Urban Government Center sign

LOUISVILLE, Ky. (WDRB) -- Members of two neighborhood groups are urging city officials to rethink the redevelopment of the Urban Government Center property, where the latest plan is mired in a funding dispute.

The president of the Paristown Pointe Neighborhood Association and board members of the German-Paristown Neighborhood Association raised the idea on Wednesday of subdividing the 10-acre site and involving multiple developers.

Metro government’s preferred developer, Underhill Associates, said Monday it planned to pursue city budget funds and federal stimulus dollars to close a nearly $14 million gap in its financing plan. Mayor Greg Fischer’s administration had urged Underhill to seek tax increment financing or other traditional city incentives to complete the funding and steer clear of any direct budget subsidy.

Jeff O’Brien, Co-Chief of Fischer’s Louisville Forward economic development agency, told Metro Council members on Tuesday that officials are looking at Underhill’s response and “determining next steps at this point in time.”

“We're going to continue to negotiate with Underhill Associates to try to get the deal done,” he said.

O’Brien said traditional incentives available to developers can cover 8-12% of project costs; the current gap is roughly 20% of the Underhill proposal’s budget, estimated at nearly $59 million.

Mayor Greg Fischer told WDRB News on Wednesday that federal guidelines govern how Louisville can spend its share of money from the American Rescue Plan Act, the coronavirus relief bill Congress approved in March.

“A project like that’s not eligible,” he said.

(Metro Council President David James said Tuesday it’s not clear if the Underhill proposal would qualify, but even if it does, there are other priorities also vying for funding.)

Fischer also dismissed Underhill’s push for budget funds. The mayor had announced $17.5 million in revised revenues 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.

“If that was the case we would have put that in the request for proposal (for the Urban Government Center property) to begin with,” Fischer said.

The German-Paristown Neighborhood Association suggested in a statement that the current proposal has “failed” and said “a new approach needs to center on involving two or three development companies to work together to create a new opportunity, and this time make the conversion more workable and more financially practical. Moving forward this way will assure … the continued deterioration of the buildings on the property.”

“This process is broken and it does not work for this property!” Shannon H. Musselman, president of the Paristown Pointe Neighborhood Association, said in a statement. “We need a whole new concept and process. This is a huge piece of pristine 10 acres in the heart of our city. There is no life left in the campus and revival is desperately needed. It is worn out and so are Paristown Pointe neighbors.”

Musselman said one option would be dividing four parcels at the site into “smaller options for more than one developer and concept.” She said neighbors have been “more than patient with the city bureaucratic process and red tape. We played your games. Now please listen to us.”

Underhill is the second developer chosen by the city to redevelop the site; the Marian Group backed out in late 2019 after it couldn’t reach a development agreement.

Metro government has tried since 2017 to transform the Barret Avenue property in the Paristown Pointe neighborhood bounded by Barret Avenue, Breckinridge Street and Vine Street. There are four buildings on the site once used as government offices, including the seven-story former Kentucky Baptist Hospital.

A city selection committee chose Underhill to oversee the redevelopment of the property last November, although it raised concerns about a funding gap then estimated at $12.1 million. After months of negotiations, Louisville Forward told Underhill in May to provide a revised budget by June 14 or “negotiations will be terminated.”

Speaking at the Metro Council’s Labor and Economic Development Committee meeting Tuesday, Republican councilmember Anthony Piagentini said he hopes the deal with Underhill succeeds.

“If this reopens again or fails, you know, it's just one more case of an abandoned property that's going to linger out there -- and I'm getting more and more concerned about that,” he said.

Council member Pat Mulvihill, a Democrat, said city officials may need to consider a new approach if the Underhill proposal doesn’t move forward.

“I think sometimes we try to make a perfect project and have a development, and we get too involved in what's going to go there as opposed to what can go there,” he said.

Metro government has led a procurement process that has involved community input and set minimum requirements for any development there.

A better method, Mulvihill said, may be to “let the free market decide what should go there. Put some restrictions on what can and then sell it and let the free market decide what it should be.”

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