Welcome to the May 11 Monday Business Briefing, your private business intelligence briefing from Insider Louisville.
We’re making a few changes to MBB starting this week. You’ll notice we’ve brought back briefs — vetted tips, outtakes from big events, names in the news, and remainders from the week’s business happenings.
We’re also introducing a byline for the first time on this briefing. As MBB has evolved, we’ve made it a more deeply reported feature, and we think its format should better reflect that change — and the accountability that comes with it. Finally, we’ve added a tipsheet of items that are driving the week in business and government, an effort to keep you better informed about where the news might take us this week.
Thanks, as always, for reading. We hope you like it.
PVA will re-examine some property assessments as controversy continues
In a tacit acknowledgement that last month’s round of property assessments — in which some homeowners saw increases as high as 150 percent — could have been skewed, the Jefferson County Property Valuation Administrator’s office told MBB on Friday it has begun a review of all property assessments that rose more than 30 percent. The review comes as the office expects nearly double the regular number of appeals of those assessments from scorned homeowners.
PVA chief of staff Colleen Younger said in an interview that she remains confident the assessments, which are conducted by computer, are accurate. However, if they find irregularities in valuations, she said those assessments would be updated.
“We’re going to find out if there was some kind of reason it went up and see if we got it right,” she said. “And if we didn’t get it right, we will make adjustments accordingly.”
She also acknowledged the PVA’s system, which uses a computer imaging tool called Pictometry, does not track for anomalies in neighborhoods — for instance, when one house is assessed significantly higher or lower than others nearby.
The PVA reassesses home values roughly every four years, depending on the neighborhood and health of the housing market. After issuing new assessments of around 60,000 houses in the Highlands, Cherokee Triangle, Crescent Hill, Audubon Park, Indian Hills, Germantown, Schnitzelberg and others last month, the agency has taken punch after punch — mostly for massive and seemingly inconsistent increases in value, which translate to higher taxes.
Last week, Metro Council members in both parties skewered PVA officials who appeared before the council’s government accountability committee. Councilwoman Angela Leet, R-7, was among the most vocal, and in an interview with MBB, she said the PVA — headed by Tony Lindauer, who did not appear before the committee — had an opportunity to explain why tax assessments rose so dramatically in some cases, but they failed to do so.
“Nobody felt like they were lining up for a 100 percent increase in their assessments,” she said. “And basically the PVA is saying, ‘Sorry we didn’t do our job. So now we’re playing catch up and penalizing you.'”
The deadline for homeowners to appeal their latest assessments is May 18, but the controversy is likely to stretch far beyond that.
MBB has heard from a number of readers who’ve seen everything from a 50 percent hike to 150 percent. And because the PVA froze assessments during the recession, the double-digit increases — 15 percent on average, the agency reports — are not only hitting exceptionally hard, they’re taking people by surprise.
As of about 10 days ago, the PVA had received more than 2,800 appeals, Younger said. She expects that number to top out close to 6,000 — double what is normal, and about 10 percent of the total number of reassessments conducted this year.
But this has been an abnormal year.
For example, it’s the first time since at least 2007 that home assessments have increased on the whole — and even back then, they jumped by an average of less than half of what they have this time around, albeit for different neighborhoods.
It’s well-known by now that Mayor Greg Fischer’s house on Spring Drive in Cherokee Park actually dropped in this assessment, from $1.71 million six years ago to $1.55 million. Fischer bought the house for $1.7 million in 2001. That’s remarkable flatness.
But a couple of Fischer’s neighbors saw massive increases. A similarly sized house two doors down, at 1640 Cherokee Road, went up 60 percent, from $768,520 to $1.22 million. And the house next door to that, 1644 Cherokee Road, jumped 90 percent, from $813,460 to $1.54 million.
“I find it certainly bothersome,” Leet said.
Younger told MBB Fischer’s neighbors’ houses had been undervalued, and the massive jumps are bringing them closer to fair market. PVA Tony Lindauer’s house in Cherokee Triangle went up 25 percent, to $379,920. Several of his neighbors actually saw their property values drop.
