Legislation extending KFC Yum! Center TIF up to 25 years passes General Assembly
03/30/2017 08:30 PM
8:30 P.M. UPDATE FRANKFORT — The General Assembly passed legislation that would extend the life of a tax increment financing project for the KFC Yum! Center Thursday, sending the bill to Gov. Matt Bevin for his signature or veto.
House Bill 330 cleared the Senate on a 30-7-1 vote, with Sen. Wil Schroder, R-Wilder, voting “pass.” The House later approved HB 330 on a 72-8 vote without debate.
The Senate Appropriations and Revenue Committee amended the bill earlier Thursday to extend the TIF by up to 25 years, send excess revenues at the KFC Yum! Center to retire refinanced debt and require annual reporting to the legislature and governor. Scott Brinkman, secretary of Bevin’s executive cabinet, testified that the Louisville Arena Authority is expected to default on bonds for the KFC Yum! Center by 2020.
Sen. Chris McDaniel, a Taylor Mill Republican who chairs the Senate budget panel, voted for HB 330 but with a caveat that he offered during the earlier committee meeting.
“There is an expectation from this body that they will step up beyond what has been stepped up before and come to the table and do this deal,” he said, referencing an agreement between Louisville Metro Government and the University of Louisville to increase their annual financial contributions to the project.
“And if they don’t, mister president, I will assure the members of this body the only thing that you will see me work on outside of the budget is to kill this TIF in its entirety and force an immediate default on these bonds.”
Not everyone supported the measure.
Sen. Paul Hornback, R-Shelbyville, said the state will lose out on $350 million in tax revenue with the TIF extended 25 years, money that could be utilized by the state’s ailing pension systems. Sen. Stephen Meredith, R-Leitchfield, said that cash, plus the $75 million the state appropriated for the project in 2010, would be useful in the state and his rural district.
“Three hundred and fifty million dollars for a future period of time would make a significant change in every county in this state,” Meredith said.
1 P.M. UPDATE FRANKFORT — A bill that would extend the life of the tax increment financing project funding Louisville’s KFC Yum! Center cleared the Senate budget committee on Thursday, the closing day of this year’s 30-day legislative session.
The Senate’s amended version of House Bill 330 passed on a unanimous vote the day after the House added the bill’s original text to Senate Bill 235.
The bill would extend the TIF, which is set to expire in 2029, by up to 25 years and require annual reports to the General Assembly. HB 330 would also require that refinanced KFC Yum! Center bonds be paid before their 30-year terms, if possible.
“The goal is for everybody to be relieved of their respective obligations as soon as possible through the full payment of the bonds,” said Scott Brinkman, secretary of Gov. Matt Bevin’s executive cabinet. “At that point, the TIF ceases and all the revenues that were otherwise remitted to the Louisville Arena Authority will be remitted to the General Fund of the commonwealth.”
Brinkman told lawmakers that now is an ideal time to refinance the downtown Louisville arena’s bonds with the U.S. Federal Reserve beginning to increase interest rates and the Louisville Arena Authority facing the prospect of defaulting on its debt in 2020.
Current income streams — operating revenues plus contributions from Louisville Metro Government and the TIF area surrounding the arena — “will not be sufficient to pay the scheduled debt service on the bonds.”
“It’s been very tight, but the way the schedule was developed when the existing bonds were issued, there’s a spike beginning in 2020 and continuing for a number of years, and under every conceivable analysis there will be a shortfall in revenues to make those required payments on the bonds starting in 2020,” he said while testifying for HB 330. “… That’s why there’s a sense of urgency.”
Along with refinancing the KFC Yum! Center’s bonds, Brinkman said the city has committed to pay $10.8 million per year on the refinanced bonds and the University of Louisville, the main tenant of the arena, has agreed to add $2.5 million in annual payments to its lease agreement. The Louisville Arena authority also agreed to dedicate excess revenues to debt service, he said.
Those provisions were not included in the Senate’s version of HB 330, something that concerned Sen. Chris McDaniel, a Taylor Mill Republican who chairs the Senate Appropriations and Revenue Committee.
McDaniel said he also worried that as faces changes at the various entities involved in the agreement, some might not keep their ends of the arrangement.
“I hope that the leaders of the other agencies understand the seriousness with which this body takes this, and I can assure you in the event that those leaders do not take their responsibilities as seriously, we will be back here with a bill that I will bring to make sure that they either take them seriously or they can deal with the repercussions thereof,” he said during Thursday’s meeting.
HB 330 cleared the budget panel without a dissenting vote, McDaniel was among senators who expressed their misgivings on the proposal. After the meeting, he did not commit to voting for the bill when it hits the Senate floor later Thursday.
“The biggest issue confronting the commonwealth is we have a pension system that’s in crisis mode, and this bill has the potential to sap up to $350 million away from the General Fund in the out years,” McDaniel told reporters.
“Now that is more than 12 years away when that actually begins to occur, but the commonwealth needs to be fiscally solvent and prudent, and so I want to make sure that every deal we do meets that threshold.”
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