Week of January 24, 2022
By: Gillian Stawiszynski & Richard Young
Lexington’s Financial Outlook / Budget Season Begins! / Get Engaged / Updates from Last Week / This Week in City Government
🔎 - Big topic this week: Lexington & LFUCG's Financial Outlook
This week, we'll be watching a presentation from Dr. Michael Clark, Associate Professor of Economics and Director, Center for Business and Economic Research at UK. He'll be presenting a forecast of Lexington's economy and the city's Revenue for the Budget, Finance, and Economic Development Committee.
Watch the meeting on LexTV on Tuesday, January 25 at 1 pm.
Like the rest of the world, the COVID-19 pandemic hit Lexington's economy hard.
Lexington's economic output decreased by almost 9% in the second quarter of 2020, but it rebounded 7.5% in the next quarter.
Lexington's unemployment rate spiked in 2020 to 16%. It's now down to 2.4%, lower than before the pandemic and lower than Kentucky's and the US as a whole.
Employment in Lexington is down 4.3% since January of 2020. Since November 2019, there are now 8,000 fewer people employed and 9,400 fewer people in the labor force. Many people have left the labor force; nationally, Baby Boomers have been driving this trend.
Both hourly and weekly wages in Lexington grew rapidly (at one point up 13% year over year) in late 2020, but those rates have since fallen significantly (now down to 2% year over year).
Costs are up - in 2021, inflation rose to a decade high of a 7% increase year over year. Corporate profits have also increased dramatically over the past two years to a two-decade high.
All of this has implications for LFUCG since it primarily depends on taxes on wages earned (payroll / occupational licensure) and net corporate profits for revenue to fund city services.
In 2021, LFUCG saw a 2.4% increase in payroll taxes and a 26.4% increase in Net Profit taxes.
Dr. Clark projects that LFUCG will continue to see revenue increases in the next two years. He projects that LFUCG will see $25M in new revenue through the payroll tax and $5.5M in new revenue through net profits. He projects that these will increase sharply in 2022 (7.7% for payroll, 12.9% for net profits) and then much more gradually or decrease in 2023 (3.8%, -1.3%).
Dr. Clark suggests that it is a very uncertain time for the economy due to COVID, consumer response to COVID, and other factors. This uncertainty makes it challenging for LFUCG to plan and makes creating new programs that require recurring funding difficult.
🏢 - This Week in City Hall: Budget Season Begins!
Budget season is upon us! In Tuesday's Council Work Session, Stacey Maynard, Council Administrator, will present a proposed budgeting process for FY23, which starts on July 1.
Watch the meeting on LexTV on Tuesday, January 25 at 3 pm.
Generally, the Mayoral Administration creates the LFUCG budget, and then it is modified and adopted by the Council. They modify it through "Budget Links," which are five subcommittees of the Council focusing on specific budget areas.
In a unique move last year, Council sat in on the Mayor's Budget Hearings, which analyze requests by divisions and departments inside LFUCG to build the budget. Many on Council found this helpful, and it looks like they will continue that this year in early March.
The requests included in the Mayor's Budget will be distributed to the relevant Council Budget Links before the Mayor's Budget Address on April 19.
As usual, after the Mayor's Budget Address, the process will be fully handed to Council. They will meet in their Budget Links and request meetings with Divisions and Departments when necessary.
Budget Link recommendations will be due on May 20. Maynard proposes that the Council should have a final budget decided by June 2 to get it adopted by June 14, in time for the new Fiscal Year.
Here are some big dates for public meetings on the budget to write down:
April 26 - 1 pm Budget Committee of the Whole (COW) - they'll talk about revenue, debt, and bonding.
May 5 - 6 pm Public Hearing on the Mayor's Proposed Budget
May 20 - Council Budget Links and individual CMs submit their proposed changes
May 31 - 10 am Budget COW for late items and review of Budget Link recommendations
June 2 - 10 am Budget COW to Vote on Changes
June 7 - 3 pm Council Work Session Ratification of the Budget for the Council Docket
June 9 & 14 - Council Meetings for First and Second Reading
Don't forget, CivicLex will have coverage of the budget process all along the way in our newsletter!
🏃 - Get Engaged
ADU Conference
From 8:30 am to 12 pm on February 1 and 2, the Division of Planning will have a virtual conference for anyone interested in learning more about Accessory Dwelling Units. Here's our explainer on what they are and what introducing them could mean for Lexington.
