Stop us if you’ve heard this one before.
Baltimore-based The Cordish Cos. is proposing to city officials a $245 million Center City plan for Third Street.
If it sounds familiar, this is an update of a pre-Great Recession project that never happened.
The new proposal announced today centers around a 600-room hotel, with condos and limited retail.
Cordish officials did not return calls for comment.
But the question becomes, “Will this become another public obligation a la KFC Yum! Center?”
If that’s the case, it’s going to be a hard sell for the city, said Ted Smith, economic growth and innovation officer for Louisville Metro Government.
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.
Louisville’s projected 2013 budget deficit is about $14 million on a total budget of about $500 million.
That deficit includes $8.9 million the city is legally obligated to pay to cover the difference between tax increment financing district revenue and arena income on KFC Yum! Center and the amount required to service $349 million in bonds issued to build the downtown arena.
Louisville Metro Mayor Greg Fischer “is working really hard to resolve a structural deficit,” Smith said.
Every mega-project comes with a request for state and local goverments to grant tax incentives or even a direct contribution by the city, he said.
“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 emphasized the Cordish plan is just a proposal, and just one proposal of many they’ve floated. It just happens to have the element interesting to the city in an area connecting to the Kentucky International Convention Center, which is slated for a major expansion.
Last month, the Kentucky Fair Board proposed a $180 million renovation and expansion, though no funding model has been adopted.
Smith said Cordish Vice President Blake Cordish brought city officials a detailed pro forma for the revised City Center plan.
“I have to give Blake credit,” he said, adding the plan is consistent with the city’s need for more hotel rooms as the convention business grows with the expanded convention center.
“I’m glad we’re having this dialog about that property.”
Under a development agreement that dates back to the origins of Fourth Street Live, which was developed by Cordish, Cordish has to present follow-on proposals to city officials, Smith said.
But Smith emphasized the public is going to have to back the new Center City plan if it requires city resources.
Smith said he hopes the proposal will lead to a very public dialog about what’s possible and practical “because we’ll really need the will of the people to make that (project) happen. I want to reiterate that I welcome … public dialog about this because we’re not doing anything with a big chunk of land.”
The new Cordish plan is markedly different from the original.
This is from “Phantom bridges and thrusting towers: A list of Louisville’s yet-to-materialize projects,” a 2011 Insider Louisville post:
What they said would happen: The Cordish Cos., the Baltimore-based firm that created Fourth Street Live, was going to invest $250 million to redevelop several blocks along Muhammad Ali – from Second to Sixth streets – into stores, restaurants condos, movie theaters and a hotel. Eyesores such as the vacant former Louisville Water Co. headquarters would be swept away, replaced by hundreds of thousands of square feet of new construction. Cordish VP Zed Smith told Business First in 2008, “Center City is more than a project but rather is about the transformation of an entire district of the downtown. We are committed to maintaining the highest standards in terms of architecture, planning and tenancy with guiding principles of creating a world-class development.”
What really happened? Nothing.
Starting under Mayor Jerry Abramson, continuing with Mayor Greg Fischer, the position has been that Cordish has a development obligation under an operating agreement dating back to 1998 and Fourth Street Live to follow-on with a Center City plan.
So, the plan was never dead, but in limbo because of the economy.
In 2007, Kentucky’s Tax Increment Financing Commission approved $120 million in tax rebates for the original Center City proposal. That first version went all the way west from Third Street to Sixth Street and included Louisville Gardens, which takes up a full block between Fifth and Sixth streets on Muhammad Ali.
But in 2008, after it was revealed the Center City deal with the city only required Cordish to put up $12 million of the supposedly hundreds of millions that would be invested, Cordish executives said they were going to look at other markets.