Kentucky approves tax funds for Louisville stadium project

The wave of soccer stadium projects contemplated or completed has brought new attention to a heretofore little-known funding mechanism: tax-increment financing, or TIF for short.

The principle is a financing authority approves the diversion of future tax revenues to pay for up-front improvements on a development project. The idea is that the seed money pays itself back many times over with future tax revenues that a government would not otherwise generate and it is a valuable tool to encourage development in run-down areas.

The latest TIF project: Kentucky Economic Development Finance Authority voted to give $21.7 million for a $193.1 million project in Louisville's Butchertown neighborhood that includes USL champion Louisville City's 10,000-seat soccer stadium estimated to cost $50 million.

The 37-acre development will also include:

-- Two hotels with 308 combined rooms;
-- 20,000 square feet of retail space;
-- 50,000 square feet of restaurant space; and
-- 340,000 square feet of office space.

The Louisville Courier-Journal reported the math on the project is that it will generate an estimated $122.9 million in state tax and $33 million in local tax revenues over 20 years -- or seven times the TIF funds paid out.

Louisville City, which was hoping to receive $30 million-$35 million, hopes to begin work on the stadium in late 2018 and open in 2020. The rest of the project would be completed over the next decade. It has been playing at Louisville Slugger Field, a Triple-A baseball stadium, for its four seasons but has said it cannot be economically viable without its own stadium.

Lou City averaged 8,613 fans in 2017 -- third in the USL behind only MLS-bound FC Cincinnati and MLS expansion finalist Sac Republic FC -- but it is averaging just 7,379 through six games in 2018 -- sixth in the league behind FC Cincinnati and Sac Republic FC as well as three first-year teams, Nashville SC, Indy Eleven and Las Vegas.

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