“We feel like we have come closer to getting it right this year than any PVA ever has,” Younger said. “Some of these properties have been grossly undersized for years — way before Tony Lindauer was in office.”
Expect council Republicans to keep the heat on the PVA, even as the agency encourages the public to appeal if they find their assessments are out of whack. They’re also keeping public hours at the Crescent Hill and Highlands public libraries every day this week, in part a response to council members’ criticisms that the appeals process is inaccessible.
As of press time, the PVA had yet to inform council members of its plans to review all assessments with increases of more than 30 percent. Told by MBB of the reviews, Leet indicated it was a step in the right direction, but she remains unsatisfied by the PVA’s responses to her inquiries.
On a similar note… MBB asked the PVA why certain high-value businesses seemingly get huge tax breaks via low property assessments. For instance, GE’s Appliance Park was last assessed at $31 million — far, far lower than the actual value of the 900-acre advanced manufacturing campus. The two parcels that make up Fourth Street Live, owned by Baltimore-based Cordish Cos., were assessed last year at a combined $14.01 million. (In each of those cases, the owner appealed PVA’s original assessment and ended up with one lower.)
Meanwhile, the former Brown & Williamson tower, in the same block, was valued at more than $25 million at the end of last year.
Tommy Hart, who analyzes commercial assessments for the PVA, said the reason for the undersized valuations is simple: The PVA can only take into account the land and structures when assessing a property. In other words, the value of the business that inhabits it doesn’t matter.
How to fill the economic hole left by the National FFA Convention
When the National FFA Convention told officials with the Louisville Convention and Visitors Bureau last week it would not exercise its option to hold its national event here in 2019-21, the organization was clear in its reasons: There aren’t enough inexpensive, double-occupancy hotel rooms here — and specifically, near the fairgrounds, where the convention held its main events. In addition, the city lacks a concert venue big enough to hold its main music events for the 60,000-plus kids and parents who come every year (with Lucas Oil Stadium, Indianapolis sure does).
And while the Kentucky State Fair Board still has an RFP out to build another headquarters hotel near Gate 1, that’s not happening anytime soon.
“In Louisville, we have about 17,000-and-change in hotel rooms,” said Karen Williams, president and CEO of the CVB. “Indianapolis has 30,000 and change. Right there you can see they can fill that void pretty quickly. Those are things we just couldn’t change.”
And even though there are thousands of hotel rooms under construction, coming online or just recently opened downtown, they don’t fit the bill. So are we building the wrong kinds of hotel rooms? What is the target audience for downtown or peripheral hotels? Should we now be worried about losing the Mid-America Trucking Show, Louisville’s second-largest convention behind FFA?
MBB asked business leaders and downtown developers what they make of the news. The group of six was split in key ways, with some saying the city will make up the losses and others suggesting it could be the start of a troubling trend.
“Never want to lose business,” texted developer Steve Poe, who’s building the 175-room Aloft boutique hotel on First and Main. “But plenty of time to backfill with other higher-end business.”
“Disappointing and costly,” wrote developer Bill Weyland in an email. “It is going to be increasingly difficult to match the rapid expansion of facilities in competitor cities because Kentucky lacks the incentives, tax structures, and business climate that exist in surrounding states. At least there is some momentum, but we are behind.”
Jonathan Blue, chairman and managing director of Blue Equity, said the loss stings, but city leaders also shouldn’t let it distract from the need to continue building hotel infrastructure in the urban core. He said the city should consider working with developers and owners of downtown office buildings with large vacancies to convert those into hotel rooms to meet a growing demand. Blue, who travels frequently for business and often brings out-of-town clients to Louisville, said associates regularly tell him how routinely difficult it is to find a hotel room downtown.
Still, there was consensus among business leaders that losing the $40 million economic impact of FFA is a major blow. So what do you do to fill that gap? A mix of new, smaller events that emphasize Louisville’s balance of offerings, said Williams.
“Our goal is to have meetings at the renovated and expanded (Kentucky International Convention Center), then doing some at the Expo Center, and the hotels can do their corporate business, and still we’ll have the same result,” the head of the CVB said. “It’ll just be different groups; it won’t be the one group.”
