LOUISVILLE, Ky. (WDRB) – Two national developers announced plans Thursday to build a 600-room hotel, upscale grocery store and 200-unit apartment complex downtown – a project Mayor Greg Fischer called a "huge leap forward" for the Louisville area.

Dallas-based Omni Hotels & Resorts is to build the hotel on the old Louisville Water Co. block bounded by Muhammad Ali Boulevard and Liberty, Second and Third streets. The apartments and grocery store will be built by Baltimore-based Cordish Co., which also plans retail space.

At a press conference, Fischer said the $261 million project is the largest investment downtown since the construction of the KFC Yum! Center, and it comes amid a slew of other developments from new hotels to a proposed expansion of the Kentucky International Convention Center.

"You can really start to feel the enormous transformation that's a going on in our downtown and how it's so good for entertainment and business in the state in so many different areas," Fischer said.

The cost of the project will be divided between the private companies and Metro and Kentucky state government – although the city will be responsible if a state tax-increment financing district at the hotel site fails to meet projections.

The private developers indicated that they have their financing in place, although the city still has to issue more than $100 million in bonds before construction can start in 2015, as scheduled.

Also unclear is the fate of several historic buildings on the block, including the old Morrissey Garage and the Falls City Theatre Equipment Co. No decision has been made on whether those buildings will be incorporated into the project.

The Louisville hotel would join the nearly 60 luxury hotels Omni operates in North America, according to Fischer's office. Called a "four-diamond" hotel, it would be the chain's first Kentucky property and include 70,000 square feet of meeting space, a rooftop pool-side café, a spa and fitness center.

Several high-profile Louisville downtown projects – the Museum Plaza skyscraper and the original Iron Quarter complex on Main Street, for example – were announced with much fanfare over the past decade but failed to materialize because of financing difficulties.

But Mike Garcia, Omni's chief financial officer and senior vice president of development, said his company's project is a "reality."

"Today we are not here to talk about a plan. We are not here for discussions. This is a reality and we're going to make this happen," he said.

Garcia said each of the company's hotels is unique. The exact design of the hotel, which will likely be between 20 and 25 stories, hasn't been determined, but Garcia said the style and décor will reflect Louisville, which he called a "foodie city" that's close to Kentucky's bourbon distilleries.

Cordish, which developed and operates the 4th Street Live downtown, hasn't determined which type of grocery store will be built at the site. Nick Benjamin, the company's development director, said the apartments will be one- and two-bedroom units between 700 and 1,300 square feet.

Omni will contribute $105 million in private equity and Cordish will add $30 million in equity, while the city will hand over the $17 million value of the previously-purchased land. The Parking Authority of River City, a city agency, will issue $17 million in bonds to pay for a parking garage.

Louisville Metro will issue about $104 million in debt, including financing costs, to raise $90.5 million for construction, said Steve Rowland, Fischer's chief financial officer.

Rowland said the bonds will be paid back over 30 years by a portion of the new sales, property and employee income taxes generated at the site.

Under tax-increment financing, or TIF, a portion of the annual increase in tax revenue will be set aside for repaying debt, rather than go to government coffers. There won't be any new taxes levied.

If the tax revenues don't come in as projected, it'll be Metro government's responsibility to make the debt service payments of about $4.5 million per year – an event Rowland believes is unlikely.

"For that to happen, the hotel would have to close, the grocery would have to close and the property would have to go off the books," he said.

The TIF arrangement will be structured differently than the one that is helping pay debt on the bonds for the KFC Yum! Center. (The Omni TIF wouldn't contribute to the arena TIF, but officials are banking on increased activity from the project indirectly affecting the arena district.)

Rowland said the TIF arrangement for the Omni will be similar to taxing district that helped pay for the downtown Marriott.

And unlike the TIF backing the KFC Yum! Center, which so far has fallen short of its projected revenue, the Omni TIF does not rely on any other businesses other than those involved in the project to generate tax receipts, he said.

"The Marriott has worked beautifully even during the recession," Rowland said.

Metro Councilman David Tandy, whose downtown district includes the hotel site, said he's excited about the project and its impact on downtown.

"It allows for us to grow our local economy in the long term by bringing people in, introducing them to the city of Louisville and seeing Louisville as a place where they can come to live, raise a family and start a business themselves," Tandy said.

In the past, some hoteliers have raised concerns about adding new hotel rooms downtown.

But Fischer said Louisville needs new hotel rooms downtown to accommodate a "whole new type of tourist" using the city as a base for visiting bourbon distilleries in Kentucky.

"That's one of the reasons you're seeing all these hotels being built in the city," he said.

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