Museum Plaza bonds OK'd
Council ratifies $47 million issue
The Courier-Journal
12/21/2007

By Marcus Green

Louisville will issue $47 million in bonds to help pay for public improvements at the Museum Plaza skyscraper -- the final government approval needed for the downtown project to advance.

The Louisville Metro Council voted 21-5 last night in favor of the bond issue, which caught members off guard when they learned of the proposal last month.

"The fact that this was approved now allows us to go forward and obtain a construction loan, and we had to have this done for that to happen," Steve Poe, one of four investors in Museum Plaza, said after the vote.

Besides the bonds and the developers' own money, a construction loan would be used to pay for the $490 million complex at Seventh Street and River Road. Poe said developers hope to obtain a loan within the next month. The council turned back an amendment by Councilman Hal Heiner that would have given the city a 10 percent share of any profit if Museum Plaza is sold, reflecting the extent of the city's investment from the general fund.

Heiner described his plan as fair to Louisville taxpayers and said it would send a message that the council should be actively involved with developments seeking general fund money for public infrastructure.

"This amendment is a step toward protecting the public," said Heiner, R-19th District. Councilman Kelly Downard, R-16th, argued that the city was setting a precedent that other developers could follow, and he said that the profit-sharing amendment wouldn't affect the project's cost.

But the measure was defeated 17-9. Opponents, like Councilman Tom Owen, compared the amendment to "rolling the dice" and said it could kill the project. He said the developers already had made compromises during negotiations with the city.

"This project could be at risk if we push, push, push this last measure," said Owen, D-8th.

In a telephone interview after the vote, Poe said Heiner's amendment would have put the project at risk.

Poe said the skyscraper will be "cross-collateralized" with the construction lender. In the event that the developers sell the hotel, for example, the lender would take most of the proceeds to pay down debt on the rest of the project.

"If we said that we had to pledge those proceeds to the city, I doubt that any construction lender would make that loan," he said.

Earlier this month, the council approved the issuance of $130 million in bonds for the project. That money, along with the $47 million bond, will be used to pay for sidewalks, new streets, a public plaza, floodwalls and other infrastructure related to the project. It will be repaid through a portion of future taxes generated at Museum Plaza.

If the tax revenues aren't enough to pay debt on the $47 million issuance, the city would be responsible for the payments. The city is not guaranteeing the $130 million in bonds. Plans call for a 62-story skyscraper that includes lofts, condos, a contemporary art center, office and retail space, and a Westin hotel. Officials broke ground this fall, and plans call for Museum Plaza to open by 2011.

Reporter Marcus Green can be reached at (502) 582-4675.