SUNDAY EDITION | City, pro soccer club kicking around public costs of Butchertown stadium deal
The potential public costs remain under negotiation nearly three months after Louisville City FC owners unveiled their preferred stadium site. As talks continue between the club and Mayor Greg Fischer’s administration, neither side is willing to say just how much taxpayer support may be included in the deal.
LOUISVILLE, Ky. (WDRB) – Partially hidden behind a screen of trees, abandoned tanks line the site where Louisville City FC soccer club officials want to build a new stadium as part of a bigger development in Butchertown.
A refinery operated there from 1919 to 1986, while nearby land once was home to an iron works, foundry and veneer mill, among other businesses, state records show.
The Metro Council set aside $250,000 for the stadium project in the city’s recently approved budget. Metro government will use the money to conduct an environmental review of the properties and keep more than 30 acres near N. Campbell and Adams streets under option.
But the larger, potential public costs remain under negotiation nearly three months after team owners unveiled their preferred stadium site. As talks continue between the club and Mayor Greg Fischer’s administration, neither side is willing to say just how much taxpayer support may be included in the deal.
“That’s probably the best title for where we are right now is the due diligence phase,” said Mary Ellen Wiederwohl,, chief of Louisville Forward, metro government’s economic development agency. “We’re working on the issues that might be there with the land, if any, and also of course the financials.”
Louisville City FC has played at the Louisville Slugger Field baseball stadium during its three years in the professional United Soccer League. Attendance has grown steadily, with crowds averaging about 8,050 this season – up from 6,840 at the same time last year and 5,335 in 2015, according to team data.
But the league has given its teams until 2020 to move into venues meant for soccer, prompting Louisville City to seek out land for a stadium of its own.
The project would include more than a new soccer pitch. Team officials envision a broader entertainment district that could include two hotels, four office buildings, restaurants and bars.
In announcing the project in April, Louisville City FC’s owners said private investment would provide the bulk of the overall funding. But they are also working to get city and state participation as well.
Team and city officials declined to provide estimates of those costs because the ultimate financing structure isn’t yet known.
But they suggested several possibilities, including Metro Government buying the land and leasing it to the team. The properties on the stadium site, which takes in the former Challenger Lifts site, a storage facility, Marshall’s Auto Parts and the former oil tank farm, are assessed for tax purposes at $8.3 million, according to a WDRB News review of Jefferson County online property records.
The assessed value of land often understates the price it may fetch on the open market, especially when much of the properties have not been sold in years. Meanwhile, the expansion of Waterfront Park and the opening of Slugger Field have occurred nearby, likely helping elevate property values.
Louisville City FC also is seeking to use tax increment financing, or TIF, a tool that allows developers to get a rebate on some tax revenues that otherwise would go to city and state governments. It has been approved for projects such as the downtown Marriott hotel, an industrial park near Louisville International Airport and the KFC Yum! Center.
Team officials expect to receive an analysis in the coming weeks that will look at the potential economic impact of the project, said Mike Mountjoy, a Louisville FC board member.
“It will take all of that into consideration and determine what the gross tax revenue to the city and state will be from that – from that study – and that will give us an understanding of what we might be able to expect from a TIF,” he said.
Several types of TIF districts are allowed in Kentucky. In most cases, the incentives help offset a project’s cost based on the taxes that are generated once a development is complete.
The theory is straightforward: A block of blighted land, for instance, creates little public benefit. But building on it will result in higher property, sales and other taxes. The difference between the taxes generated from the site before and after it’s developed is the “increment.”
Kentucky law lets developers keep a portion of any annual incremental increases in the taxes earmarked in the TIF, then apply those to repaying construction debt. No new taxes are created.
The entire cost of the Louisville City FC project could reach $200 million, Mountjoy said, with the stadium and parking areas estimated in the “$50 million range.”
He said Louisville City is exploring property, sales and other taxes, such as payroll taxes, as part of its proposed TIF. Marshall’s and the Extra Space Storage facility are still operating on the site; Challenger closed its offices there several years ago.
“The tax revenues generated off of it now are probably a very small number, and so anything we add to it would probably be a pretty significant increase,” he said.
Louisville City FC would restrict the TIF to the development itself, keeping it outside a similar district for the KFC Yum! Center that includes the arena and a larger two-square mile area downtown.
More than $3 billion in state sales, income and property taxes may be rebated from current TIF districts across the state, according to a research paper published last month by the Kentucky Center for Economic Policy, which calls the state’s program “overly generous.”
In the coming year, it notes, TIF projects are expected to lower state revenues by more than $22 million.
The group is advocating for reforms to the state’s TIF policies ahead of a special legislation session that Gov. Matt Bevin has said he will convene later this year to address tax and pension reform.
Among other things, it argues that Kentucky should limit the types of taxes that qualify for TIF to property taxes or forbid taxes paid by existing companies and their workers that move into a TIF district. (That was the case in Louisville, where Atria Senior Living moved about a half-mile into the University of Louisville’s Nucleus district, creating “new” tax dollars for the TIF.)
“You could have businesses that just move from outside that are already in Kentucky and are already operating and all they do it relocate and that counts as new revenue for the developer,” said Pam Thomas, a senior fellow at the policy center. “And so it’s not really new economic activity at all. It’s just movement of activity from one place to another.”
For its part, the soccer club is aiming to draw some tenants to the project from outside Louisville, Mountjoy said.
If a deal is struck, it would then go before the Metro Council.
The project could be an “economic boon for our community,” said Barbara Sexton Smith, whose council district includes Butchertown. She said her office has received many phone calls from people in support of the stadium.
Sexton, a Democrat who toured the site last week, said she expects council members will take a hard look at the project’s financial projections. She expects her colleagues will be mindful of the lessons of the Yum! Center – which, despite city support of $9.8 million a year, has struggled financially.
“I’m looking very forward to being involved in these discussions to make sure it’s a deal that is good for the city – and most importantly good for the taxpayers,” she said.