The Omni Hotel in San Diego

The Omni Hotel in San Diego

Sources are telling Insider Louisville that negotiations are ongoing between city officials and Cordish Companies over what began back in 2008 as a project dubbed City Center.

Restarted City Center talks have reportedly advanced to the point where Cordish executives are proposing a 600-room Omni Hotel as the flag, a project for which the Baltimore-based developer is seeking city and state incentives … a continuation of negotiations that resumed back in April.

The Irving, Texas-based Omni operates about 45 luxury hotels in the United States. Cordish and Omni also are in negotiations to build a hotel at Kansas City Power & Light, Cordish’s entertainment district in Kansas City, a private-public partnership.

In Louisville, sources say, the Omni would be built on the vacant Louisville Water Co. property at Third and Liberty streets, across from the Marriott Hotel Downtown at Third and Jefferson streets.

Picture 5

An aerial view of the block where sources say the Omni would be built.

Those sources tell us the hotel would take up the entire block bounded by Liberty to the north, Second and Third streets on the east and west, and Muhammad Ali Boulevard on the south.

Cordish officials did not return calls for comment. Chris Poynter, spokesman for Metro Mayor Greg Fischer, declined to comment about a possible economic development deal.

In April, Cordish officials reintroduced what began life in 2008 as a proposed extension of Fourth Street Live called City Center. The original City Center plan proposed investing $250 million to redevelop several blocks along Muhammad Ali – from Second to Sixth streets – into stores, restaurants condos, movie theaters and a hotel, with the city contributing the bulk of the money.

The vacant former Louisville Water Co. headquarters on Third Street was to be replaced by hundreds of thousands of square feet of new construction.

In April, Cordish condensed that original City Center plan into a 600-room hotel, with condos and limited retail, with only Third Street redeveloped.

At the time, at least one Louisville economic development official was guarded in his appraisal of the proposal.

Ted Smith, then economic growth and innovation officer for Louisville Metro Government, acknowledged Cordish mega-projects such as Fourth Street Live assume state and local governments granting tax incentives or a direct contribution by the city.

That was going to be a tough sell in a city running a budget deficit, about $14 million on a total budget of about $500 million for 2013, said Smith, now director of the city’s Department of Economic Growth and Innovation.

From our post:

Smith said he welcomes the proposal, which could potentially transform an entire abandoned block of Third Street including the former Louisville Water Co. headquarters, “and I am getting tired of looking at an empty lot.” But Smith said the reality is, the city is running a deficit.

“To be fair, it’s not just Cordish. Any (developer) is going to make that request. The city paid half of the cost of the downtown Marriott.

“The issue confronting us is, ‘How much will be public? How much will be private?’ ” That’s not yet clear, Smith added.

Smith acknowledged then that another deal with Cordish, which has never paid the city a cent in a “profit sharing” agreement for Fourth Street Live, might be a tough sell politically.

Since then, another complication has developed: multiple private-sector hotel deals either planned or started.

If a deal is reached with Cordish on an Omni Hotel, it would put 600 additional rooms – a hotel roughly the size of the Brown and the Seelbach hotels combined – next to the 591-room Marriott, and a block east of the 270-room Embassy Suites hotel Mary Moseley currently is installing into the former Stewart’s Dry Goods building at Fourth and Muhammad Ali.

Developer Bill Weyland, managing partner of downtown-renewal specialist CITY Properties, started construction in September of an eight-story, 162-room Hilton Garden Inn on the southeast corner of Fourth and Chestnut streets.

Developer Steve Poe’s Poe Companies just announced plans to build a boutique Aloft Hotel, a $25 million project at the corner of First and Main streets, which would put 175 rooms just east of the KFC Yum! Center.

Even before the Aloft announcement, it was clear the number of downtown rooms could increase about 33 percent by 2015.

Counting the 280 Embassy Suites rooms in the renovated former Stewart’s Dry Goods building at Fourth and Muhammad Ali, that would put about 775 rooms within four blocks of Fourth and Muhammad Ali, including the Seelbach Hilton, the Brown Hotel and Weyland’s Hilton Garden Inn.

Add the Downtown Marriott at Third and Jefferson and Moseley’s Galt House complex on Main Street, and that would total 3,000 hotel rooms in a 1-square-mile section of downtown.