Residents file lawsuit aiming to stop West End tax subsidy plan

LOUISVILLE, Ky. (WDRB) – A group of West End residents is suing in a bid to stop a massive tax increment financing district it claims violates the Kentucky Constitution.

The lawsuit, filed last week in Jefferson Circuit Court, seeks to have legislation that created the public subsidy program in 2021 declared unconstitutional and be stopped immediately.

If a judge agrees, it would prevent the West End Opportunity Partnership, the public corporation formed to manage a portion of tax revenues generated in a 12-square-mile area in western Louisville, from receiving that money.

The tax increment financing (TIF) district stretches across nine neighborhoods and would be the largest in Kentucky once it takes effect. The lawsuit was filed by residents of seven of those neighborhoods and a business executive with an office in another neighborhood.

The plaintiffs include two outspoken opponents of the TIF – Martina Kunnecke of Shawnee, president of the Neighborhood Planning & Preservation Inc. advocacy group and a former candidate for Louisville mayor in 2023; and Ameerah Granger of Chickasaw, who ran for Metro Council in 2022.

The lawsuit alleges that the TIF legislation is unconstitutional because it violates a section on special legislation targeted to “a particular individual, object, or locale”; diverts property taxes away from public schools; creates a debt to the state of more than $500,000 without voter approval; and didn’t follow General Assembly rules before being passed.

In particular, the lawsuit claims that the final version of the bill establishing the TIF area and the partnership didn’t receive the required three readings on the floor of each chamber.

Kelly Parry-Johnson, the residents’ attorney, said the lawsuit wants “accountability” for the legislative process that resulted in the TIF.

“They're well aware that oftentimes TIFs don't serve the people that they claim to serve. Instead, they serve the corporate interests, they serve the moneyed interests, the investors,” Parry-Johnson said in an interview. “And so, when examining this bill in detail, these neighbors uncovered that there was a lack of process and accountability on this legislation from the very beginning.”

She also noted that the bill didn’t carve out school property taxes from the broader category of property taxes.

The West End TIF involves a “baseline” amount of taxes that include local property and occupational taxes, as well as state property, income and sales taxes, generated in the TIF area prior to this year. Then, for two decades, 80% of the annual tax revenue generated above that amount would go to the partnership to spend on yet-to-be determined investments.

Amy Cubbage, counsel for the West End Opportunity Partnership, said in a statement that the claims made in the suit “all display a profound misunderstanding of how the legislation creating and governing the Partnership works, as well as a misunderstanding of how the cited constitutional provisions work.”

She noted that the lawsuit does not accuse the partnership of acting improperly and focuses on the legislative process instead. “Nevertheless, the Partnership plans to defend the legislation vigorously. The Partnership is proud to serve its neighbors in West Louisville, and it will not be distracted from its important work by this frivolous and ill-founded litigation.”

Concerns over rising property values and the potential to displace residents long have been among the chief complaints of neighbors fighting the proposal. Its supporters argue the TIF revenue will help parts of Louisville where investment has lagged behind other areas for years.

WDRB News reported in 2022 that the TIF district would be the largest in Kentucky. The state had limited those districts to no more than three square miles, but legislators changed that when they wrote new TIF statutes for the West End project.

The measure that approved in the final hour of the 2021 General Assembly also didn’t include the state oversight and approval that usually apply to TIF proposals with state taxpayer dollars, such as an independent consultant’s report.

The bill also didn’t require data “demonstrating that the projected benefits outweigh the anticipated costs,” as was mandated at the time for TIF districts using state taxes.

The lawsuit also names Louisville Metro government and the Kentucky Department of Revenue as defendants.

A revenue department spokeswoman did not immediately respond to a request for comment Thursday.

The Jefferson County Attorney’s Office, which represents Louisville Metro government in legal matters, generally does not comment when lawsuits are filed.

A dispute over internal partnership board rules governing its membership spilled over into the state legislature this year. Before adjourning last week, the General Assembly approved a bill that lets the board oust some members who don't follow bylaws.

This story may be updated.