Why Lexington’s new expansion area will likely not include affordable housing

Citing escalating housing costs, the Lexington-Fayette Urban County Council voted earlier this month to allow up to 5,000 acres to be added to the city’s growth boundary.

But city planners caution the city can’t mandate affordable housing be built on newly added land. Other issues like who will pay for additional city services in the area still need to be worked out under a very tight deadline.

The June 1 council vote was the first time the city has agreed to open its growth boundary in 27 years. The last time land was added to the boundary was in 1996 when about 5,330 acres were added.

Under the framework approved by the council at its June 1 meeting, the Urban County Planning Commission has until Dec. 1, 2024, to identify between 2,700 and 5,000 acres along the city’s major corridors to add to the city’s growth boundary where development can occur.

In addition, the planning commission must also develop an expansion area master plan by that date. If it does not, the boundary will be expanded without a master plan, according to the rules adopted by the council.

The decision whether to expand the boundary is part of the 2045 Comprehensive Plan, a five-year planning document that helps the city determine what type of development can go where. The council is expected to take a final vote on the 2045 Comprehensive Plan at its June 15 meeting.

There’s nothing in the city’s development requirements or zoning code that mandates or requires a developer build affordable housing, said Jim Duncan, director of planning for the city.

“That is not something that can be guaranteed through a master planning process,” Duncan said.

An expansion area master plan can determine where housing should go. That will likely be in areas that are close to roads, public transportation and other amenities, Duncan said.

The council did not dictate how much of the newly added land should go toward housing or should be set aside for business. That will also be up to the planning commission to decide, he said.

Those that pushed for an immediate expansion of the boundary also said the city needed more land for new and existing business to expand. The bulk of the city’s revenues comes from a tax on wages. The more people working in Fayette County, the more taxes the city can generate.

“We want to make sure that the regulations are not inhibiting housing development,” Duncan said. “Part of the master planning will be to allow for housing and for as much variety of housing.”

To do that, the planning commission can recommend certain areas have more density of housing — such as apartments and townhomes.

“We can recommend minimum densities so we can get as much as housing as possible,” Duncan said.

Those that have pushed for more land for housing have argued that if more housing is added, it will up supply and decrease demand, lowering housing prices.

To date, no homes for low-income people to buy have been built in the 1996 expansion area. However, there were affordable apartments built for lower-income households in the Polo Club Boulevard area, Duncan said. Affordable housing grant money and loans were used to build those apartments.

Who pays for it?

The other big question the planning commission must answer when it develops a master plan: Who will pay for the infrastructure? That includes roads, sewer lines, pump stations, retention basins for stormwater run off and new parks.

The council did not set guidelines or guide posts on how and who will pay for infrastructure in the new expansion area.

In 1996, the city developed an exaction fee program for the 5,330 acre expansion area that includes parts of Hamburg and areas near Hayes Boulevard off of Richmond Road.

The purpose was to make sure those using new city services paid for those services. Every parcel in the 5,330 acres was assigned an exaction fee for development. If a developer choose to put in the infrastructure — roads, sewer lines, etc. — instead of paying the fee, the developer got a credit that could be used for future development of different parcels in the expansion area.

However, tracking those exaction fees and credits proved to be problematic over time. There have been fights between the city and developers over those credits and fees.

Duncan said the city will likely not use an exaction fee system in the newest expansion area master plan.

One study that will help the planning commission hone in on areas that can be added to the expansion area is a sewer capability study. An update to that study will likely be released in July. That study will also show costs to install sewer in certain areas, city officials have said.

After that study is released, the planning commission can begin its work identifying acres to add and developing a master plan, Duncan said. That will likely start in earnest this fall.

The planning commission will have a lot on its plate in coming months.

First, the planning commission, an all volunteer 11-member body that is appointed by the mayor and confirmed by the council, must finish the 2045 Comprehensive Plan. If the council passes the goals and objectives as expected June 15, the commission will have to finish the remaining parts of the plan. That’s in addition to its regular duties, which include overseeing major development plans, changes to the zoning regulations and zone changes for new developments.