Thursday, November 17, 2011

A Kentucky City Reinvents a Faded Downtown

The New York Times
By KEITH SCHNEIDER
Published: November 15, 2011

OWENSBORO, Ky. — Ron Payne, the energetic and determined 65-year-old mayor of this small city on the Ohio River, keeps a map of new development projects in a corner of his City Hall office. There are more than a dozen sticky notes fixed to the map, each designating the location and cost of a local construction project recently completed, under way or planned.

Riverfront construction in Owensboro, Ky., includes a river wall and several walking paths.

The total value of the projects is more than $1 billion, including a $385 million hospital under construction east of town; a $2 million, 8,500-square-foot expansion of the regional airport terminal; various road and drainage projects; and a new shopping center along the city’s highway bypass.

But the densest collection of yellow stickers is in Owensboro’s rapidly recovering downtown, which after decades of decay is generating significant new entertainment, hotel, housing, retail, and office development.

Like so many other American cities after World War II, Owensboro’s pattern of residential and business development spread out from the downtown core. By the late 1970s, when the Town Square Mall opened just beyond the city’s beltway, downtown was an island of moldering buildings surrounded by a sea of surface parking lots.

Of late, though, this city of 57,265 and surrounding Daviess County, where 96,656 people live, have invested in an array of business development initiatives in health care, transportation, education, and tourism and travel that focused on making the city and county more competitive in attracting residents and businesses.

Job growth is coming from construction, an expanding medical sector, new businesses in high tech and biotechnology, and the three loan service centers of US Bank Home Mortgage.

Most improbable in this politically conservative region, more than two hours downriver from Louisville, is the $80 million tax increase that provided almost half of the $178.4 million in public and privately financed downtown development projects now under way.

The tax increase, which raised the city insurance premium tax rate to 8 percent from 4 percent, and the county rate to 8.9 percent from 4.9 percent, is paid by residents and business owners on premiums for auto, homeowners, boat and casualty insurance policies. The increase, which came after vigorous debate, was approved by a vote of 7 to 2 in February 2009 by city commissioners and the Daviess County Fiscal Court, the equivalent of a county commission.

Though the new tax revenue is producing jobs and new downtown projects, the effect of the vote on local political careers also was unmistakable. Of the seven city and county officials who voted to approve the tax increase, just two remain in office; two were defeated and three did not seek re-election in 2010.

The largest project by far is a $48 million publicly financed, 169,000-square-foot convention center overlooking the big bend in the Ohio where the city has stood since its founding in 1817. The angular steel and aluminum building, designed by Trahan Architects of Baton Rouge, La., enfolds contiguous zones of glass so the city and river are visible from almost anywhere inside. Construction is scheduled to start in February and be completed by the fall of 2013, Mayor Payne said.

Attached to the convention center by an aerial bridge is a privately financed, $20 million, 130,000-square-foot hotel with 151 rooms. The seven-story hotel, developed by the Malcolm Bryant Corporation of Owensboro, is designed with solar generating capabilities and state-of-the-art energy efficiency measures.

It is the first hotel to be built downtown since 1977 and partly replaces a 591-room hotel that was demolished in 2009. Construction is scheduled to start before the end of the year, and the completion is timed to the 2013 opening of the convention center.

“For so long we were kind of isolated,” said Mayor Payne, who is credited in Owensboro and Daviess County with leading the redevelopment. “We were kind of on a cul-de-sac. You had to be going here to get here. If anything was going to happen in this community, we were going to have to do it ourselves. We decided to reinvent this community, and that’s what we’re doing.”

Along the riverfront and on the busy blocks nearby, construction crews are completing a $40 million federally financed river wall, for flood and erosion control, and shoreline park. In addition, $52 million in city-financed projects are adding promenades, a water-jet fountain, a riverfront playground, and a host of street and sidewalk design features to invite more foot traffic, and the cafes, bars, and leisure businesses that thrive in an active downtown.

Owensboro’s downtown redevelopment also is prompting new construction and business starts in other parts of the city. Revenue from Owensboro’s occupational tax rose 7.8 percent last year, the highest on record. For seven consecutive years city government has ended the fiscal year with surpluses, most recently with $1.1 million in its general fund at the end of the 2010-11 fiscal year.

The unemployment rate fell to 7.7 percent in September, well below the national rate of about 9 percent. And in the last two years Owensboro and Daviess County added 2,400 jobs, more than any other metropolitan area in Kentucky.

One of the home-grown businesses that is adding new employees and making an investment downtown is First Security Bank, founded in Owensboro in 1997. The bank is spending nearly $3 million to convert a 1960s-era four-story, 28,000-square-foot building on Frederica Street, Owensboro’s primary north-south boulevard, into the bank’s new headquarters.

In addition the two local developers, Larry Conder and Terry Woodward, said in interviews that they were planning separate projects to build mixed-used retail and residential buildings on empty downtown lots. Mr. Woodward said in an interview that he was prepared to spend $7 million to build a five- or six-story, 50,000-square-foot residential and retail building along Veterans Boulevard. Mr. Conder is planning to start construction in the spring on a five-story, 22,000 square-foot mixed-use building with 12 residences and a 3,800 square-foot food market on the ground floor, at a cost of $3.25 million.

As an example, Mr. Conder pointed to an empty century-old brick building on Second Street that he is interested in buying. Two years ago the owner was asking $125,000 for the 2,400-square-foot building. “Now they want $350,000,” Mr. Conder said. “Prices are going up.”