Essential news and analysis from Kentucky’s state and local governments on housing, planning, and economic development.
City County Connector
This month in Lexington, the Urban County Council adopted an ordinance creating the Preservation and Growth Management Plan, creating the city’s first explicitly data-driven approach to determining the new for additional vacant land to be added to the Urban Service Area. The Plan employs mathematical formulas and specific statistical benchmarks of the city’s population and growth projections to inform the Council and the Planning Commission of the need for more land for development. The ordinance includes an amendment, sought by both the housing and preservation communities, that ensures that the subcommittee overseeing the vacant land review that includes members with professional expertise in the areas of agriculture and farmland, economic development, environmental sciences, housing and residential development.
This week in Lexington, the Urban County Council will consider a new ordinance requiring installation of carbon monoxide detectors in all Lexington residences that are at an elevated risk for carbon monoxide poisoning: homes with gas fuel heat or appliances, and homes with attached garages. Carbon monoxide detectors have been required in all new construction residences under the most current building code since 2011. This ordinance would eliminate the exemption from the requirement for older dwellings grandfathered in. If passed, ordinance would take effect six months after passage, allowing time for marketing and public service announcements regarding the ordinance.
In Harrodsburg, the Mercer County Fiscal Court is considering if, and how, to regulate possible data center development in their community. Earlier this month, officials received a presentation from Parkway Partners on the benefits and risks of data centers locating in Mercer County, including a discussion of if data centers are allowed, or even contemplated, under the County’s current planning and zoning scheme. The Fiscal Court also hosted a town hall session for residents to voice their concerns and ask questions on the issue. Given the community’s proximity to reliable power generation and high-voltage transmission, as well as the possible availability of nearby water resources, Mercer County will likely remain a popular potential destination for the rapidly expanding data center industry.
Rotunda Roundup
At the state Capitol in Frankfort, the Kentucky Legislature passed the halfway mark of this year’s General Assembly. Only one bill has been passed both houses and signed by Governor Beshear yet, but the velocity of bills moving through committees is accelerating. The deadlines for introducing new bills for consideration this year are March 4 in the House of Representatives, and March 2 in the Senate, so one could expect that bills with a chance to pass both houses will begin rapidly moving through committees and both bodies soon.
Of particular note, Kentucky Senate Bill 9, principally a bill to address Kentucky’s lack of housing inventory and development, which would allow local municipalities to establish both Residential Infrastructure Development Districts and/or Housing Development Districts, flew through committee and passed the full Senate 35-2. This is a bill receiving support from a consortium of growth and housing interests, including various chambers of commerce, Realtor®, and homebuilding organizations. Senate Bill 9 now is awaiting assignment to a in the House, where it will likely receive scrutiny alongside House Bill 536, it’s lower chamber counterpart, , has not yet made it out of House Local Government Committee.
Governor Andy Beshear continues to tout his “Pre-K for All,” which has garnered widespread support from not only child development and education advocates, but as well as support from the Kentucky Chamber of Commerce, dozens of county judge executives, and many business leaders as a workforce and labor participation initiative. Given the austere initial budget proposal from Republican leadership, expect a cool reception to this particular budget request.
Last week, the Kentucky Attorney General Russell Coleman’s office obtained a default judgment in its civil action against defunct roofing company Lexington Blue in the amount of $8.54 million. Expect the Attorney General’s office to take this judgment to Bankruptcy Court to try to enforce it against the former Company and its owners on behalf of more than 300 victims who paid for roofing services that were never delivered as promised.
Of note at the February meeting of the Kentucky Real Estate Commission, Eric Gibson, director of Kentucky’s Office of Emergency Management, made a presentation to the commissioners on an issue he has discovered in the relationship between homeowners, the Federal Emergency Management Agency (“FEMA”), and the National Flood Insurance Program (“NFIP”). Currently, there is no mechanism for property owners or purchasers to know if a prior owner has asserted an individual assistance claim with FEMA under NFIP for one-time benefits per property. The assistance under NFIP attaches to the property where the claim was made, not for the owner of the property at the time of the loss suffered. Thus, the options for a disclosure mechanism aren’t great:
There’s no public facing database at FEMA or NFIP of properties that have asserted an individual assistance claim.
Requiring notification on a Seller’s Disclosure of Property Condition form is problematic, because the form only covers the period of ownership of that seller, and it is not required under Kentucky law that a seller must fill out such a disclosure.
Blackmarking a property in an existing database, like the Property Valuation Administrator’s office or at the County Clerk, creates a stigmatized property situation that may unfairly burden sellers as they market their property.
It’s a novel problem that will likely require a change to federal or state law, or both, in order to provide fair notice of the potential nonavailability of a government benefit to would be owners and renters.
While most legal observers’ attention gravitated to the US Supreme Court in Washington D.C. and the decision striking down most of the President’s emergency power tariff impositions, the Kentucky Supreme Court unanimously struck down Kentucky’s fledgling charter school funding statute, passed in 2022, as in violation of the state constitution. In the majority opinion, Justice Keller wrote, “The Constitution as it stands is clear that it does not permit funneling public education funds outside the common public school system.” The charter school funding rebuke from the Court follows the rejection at the ballot box of a proposed 2024 Constitutional Amendment that would have amended the state constitution to allow public funding of private education in Kentucky.
