SUNDAY EDITION | Historic properties near new bridges still a drain for Kentucky taxpayers
The state has spent more than $15 million buying mansions, paying the utility bills for empty houses and mowing vacant lawns as part of the Ohio River Bridges Project. Are taxpayers getting any benefit?
LOUISVILLE, Ky. (WDRB) – Perched above a wooded grove near the Ohio River, the Rosewell estate is a throwback to Louisville’s well-heeled past: A Greek Revival mansion complete with Corinthian columns and eight fireplaces, and a brick smokehouse nearby.
A real estate brochure for the property suggests it’s an ideal setting for Kentucky Derby parties: “What better place to celebrate the Run for the Roses than at Rosewell?”
But prospective buyers beware. According to a 41-page easement attached to the property, some decisions normally made by homeowners – from repainting to installing a satellite dish – will need advance approval from Kentucky preservation officials.
The house has sat empty since the state bought it for $1.6 million in 2005, part of a sweeping agreement meant to protect historic properties near the Ohio River Bridges Project.
For Rosewell, just south of the new East End bridge near Harrods Creek, Kentucky agreed to limit damage from blasting and “make every reasonable effort” to buy the house and then to sell or donate it after adding a preservation easement.
Yet, even as the bridge nears completion and a downtown span is open, taxpayers still own Rosewell and two other historic properties acquired for the project – a total of $13.5 million in Jefferson County real estate.
Officials have set, and missed, goals for selling the properties and recouping some of the state’s earlier investment.
In addition, Kentucky has spent nearly $1.6 million to mow grass, clean gutters, provide security and perform other repairs at the three historic sites, according to figures provided in response to an open records request.
Kentucky plans to sell the properties at a time when state government is facing a budget shortfall, with new Republican Gov. Matt Bevin warning that state agencies may face cuts as a result of growing pension obligations. Just last week, Bevin issued $112.5 million in cuts to the Transportation Cabinet’s budget.
To be sure, the money spent on the historic properties represents a fraction of the larger $2.3 billion bridges project that Kentucky and Indiana are leading. But the costs continue to mount.
The state has paid more than $41,000 over the last decade on security at Rosewell, even though no one lives there. Architect Robert Burry of Shelbyville has received nearly $1 million to develop a “treatment and stabilization plan” for the house.
The most money has been spent at the Drumanard estate near Wolf Pen Branch Road and U.S. 42. The estate’s status on the National Register of Historic Places prompted the states and the federal government to dig a 1,700-foot tunnel underneath it as part of a $511 million approach to the East End bridge.
Critics of the tunnel have singled out Drumanard as an example of the project’s waste and, in one instance, argued that preservationists sought the historic designation in the 1980s to block the expansion of the Gene Snyder Freeway.
Rowe Harper, who lived in the nearby Shadow Wood subdivision until his house was purchased to make room for the tunnel, said he supports the bridges project’s economic impact on the Louisville area. But, he added: “There’s nothing historical about that house.”
“It could not have been handled any worse than the whole thing was handled,” he said. “This is the kind of thing that frustrates people about government.”
Since Kentucky bought Drumanard in 2012, it has fought to collect rent from the former owners, who were allowed to continue living in the mansion, and later filed a lawsuit seeking more than $56,000 in back rent and unpaid property taxes.
In broad terms, the historic preservation efforts should be applauded, especially since other structures were razed for the downtown bridge work, said Martina Kunnecke, president of Neighborhood Planning and Preservation, a Louisville nonprofit group focusing on urban planning and government transparency.
Nevertheless, she questions the public benefit of the land purchases. In the case of Drumanard, for example, Kentucky paid more than $5 million over the prior sale price and $1.5 million more than its own appraisal said the property was worth.
“We so overpaid for that as taxpayers and yet we have no return on that or no promise of return. It’s an insult to us,” Kunnecke said.
But Andy Barber, bridges project manager for the Kentucky Transportation Cabinet, said the state’s commitments were needed for construction to advance. The overall $2.3 billion project once stood at $4.1 billion and now has a construction schedule that will mostly finish both spans by the end of this year – about eight years earlier than prior estimates.
