Local developer The Marian Group will ask the Louisville Metro Government to approve tax incentives to help finance the redevelopment of the city-owned Urban Government Center.
As previously laid out, The Marian Group plans include mixed-income housing, retail, restaurants, a multiuse community center, a parking garage, a large amount of green space and a boutique hotel.
A signed development agreement between the city and The Marian Group, which was released publicly Monday evening, leaves the door open for the developer to ask for a TIF, or tax increment financing, district — something that The Marian Group principal Justin Brown told Insider that the company plans to do.
A TIF can be requested if The Marian Group “determines that the Project cannot happen without the assistance,” the agreement states.
Louisville Metro Council must approve the TIF, which is a local tax incentive that allows developers to pay a set amount in property taxes even as the value of the property they are developing increases. How much a TIF is valued at depends on how much the property value rises and how many years the TIF is good for, typically 15 to 20 years.
Another The Marian Group project, the 147-unit, $20 million Bradford Mill Lofts, received a 20-year TIF valued at $1.7 million.
The total cost of the Urban Government Center redevelopment is unknown but will be “well over” $50 million, Brown said in an email. According to the signed development agreement, $50 million is the minimum The Marian Group must spend at the site.
The agreement also states that if a TIF is not approved, The Marian Group can terminate the development deal with the city.
Possible other project financing listed in The Marian Group’s development proposal includes traditional bank financing, low-income housing tax credits, New Market Tax Credits, private equity, grants, money from community lending organizations and crowdsourcing from small investors and residents.
In addition to the potential tax break, Louisville Metro official have committed to having the Parking Authority of River City, which the city owns, evaluate the feasibility of constructing a parking garage on the Urban Government Center site. The garage, which would be paid for with tax dollars, must receive approval from the PARC board and Metro Council.
The agreement also offers The Marian Group a deal on the property itself — a common incentive aimed at revitalizing vacant sites.
Louisville Metro will sell the developer the roughly two-acre property at 814 Vine St. for $1 and will lease another 10 acres bound by Barret Avenue, an unnamed alley and Vine and East Breckinridge streets to the company for $1 a year over 20 years.
On the larger parcel, Laura Ferguson, assistant director of Louisville Forward, said: “They are still doing their due diligence. There are still questions that need to be answered,” adding, “If something falls through, we’ve got control of the land.”
There are provisions within the development agreement that would allow The Marian Group to buy portions of the 10-acre lot in the future and also allow the city to receive a portion of any profits made should any of the land be sold within 10 years of it leaving Metro hands.
According to the agreement, The Marian Group will construct 22 single-family houses on the Vine Street property, along with an outdoor community space and a pedestrian walkway. It also will retain the existing community garden on that site. At least three of the 22 houses must be sold at a price affordable to a family earning 130 percent below the area median income.
Work on Vine Street must start by April 2019 and be substantially complete by December 2020.
The agreement limits the development of the main 10-acre site, which will feature a mix of residential, retail and other commercial development, as well as green space. As much as 20 percent of the buildings fronting Vine Street can be commercial or retail.
Limits also were set on how much affordable housing it can develop at the site as well. No more than 10 percent of the multifamily units on the property can be affordable to people earning 80 percent of the median area income. However, there is a provision allowing that percentage to be altered if units are constructed to house people at an even lower-income level.
One housing development already planned is a 36-unit low-income apartment complex for single parents receiving services from the local nonprofit Family Scholar House, which helps single parents receive an education and become self-sufficient.
“We are in active discussions with other potential partners, tenants, etc., but are not in a position to announce anything yet,” Brown said in the email.
According to the development agreement, construction on the main Urban Government Center site should commence by June 2019 and be substantially complete by December 2025.
The Urban Government Center formerly housed Louisville Metro offices, but they were moved after the buildings on the site were found to be infested with mold.
The Marian Group received 725 out of a possible 800 points, with the committee listing the plans for plenty of green space, community amenities, mixed-income housing and the possible incorporation of solar panels and stormwater infiltration systems among the positives.
A proposal by another local developer Underhill Associates ranked second with 705 points. Along with positives such as a focus on small retailers, the inclusion of a library and plans to use sustainable energy technology, the committee noted that preserving buildings on the property could become too costly and limiting in terms of design. The committee also stated that it was concerned about the “specificity provided in identifying tenants and what would happen to fill those spaces should the listed uses be unable to locate.”
Officials with Louisville Forward, the city’s economic development arm, have spent the past six months negotiating a formal development deal with the company. Louisville Metro recently completed a similar process for Heritage West, a vacant site at 30th Street and Muhammad Ali.
UPDATED 7:56 A.M.: A previous version of this story incorrectly stated how much affordable housing the project can have. The agreement allows for no more than 10 percent of units to be workforce or affordable housing.