Louisville is one step closer to getting a professional soccer stadium.
The Louisville Metro Council on Thursday voted to approve a set of measures to assist in the development of a stadium, retail and office park in the Butchertown neighborhood, including an ordinance that will send $30 million in public funds to the project.
The public money will be distributed via bond – which will accrue interest over its 20-year term, resulting in a total cost of some $42 million.
The funds are being allocated to purchase and prep the project site for development.
The soccer team’s ownership group will spend at least $45 million on construction of the actual stadium and pay back $14.5 million to Louisville Metro government, according to the development agreement.
.@loucityfc squad squeezed in to City Hall ahead of vote for soccer stadium. pic.twitter.com/hVhu031e5s
— jacob ryan (@jacobhryan) October 26, 2017
Council debated for nearly an hour before its vote Thursday night in a meeting that stretched six hours.
After the measure gained approval, the some 50 people remaining in the council chambers -- mostly soccer fans, team employees and owners, erupted in applause.
But despite the praise, the proposal to spend public funds on a sports stadium has been a contentious issue in recent weeks.
Economists have questioned an economic impact study – commissioned by the team – that estimates the project will generate some $1.8 billion in labor income and more than $260 million in added state and local tax revenue in a 20-year period.
And some council members were concerned the team’s 47-member ownership group wasn't as committed to securing additional private investment as they’ve suggested.
But in an amendment made just hours before the vote, the owners agreed to a provision that would incentivize securing such investment. The amendment gives the team the option of paying back the $14.5 million reimbursement in 10 years — half the original time. If that doesn't happen, the ownership group will be required to lock-in at least $130 million in private investment or pay back the remaining balance of the city's tab for buying the land. That remaining balance is after the team pays back the agreed upon $14.5 million reimbursement, and after accounting for whatever newly generated local tax revenue is collected.
"I think that's a huge step," said Councilwoman Angela Leet, a District 7 Republican.
Councilman Brandon Coan, a District 8 Democrat, voted in favor of the measures to assist in the project's development -- despite having some reservations.
"This is not the deal I would have put together," he said.
Still, he's hopeful the impact of the project will "ultimately go well beyond the 40 acres."
Councilman James Peden, a District 23 Republican, said the deal "could have been so much better."
"I want a stadium," he said. "I just want a soccer stadium."
Councilwoman Marilyn Parker, a District 15 Republican, did not vote for the measures to support the stadium.
"I'm all in for the stadium, but I'm not all in for this deal," she said.
Parker said upfront payment from local government is too high and the risks are too high. She said the city should instead focus on getting a new police headquarters, or the needs associated with shoring up the state's pension crisis.
"The stadium is a want, it's not a need," she said.
Councilman Brent Ackerson, a Democrat from District 26, supported the project despite his track record of a being a staunch opponent of public subsidies.
"Like anything in life, we take some gambles," he said. "There is some risk here, but the return is huge."
Louisville Mayor Greg Fischer issued a statement via email shortly after the vote, praising the council's decision.
Details of The Deal
The stadium project is the product of a successful team, committed fan base and eager city leadership.
The team is called Louisville City FC and began playing in Louisville in 2015. They’ve excelled in the second-tier USL Pro League and are currently making their way through the league's postseason.
Home games are currently played at Louisville Slugger Field and they’ve attracted audiences of some 11,000 people.
Building a soccer stadium not only will give the team their own field on which to play, but it will also increase the city’s chance of attracting a Major League Soccer franchise – which Fischer has said is a goal.
But Councilman Bill Hollander, chair of the Democratic caucus, said he's "skeptical" that would happen.
"But my bottom line is, when opportunities present themselves, we need to take them, and this is a good opportunity," he said.
Thursday’s council vote was a major hurdle – but it’s not the last. The team ownership group will still need to apply for and be granted necessary state tax incentives to make the project feasible.
In all, the ownership group has pledged to commit $45 million to build the stadium. They’ll also pay $14.5 million back to the city, at which point they’ll own the land.
The project also calls for the development of retail, office space and hotels on the site near Interstate 64.
If such private investment does take hold, the ownership group stands to get back up to $30 million in state tax incentives, if they’re approved for such incentives, said, Tim Mulloy, a spokesman for the ownership group.
Analysts at Lexington-based Commonwealth Economicsforecast the project will yield big returns once completed.
Andrew Zimbalist, a noted expert on sports stadium financing, called the projections “completely unrealistic and lofty.”
And others said the bombastic projections are unlikely, but expected.
“Because I expect for-profit sports team owners to generate absurdly high economic estimate numbers in order to con gullible city council members into granting subsidies," said Victor Matheson, economics professor at the College of the Holy Cross.
Big Win For Fans
Despite the criticisms and questions, soccer fans are ecstatic.
They’ve got a winning team, a supportive city and a stadium on the way – a hat trick.
Tom Farmer is the president of The Coopers, an independent supporter group of the Louisville City FC.
He said he wasn't even a soccer fan until he attended his first Louisville City FC game in 2015.
"I fell in love," he said.
Farmer said he understands the apprehensions from council members.
"That's legitimate, it's their duty to oversee our public funds responsibly," he said. "And even though public funding of any land purchase deal will be controversial, I think they made the right decision tonight."
Disclosure: Louisville City FC is privately owned by 47 investors. Two of those, Gill Holland and José Donis, are Louisville Public Media board members.
