Lexington, KY

Lexington-Fayette’s relatively stable economy revolves around the horse industry, and the corporate presence of Toyota and the University of Kentucky. The area claims one of the most educated workforces in the nation, which also helps to support the local economy. Although Lexington-Fayette is Kentucky’s second largest city, the area ranks fourth in foreclosures. Foreclosures have impacted more middle-income residents than low-income residents primarily due to the high number of market-rate housing units built and purchased prior to the housing crisis coupled with higher rates of unemployment. Unlike many other communities, the incidence of foreclosure has been dispersed throughout the community.


LexingtonHistorically, Lexington’s municipal priorities have not included housing issues. In implementing NSP, the city’s primary challenge was the lack of time available to coordinate with potential partners and insufficient staff capacity to juggle both existing neighborhood and housing development programs and NSP activities. Additionally, because of a lack of capacity, the city has experienced difficulty in coordinating the different actors implementing NSP resulting in several other organizations being awarded NSP funds.

Lexington-Fayette officials anticipate using NSP funds to purchase and demolish 27 structures in targeted neighborhoods allowing new homes to be constructed with available HOMES funds. Officials were discouraged from pursuing a purchase and rehabilitation strategy due to staff limitations, market pricing and limited quality inventory.

Initially, State officials were requiring Lexington-Fayette representatives to target very low-income neighborhoods determined to be the “hardest hit.” Since many of the foreclosures are not located in these neighborhoods, Lexington officials felt restricted by the State’s focus. As a result, they worked successfully to persuade the State to allow use of NSP funds on housing options in other neighborhoods where they believed a greater impact could be realized.

Promising approaches

The city’s straightforward approach to purchase and demolish foreclosed structures to make way for new housing in targeted areas provides the city with a very manageable strategy. In developing this focus, city officials considered staff resources, market conditions as well as the area’s foreclosure situation. Rather than designing an overly complex strategy, this manageable plan allows the city to effectively target a few areas which should serve the city well in stabilizing impacted neighborhoods.

More information


Irene Gooding
City of Lexington