Louisville City FC nets state tax subsidy for Butchertown soccer stadium deal
The Louisville FC soccer club's owners and investors have been waiting for state approval to finalize financing.
FRANKFORT, Ky. (WDRB) -- Developers of a Butchertown soccer stadium complex got state approval Thursday to use tax revenue generated by the project, the final piece of public financing needed before construction can start.
With little discussion, the Kentucky Economic Development Finance Authority granted the tax increment financing request sought by the owners of the Louisville City FC soccer club after a state-chosen consultant recommended it. The state's budget director and finance cabinet also signed off.
The board agreed to provide a maximum rebate of $21.7 million in withholding, sales and property taxes over 20 years. That was less than the roughly $30 million the soccer group had hoped to get.
Even so, team representative Mike Mountjoy said the state action is a step towards securing local bank loans and other investments within the next two months.
"That’s going to help us in our structuring of our financing to get the stadium built," he said. "So we’re elated.”
The state gave the project preliminary approval in January, but the final endorsement came after the consultant determined that the new development would have a "net positive impact" on the state. That is one of the requirements for the subsidy.
(The Kentucky Cabinet for Economic Development did not immediately provide the name of the consultant. The agency does not release the detailed consultant reports, which it argues can be withheld under a public records exemption for "proprietary" documents related to incentives, spokesman Jack Mazurak said.)
The finance authority also required the stadium developers to spend the total investment amount -- $193.1 million -- in order to receive the total tax rebate. The revenue would begin to flow back to the project only after $20 million is spent.
Mountjoy, a member of the Louisville City ownership group, said a groundbreaking on the site at Adams and Cabel streets near Waterfront Park is expected by the end of June. Work would be finished by March 2020.
Through a tax increment financing district, or TIF, project, investors would earmark a portion of new state taxes generated at the site for construction debt, with the rest going to government coffers.
The original stadium size -- 10,000 -- has been expanded slightly to 11,300, Mountjoy said Thursday. The 37-acre development also would have 340,000 square feet of commercial office space, 50,000 square feet of restaurant space and 20,000 square feet of retail space, along with a 166-room hotel and a 142-room hotel, according to documents filed with the state.
Mountjoy told the state incentives board that it was "too early" to say which hotel brands might be interested. He later told WDRB News that his group is talking with four to five potential tenants about office space, and a "number of restaurants" also have shown interest.
The tax increment financing, or TIF, proposal would let project investors earmark a portion of new state taxes generated at the site for construction debt, with the rest going to government coffers.
The Louisville Metro Council voted in late October to issue $30 million in bonds for the project and make the 37-acre site a TIF district. The council also required developers to guarantee that $130 million in private capital will be spent and reimburse the city $14.5 million through stadium rental and other revenue.
TIFs operate under an assumption that blighted or underutilized land will generate higher property, sales and other taxes once it’s developed. The difference between the taxes generated from the site before and after it’s developed is the “increment.”
This story will be updated.
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