The conference will feature professional speakers who are experts on everything related to the ADU process. They will speak on their multiple uses and implementing them on a project level.
You can sign up for this free conference and find more information on the Imagine Lexington website.
Opportunity Zone Input
The Urban League of Lexington, EHI Consultants, and the City of Lexington are holding a series of events about Opportunity Zones in Lexington.
Opportunity Zones are part of a federal program that allows investors to delay their capital gains taxes by investing them in funds to redevelop designated low-income communities. Any profit made through these Opportunity Zone Funds is tax-free for the investors. Nationally, Opportunity Zones have a mixed reputation.
Lexington has one Opportunity Zone, including much of Lexington's North and East End neighborhoods. These EHI/Urban League events seek to gather input on how Lexington should deal with Opportunity Zones.
There are upcoming events on January 25 and February 8 at noon. Register at https://cutt.ly/OZMeetings.
Food Access
2020's Commission for Racial Justice and Equality recommended that the city focus on improving healthy food access throughout the city. The city is considering creating a new mobile grocery store that would take fresh food into communities with little access to groceries.
You can get involved by attending one of five focus groups:
Centro de San Juan Diego, 1389 Alexandria Drive, at 5:30 pm on January 19
Lexington Legends Ballpark, 207 Legends Lane, at 5:30 pm on January 25
Black & Williams Neighborhood Center, 498 Georgetown Street, at 5:30 pm on February 15
Lyric Theatre & Cultural Arts Center, 300 East Third Street, at 5:30 pm on February 22
Virtual Zoom Meeting at Noon on March 8. Zoom link will be made available at a later date.
You may also fill out this survey with your thoughts and experiences.
🗞 - Updates from Last Week
Expanded Zone Change Notifications
Samantha Castro, the Division of Planning's Senior Planner presented to the Planning & Public Safety Committee about expanding who gets notified when a zone change is initiated. See our coverage on the topic in last week's newsletter.
The change would mean that businesses and residents that rent properties near the change would be informed of zone changes. Currently, just the owners of properties - not the tenants - are notified.
The expansion of notifications would cost developers seeking a zone change an additional $25-50. Depending on the number of rental properties, they would also have to mail more letters notifying residents and business owners of the change.
Here's what happened in the meeting:
Some council members expressed concern about the increased cost and mailing burden on developers. They also expressed concern about legal issues if a tenant filed a due process lawsuit if they didn't receive their letter.
Some council members also said it raised concerns for landlords if tenants showed up to oppose a zone change in fear of their rent increasing.
Other council members were in favor, saying that it was the right of tenants to know what was happening in their community and that it was a governmental transparency issue.
Here is the end result:
Council opted to create a pilot program that tested this concept for one year, with the Division of Planning sending out letters and paying the mailing costs. They will revisit the program in 2023 to see if it is effective and if the cost burden is too high to place on developers.
You can watch a recording of the meeting here.
Revisions to Street Patterns and Continuity
In last week's Council Work Session, the Council considered amendments to Lexington's Zoning Ordinance to change how new neighborhoods are designed. See our coverage of the topic in our November 1, 2021 newsletter and how the Planning & Public Safety committee modified the changes in our November 8, 2021 newsletter.
The changes as amended in committee would require that blocks are shorter, change how cul-de-sacs can be designed, and require access to public/green space in new neighborhood developments.
In the Planning and Public Safety Committee, an amendment was attached to these changes that exempted any development plan already adopted at any time from the changes.
LFUCG regulations require that any development that hasn't made significant progress in five years be re-reviewed. They must adhere to any new rules that the city has adopted.
Developers can always apply for an exemption from the rules from the Planning Commission.
Here's what happened in the meeting:
In this meeting, some on Council were concerned that this could expand to other parts of the Zoning Ordinance, giving developers a chance to avoid any new rules created by the City. Other Council Members were concerned about the burden these new rules would place on developments already in process.
Here is the end result:
In this meeting, Council removed the amendment exempting developers with already adopted development plans.
Council also delayed implementing these new rules for one year to give developers a chance to incorporate them into any new development plans.
You can watch a recording of the meeting here.
