution.Webelievethepublichasarighttoknowofthecircumstancesunder
whichtheRestorationAgreementwasexactedbythatsamespecialcounselfortheCity.Whenwehad
compliedwithallrequirementsnecessaryfortheCitytoissuetheexcavationpermittowhichwewere
entitled,ourcounsel,DarbyTurner,waspresentedwiththeRestorationAgreementbytheCityssame
specialthirdpartycounselontheeveoftheissuanceofthatpermit.Darbywastoldthatthepermitwould
notbeissuedunlessanduntiltheRestorationAgreementwassigned.Darbythenremindedthatsame
specialthirdpartycounselthattheexcavationpermittowhichwewerethenentitledwasdesperately
neededtokeeptheTIFandotherbenefitsfortheprojectaliveaswellastosatisfythetimelinesand
occupancyneedsofourtenants.Ourexcavationcontractorwasherewithhisequipmentlikewisewaiting
forthepermitsoitcouldbegintheexcavationofoursitefortheundergroundParkingGaragethatwas
calledforin theDowntown MasterPlan. Darbyalsopointedout tothatspecial counselthatnosuch
requesthadeverbeforebeenimposedonadeveloperandmostlikelywouldneverbeimposedinthe
future.

Evenworse,thetextofthatagreementspecificallyreferstothefillmaterialasbeingwithdirtorearth
similartothatwhichwasbeingremoved,butatthelastmoment,thatsamespecialcounselinsertedan
additionalpageattheendofthedocumentspecifyingthatengineeredfillhadtobeusedwhichcould
costthedeveloperanother$1,000,000.00.Worstofall,thisdocumentisnowbeingwavedatthepress
andthepublicbythatspecialcounselinordertofantheflamesofpublicdiscontentwithrespecttothe
CentrepointeProject.Theseadditionalconditionswereunilaterallyimposedattheverylastminutewhen
theissuanceoftheexcavationpermitwascritical.Suchactionswerealsotakenwithoutdisclosuretoor
avotebytheCityCouncil.

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Centrepointe Vertical, LLC


250 West Main Street, Suite 3000
Lexington, Kentucky 40507
Tel: (859) 253-0000
Fax: (859) 281-5687

Tofurtherprejudiceandinflamethematter,theagreementcalledforadditionaltimetobeaddedbeyond
thedefaultperiodforgoodcauseshown,buttheCitysspecialcounselhasneverrecognizedthatthe
City fouled this up by refusing to issue the bonds, nor has consideration been given to the 61 bad
weatherdaysandtheholidaysthatoccurredduringouractiveconstructionperiod.Likewise,hehasnever
informedtheadministration,theCityCouncil,thepressandthepublicoftheseextenuatingcircumstances
thatmorethanjustifyourdelays.

Butmoretothepointwhywouldanyonereallyeverconsiderfillinginaprojectthathasreachedthe
stageatwhichitsitsandalreadyinvolves,todate,theexpenditureof$28.0millionofprivatemoney?
Surely the City did not authorize a third party contract attorney purporting to serve its interests to
withholdtheissuanceofanexcavationpermittowhichtheapplicantisentitledinordertocoercethat
privatepropertyownerintosigningaRestorationAgreementthatitwouldnothaveotherwisesigned?
And did that special counsel have the legal right to require of Centrepointe something that no other
organizationorcitizeninthiscommunityhaseverbeenrequiredtosignbeforeorsince?Whileourproject
wasbeingtreatedthisway,theCityappearstohavegiveneveryaccommodationtoaneighboringand
competingprivateprojecttoinduceittohappen,includingtensofmillionsofdollarsofpublicmoney.

Weshouldallthinkabouttheramificationsofthiskindofconductbyagovernmentalentity,notonlyon
us,butastootherswhoseektodevelopdowntownprojectsortheirownpropertyanywhereelseinthe
community.WilltheMidlandAvenuedevelopersfacethesameroadblocks?Isthisthekindofmessage
this City and its leadership want to send to the world that Lexington is opposed to new growth?
Everyone should think carefully about the implications of this kind of treatment of proposed private
developmentprojectsinthefuture.

Withallduerespecttoeveryoneinvolved,weknowtheevolutionofthisprojecthasbeenfrustratingfor
thecommunity,andforthatwesincerelyapologize.Theentireprojectstartedwhenwewereaskedby
the then head of the Lexington Convention and Visitors Bureau to please develop another new hotel
downtowntomeettheneedformoreroomssothatmajorconventionscouldbeattractedtoLexington.
We agreed to do so and initially had the wholehearted encouragement and support of the then City
administration.Thatdidntlastlongaftercertainselfappointedguardiansteamedwiththespecialthird
partycontractattorneytotrytothwarttheprojectandportrayusasbadguys,thievesandunAmerican.

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Centrepointe Vertical, LLC


250 West Main Street, Suite 3000
Lexington, Kentucky 40507
Tel: (859) 253-0000
Fax: (859) 281-5687

After that, we had to endure five years of the great recession when no new development projects
anywhereweremovingforward.Andthenwhenthemoneymarketsdidfinallyrecoverin2014andwe
couldsellthebonds,theCityrecantedonits2008commitmenttoissuethem.Andduringthetimesince,
wesacrificedanother10monthsbecauseindicationswerethattheCollinsgroupcouldbringCityHallto
theproject.Believeyoume,ifwehadknownallthatwedonow,wewouldneverhavegottendistracted,
butthatisnowbehindus.

Thebottomlineisthatwehavewaitedpatiently,listenedcarefully,andhopedthatwecouldgetthesame
cooperationandassistancethattheCityhasgiventoothers,butitnevercame.Asaresult,wehavenow
decideditisbesttomoveforwardwiththisprojectonourown,justasweoriginallyplanned,andtoseek
justicelater.WealllovethisCity,wantittobethebestthatitcanbeandwantnothinglessthanan
exceptional,multiuseprojectthatcanbeenjoyedbyeveryone.Allweareaskingisforthepublictoknow
thefulltruthandtoreceivethecooperationoftheCitysleadershipandtheCounciltohelpusmakethis
projectareality.Thiscommunitydeservesnoless.

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