LOUISVILLE, Ky. (WDRB) – Passport Health Plan would receive up to $10.5 million in local property tax rebates over two decades under incentives the city is offering the nonprofit organization to build a corporate office in western Louisville.

That amount – the largest public subsidy involved -- has more than doubled from previous estimates detailed in a March letter of intent between Passport and Metro government. At the time, $2.8 million to $4 million in tax rebates were expected.

The increase is an indication that the improvements planned for the site will create more property taxes than previously thought.

Passport spokesman Michael Rabkin said the earlier figures were “conservative” and have been refined as more work has been done on the project.

Passport now envisions a $130 million mixed-use project at 18th and Broadway, including a headquarters building, 525-space parking garage, retail space and an additional project “to be developed with community input,” according to documents recently made public. Anderson and Maple streets also could be extended.

“We’re focusing on Phase One right now with Phase Two on the horizon,” Rabkin said.

An agreement outlining the tax rebate plan was filed this week with the Metro Council, which would give final approval. The council’s labor and economic development committee is expected to take it up September 5, said Jessica Wethington, spokeswoman for Louisville Forward, the city’s economic development agency.

Passport announced plans last April to move its headquarters to the 20-acre site where Walmart hoped to build a megastore before that deal collapsed in 2016. The property has sat vacant since a Philip Morris cigarette factory closed in 2001.

To get Passport to move from its current Preston Highway location, Metro government has agreed to give it a $500,000 grant that also was offered to Walmart and a $762,000 payment for acquisition and other costs.

The biggest enticement, however, is the tax increment financing district.

Under tax increment financing, local and state governments let developers keep a portion of new tax revenue that ostensibly wouldn’t exist had their projects not been built. The developers, in turn, use the rebates to defray construction and other costs.

The difference between the taxes generated from the site before and after it’s developed is the “increment.” In Passport’s case, it would get 80 percent of the annual increase in local property tax revenues.

The rebates would end once the $10.5 million has been returned or after 20 years.  

The KFC Yum! Center, the University of Louisville’s downtown Nucleus building and other projects have used tax increment financing as development tools, but the Passport district would be the city’s first west of Ninth Street – widely seen as a socioeconomic divide between western Louisville and neighborhoods to the east.

Overall, the project is expected to create new real estate tax revenues of $313,325 annually starting in 2019 and reaching nearly $850,000 by 2038. Plans call for the office building, which would have space for 1,000 workers, to open in 2020.

Passport, a group of hospital companies and doctors’ practices that administer Medicaid benefits under a state contract, would pay more than $9 million to Newbridge Development for the site and another nearby parcel where Dixie Highway would be reconfigured.

Reach reporter Marcus Green at 502-585-0825, mgreen@wdrb.com, on Twitter or on Facebook