ARPA Committee of the Whole
In Thursday's ARPA Committee of the Whole (COW), Council heard an update from Sally Hamilton, LFUCG's Chief Administrative Officer, about the feasibility of the ARPA projects that Council has advanced to date.
Over the winter break, the Administration reviewed the ARPA projects advanced by Council. It looked at alternate ways of funding some of the projects. The goal of this analysis was to provide the most flexibility with federal regulations and support as many of the proposed projects as possible. As of now, Council's current ARPA project proposal list exceeds the ARPA funding by $67.6 million. CAO Hamilton's plan included additional funds from the budget, including:
Budget Stabilization - $8,740,00
Fiscal Year 2023 Bond - $15,230,000
Operational Reallocation - $1,1155,000
The plan proposed by CAO Hamilton includes funding for all proposed ARPA projects but reorganizes nine projects into a $22.5M competitive fund for large-scale projects. Projects moved to that competitive fund include:
$5.6M for Energy Efficiency for Affordable Housing
$10M for Sports Complex
$9.7 Farmer's Market
$2M for BCTC Dental Hygiene Relocation
$1M for Village Branch Library
$5M for LexArts / Arts Programming
$10M for Versailles Road Bike/Ped Improvements
$2.5M for Ag/Tech Proposal
$7.5M for Town Branch Park High Street Improvements
Some projects were also reduced in their recommended funding amount or removed:
Tree Canopy - reduced to $1.5M
Versailles Road Bike/Ped - reduced to $10M
Coldstream Infrastructure - reduced to $10M
FY23 Workforce Development Grants - reduced to $200k
$1M for Vaccine & Testing Contingency - Removed
These are only suggestions for the Council, who will decide how ARPA funds are used. While the alternative funding sources would allow Council to fund more proposals, the increased bonding and use of budget stabilization funds are already receiving pushback from some on Council.
The next ARPA meeting will likely be at 3pm on February 3.
🏢 - This Week in City Government
Monday, January 24th
No Meetings
———
Tuesday, January 25th
Budget, Finance, & Economic Development Committee Meeting
⏱ - 1:00 pm on January 25th
📍 - Virtual
📺 - Watch via LexTV
🗣 - No input option
Council Work Session
⏱ - 3:00 pm on January 25th
📍 - Virtual
📺 - Watch via LexTV
🗣 - No input option
———
Wednesday, January 26th
Courthouse Area Design Review Board Application Filing Deadline
⏱ - 8:00 am - 4:00 pm on January 26th
📍 - Phoenix Building — 7th floor, 101 East Vine Street
📺 - No virtual viewing option
🗣 - No input option
Technical Committee Meeting
⏱ - 8:30 am on January 26th
📍 - Virtual
📺 - Watch via Zoom
🗣 - No input option
Commission for People with Disabilities
⏱ - 11:00 am on January 26th
📍 - Virtual
📺 - Watch via LexTV
🗣 - No input option
Animal Care and Control Advisory Board
⏱ - 1:00 pm on January 26th
📍 - Virtual
📺 - Watch via LexTV
🗣 - No input option
Transportation Policy Committee
⏱ - 1:30 pm on January 26th
📍 - Virtual
📺 - Watch via LexTV
🗣 - No input option
The Rural Land Management Board meeting
⏱ - 3:00 pm on January 26th
📍 - Council Chamber, 2nd floor, 200 East Main Street
📺 - No virtual viewing option
🗣 - No input option
Parks and Recreation Advisory Board
⏱ - 4:00 pm on January 26th
📍 - Virtual
📺 - Watch via LexTV
🗣 - No input option
———
Thursday, January 27th
Council Retreat
⏱ - 1:00 pm on January 27th
📍 - Senior Center, 195 Life Lane
📺 - No virtual option
🗣 - No input option
Planning Commission Public Hearing — Zoning Items
⏱ - 1:30 pm on January 27th
📍 - Council Chamber, 2nd floor, 200 East Main Street
📺 - Watch via Zoom
🗣 - No input option
Council Meeting
⏱ - 6:00 pm on January 26th
📍 - Virtual
📺 - Watch via LexTV
🗣 - No input option
———
Friday, January 28th
Subdivision Regulations Waiver Deadline
⏱ - 4:00 pm on January 28th
📍 - Planning Office, Phoenix Building — 7th floor, 101 East Vine Street
📺 - No virtual viewing option
🗣 - Contact