A developer hoping to build a 122-room hotel on E. Market Street in Louisville is asking Metro Government for a nearly $2 million tax break.
Delaware-based Mountain & River City, LLC is planning to build the hotel on what is currently a surface parking lot next to The Green Building at 726 E. Market Street in the NuLu neighborhood. The hotel would offer two food and beverage establishments inside, as well as an art gallery. It’s expected to cost around $29 million.
Louisville Metro Council is currently considering an ordinance to create a tax increment financing district for the property. That would mean the city would note how much property tax the lot is currently generating, then, over the next 20 years, any property tax revenue the city gets above that number from the project would go back to the developer, up to $1.8 million.
Council Member Jecorey Arthur (D-4) represents the district where the proposed hotel would be located. Arthur said the developer approached him to sponsor the ordinance for the tax break, but he refused.
“Walk around NuLu and there’s hotels popping up everywhere,” Arthur told WFPL. “I don’t know what the hotel need is, but to my understanding we don’t need any more hotels. We need more housing for people.”
Three hotels currently exist within just a few blocks of Mountain & River City, LLC’s proposed hotel: Hancock House Louisville, Hilton’s Home2 Suites and Marriott’s AC Hotel. The AC Hotel started receiving a similar tax increment financing incentive in 2017, a tax break worth up to $4.3M over the next 20 years.
In order to qualify for the tax break, the property developers hope to build on will have to be labeled “blighted.” The proposed ordinance states the property has seen “a substantial loss of residential, commercial, and industrial activity.”
At Metro Council’s Labor and Economic Development Committee meeting on Tuesday, some council members questioned whether a piece of land in the middle of a thriving commercial district of Louisville could reasonably be called blighted. Echoing Arthur’s criticism, members also questioned the need for yet another hotel in the NuLu neighborhood.
Stephen Wendell, a representative for the developer, told Metro Council that putting together financing for a hospitality development is tough in the post-pandemic market. He also said that with the new improvements to the Kentucky International Convention Center, there will be enough tourism to sustain multiple hotels in NuLu.
“We carefully study markets from multiple feasibility studies before entering them,” Wendell said. “I believe Louisville is on a 10-year trajectory to do really, really great.”
Wendell is a principal with the South Carolina-based Mountain Shore Properties. The company, along with the owners of Rabbit Hole Distillery, is the primary developer behind Mountain & River City, LLC. The Bunkhouse Group based in Texas would manage the hotel.
Even though he is not sponsoring the tax break ordinance, Arthur said he is working with the developer and the Phoenix Hill Neighborhood Association to create a community benefits agreement. That would require Mountain & River City, LLC provide some public benefit in exchange for getting public dollars for their hotel.
“I just want to make sure that if it’s going to pass, there is a benefit for the community,” Arthur said.
Kristi Ashby, the president of the Phoenix Hill Neighborhood Association, said this would be the first community benefits agreement of its kind in the NuLu area. A final agreement hasn’t been drawn up yet, but Ashby said they have asked for priority hiring of neighborhood residents, community involvement in the hotel’s planned art gallery and amenities for residents experiencing homelessness.
“This is kind of another way for us to work with new development coming in, [to say] like this is our goal: we want to keep our neighborhood diverse, socially, economically, racially,” Ashby said. “We hope that businesses will recognize that and the benefits of that, and that they’ll work with us to keep that aspect of our neighborhood.”
The proposed ordinance providing the tax break to Mountain & River City, LLC was approved by Metro Council’s Labor and Economic Development Committee on Tuesday. It is expected to be voted on by the full Council at its next meeting on August 12.
