Wed February 27, 2013
Amid Financial Woes, Mayor Greg Fischer Appoints City CFO to Arena Authority Board
Mayor Greg Fischer has appointed the city's chief financial officer to the Louisville Arena Authority Board amid growing concerns about the financial stability of the KFC Yum Center in downtown.
The mayor named Steve Rowland to the board on Wednesday, giving the CFO a voting position. Fischer believes the CFO will help the arena authority have a broader view of city operations and related financial projections.
"There’s no doubt the KFC Yum Center is a shining star and the envy of other cities," Fischer said in a statement. "At the same time, the city’s financial responsibility to the bondholders is a significant expense in the city budget. Additionally, revenues from the tax-increment financing district supporting the arena have not performed to the original projections."
Supporters of the project had said revenue from the arena taxing district—made up of property, occupational and sales levies—would generate around $20.1 million by 2012. The Yum Center has only garnered about $6.4 million.
For the past two years, Metro Government's contribution towards the $39 million in arena construction bonds has been $6.5 million annually. In recent weeks, however, the arena board has asked for $9.8 million and with Louisville taxpayers on the hook it appears city officials are taking a closer notice.
From LEO Weekly:
While shortfalls in future years could mean Metro Government consistently pays an additional $3.3 million annually — adding a hefty strain to a budget already struggling to provide needed services — there’s also the even greater fear that these funds and operations revenue (a guaranteed minimum of $1 million from AEG) still wouldn’t be enough to meet debt service payments.
Metro Council President Jim King, D-10, who serves as a nonvoting member on the Arena Authority’s Board of Directors, has consistently dismissed concerns about the authority’s finances over the past few years, insisting it will work itself out once the economy is back to normal.
However, King now tells LEO it is “legitimate to wonder if the TIF district is going to achieve its projected results,” and while he is optimistic the TIF will grow at historic levels as the economy expands, the numbers in the years ahead look daunting.