“The things that we’ve had to do, the things that we’ve had to overcome are getting us to the bigger goal: Increased cross-river mobility,” he said.
“A little too ambitious”
After years of study, Kentucky and Indiana reached an agreement in 2003 with the federal government and preservation groups to protect properties in or near the path of the project.
Among the commitments were saving Indiana’s historic lime kilns, studying noise impacts to four churches in Louisville and preserving a farm in eastern Clark County, Ind.
Under the terms of the original Memorandum of Agreement, Kentucky was required to buy only Rosewell. But as the project advanced, the state agreed to buy Drumanard and the former Grocers Ice and Cold Storage building on Main Street.
Last March, at a meeting in Louisville, project officials said they expected Grocers Ice and Rosewell to be sold in the spring, followed by Rosewell in the summer, according to minutes of the meeting. Those goals weren’t met.
“That was a little too ambitious,” Barber said.
The state tried to sell Grocers Ice last fall, but the lone bid submitted was rejected because it was below the appraised value, according to the Transportation Cabinet. Drumanard and Rosewell haven’t yet been put up for sale.
Unlike a typical real estate transaction, the properties would be sold under the Transportation Cabinet’s surplus property program, which accepts sealed bids and favors the highest bid above the appraisal.
The state declined to provide appraisals for the three properties, citing a section of Kentucky law that allows them to be kept confidential until a sale.
Barber said he expects the properties eventually will be sold, although he didn’t provide a timeline.
Selling a house with a preservation easement requires a “very special buyer” who understands the restrictions placed on the homes, said Louise “Butter” D’Alessandro, associate broker and partner at Elfant Wissahickon Realtors in Philadelphia.
D’Alessandro and her colleague Janice Manzi sold a Philadelphia-area house owned by the National Trust for Historic Preservation and protected by an easement.
“There are many people out there who love it,” D’Alessandro said. “They appreciate it. They love the guidance. They love the partnership.”
Gary Valentine, a former bridges project manager for the Kentucky Transportation Cabinet, told The Courier-Journal in 2009 that he expected Rosewell to be sold or donated in 2010. Valentine, who has since retired, could not be reached for comment.
But John Carr, a former Kentucky deputy state highway engineer, said the economic recession and downturn in the real estate market in the late 2000s could explain why the state still hasn’t sold its properties.
“The reason I think government doesn’t like to be in the real estate business is because of all those unknowns,” he said.
Costs climb at Drumanard
Instead of a roadway cutting across Drumanard’s wooded lot, the Federal Highway Administration chose to dig a tunnel in order to meet transportation law that required historic properties to be left intact if other options exist.
“It had nothing to do with what any of us sitting around the table felt like,” said Ann Simms, a retired administrator for the city of Prospect, where the new bridge connects on the Kentucky side. “We couldn’t change the law and, indeed, we had to live up to it.”
Several efforts to remove the estate’s historic status failed, including a push by a group opposing bridge tolls in 2010. The group argued that Drumanard’s landscaping, which helped secure the property’s place on the National Register, wasn’t significant.
Since the Transportation Cabinet bought Drumanard in 2012, it has added an easement that restricts future development and paid more than $347,000 to clean up and repair the property, according to state figures.
More than $6,000 was spent to install a security system in 2014. In 2015, $7,850 was spent on yard work, such as mowing and removing tree limbs and sticks.
Kentucky allowed the previous owners – members of the family connected to the Soterion Corp. – to live in the house until 2014, when they were evicted for not paying rent. The state later sued Soterion, alleging that it owes the state $34,516 in unpaid Jefferson County property taxes and $21,600 in late rent.
Soterion, which received more than $8 million in the Drumanard sale, acknowledges in court filings that it didn’t pay rent, but it claims it “did not receive proper and timely notice of such taxes due.”
The lawsuit is pending in Jefferson Circuit Court.
Barber, the Kentucky project manager, declined to comment on the lawsuit. But he defended the state’s decision to rent the house back to the previous owners, saying it is “common practice.”
“When the Cabinet purchases properties you see these lease arrangements in place because that ensures that someone is there,” he said.
But now, like the other properties Kentucky owns and hopes to sell, Drumanard sits empty.
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