Just months after approving a nearly $2 million tax break for a 122-room hotel on E. Market Street, the Louisville Metro Council is considering a similar incentive for a mixed-use project in the same neighborhood. This time, the developer is asking for up to $7.7 million.
Local development firm Weyland Ventures is proposing a $115 million development for the NuLu area that includes 130 hotel rooms, 295 market-rate apartments and 60 units of affordable housing. It’s also planning to create 70,000 square feet of office space with a parking garage that can hold up to 280 cars.
The project would sit on multiple parcels of land east of downtown along Shelby, Ballard and Jefferson Streets that were previously home to the Clarksdale Housing Complex, a public housing development that was demolished in 2005.
Speaking to Metro Council’s Labor and Economic Development Committee this week, Weyland Ventures CEO Mariah Gratz said the tax breaks will help fill a critical financing gap.
“If we want community parks and we want a development that was sidelined by COVID to come back to reality, in a city that is not looked at very favorably from outside investment right now, the [tax breaks] are the first piece of that we feel we can come and put in place,” Gratz said.
If approved, the mixed-use development would receive nearly $8 million in public assistance through tax increment financing. That means the city would note how much property tax the vacant lot is currently generating. Over the next 20 years, 80% of any property tax revenue the city collects above that number would go back to the developer, up to $7.7 million.
There are currently five other housing developments in NuLu receiving similar tax breaks, four of which are: Marriott’s AC Hotel, 422 E Main, the Louisville Chemical Building and the planned hotel on E. Market Street.
Louisville currently has $1.5 billion worth of property receiving these types of tax rebates, according to Metro records.
Grazt told council members that the project will include $11 million in spending on public infrastructure, such as upgrades to the water, power and sewage systems. She said her company had not considered asking for a tax break before the COVID-19 pandemic hit.
“This project was conceived in 2019, and obviously the economy was in a much different place,” she said. “COVID happened, all of the financing options for the project went away, and the project was pushed back.”
The Labor and Economic Development Committee unanimously recommended the tax breaks for approval this week, but not before peppering developers and city officials with questions.
District 3 Council Member Keisha Dorsey, a Democrat and the committee’s chair, raised doubt about the need to spend public money on more hotel projects in NuLu.
“Why would we continue to do specific types of [tax increment financing projects]?” Dorsey asked. “Right now they’re all around housing, what is the opportunity cost if you get another type of business in there such as retail or a grocer? Does that limit their opportunity?”
Rebecca Fleischaker, the director of Louisville’s Department of Economic Development, said the project would fill a need for more hotels in the city.
“We do know that we lose out on conferences, for instance, simply because we don’t have enough room for everybody who would come,” Fleischaker said. “Not only do you need the conference space, but you need the hotel space.”
Many council members, however, said it was the project’s affordable housing component that convinced them to support the tax breaks.
Weyland Ventures agreed to create 60 affordable units in partnership with Family Scholars House, a nonprofit that provides assistance to disadvantaged parents working toward college degrees with the goal of self-sufficiency.
There are currently more than 400 public housing units in NuLu, most of them coming from Liberty Green redevelopment project. Weyland Ventures was contracted to develop the market-rate housing part of that project.
Democratic District 4 Council Member Jecorey Arthur, who represents NuLu, is sponsoring the tax breaks proposal. He said Louisville desperately needs more housing for its poorest residents.
“I don’t care for the hotel,” Arthur said. “I don’t care for a lot of the incoming [tax increment financing] prospects that we have on the table, but this affordable housing piece is significant for our city.”
The developer also signed an agreement with the Phoenix Hill Neighborhood Association, which promises certain community benefits: Weyland Ventures has agreed to target neighborhood residents for hiring and training, prioritize former residents of the Clarksdale Housing Complex for affordable housing and create two pocket parks along South Shelby Street. There will also be programming for community families like yoga and cooking classes, as well as a wage floor for most workers of $15.00 per hour.
The proposed tax breaks will go before the full Metro Council at their next meeting on Dec. 2.