FRANKFORT, Ky. (WDRB) – A state incentives board will review the merits of a plan allowing developers of a soccer stadium in Louisville to use a portion of the project’s tax revenue to pay off debt.
The Kentucky Economic Development Finance Authority voted Thursday to let a state-chosen consultant evaluate the Butchertown stadium district’s tax increment financing proposal – a key part of paying for the $193.1 million project.
Once that work is complete, the authority will consider whether to grant a subsidy that the owners of the Louisville City FC soccer club believe could offset roughly $35 million of the overall cost.
Mike Mountjoy, a member of the team’s ownership group, said he is hopeful a final decision will occur by April.
“Final financing will come after we hear back from them on what their approval amount is,” he said.
Construction would begin this summer and finish by March 2020, according to documents filed with the state. That is the deadline for the team, the reigning champions of the United Soccer League, to remain a league member.
The developers envision a 10,000-seat stadium, 340,000 square feet of commercial office space, 50,000 square feet of restaurant space and 20,000 square feet of retail space, along with a 166-room hotel and a 142-room hotel, the documents show.
The tax increment financing, or TIF, proposal would let project investors earmark a portion of new state taxes generated at the site for construction debt, with the rest going to government coffers.
The Louisville Metro Council voted in late October to issue $30 million in bonds for the project and make the 37-acre site near Cabel and Adams streets a TIF district. The council also required developers to guarantee that $130 million in private capital will be spent and reimburse the city $14.5 million through stadium rental and other revenue.
TIFs operate under an assumption that blighted or underutilized land will generate higher property, sales and other taxes once it’s developed. The difference between the taxes generated from the site before and after it’s developed is the “increment.”
Kentucky law lets developers keep a portion of any annual incremental increases in the taxes earmarked in the TIF, then apply those to repaying construction debt. No new taxes are created.
The land in Butchertown was home to Challenger Lifts, Marshall’s Auto Parts, a storage facility and above-ground oil tanks. The city funds are being used to clear and prepare the site for new construction.
Mountjoy said most of the tanks have been removed, and cars are being taken off the site. Crews haven’t yet begun demolishing the Challenger Lifts and storage facility buildings, he said.
The structure of the private financing hasn’t yet been determined, but it’s likely to include the developers’ equity and bank financing, Mountjoy said.
Businesses are interested in the site’s commercial space, Mountjoy said. “When spring comes, we’ll be out there selling,” he said.