LOUISVILLE, Ky. (WDRB) – A bill containing $175 million in new Kentucky tax breaks for developers and film producers includes a provision specifically designed to deliver up to $6 million in state money to the Ohio company planning to renovate the historic Seelbach Hilton hotel in downtown Louisville.
The hotel isn’t named in the legislation, House Bill 249. But two high-ranking members of the supermajority Republican leadership in the state Senate confirmed the Seelbach connection in interviews with WDRB.
Policy groups on opposite ends of the ideological spectrum denounced the provision as an under-the-radar giveaway to a wealthy developer who employs well-connected lobbyists.
“Taxpayers, especially in rural Kentucky, have every reason to be outraged that a hospitality hedge fund from Columbus, Ohio got a multi-million dollar handout to renovate a luxury hotel in Louisville,” said Andrew McNeill, a former deputy Kentucky budget director, who is now a fellow at the Bluegrass Institute for Public Policy Solutions, free-market thinktank. “The Seelbach’s lobbyists couldn’t get the legislation done in the light of day and resorted to having this corporate welfare passed in the closing hours of the session.”
The “refundable” tax credits that will become available to the Seelbach’s owner and other historic properties in future years “are in essence an appropriation to a private business administered through the tax code,” said Pam Thomas, a former legislative staff supervisor, now with the progressive Kentucky Center for Economic Policy.
“Every dollar sent to a developer under this program is a dollar lost to spend on other important needs, like textbooks and social workers,” Thomas said.
HB 249 was among a flurry of bills passed Tuesday, a deadline that preserves the Republican-dominated legislature’s option to override any bill’s veto by Democratic Gov. Andy Beshear.
In addition to reinstating Kentucky’s incentives to film producers at a cost of up to $75 million a year, HB 249 also dramatically increases the state’s budget for tax credits to developers and residential owners to rehabilitate historic properties, from the current $5 million to $100 million.
The new $100 million pool can’t be tapped until 2022, except in one instance.
The bill says the Kentucky Heritage Council may award one tax credit for a “major certified rehabilitation for a certified historic structure” prior to June 30, 2022.
While no specific project is named, the bill sets out criteria (for example, a project of at least $50 million for a facility on the National Register of Historic Places) that would appear to apply to the Seelbach.
Rockbridge Capital, a Columbus, Ohio firm that invests in real estate and other businesses, announced last year that it plans “a comprehensive renovation of the Seelbach Hilton to include all guest rooms, public spaces, and the addition of a tower with rooftop bar.” Louisville-based Musselman Hotels is also a partner in the project.
The developers also filed plans to add a new 11-story guest room tower above the hotel’s existing two-story ballroom addition.
Rockbridge did not respond to inquires on Wednesday.
But HB 249 was one of two bills the company lobbied in 2021, according to public disclosures.
Under the provision approved in HB 249 – which was never publicly debated in Frankfort – whoever qualifies for the one historic preservation tax credit made available before next year could get up to $6 million from the state, said Thomas, who used to oversee the staff that drafted taxing and spending bills for the Senate budget committee.
Sen. Majority Leader Floor Leader Damon Thayer confirmed the Seelbach connection when speaking to WDRB on Tuesday about HB 249.
“There’s a thing in there for Louisville that would help the Seelbach in its renovation and restoration in terms of tax credits,” Thayer said.
Senate budget committee chairman Chris McDaniel, whose committee drafted the rewritten, final version of HB 249, confirmed that on Wednesday.
“You do have one in there specifically designed to help get the Seelbach rolling and make it successful as part of the overall,” McDaniel said.
McDaniel said the Seelbach project is only “a small portion” of the $100 million in historic preservation tax credits made available through the bill.
“Lots of towns throughout Kentucky, you have a lot of historic properties, and renovations is just expensive, and you need to be able to close the funding gap on these types of thing,” McDaniel said.
Rockbridge evidently smoothed the way for the historic tax credit award by purchasing influence in Frankfort.
RB Seelbach, the limited liability company that owns the hotel, has spent $41,256 since January employing well-connected lobbyists at McCarthy Strategic Solutions, according to records from the Legislative Ethics Commission.
As HB 249 neared final passage on the House floor Tuesday night, Rep. Angie Hatton, D-Whitesburg, pressed House budget chairman Jason Petrie, R-Elkton, about whether the provision was designed to benefit a particular hotel project.
“I don’t know that it pertains to a particular project. I just know that it puts a guideline around a particular kind of credit … I am unaware of any particular project it’s set for," Petrie told Hatton.
Hatton wasn't convinced.
"It looks to me like a special interest project here," Hatton said.
She voted against the bill, saying the state needs to preserve revenue for things like textbooks and full-day kindergarten.