A creative financing plan for the Museum Plaza project in Louisville is on track after a public hearing in Frankfort Wednesday morning.
The Kentucky Department of Local Government (DLG) says it will apply for a $100 million HUD loan to be personally guaranteed by the project's developers. It is an "unprecedented" leveraging of state community block grant funds, said DLG staffer Lynn Travis Littrell.
The DLG says it will file an application on Friday to the Louisville HUD office, to be immediately forwarded to the U.S. Department of Housing and Urban Development, which is expected to take up to 60 days to approve or deny the request.
The $465 million, 62-story skyscraper project has been stalled for two years, in part because of the unavailability of private financing.
Both the state and developers stress that the HUD loan consists of new dollars and that no funds are being diverted from other projects. They also stress that, while the loan is personally guaranteed by the developers, they are confident that the project is self-sustaining.
"We are confident that the hotel, the office, the parking, the condominums and the retail space will collectively provide ample revenue to fully repay HUD, hopefully early, well before the 20 year term of this loan," said developer Craig Greenberg.
"I must admit, my first impression was I want to protect our allocation," acknowledged Tony Wilder, Department of Local Government Commissioner, "Our Community Block Development Grant allocation is crucial to the communities across the state. But as the process moved forward, it evolved. We were able to solve the problem with the security and make this happen. It's really a win win."
The public financing is justified by the jobs Museum Plaza promises to create, 4,500 construction jobs and 2,300 permanent jobs.
"We always knew that Museum Plaza would be a regional economic stimulus package and that it would create jobs for folks around the entire region," said Greenberg, "But with this project, we had to put that commitment into writing."
At the public hearing, no one voiced any opposition; everyone talked jobs.
"From an economic development standpoint and from a social responsibility standpoint, this project has been committed to developing workers in the Greater Louisville area," said Joe Wise of the Greater Louisville Construction & Building Trades Council.
"The job market and many people in our cities without jobs and, like Joe and the rest of us, we are here to support this project in any way we possibly can," added Rev. Milton Seymore of the Justice Resource Center in Louisville.
And, Barbara Sexton-Smith, who lives in a condominium destined to be in the shadow of Museum Plaza, delivered an impassioned plea for the HUD loan, saying Museum Plaza is essential for Kentucky's economic development, education and quality of life.
"Reach out. You've got it right now as the merry go round passes the brass ring, just grab it," said Sexton-Smith, "Let's grab that HUD money. Let's bring it and let's hand that to all Kentuckians."
Cathy Hinko, the Metropolitan Housing Coalition's executive director says its an unusual use of a HUD loan -- but she is not objecting to it.
"We hope that the state will now use it again in the future to create affordable housing throughout the state, now that they will have some experience with this loan," Hinko said.
Museum Plaza developers hope to start construction this year. The site is clear and ready. The general contractor on the KFC Yum! Center project, Mortensen Construction, is also the general contractor at Museum Plaza, just five blocks down Main Street.