Urban Government Center

The old Urban Government Center on Barret Avenue.

LOUISVILLE, Ky. (WDRB) – Mayor Greg Fischer’s administration is giving its preferred developer until mid-June to commit to negotiations on the old Urban Government Center property and fill a $13.7 million funding gap.

The Louisville Forward economic development agency notified Underhill Associates in a May 17 letter that it won’t agree to using city budget or American Rescue Plan Act funds to close the gap, which represents about 23 percent of the project’s $58.9 million cost.

The city recommends that Underhill use tax increment financing and other sources and provide a revised budget by June 14. If that doesn’t happen, “negotiations will be terminated,” Louisville Forward Co-Chief Jeff O’Brien wrote in the letter, a copy of which WDRB News obtained through an open records request.

A selection panel of Metro government officials chose Underhill last November to oversee the long-planned renewal of the 10-acre site off Barret Avenue in the Paristown Pointe neighborhood once home to city offices. The panel, however, said it had “serious concerns” about a funding gap of $12.1 million.

City discussions with Underhill began in December, O’Brien wrote. In late March, Louisville Forward confirmed that the developer needed $13.7 million to fund the project, which envisions a grocery store, farmer’s market, restaurant and retail space, and affordable housing, among other things.

Jeff Underhill, president of Underhill Associates, said negotiations are continuing, but declined to comment further. He said he has agreed not to publicly discuss those negotiations. 

Caitlin Bowling, a Louisville Forward spokeswoman, declined to comment on the letter. 

The letter says Underhill Associates has indicated it wants to use a portion of Louisville’s share of the American Rescue Act, the latest coronavirus relief package, to help pay for the redevelopment. The city stands to receive $388 million for a wide range of uses from the bill over the next year. The money can be spent on replacing lost revenues and covering other expenses from the COVID-19 pandemic, as well as some water, sewer and broadband projects.

“After reviewing the guidance for the ARPA guidance, we believe it is unlikely those funds would be able to be used for this project as the subject property is not in a Qualified Census Tract,” O’Brien wrote.

Instead, the city wants Underhill to tap tax increment financing, or TIF, an economic development approach that lets developers receive a portion of newly created property tax revenues to pay off debt. However, O’Brien wrote, it is “unlikely that the TIF will cover the full gap that has been identified for this project.”

The Metro Council would have to approve any TIF deal.

Underhill was among the losing bidders during an earlier proposal period for the site in 2017. Metro government ultimately chose the Marian Group, but it backed out in late 2019 after it claimed the city failed to secure land-use and other approvals it promised.

This story may be updated.

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