Kentucky Bill would pave the way for more tax incentives for developments in downtown Louisville

A legislative template that is moved by the general assembly of Kentucky would enable Louisville to offer developers tax benefits to find projects in the city center. Followers say that this would open up new opportunities to improve parts of the city center.

The city can currently use the popular development incentives known as tax increases almost anywhere in the central business district. This is because a TIF district that started in 2009 to finance the construction of the KFC Yum! The center already includes large parts of the city center.

The existing TIF runs from Ohio River South to East Kentucky Street. The borders include the South Clay Street in the East and 9th Street in the West.

House Bill 775 would enable the city officials and developers to develop new TIF districts within the larger Yum! Center District, often known as Arena District.

Mayor Craig Greenberg announced LPM News that the change in the city could help to meet some of its priorities, e.g. B. the renovation of some of the many parking spaces in the city center in the city center.

“It is difficult to promote large economic development projects in the city center of Louisville (the Yum! Center TIF),” he said.

These parking spaces or free buildings in the city center do not achieve much income for the KFC Yum! Middle either. It uses new tax revenue and profits to repay the bonds of 339 million US dollars that were taken to finance the arena building. New developments, even those subsidized by a TIF district, could mean more money for the arena, said Greenberg.

HB 775, sponsored by the Republican MP Jason Nemes from Louisville, equipped the committee last week. This week it could receive a final vote in the house before it is moved to the Senate.

How it would work

Financing the tax increase is one of the most popular instruments that use local governments in the United States to motivate development.

Officials attract the limits of a TIF district that could only include the project itself or some of the surrounding blocks. All new tax revenues generated by the project are shared: the majority return to the developer and the rest of the local and state government.

Louisville civil servants usually design TIFs that bring 80% of the new taxes back to the developer, while the city and the state divided the remaining 20%. These tax incentives can take between 20 and 45 years.

Proponents of TIFs argue that they are a way for governments to finance projects that would otherwise not be built up. The opponents now see TIF districts as a handout for wealthy developers.

According to HB 775, the Louisville Arena Authority would have to approve the creation of a new TIF district within the borders of the existing approval. In most other cases, the city or the state manage TIFs.

The authority is responsible for the administration of the KFC Yum! The center and ensure that it can repay its debt obligations that have increased to almost 1 billion US dollars in the past decade. The company that assures the authority bonds would also have a say in new subsidies.

The authority was confronted against its debts in 2017, but has since stable after refinancing its bonds. The state of Louisville Metro and the University of Louisville also had to increase their contributions to the KFC Yum! Center to keep it alive.

If the legislation is passed, the authority would work out proposals for new TIF districts from case to case, said Leslie Geoghegan, CEO of the Louisville Arena Authority. The authority would be the greatest concern whether a new TIF would eat the revenue for the repayment of the debts.

“We can’t just approve everything,” said Geoghegan. “It must meet certain threshold values ​​and be an important project.”

To ensure that the authority also benefits from new TIFs in the city center, HB 775 would require 10% of all new tax revenue to go to the KFC Yum! Center.

Greenberg said that the city will be able to identify projects in which a TiF deal of the community, the developer and the authority can benefit.

“For projects that are currently not providing support for (KFC Yum! Center) TIF, it is easier to see,” he said. “We need more living space, we need more jobs in downtown Louisville and we need a new tool.”

Greenberg recently pointed out a proposal to convert a parking space next to the Slugger field into apartments, shops and a boutique hotel. At the announcement of the 250 million dollar project last December, the mayor found that “there is a chance for some TIF incentives”.

HB 775, which the Greenberg administration asked for, would delete the way for a TIF district to support this proposal.