Tax district for KFC Yum! Center falls below expectations in 201 - WDRB 41 Louisville News

Tax district for KFC Yum! Center falls below expectations in 2014

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LOUISVILLE, Ky. (WDRB) – The state tax revenues that help pay off the KFC Yum! Center’s construction debt climbed in 2014 but failed to meet expectations, according to figures released Monday.

The arena’s downtown tax-increment financing district produced slightly more than $8 million last year for the Louisville Arena Authority, up from $7.4 million in 2013 and $5.7 million in 2012. The proceeds were about $1 million less than budgeted, arena authority chairman Larry Hayes said.

The TIF district is a bellwether of the arena’s intricate financing plan, which uses revenues from arena events, sponsorships, state tax subsidies and an annual payment from Louisville metro government to cover bond payments.

Despite less-than-expected growth in the TIF district, the arena authority is “in very good shape” to make its upcoming payments in December and through next year, Alex Rorke, senior managing director of municipal securities for arena adviser Hilliard Lyons, said at Monday’s arena authority meeting.

Hayes acknowledged the shortfall, but he said in an interview that other revenues have been better than expected. For instance, he noted that the profit from arena operations was about $2 million for the fiscal year that ended June 30 – or $455,950 above estimates.

The TIF district had encompassed six square miles before the arena authority reduced it to two square miles in 2013. Hayes, who plans to retire this year as Kentucky’s economic development secretary, said officials will survey the smaller TIF and catalog the properties in the area, such as vacant buildings.

“It’ll help us be able to come up with a more, I think, better thought-out projection of what the next year will be,” he said.

The TIF district was supposed to generate millions of dollars a year for the project under projections made when the bonds were sold in 2008. But with those forecasts failing to materialize, the arena authority has asked metro government to pitch in more money.

At the same time, bond rating agencies have lowered the ratings on the arena bonds to below investment-grade – commonly known as “junk” status – and a state legislative committee is looking into the arena’s “funding process.”

The TIF returns 80 percent of annual increases in sales and property taxes to the arena authority, while the remaining 20 percent goes into government coffers. The arena received $7.5 million in sales tax revenue in 2014, up from $6.8 million the year before. Property tax revenue was essentially flat.

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