A creative financing plan for the Museum Plaza project in Louisville is on track, with an application expected to be filed with the U.S. Department of Housing and Urban Development by the end of the week, according to state officials.
Calling it an "unprecedented" leveraging of state Community Block Grant Funds, the Kentucky Department of Local Government (DLG) says it will apply for a $100 million HUD loan to be personally guaranteed by Museum Plaza developers.
HUD is expected to take up to 60 days to approve or deny the request, said DLG official Lynn Travis Littrell.
The $465 million, 62-story skyscraper project in downtown Louisville has been stalled for two years, in part because of the unavailability of private financing.
Under HUD’s Section 108 Loan Guarantee Program, the DLG would serve as a "pass-through" agent for the funding.
At a public hearing in Frankfort Wednesday morning, all three comments from the audience were supportive of the plan. Speaking in support of the project were Joe Wise of the Greater Louisville Building and Construction Trades Council, Rev. Milton Seymore of the Justice Resource Center in Louisville and Barbara Sexton-Smith who lives in what would be the shadow of the building.
The justification for using HUD money is that the state says residents of surrounding counties will be targeted as potential permanent employees at the development. The Community Block Development Grants of the surrounding counties are officially the collateral for the loan, however the Museum Plaza developers are personally guaranteeing the loan.
"I think the argument could be made that it's a little bit of a shoehorn to get this in as eligible for the 108 activities," said Cathy Hinko of the Metropolitan Housing Coalition in Louisville. Hinko said the group did not attend the hearing because the state and not the city is pledging community block grant money to secure the loan.
"Our hope is that having done this the state will sometime in the future again think large about 108 loans to actually produce affordable housing," Hinko added, "because we think that with the rise in homeless children that is a very important issue that should be addressed."
The state says this is the first time this program has been applied for by the Commonwealth, though it has been used by local officials in Covington, Kentucky.
Larger projects to implement similar financing in the past include the Boston Convention Center Hotel project and the Cadillac Hotel Project in Seattle.