The incentives are part of a $3 million Downtown Revitalization Fund, which was approved by Louisville Metro Council in June and is part of the current city budget. Louisville’s Cabinet of Economic Development is overseeing the fund.
Pat Mulloy and Jeff O’Brien serve as the cabinet’s deputy mayor and executive director, respectively. On Tuesday, they presented the fund to Metro Council’s Labor and Economic Development Committee.
The city is offering businesses up to $30 per square foot to improve their downtown buildings, such as through better infrastructure. It’s available to businesses that lease 50,000 square feet or more for at least five years.
Caitlin Bowling, a spokesperson for Economic Development, said the fund is currently available for businesses both new to downtown and expanding their downtown presence.
But she added that the city is reviewing whether to change certain details, based on a concern raised at the Tuesday hearing by committee vice chair Anthony Piagentini.
Piagentini, a Republican who represents cities and areas in eastern Jefferson County, said he worried about the fund incentivizing businesses to move downtown from elsewhere in the county.
The fund also includes a provision to take back funds if a business leaves before the lease expires, and wouldn’t be available to businesses moving between downtown Louisville offices.
Outside of the fund, the Parking Authority of River City, which is also part of Metro Government, is offering reduced downtown parking rates for new businesses that lease a minimum of 20,000 square feet.
O’Brien said at Tuesday’s committee meeting that office buildings in the central business district have had rising vacancy rates.
“The trend that we’re seeing right now is a lot of leases are coming due,” O’Brien said. “We’re seeing tenants actually downsize. So that number’s gonna go up.”
Stressing the fund’s importance, Mulloy said Louisville Metro is recruiting a large business to set up office space downtown, and that it would bring smart, valuable workers to the city.
“We need young people with brains coming here and living, and starting their own businesses,” Mulloy said.
Commercial real estate company CBRE found about a quarter of space in large downtown Louisville office buildings was vacant from April to June. The vacancy rate is about 10 percentage points higher than the rate four years earlier, before the COVID-19 pandemic shifted many workers out of offices.
Any money unspent after two years would be added to a downtown housing loan fund run by the Louisville Downtown Partnership.
Mulloy told council members that the cabinet plans to ask them for more funding in the future. The city would look to use some of it to convert office buildings into housing units.
“There’s a bunch of office buildings that I think will have to be reconfigured from office into housing and to hotel rooms,” Mulloy said.
O’Brien told LPM News in August that the city originally planned to promote downtown workforce housing in the fund’s first year. Those types of homes are meant to be affordable to residents making slightly less than the area median income.
This past spring, Louisville’s central business district had less than half of its pre-COVID activity. That’s according to University of Toronto researchers, who examined cellphone data of major North American downtowns.
