Ohio developer seeks $11.3 million in tax breaks for Highlands apartment projects
Ohio developer Edwards Cos. is asking Louisville Metro government and Jefferson County Public Schools for property tax breaks worth $11.3 million over the next two decades. The breaks would serve as incentives for Edwards to move forward with two large apartment projects near the intersection of Baxter Avenue and Broadway.
LOUISVILLE, Ky. (WDRB) -- Ohio developer Edwards Cos. is asking Louisville Metro government and Jefferson County Public Schools for property tax breaks worth $11.3 million over the next two decades.
The breaks would serve as incentives for Edwards to move forward with two large apartment projects near the intersection of Baxter Avenue and Broadway.
Edwards has previously announced plans to develop 4-story apartment buildings at the old Mercy Academy site, 1172 E. Broadway, and at the former Phoenix Hill Tavern at 644 Baxter Avenue. The sites are two-tenths of mile apart.
Details of the proposed property tax breaks were included in the meeting materials of the Jefferson County school board, which will be briefed on the proposal at its work session on Tuesday.
The documents show that Mayor Greg Fischer’s economic development department has agreed to tax breaks worth up to $7.5 million for Edwards over 20 years, subject to the approval of the Metro Council.
Meanwhile, Edwards will ask the Jefferson County school system to give up $3.8 million in tax revenue over 10 years, according to the documents.
Jon Wood, an official with Columbus, Ohio-based Edwards, said in an email Monday that the projects would not be “economically feasible” without the tax breaks.
Bill Bardenwerper, a Louisville attorney representing the company, said the subsidies are “critical for Edwards to afford the excess” costs of building in Louisville’s urban core – mainly, the parking garages required to serve both apartment buildings.
Though Edwards spent $1.4 million last month to buy the Mercy site, Bardenwerper said it’s not too late for the company to abandon either project if the tax breaks are not approved.
Edwards is in line to receive roughly the same level of public subsidy from Metro taxpayers as three other recent urban apartment projects, according to Jeff Mosley, deputy chief of Louisville Forward, Fischer’s economic development department.
Those projects are the remodeling of the aging 800 Building at 800 S. Fourth Street; the proposed Main & Clay development downtown; and the Axis at Lexington complex at Lexington Road and Payne Street.
In each case, Metro government set up a tax-increment financing district that allows the developers to receive 80 percent of the new tax revenue generated their projects, up to a pre-determined cap, over 20 years.
Mosley said city officials “feel strongly” that the subsidies were “critical in making those projects work -- or they would not have gone forward.”
“They are all good projects that will lead to benefits to the city in the long run,” he said.
Within the same parameters, Louisville Metro has agreed to “abate” up to $4.9 million in taxes for the Phoenix Hill project and up to $2.6 million for the Mercy Academy project, according to a Feb. 19 letter from Mosley to Edwards Cos., which was included in the JCPS meeting materials.
But the type of deal Edwards Cos. is seeking – called an Industrial Revenue Bond – would allow the company to get an additional incentive from JCPS.
The deal calls for Louisville Metro to own the real estate on which the two apartment projects are built, a move that would exempt the sites from property taxes.
Then, Edwards would make up for some of the tax revenue the city and school district would have received by making annual “payment(s) in lieu of taxes” to Louisville Metro and to JCPS.
For JCPS, the deals would mean accepting only a fraction of the property taxes the district would otherwise have gotten for ten years.
For example, during the first five years of the agreement, JCPS would be owed about $450,000 to $500,000 annually, but Edwards would have to pay only $80,230, according to the documents.
Edwards plans to sell the school board on the plan by emphasizing how much more tax revenue apartment projects will generate over the long term – as opposed to leaving the sites in their current state.
Even with the tax breaks, the apartment projects would deliver $6.8 million more to JCPS over 20 years than the district would receive if the sites were not developed, according to the documents.
Bardenwerper noted that the Mercy Academy site, a former school, had generated nothing for the city and school coffers for decades, as it was exempt from taxes.
While the proposal would require approval by the school board, the board will not vote on it on Tuesday, JCPS spokeswoman Allison Martin said. WDRB EDUCATION REPORTER TONI KONZ PREVIEWS THE MEETING.
She said it would be “inappropriate” to comment on the deal before it is presented to the board.
Under the proposed Industrial Revenue Bond, Louisville Metro would issue up to $60 million in bonds to finance the Phoenix Hill project and up to $30 million for the Mercy Academy project, according to the documents.
Edwards – not the Metro government – would be on the hook to repay that debt, Mosley said.
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