The future of Lexington’s Distillery District reaches crossroads [Lexington Herald-Leader]

Oct. 19--More than 10,000 visitors from as far away as Japan have come to the Barrel House Distillery on Manchester Street over the last year.

Located on the far west end of Manchester Street in the city's Distillery District, the craft distillery that makes small-batch liquors such as Devil John Moonshine has become such a draw that it expanded its tour days from two to five days a week, said Jeff Wiseman, co-owner of Barrel House Distillery.

"It's really shocked us," Wiseman said. "Last Saturday, we had 125 people."

Distillery District backers point to those numbers as evidence that there's tremendous economic potential in the stalled Distillery District on Manchester Street, an arts and entertainment district first proposed in 2007.

The city borrowed $2.2 million in 2009 to build a trail and to make other infrastructure improvements in the district.

But in the past four years, much of that money went unspent as the city and private developers bickered over who should pay for infrastructure improvements.

The future of the district, which runs along Manchester Street from Oliver Lewis Way to Forbes Road, is now at a crossroads as the city has finally begun to make decisions on how to spend that money.

The city allocated $500,000 of the $2.2 million earlier this year on a feasibility study. That study showed that it will cost between $14 to $23 million to make necessary public infrastructure improvements to the long-neglected industrial corridor of famed Rupp Arena. The area has few sidewalks, street lights, curbs or gutters.

The western portion of Manchester Street does not have a sewer system. People who visit the Barrel House Distillery must use a green portable toilet outside if they need to use the restroom.

Earlier this month, Urban County Council narrowly approved spending an additional $500,000 for a flood plain study that included the distillery district and almost all of downtown. The vote, which was taken during the Oct. 1 work session, required a tie-breaking "yes" vote by Mayor Jim Gray to move ahead with the flood plain study.

The flood plain study is essential before any other money -- public or private -- is spent, city officials said. The flood plain study will tell which areas are in a flood zone and which are not.

The current flood plain study, which includes that area, was completed in the 1970s, said Derek Paulsen, the commissioner of planning, preservation and development.

"If we're going to do these infrastructure fixes, we need to know what the flood plain is," Paulsen said.

Under the old maps, much of the district is in a flood zone. Banks are hesitant to loan to properties in flood zones.

Properties in the Distillery District and throughout the area have to pay costly flood insurance that they might not need, said Barry McNees, who pushed for the creation of the Distillery District and owns several properties on Manchester Street.

Some city council members wanted McNees and other Distillery District property owners to pay for the flood plain study, but property owners balked because a flood plain study for the area would largely benefit public land, such as the redesign of Rupp Arena and the convention center.

"It even covers The Red Mile," Paulsen said of the proposed study. "It will help us understand what the water levels are for the whole watershed."

But even if the Urban County Council gives final approval to the flood plain study in coming weeks, that leaves $1.2 million of the original $2.2 million to spend.

Paulsen will return to council soon with a list of possible projects. The bond was originally supposed to be used to construct portions of the Town Branch Trail that winds through the Distillery District. But the $1.2 million could only be used for a small portion of the trail, Paulsen said.

Wiseman and some other property owners would still like to see the west end of the Town Branch Trail developed even if it does not connect with other parts of the Town Branch trail system.

"It would at least give people who are coming to the area something to do," Wiseman said. A trail would also connect the western portion of Manchester Street to the east end, which has some sidewalks. Wiseman said that out-of-town visitors to Barrel House who are staying in downtown Lexington often try to walk to the distillery. "It's just not safe for a variety of reasons," Wiseman said. "We end up giving a lot of people a ride back."

Councilman Kevin Stinnett, who chairs the council's Environmental Quality committee, said that he would like to see a complete list of what could be done with the money. Much of the debate about how to move forward on the Distillery District has been in the Environmental Quality committee.

"We don't want to have to build a trail now and then have to tear it down later for a sewer project," Stinnett said.

The $1.2 million will only cover a portion of the Town Branch Trail, Stinnett said. "It doesn't make sense to build part of a trail that doesn't go anywhere."

To boot, there's a lot of other needs in Lexington.

"This area is competing with other areas of the city that also have a lot of needs," Stinnett said.

Meanwhile, some landowners on the western portion of Manchester Street have agreed to pay for their own sewer system because they can't wait for the city to do it. Construction on that project should start soon, McNees and others said.

Since the district was proposed in 2007, many businesses have moved to the eastern portion of Manchester Street. Businesses located there now include Buster's Billiards and Backroom, several artist studios and Grand Reserve Events.

Tony Higdon moved Ironhorse Forge, which makes custom furniture and does other custom work, to Manchester Street two years ago because he wanted to be close to downtown. He and some partners purchased the old Pepper Distillery building in June, which is near the Barrel House Distillery.

Higdon has been approached by six different entities interested in moving into the five-story former distillery -- including an out-of-state distiller.

"Their concerns are the same," Higdon said. "The infrastructure is limited."

Chris Kelly, one of Higdon's partners, said he decided to put money into the Distillery District because it is one of the few areas of downtown that hasn't been developed yet. Lexington needs to do more to capitalize on the popularity of bourbon and the Bourbon Trail, a statewide tour of distilleries.

"Louisville is making millions of dollars off the Bourbon Trail," Kelly said. "We are not embracing it as much as Louisville has."

McNees said he views the council's actions in recent weeks as reason to be hopeful that private and public investment in the Distillery District can work.

"There is tourism potential that is being lost by not having this area of town better connected," McNees said. "I think we've made good progress in tough economic times. Even though it's taken longer than expected, it's exciting to see the public and private sector beginning to be aligned and moving forward."

Beth Musgrave: (859) 231-3205. Twitter: @HLCityhall

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