The Wall Street Journal (our favorite news site despite its Rupert Murdoch, to the right of Attilah the Hun editorial bias) has a “but for the grace of God goes Louisville” story today about Cordish Companies’ adventures in Kansas City.
In “Urban Center is a Budget Hole,” WSJ reporter Eliot Brown dissects how KC city officials bet big on Power & Light District, a 2006 Cordish entertainment district project to revive the city’s downtown. (Sound familiar?)
The Baltimore-based developer would bring in block after block of top restaurants, clubs and convention destinations to Power & Light District,with Kansas City metro government picking up most of the tab. (Sound eerily familiar?)
The total tab would be $850 million.
But KC had a plan: Why the whole thing would just finance itself, with sales and property taxes in a special taxing district devoted solely to debt service on the gia-normous bond issue – about $300 million – for which the city is on the hook.
Because in 2006, real estate values and taxes only were going to go up, as was sales tax revenue, right? (Sound scarily familiar?)
Stupendeous idea in 2006.
Stupid idea in 2012:
Today, the project, which sits near the one-time headquarters of Kansas City Power & Light Co., generates less than one-third of what is needed to cover the debt service on the bonds. The city is setting aside $12.8 million in its budget for the fiscal year that starts next month to cover the gap, a notable hole in a $1.3 billion budget that calls for $7.6 million in cuts to the fire department. Given the sluggish real-estate recovery, the city expects similar gaps to persist for years. “Our street maintenance has had to come down; our budget for neighborhood and community services has had to come down,” says Scott Wagner, a first-term member of the city council.
Kansas City officials are considering cutting $7.6 million in funding to fire fighters!
But, hey, KC got a swell party place … it can’t afford.
The TIF for the KFC Yum! Arena aside, the story takes us back to the big Cordish’s big Center City plan here in Our Fair City circa 2006.
Center City was going to far and away exceed the cosmically successful Fourth Street Live plan, moving our entertainment east to the block of Third Street where the former Louisville Water Company headquarters sits empty and disintegrating.
Business First literally went nuts. I know I’m going to hear from literalists about this careless use of “literally.” But you have to read the stories, which make you wonder if BF reporters and editors took leave of their senses, or at a least gave in to a total suspension of journalistic disbelief.
Also included in the plans is a major renovation of The Gardens. The city-owned property would be leased to Cordish and turned into a 6,000-seat venue for concerts and possibly a minor-league hockey team. Blake Cordish declined to identify the league in which the team would play, but he said the Louisville squad would be an expansion team, not a franchise moved from another city.
We were going to get a hockey team! Can you believe it?
City officials created a tax increment financing district and pledged $25 million toward the proposed $442 million Center City. Cordish was going to pay for it, and we only had to reimburse them over 30 years, which is a hell of a lot better deal than Kansas City got.
But the point is, our city leaders – just like those in Kansas City – were willing to take a huge chance on a dream peddled by an outside developer. Again, Louisville has gotten off a lot lighter than KC.
Here, Cordish got a money-pumping downtown parking garage for pennies on the dollar and Fourth Street Live for $1, as well as some cash skimmed off a never-happened expansion of Fourth Street Live.
The city gave Cordish a $1.8 million forgivable loan in 2009 to extend Fourth Street Live into the Hertz Starks Building and ultimately to the proposed Center City. Instead, Cordish executives used the money to buy out the Lucky Strikes space in Fourth Street Live and covert it to Sports & Social Club.
Oh, and lest we forget, just a few weeks ago, Cordish tried to get the city to pay $850,000 to attract a swell new tenant to Fourth Street Live – from three blocks away.
Louisville may look gullible, but at least we ain’t broke.