TIF legislation filed to support nearly $250 million Urban Government Center redevelopment

The developers of the long-stalled redevelopment of the Urban Government Center could receive up to $20 million in property tax subsidies, should a newly introduced ordinance win Louisville Metro Council approval.

Developer Steve Smith seeks to transform the city-owned property that’s been vacant for years into a $249 million mixed-use project to include residential, office, and commercial space, a hotel, and parking garage.

The ordinance, filed this week by Metro Councilman Phillip Baker, would create a tax increment financing district, also known as a TIF district, to support the redevelopment of the Louisville Metro Government-owned property in the Paristown Pointe neighborhood.

The TIF would be in effect for 20 years or until the developer receives just over $20.3 million, whichever comes first.

In supporting documents, the city calls the proposed development “an important catalyst” to development in surrounding neighborhoods, one that will generate “significant” new tax revenues but can’t happen without public financing.

“No other adequate funding mechanism affords the proposed improvements absent the incentives…” the city wrote in newly filed papers. “These improvements cannot be facilitated with private investment alone."

The ordinance is expected to be introduced at Thursday’s Metro Council meeting and be assigned to the Labor, Economic Development, and Appropriations Committee, which is chaired by Baker.

It’s scheduled for discussion at that committee’s meeting on April 16, Baker said, though a vote would come after a public hearing to gather citizen input, which is required under state law .

That meeting is scheduled for 5:30 p.m. on April 18 at 444 S. Fifth St., room 101. A virtual attendance option will also be available.

Should the ordinance pass out of committee, the measure would go before the full council for a vote.

The Urban Government Center property includes buildings built between 1924 (the seven-story former Kentucky Baptist Hospital) and the 1990s. Aging facilities and concerns over mold led city government to leave the site mid-last decade, and since then, its future has been anything but clear.

Smith’s proposal is the third attempt to repurpose the site since 2016 when the city announced plans to reimagine the property.

Two earlier attempts at redevelopment with different developers ultimately did not materialize, leading to Smith’s Upper Paristown Preservation Trust entering into a development agreement with city government in December 2021.

Smith is the developer behind the nearby Paristown arts and entertainment district along Brent Street, which includes The Village Market food hall and Old Forester’s Paristown Hall .

Smith, though a spokeswoman, declined comment.

"Seven years. Three developers. It’s been a hot topic," Baker told the Courier Journal, noting that while he agreed to the administration's ask to sponsor the ordinance, he's not yet made up his mind about his vote.

He encouraged citizens to reach out to his office with feedback or attend future public meetings.

“There’s still engagement in this process," he said. "This is not something that’s being shoved down the community’s throat. The administration sent this over, and this is where we are."

20-year TIF capped at $20.3M, has affordable housing requirement

The seeking of a TIF district isn’t a surprise, as city government pledged in its development agreement with Smith to assist the developer in bringing legislation before the Metro Council.

Should it pass, the TIF would help the developer recuperate some costs of development. TIF funds would not be distributed on the project’s front end. Rather, it is tied to how much the development increases property tax revenues above a base year.

A 2023 base assessment value was calculated at $650,000 (generating about $3,000 in property taxes). This figure doesn’t take into account about $2.01 million in assessed value of four of the property’s five parcels, which are exempt from property taxes.

A year-by-year estimate of the new property tax revenue the project is projected to generate shows increases from approximately $1.05 million in 2026 to more than $1.52 million in 2045.

Each year over the 20-year TIF lifespan, 80% of the difference between property taxes collected in the base year and property taxes collected in subsequent years would go to the developer.

The TIF district, called the Urban Government Center Development Area, would include more than 11.5 acres across 768, 810 and 850 Barret Ave.  as well as 1235 E. Breckinridge and 814 Vine streets.

According to the city's Cabinet for Economic Development, which developed the TIF ordinance, Smith is only pursuing a local — and not a state — TIF.

Smith envisions multiple uses for the former government site and has previously told the Courier Journal it would be a phased development.

Nearly all buildings on site, including a Louisville Metro Housing Authority building and former police substation, would be demolished. A steam plant building along Vine Street would be saved.

The current vision includes 440 apartment or condominium units, approximately 165,000 square feet of office and commercial space, about 20 cottage homes, a hotel with approximately 100 rooms and five rooftop condominiums, a parking garage with some 850 parking spaces, and public green space.

The TIF agreement would hold the developer to making 46 units affordable to those earning 80% or less of area median income, as defined by the U.S. Department of Housing and Urban Development. In Jefferson County, 80% equates to $61,700 for a two-person household.

The 46 units represent 10% of all units in the development and would be equally applied across unit types (one-bedroom, two-bedroom, etc.).

The developer would be required to submit yearly reports on how its spending TIF funds and how it plans to spend the next year’s allotment of funding. It would also be required to detail development activities and certify it’s maintaining the agreed-upon level of affordable housing.

Growth & development reporter Matthew Glowicki can be reached at mglowicki@courier-journal.com, 502-582-4000 or on Twitter @mattglo.

This article originally appeared on Louisville Courier Journal: TIF legislation filed to support nearly $250 million Urban Government Center redevelopment