Developers of the long-delayed redevelopment of the Urban Government Center could receive up to $20 million in property tax subsidies if a new ordinance is approved by the Louisville Metro Council.
Developer Steve Smith is turning the long-vacant city-owned property into a $249 million mixed-use project that will include housing, offices, commercial space, a hotel and parking.
The ordinance, introduced this week by Metro Councilman Philip Baker, would create a tax increment financing district, also known as a TIF district, to support the redevelopment of Louisville Metro government-owned land in the Paristown Point area.
The TIF will be in effect for 20 years or until the developer receives just over $20.3 million, whichever comes first.
In supporting documents, the city said the proposed development would be a “significant catalyst” for development in the surrounding area and would generate “significant” new tax revenue, but could not be accomplished without public funding. There is.
“Without incentives, there is no other appropriate funding mechanism that would allow us to implement the proposed improvements…” the city said in a new filing. “These improvements cannot be driven by private investment alone.”
The ordinance was proposed at Thursday's Metro Council meeting and will be assigned to the Labor, Economic Development and Appropriations Committee, which Baker chairs.
Baker said the bill will be discussed at the commission's April 16 meeting, but the vote will come after a public hearing to gather public input, as required by state law.
The meeting is scheduled for April 18th at 5:30 p.m. at 444 S. Fifth St., Room 101. Virtual attendance options are also available.
The Urban Government Center site includes buildings built from 1924 (the seven-story former Kentucky Baptist Hospital) to the 1990s. Concerns about the aging facility and mold led the city government to retreat from the site in the middle of the last decade, and its future has never been clear ever since.
Smith's proposal would be the third attempt to reuse the site since 2016, when the city announced plans to overhaul the site.
Two previous redevelopment attempts by different developers ultimately failed, leading Smith's Upper Paristown Preservation Trust to enter into a development agreement with the city government in December 2021.
Smith is the developer of nearby Paristown's arts and entertainment district along Brent Street, including the Village Market food hall and Old Forester's Paristown Hall.
Smith did not immediately respond to a request for comment Wednesday.
“Seven years. Three developers. It's been talked about,” Baker told the Courier-Journal, adding that while he agreed to the government's request to sponsor the ordinance, he has not yet decided on a vote.
He encouraged the public to reach out to his office or attend a future public meeting.
“There is still engagement in this process. This is not something that will be imposed on the community,” he said. The government sent this and this is where we are. ”
The 20-year TIF is capped at $20.3 million and has affordable housing requirements.
Seeking the creation of a TIF district is not surprising, as the city government promised in its development agreement with Smith that it would help the developer submit the bill to the Metro Council.
If passed, TIF would help developers recoup some of their development costs. TIF funds are not distributed to the front end of the project. Rather, it has to do with how much the development increases property tax revenue over the base year.
The base assessed value for 2023 was calculated to be $650,000 (resulting in approximately $3,000 in property taxes). That figure doesn't take into account the approximately $2.01 million assessed value of four of his five parcels of real estate, which are exempt from property taxes.
Annual estimates of the new property tax revenue expected to be generated by this project show an increase from approximately $1.05 million in 2026 to more than $1.52 million in 2045.
Over the life of the TIF, which is 20 years, 80% of the difference between property taxes collected in the base year and property taxes collected in subsequent years is paid to the developer.
The TIF district, known as the Urban Government Center Development Area, includes more than 11.5 acres spanning 768, 810 and 850 Barrett Avenue, 1235 East Breckinridge Street and 814 Vine Street.
The city says Smith is only pursuing local, not state, TIFs.
Smith previously told the Courier-Journal that he envisions multiple uses for the former government site and that it would be developed in phases.
Nearly all the buildings on the site would be demolished, including the Louisville Metro Housing Authority building and the former police station. The steam factory buildings along Vine Street will be saved.
The current vision includes 440 apartments or condominiums, approximately 165,000 square feet of office and commercial space, approximately 20 cottages, approximately 100 hotel rooms and five rooftop condos, and approximately 850 parking spaces. Includes parking and public green space.
The TIF agreement requires developers to make 46 units affordable to people at or below 80% of the area median income, as defined by the U.S. Department of Housing and Urban Development. In Jefferson County, 80% equates to $61,700 for her two-person household.
The 46 units represent 10% of all units in the development and are applied evenly across unit types (1 bedroom, 2 bedroom, etc.).
Developers will be required to submit annual reports on how they spend TIF funds and how they plan to spend next year's allocated funds. They will also be required to detail their development activities and demonstrate that they are maintaining agreed affordable housing standards.
Growth and development reporter Matthew Glowicki can be reached at mglowicki@courier-journal.com, 502-582-4000 or @mattglo on Twitter.
