Metro Louisville

Developers for a planned NuLu hotel will receive nearly $2 million in tax breaks from Louisville after a unanimous Metro Council vote Thursday night. In exchange, Delaware-based Mountain & River City, LLC has agreed to work with nonprofits and the neighborhood association to provide community benefits, including targeted hiring for residents.

The 122-room hotel is expected to be built at 726 E. Market Street, which is currently a surface parking lot for The Green Building. The hotel will also have two food and beverage establishments and an art space. It’s expected to cost around $29 million. The developer’s request for tax breaks has been somewhat controversial, given that three hotels already exist within just a few blocks: Hancock House Louisville, Hilton’s Home2 Suites and Marriott’s AC Hotel.

Council Member Jecorey Arthur (D-4), who represents the NuLu neighborhood, refused to sponsor the ordinance providing tax breaks, saying the area needs more affordable housing, not another hotel. But on Thursday, Arthur praised the community benefits agreement between the developer and Phoenix Hill Neighborhood Association.

“I hope it sets a new standard,” he said. “I didn’t realize when we went down this rabbit hole that this was [the city’s] very first community benefits agreement — at least one with some sort of teeth — that was between the developer and the actual neighborhood, the actual community that’s supposed to receive those benefits.”

Arthur said leaders in other neighborhoods, including Russell where he lives, have already reached out about doing something similar the next time a developer asks for public money.

Under the ordinance sponsored by Council Member Kevin Triplett (D-15), Louisville Metro Council has agreed to create a tax increment financing district for the property. That means the city will take note of the amount of property tax the undeveloped lot is currently generating, then, over the next 20 years, any property tax revenue the city gets above that number from the project would go back to the developer. The tax break is capped at $1.8 million.

Marriott’s AC Hotel, located right across the street from the planned hotel, started receiving a similar tax increment financing incentive in 2017, a tax break worth up to $4.3M over the next 20 years.

A community benefits agreement attached to the deal will require the developers to provide certain amenities for Phoenix Hill residents and the surrounding area. Mountain & River City, LLC will hold numerous job fairs targeted at hiring locals and create a hospitality school in partnership with a local nonprofit. The developer will also stock its small grocery market and hotel rooms with products from local companies, and work with a community nonprofit to ensure food that would otherwise be wasted will instead be donated.

For its part, the Phoenix Hill Neighborhood Association has agreed to help identify local nonprofits and entrepreneurs that can make it all happen. The association is also required to support the establishment and operation of the hospitality school. Whether that school will be on-site or somewhere else in Louisville Metro is unclear.

Kristi Ashby, president of the Phoenix Hill Neighborhood Association, told WFPL in an interview earlier this month that this is the first time the organization has used a community benefits agreement to get concessions from a developer asking for public funding. Ashby said this type of arrangement could help the association meet its goal of keeping the neighborhood diverse, racially and economically.

“We hope that businesses will recognize that and the benefits of that, and that they’ll work with us to keep that aspect of our neighborhood,” she said.

Plans for the hotel filed with the city show that the principal development group behind Mountain & River City, LLC is West Virginia-based Mountain Shore Properties. The company is partnering with the owners of nearby Rabbit Hole Distillery to provide programming for an indoor/outdoor art space, the filings show. The Bunkhouse Group, based in Texas, will manage the hotel.

Roberto Roldan is the City Politics and Government Reporter for WFPL.