According to Plan
Last week in Lexington, the LFUCG Planning Commission received several policy presentations that will effectively drive the development conversations for the next several months, if not years. Topics presented included the Blue Sky Small Area development plan, a review of the Urban Growth Master Plan Text Amendment development, introduction of the Article 19 Flood Plain Conservation and Protection zoning ordinance text amendment (or “ZOTA”), and End of Year Planning Review and Analysis of Vacant Land, and a discussion of the aforementioned Preservation and Growth Management Plan. The Urban Growth Master Plan, Flood Plain Conservation and Protection ZOTA, and Preservation and Growth Master Plan, examined in totality, have the potential to significantly affect future growth and development in Fayette County, so expect plenty of future scrutiny of these plans as they are developed.
This week, the LFUCG Urban County Council granted approval of a proposed eight story mixed-use apartment complex to be built in the Pralltown neighborhood, one of Lexington’s first black neighborhoods inside the city. The approved project, from St. Louis-based developer Subtext, is scaled-down version of a similar proposal that the Planning Commission voted down in 2025. This version of the project also accompanies Subtext’s promise to commit $3 million to the new Pralltown neighborhood association foundation and a promise not to propose additional developments that encroach further into the neighborhood. Payments to neighbors and neighborhoods are not unheard of in Lexington’s urban infill and redevelopment, but the development community is likely on guard to prevent normalization of this type of pay-to-redevelop arrangement, as it will only increase the ultimate costs to property owners at a time when housing affordability is a hotly contested economic and political issue. Be on the lookout for the LFUCG Council and a possible community benefits agreement template.
Developing Situations
Commerce Lexington President Bob Quick recently announced his plans to retire, effective July 31, 2026, after 25 years of service to the organization. During his tenure, Commerce Lexington transformed from a local chamber of commerce into a regional powerhouse representing commerce, economic development, and workforce initiatives across nine counties in Central Kentucky. Additionally, Quick also enhanced Commerce Lexington’s economic development tools, public policy programming and advocacy, and institutional strategic partnerships, among other accomplishments.
Thought Bubbles
Opinion and Analysis – Senate Bill 9, the Residential Infrastructure Development District (“RIDD”) and Housing Development Districts legislative proposal, is the darling legislation of the housing and development communities, and combines two important initiatives designed to spur new residential construction in hope of alleviating Kentucky’s housing inventory crisis. While developers of all shapes and sizes likely welcome the expedited development process envisioned by the Housing Development District portion of the bill, it is the residential infrastructure
The RIDD portion of the bill will allow local municipalities to identify real property for development, declare that property a RIDD, and then use the municipality’s bonding authority to issue debt obligations to finance the infrastructure necessary to develop the RIDD into housing. In exchange for financing of the infrastructure investments, the RIDD properties would be subject to a special assessment that would be used to collect an annual additional fee from the property owner until the debt obligations are retired.
This portion of the bill accomplishes several important things for Kentucky’s housing industry beyond simply encouraging the creation of additional housing inventory across the state. First, by providing a financing vehicle, the Kentucky Legislature is implicitly acknowledging that housing is a critical component of economic development.
Second, by not requiring individual developers to carry the costs of required infrastructure during construction, Senate Bill 9 levels the playing field for smaller, local developers versus larger developers with deeper pockets, who could be better equipped to absorb the costs of infrastructure installation. In theory, this should make residential development possible at a right-sized scale across Kentucky communities, not just at a grand scale of development that would traditionally justify the infrastructure development. It could be just as important to Lexington’s expanded Urban Services Area and infill and redevelopment initiatives as it may be to accommodate growth around Rockcastle County’s economic development Megasite.
Third, instead of burdening an entire population with repayment of the municipal debt the way a general obligation bond or broader tax increase would, the special assessment against the RID parcels ensures that those benefitting from the investment are the ones paying for that investment.
However, the long-term impact of those special assessments should not simply be swept under the proverbial rug. Instead of the developer’s infrastructure costs being passed along to the initial purchaser of a newly constructed home, as it was under exaction fee regimes (LFUCG imposed exaction fees upon developers to finance construction under prior Comprehensive Plans), the cost of the infrastructure investments will be passed along to all subsequent owners of a property in the form of the annual special assessment payments. This may stigmatize RID properties during the bond repayment period, ultimately resulting in lower prices available to potential sellers of a subject parcel.
Moreover, the consequences of nonpayment of the special assessments, which are allowed to be collected annually under the current proposal, will result in interest and penalties on the unpaid balances just like any other property tax bill. Additionally, the legislation allows for local governments to allocate “up to five percent (5%) of the revenue collected from a special assessment” for its administrative expenses. Remember your Friedman, folks, “nothing is so permanent as a temporary government program.”
This is not to suggest that Senate Bill 9 is a bad idea, but to simply point out that there will be costs to the consumers. However, governing is choosing, and the lack of housing inventory in Kentucky communities is a serious problem, impeding the investment and economic growth that is so desperately needed across the Commonwealth. Giving developers another tool through which to create additional housing stock is in all Kentuckians’ interest, especially if the financial burden of that process can be contained within the new developments rather than on the taxpayers writ large.
Hill Strategic Advisors 