LOUISVILLE, Ky. (WDRB) -- When Louisville's economic development agency switched to its third preferred developer for the Urban Government Center property, it required a unique deal for the nearby neighborhoods.
A "Community Benefits Agreement" would include commitments by developer Paristown Preservation Trust necessary for the city to give it the publicly owned 10-plus-acre site at Barret Avenue and Breckinridge Street for $1.
Members of Smoketown, Phoenix Hill, Paristown Pointe, Germantown-Paristown and the Original Highlands represent those areas on an advisory panel charged with the negotiations.
But that agreement has struggled to get completed, even as city legislators now are being asked to approve tax incentives of up to $20 million.
Jeff O'Brien, executive director of the city's economic development cabinet, told Metro Council members this week that Paristown Pointe is the only one of the five neighborhoods on the project's advisory group that will sign the agreement in its current form.
The cabinet has indicated that not all five need to sign on for the redevelopment project to proceed, a position that prompted the advisory group to issue a statement this week saying it expects Metro government to refuse to accept any agreement that doesn't include the group's "reasonable demands" or full approval.
The panel statement notes that the draft of the agreement filed with Metro Council "expressly contemplates" all five neighborhoods' participation.
In an interview Friday, O'Brien said that the negotiations will continue and include trying to find common ground with the neighborhood groups.
"I don't think we've made any determination that this agreement is going to go forward with only one signature," he said. "I don't think that decision's been made. I think we're still hopeful that the other neighborhoods will sign on."
The former Louisville Metro Housing Authority building at the old Urban Government Center property (WDRB photo).
The neighborhood benefits long have been an obstacle for the project, first resulting in delays in 2022. The statement released this week says the talks have "largely stalled" over whether the site should include a public play area and have certain landscaping.
"The Panel believes the play area should be located in an area that is open, accessible, and welcoming to the residents of the five surrounding neighborhoods, and designed in conformance with contemporary standards," the statement said. "Finally the panel expects assurances that landscaping throughout the Development Area have a positive impact on the environment using principles laid out by LEED," a rating system for sustainable building.
Under the draft agreement, Paristown Preservation Trust would give $25,000 to the neighborhood associations and donate $10,000 for the Paristown Pointe Community Garden or to the Louisville Parks Alliance to improve an existing playground in the neighborhoods.
Among other pledges, the development group would hang at least "Historic Paristown Pointe" banners on surrounding streets; keep an existing steam plant building on the site, if feasible; ban short-term rentals in the new units; and aim to create a "market/small grocer."
Some residents of Paristown Pointe criticized the negotiations during a public meeting Thursday. Cindy Pablo said the neighborhood panel has had members come and go – and some participate even though they weren't appointed -- while others have worked for their own agenda.
"You won't do what you're supposed to do," she said. "You're on this committee because you're supposed to be negotiating on behalf of your neighborhood, but not the price of my neighborhood."
The community agreement is needed for the city to declare the Urban Government Center property as surplus, clearing the way for it to be transferred.
The updated development plan calls for roughly 440 units of apartments or condominiums, about 165,000 square feet of commercial/office space, 20 cottage homes and a 100-room hotel with five rooftop condos. A parking garage and green space also are planned.
TIF ordinance at Metro Council
Meanwhile, the Metro Council began discussions this week on whether to approve a tax increment financing (TIF) district for the site. That would let Paristown Preservation Trust receive up to $20.3 million in local property tax revenue generated on the land over a 20-year period.
The TIF district would return that money when it is generated, meaning that no public funds would be provided until the proposed buildings and improvements are complete. Once in effect, 80% of the property tax revenue created in the development area would go to the development group; the rest would flow to Metro government.
O'Brien estimates that the site largely made up of tax-exempt government land now produces $3,042 in local tax revenue annually. It would generate more than $1 million a year once it's developed, according to figures submitted to Metro Council.
O'Brien presented the TIF plan at the council's labor, economic development and appropriations committee on Tuesday and again during an hours-long public hearing on the subsidy Thursday that attracted a range of opponents and supporters.
Jeff O'Brien, executive director of Metro government's economic development cabinet, October 3, 2023 (WDRB photo).
Brian Forrest, partner in Hoagland Commercial Realtors and a member of the Paristown Preservation Trust team, spoke in favor of the TIF, saying the tax revenue is based on the development's actual performance.
"We're not asking for money up front. We're asking for it in a TIF," he said. "Which is going to be: We have to build these buildings with everything we're doing here much like the development plans to make this work."
Louisville historian and architect Steve Wiser was among those who spoke against the TIF, arguing that there are development projects being completed without the use of public tax funds. Wiser said such a subsidy for the Urban Government Center project sets a bad precedent.
"There are hotels being built right now without TIFs. There are office buildings being built right now without TIFs. There are parking garages being built right now without TIFs, and there are houses being built right now without TIFs," he said. "Why should this private development receive a public TIF if these other projects are not?"
Another opponent, Thomas Woodcock, said the TIF plan will subsidize new office space at a time when Louisville's commercial buildings have plenty of room for tenants. "It's taking public land, giving them a subsidy and then pulling it away ... from our office buildings that are already depleted," he said.
Roughly 25% of the city's prime "Class A" office space in the downtown business district was vacant this winter, or about three times higher than what brokers say is a healthy market, according to figures from the firm JLL.
New JLL research estimates that downtown vacancies rates will grow by 9% as a result of recent decisions by Humana and LG&E to exit their respective Main Street headquarters buildings — moves whose "impact on the downtown core cannot be overstated."
Against that backdrop, O'Brien told WDRB Friday that the additional office space planned for the Urban Government Center isn't a concern.
"It would give me pause if it was a speculative-built office building, but I don't think it's a speculative-built office building," he said. "I believe they've identified a potential tenant."
Asked if that tenant would be moving from another location, O'Brien said: "I'm not at liberty to say much about anything about the office user."
The Metro Council's labor, economic development and appropriations committee is next scheduled to meet May 7.
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