$130 million Bond Issue for Museum Plaza is Approved
Money to be Used for Infrastructure
The Courier-Journal
12/6/2007

By: Dan Kiepal

The Louisville Metro Council tonight approved issuance of $130 million in bonds to help pay for public improvements necessary to make the Museum Plaza skyscraper a reality at Seventh Street and River Road.

Next up: solidifying an agreement that will have Louisville Metro government guarantee another $45million in bonds.

The $130million bond issue passed unanimously. That money, which will be used to help pay for a floodwall, new streets, a parking garage, a public plaza and other infrastructure surrounding the 62-story building, will be repaid by future property taxes generated by the site — a funding vehicle known as a Tax Increment Financing district. That debt is not guaranteed by metro tax dollars.

But in order to complete all of the infrastructure improvements necessary for the project, metro government will have to issue — and guarantee repayment of — another $45million in bonds.

That means if the tax district doesn't generate enough cash to pay both bond issuances, the city will assume payments on the $45million.

Craig Greenberg, a Louisville lawyer and one of four Museum Plaza investors, applauded the council's action tonight but said the $45million issuance is just as important.

"It's critical," Greenberg said. "This is really contingent upon the other financing falling into place."

Before that happens, the council is looking for a couple of guarantees. Hal Heiner, R-19th District, said it's important that the council get a guarantee that the project will be completed, and that tax dollars not be spent on debt service if the project is delayed by some misfortune.

"The city's money is the first spent, and the project needs to be completed" to generate the tax district, Heiner said. "Metro will need to receive a performance guarantee that the project will be completed."

Council member Jim King, D-10th District, said the $45million will go directly to the developer and it will be up to the metro government to hire a construction auditor to ensure the government's money is being used only for the construction of public infrastructure.

He said the $45million bond issue will cost taxpayers about $10million — about $2million a year in debt service for five years until the tax district revenues are generated.

The project has wide support on the council, and even former critic Kelly Downard, R-16th, has thrown his vote behind the project.

Downard said there is potential for the city to get a $490million iconic building "for free" if the tax district generates enough revenue to cover both bond issuances. The worst that can happen: The city loses $45million, he said.

"This is worth the risk," he said.