Louisville Mayor Greg Fischer finalizes downtown Omni hotel deal - WDRB 41 Louisville News

Louisville Mayor Greg Fischer finalizes downtown Omni hotel deal, Cordish no longer involved

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downtown Louisville Omni hotel rendering downtown Louisville Omni hotel rendering
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By Marcus Green and Chris Otts

LOUISVILLE, Ky. (WDRB) – An Omni hotel set for downtown will climb higher into the city skyline than initially planned, Louisville Mayor Greg Fischer said Tuesday in outlining terms of a deal finalized last month.

At 30 stories, it would be the third tallest-structure in Louisville behind the 40-story National City Tower and the 35-story 400 West Market skyscraper (formerly the Aegon Center), Fischer said at a news conference.

In addition, the Cordish Cos. will no longer be part of a project that also includes apartments, a parking garage and a grocery store, according to a development agreement dated Dec. 9 but filed with the Metro Council Monday.

"I'm pleased to report the project has grown even larger in scale and importance to the city," Fischer said. 

Hotel giant Omni agreed to purchase Cordish's stake in the venture, although Fischer said the city will pay the Baltimore-based developer of Fourth Street Live $3 million from a development account established in 2007 and extend annual state and city tourism tax credits of $250,000 over the next nine years -- in all, more than $5 million.

A Cordish corporate spokeswoman didn't immediately return a phone call seeking comment. But in a statement, the company said, “We are very pleased to have delivered a world class development for the City as we promised. We are excited to make a major additional investment in downtown and are pleased Omni has agreed to flag the convention hotel as part of this $289 million expansion of Fourth Street Live!."

Omni hopes to break ground as early as this summer and open the hotel by 2018, but additional approvals are needed. The Metro Council plans to vote on an ordinance for the project by the end of this month, budget chair Marianne Butler said. State officials also must approve a tax-increment financing district at the site.

Louisville has seen several high-profile projects scuttled over the last decade. Those include Museum Plaza, which faltered after developers couldn't secure financing after years of planning.

Omni can cover its $150 million piece "out of our operations," said Mike Garcia, Omni's chief financial officer and senior vice president of acquisitions and development.

"We are committed, and we're still here and we are now ready to get moving," Garcia told reporters.

Although Garcia said Omni is in the "advanced" design stages, he and Fischer declined to speculate on the future of several historic buildings on the Water Co. site. Those structures include the old Morrissey Garage and the Falls City Theatre Equipment Co.

A rendering provided by Fischer's office shows a largely glass-encased group of buildings as seen from the east -- hiding the western side where those buildings front Third Street -- and a video doesn't appear to show the historic buildings incorporated into the Third Street facade.

Many of the basic details of the deal, announced early last year, remain the same. Those include a 600-room high-rise hotel, a “high-quality, full-service urban grocery store” and 225 “market rate” apartments planned for an area bounded by Second, Third and Liberty streets and Muhammad Ali Boulevard.

Officials declined to discuss specific details, such as the grocery store brand and rental rates for the apartments. In an interview, Garcia said the Louisville project will be the company's first apartment venture, although it has been involved in condominium developments elsewhere.

The project will cost $289 million in all, with the city and state paying nearly half the cost through various forms of subsidy.

The hotel would include two full-service restaurants, a lobby lounge, a rooftop café, a spa and fitness center and a swimming pool, according to the development agreement. Fischer first announced the plan last March, calling it a "huge leap forward" for Louisville.

The development agreement still includes sharing some of the hotel's proceeds with Metro government -- an amount equaling 10 percent of the hotel's annual net operating income above $14 million. However, the revised deal sets a cap of $1.25 million a year and $18 million overall over a period that could last for up to 30 years.

Jeff Mosley of Louisville Forward, a city economic development agency, said the cap was part of "give-and-take" in negotiations with Omni. "We believe that the agreement as negotiated is fair and a good deal with the city," he said.

The agreement requires the hotel to be built to standards "generally consistent" with recent convention center hotels Omni has opened in Nashville, Tenn. and Fort Worth, Texas.

The Parking Authority of River City, a Metro government agency, will purchase an 820-space garage built by Omni for the hotel for a "currently estimated" price of $17 million, according to the deal.

Metro government will issue up to $120 million in bonds for construction of the hotel, the agreement says. While Metro government is responsible for repaying the debt, city officials plan to use tax-increment financing to pay off the bonds. That type of financing allows the tax revenue generated by the project -- such as property taxes and sales taxes -- to be redirected to pay construction debt.

The agreement also prevents Metro government from spending $10 million or more to subsidize any other hotel of at least 400 rooms and within one mile of the Omni for six years following the opening of the Omni.

Garcia said his company has asked for -- and received -- similar protections in other cities.

"We felt like that was a very fair part of the deal," Fischer said.

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