Paducah City staff unveils draft Southside housing plan, proposes expanded incentives and gap-funding

Palmer Stroop, a planner in the Paducah City planning department, presented a draft Southside housing revitalization plan to the Paducah City Planning Commission and asked for the commission's feedback on expanding incentive programs, program boundaries and the role of URCDA in property transitions.

The plan seeks to grow the existing pilot incentive area (Lowertown and Fountain Avenue were cited as earlier, smaller examples) into a much larger, phased Southside program running from Kentucky Avenue to Caldwell Street and from the train tracks to South Third Street. Stroop said the draft identifies roughly 83 square city blocks in the proposed core and reports about 405 vacant properties in the program area — roughly 38 percent of the parcels in the draft boundary.

Why it matters: the Southside area covers a significant portion of the city and, according to staff, contains a high concentration of vacant parcels. Staff told the commission that expanding a targeted incentive program and pairing it with gap-funding tools is intended to catalyze private redevelopment, increase density and make projects bankable in neighborhoods where comparable sales are limited.

Key proposals and details

- Incentives: Staff recommended keeping the home-repair microgrant program but raising award limits (the current microgrant maximum is about $5,000). The earlier new-construction/major-rehab incentive had capped awards near $27,000; the draft recommends restructuring reimbursements at roughly 20 percent of project cost with a capped maximum rather than a flat previous cap.

- Gap funding: To address appraisal shortfalls that can block loans, staff described a proposed gap-funding mechanism (illustrated in the discussion as a forgivable second mortgage of roughly $50,000 in a hypothetical example) that would be paired with conventional lending and forgiven incrementally over years of owner occupancy.

- Property transitions: The plan proposes reestablishing URCDA as a separate corporate entity (repealing the 2019 ordinance that merged URCDA and the planning commission) so URCDA can more actively manage surplus property transfers, buybacks and other redevelopment tools tied to the revitalization effort.

- Outreach and ancillary actions: Staff proposed a robust engagement strategy (quarterly newsletters, door-to-door campaigns, a neighborhood kickoff event), neighborhood signage, a menu of developer incentives, and working with the historic commission (HARK) on potential National Register nominations.

Commissioner questions and staff responses

Commissioners pressed staff on inventory control, financing and program mechanics. When asked how many of the roughly 404 vacant lots the city controls, staff said the city controls "a little less than a third" of those parcels and that only about three surplus parcels remain in the original pilot area. On infrastructure, staff noted about $400,000 in southside infrastructure spending in the previous fiscal year.

Commissioners also raised practical implementation concerns: bank appraisal comps and loan-to-value ratios in low-priced neighborhoods, whether incentives would be phased to create visible momentum, and whether lot-line changes or tailored small-house plans would be encouraged to increase density. Staff said the phased, adjacent expansion is intended to concentrate early investment so lenders and buyers can see nearby completions.

Specific illustrative example: a commissioner suggested offering a small cash incentive to a long-time owner who bought a neighboring parcel cheaply in the past (the commissioner suggested a $10,000 rehab incentive in return for deeding property to the city for reuse); staff said the city has used purchases and averaged appraisals in past buybacks but that fair-market-value rules and appraisal practices limit options.

Process and next steps

Staff said the draft will be released to residents within the program area and that a public hearing will be scheduled before the commission — staff proposed the commission's June 2 meeting for the hearing and possible adoption so there is time to adjust the draft based on public input. After commission action, the plan would go to the city commission for final consideration.

Representative quotes

"Tonight we will have a presentation regarding our department's . . . Southside housing plan," Palmer Stroop said when introducing the draft. Stroop also noted the area contains a large number of vacant parcels and that the plan envisions phased expansion and augmented incentives to spur redevelopment.

The plan will be subject to public notice and an advertised public hearing before the planning commission; staff will return with revised materials after the outreach period.