A pair of proposed residential developments in Louisville will be getting millions of city dollars in return for their investments.
The Metro Council on Thursday approved tax increment financing districts for the redevelopment of The 800 Building downtown and a new apartment complex, Axis Apartments, slated for Lexington Road.
They are the first purely residential projects in the city to receive this kind of public funding, although another development -- the Main & Clay apartments and retail proposed for east downtown -- was also previously approved for a TIF.
The developments are expected to substantially raise the assessed taxable value of the properties on which they will sit, according to the legislation the council approved.
Councilwoman Marianne Butler, a District 15 Democrat, said that's reason enough to justify the TIFs.
"We wouldn't get the tax gains if the project isn't done," she said.
Tax increment financing uses funds from new city tax revenue to subsidize revitalization efforts in communities. In other words, TIFs send money gained in new taxes back to private developers.
Indianapolis-based Cityscape Residential is the developer behind the Axis Apartments, which is planned for Lexington Road across from Distillery Commons. The site currently boasts about $300,000 in taxable property.
The residential development will include 300 apartments, as well as a business center, private courtyards and a coffee bar. It aims to "provide a unique urban living environment targeting young, well-educated millennials," according to the project plan.
The nearly $46.5 million project is expected to generate more than $18.6 million in new taxes over a 25-year period, according to the legislation.
Metro Council members approved a TIF district that will send no more than $4.86 million in new local taxes back to Cityscape within 19 years.
They also green-lighted local tax rebates for The 800 Building just south of Broadway in downtown.
The 29-story apartment tower, which opened in 1963, is set for a nearly $32 million overhaul by Village Green Holdings of Detroit. The redesign will cater to "professionals and families desiring an urban lifestyle, as well as baby boomers and empty-nesters seeking an urban retirement experience," according to the project's submitted plan.
Council members approved a TIF in the building's footprint that will allow no more than $2.66 million in taxes to be redirected back to the developer over 20 years.
Tax increment financing districts are becoming more common as development increases downtown.
During the past 15 years, local and state officials have approved TIF districts for a number of large-scale projects, including the KFC Yum! Center, the Marriott Downtown, Churchill Downs' renovation and the planned Hotel NuLu on East Market Street.
The two tax increment financing districts approved Thursday, which will tap local taxes only, represent a new use of TIF districts in the city: purely residential projects. Earlier this year, the council also approved a local TIF for Main & Clay, a proposed mixed-use development that is expected to include retail and other amenities in addition to apartments.
Councilman Kelly Downard, a District 16 Republican, said he was "very concerned" about transparency when it comes to how TIF districts are established around the city, and what projects they're used for.
"Let us evaluate those theories and plans ahead of time, so we don't have to look at micromanaging an individual project," he said.
Downard ultimately voted in favor of both.
Councilman James Peden, a District 23 Republican, opposed the TIF for the 800 building renovation. He said he struggled to justify sending tax money the city could use back to a company that is redeveloping an apartment building that has fallen into an undesirable state.
"Yeah, it's a big blue apartment redevelopment, but it's an apartment redevelopment," he said.
Peden said he'd rather see TIF districts directed toward other efforts, such as the development of affordable housing throughout the county -- an issue he is presently grappling with in a Metro Council committee.
Downard said the absence of criteria and uniformity among TIF districts is concerning. He added that anyone who isn't seeking a TIF district to construct affordable housing is "crazy."