She mentioned getting the Breeders Cup back to Churchill Downs — it was last there in 2011 and is at Keeneland this year — as one big-ticket initiative.
Williams added that by the time the target dates — 2019-21 — roll around, the city will look a lot different, with the 30-story Omni Hotel downtown and a renovated convention center, not to mention whatever other projects take shape between now and then.
Speaking of Jonathan Blue, the guy is on a roll lately. In the past few weeks, he’s been noted by CNBC and the International Business Times as a visionary investor in the newly (but slowly) loosening Cuban market. An avid art collector and managing partner of the eponymous Louisville private equity firm, Blue made business connections in the island nation’s art world years ago and is exploring them today in a new context — albeit one still strictly limited by trade restrictions. IL sat down with him recently and will have a piece up later about his ideas for how to tap into the emerging market of more than 11 million people.
Uncle Maddio’s Pizza Joint in the Highlands appears to be on the outs. The owners of a concept called Fontleroy’s recently applied for a 2 a.m. restaurant liquor license at the prime corner spot at 2011 Grinstead Drive, on the corner of Grinstead and Bardstown. MBB talked with the attorney representing the group, who said he wasn’t at liberty to disclose details. We couldn’t get ahold of Scott Dennison, the franchisee behind Maddio’s who’s also listed on the Fontleroy’s LLC registration. And we talked with a manager at Maddio’s who confirmed something is happening there but said it’s too early to say what. The Atlanta-based chain opened in the boutique retail center in 2011.
In other restaurant news, Metro Councilman Rick Blackwell, D-12, announced Friday morning in his constituent newsletter that southwest Louisville is about to get its first Chick-fil-A. The chicken chain will make its roost at 6650 Dixie Hwy., the site of a former Toys “R” Us. According to a building permit filed with the Metro Department of Codes and Regulations on Friday, the site will undergo a $100,000 makeover. Blackwell says to expect an open date by the end of this year. Nicklies is the developer.
Colin Underhill, manager at Underhill Associates, dropped MBB a line last week to let us know about “A Taste of Germantown,” a first-of-its-kind fundraiser for the Leukemia and Lymphoma Society. The event, for which the Germantown Mill Lofts — the $20 million adaptive reuse of the former Goss Avenue Antique Mall, being redeveloped and brought to market by Underhill — will serve as showpiece, is being held in honor of late Metro Council President Jim King, who represented the area. It’ll feature neighborhood food from the likes The Post and Eiderdown, a silent auction with some high-dollar gets, and live music. May 20, 6-9 p.m. Mark it down.
Last week, IL reported that LOGjustrips, a local startup that created an app to log car trips (makes mileage reimbursement easy, for one), claimed the $10,000 top prize at this year’s Venture Sharks competition. Here’s an interesting wrinkle: That company is among three of the past four VS winners to have emerged from LaunchIt, a startup training program at U of L’s Nucleus incubator. The others are last year’s winner, GearBrake, and 2012 winner Wicked Sheets.
Driving the Week
May 14: Get your popcorn ready: The University of Louisville Board of Trustees is scheduled to meet on Thursday, an occasion that will be unprecedented in at least one way: It is the first time board members have exercised a rule allowing them to call a special meeting with a specific agenda outside the normal course of board events. The request is a further indication of the ongoing disagreements within the board over its basic oversight role.
Board members Emily Bingham, Craig Greenberg and Steve Wilson made the formal request recently in writing. According to the document, which MBB obtained under the Kentucky Open Records Act, the three are asking for information to launch a broader examination of the university’s medical operations — University Hospital and its agreement with KentuckyOne Health, an update on the lawsuit with Norton Healthcare, and a report on the ongoing practice consolidation of the U of L Physicians. The leadership of KentuckyOne and its parent company, CHI, is scheduled to brief the board June 4.
May 15: Kentucky State Fair Board CEO Rip Rippetoe and CVB President and CEO Karen Williams headline the Downtown Partnership’s “Lunch and Learn” series. They’ll make their case for closing the downtown convention center for two years during a $180 million renovation. MBB reported recently on the anxiety that’s causing in the business community.