Urban Government Center June 14 2021

Fence surrounding 810 Barret Avenue, one of the buildings at the old Urban Government Center

LOUISVILLE, Ky. (WDRB) – In mid-May, city officials gave Underhill Associates an ultimatum: Tell us how you will fill a funding gap in the Urban Government Center redevelopment plan by June 14 or we’ll stop negotiating.

They recommended that Underhill consider bridging the nearly $14 million gap with tax increment financing and ditch the possibility of using Metro government budget funds. And they strongly suggested that federal stimulus dollars won’t qualify for the project.

But in its response on Monday, Underhill pushed back against those conditions for its proposal in the Paristown Pointe neighborhood. In particular, the real estate developer said it’s too early to dismiss spending from the American Rescue Plan Act, which is sending $388 million in coronavirus-related aid to Louisville.

“It would be grossly premature, shortsighted, and highly suspect to end the prospects of this highly popular Paristown Green proposal before full consideration of its public benefit components could be made with regards to the ARPA funding that is available and must be appropriately spent by 2024…” Jeff Underhill, the company’s president, wrote in his June 14 letter to Jeff O’Brien, Co-Chief of the Louisville Forward economic development agency.

Louisville Forward is determining its next steps but declined to comment further, spokeswoman Caitlin Bowling said Tuesday.

The letter, obtained under the Kentucky Open Records Act, also sheds light on Underhill Associates’ relationship with Louisville Forward. The company claims it was promised a preliminary contract since February – a request the city has denied.

Underhill also wrote that, according to legal counsel, a city committee’s selection of Underhill Associates last fall was “definitive and precise.”

“It is neither likely, nor legally permissible to change ‘horses after the horse race is over’ in order to now meet a new criteria that no direct or shared funding by Metro is possible when, in fact hundreds of millions of dollars are NOW available, which did not exist when the ‘formal selection committee’ selected Paristown Green,” Underhill wrote.

He suggests the city could use $17.5 million in revised revenues announced by Mayor Greg Fischer last week for the current and upcoming fiscal years, along with $15 million Metro government will recoup by covering other expenses with the federal stimulus money.

Fischer proposed spending the $17.5 million on public safety; work related to the U.S. Department of Justice investigation of the Louisville Metro Police Department; the River Road widening and other public works projects; and covering a Metro Corrections shortfall caused by a decline in inmate phone fees.

And he has recommended that the $15 million go toward “previously recommended capital projects” funded by debt, a move that would reduce city borrowing next year.

Underhill argued in his letter that the recouped budget funds could be put toward Paristown Green, as could unspent budget funds of up to $60 million.

“Furthermore, even if Mayor Fischer fails to include Paristown Green in this funding, the Metro Council will certainly have been able to alter any proposed budgetary proposal from the Mayor,” he said.

A city selection committee noted a “gap/funding ask of Metro Government” of $12.1 million when it chose Underhill last November. At that time, the committee said it had concerns about the shortfall.

In seeking bids, Metro government told prospective developers that they would be

“responsible for financing the entire cost of the project,” although public incentives and other funding sources could be used.

O’Brien wrote to Underhill May 17 that city officials believed it was “unlikely” that the American Rescue Plan Act could be used, “as the subject property is not in a Qualified Census Tract.”

Instead, Metro government recommended that Underhill pursue tax increment financing to help make up the roughly 23 percent funding gap of the $58.9 million proposal that calls for a grocery store, farmer’s market, restaurant and retail space, and affordable housing, among other things.

In his letter, Underhill said federal rules allow spending the funds on things such as “green infrastructure” and other investments.

Metro Council President David James told WDRB News on Tuesday that Underhill’s proposal is a “valuable project,” but that there are others also vying for the federal funds.

“We have to find out No. 1: Can it be used for that project? And then No. 2 is: Is there the will to do that compared to the other things that those funds need to be used for?” James said.

Underhill said his team still plans to “bring $45 million to the table” to make the project a reality. While there remains a funding gap, Underhill wrote that developer doesn’t plan to change aspects of its proposal.

Doing so, Underhill wrote, could “legally jeopardize” the rights of the losing bidder and potentially result in a legal challenge.

A prior deal to redevelop the property once home to government office buildings collapsed in late 2019. That prompted a new call for proposals that ended with Underhill’s tentative selection last November.

This story may be updated.

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