August 19, 2007

More in store for downtown

$250 million proposal for Center City District includes retail, restaurants, housing; funding plan needs city, state OK

Fourth Street Live developer Cordish Co. plans to invest $250 million in new housing, restaurants, a cinema and a boutique hotel on 23 acres of downtown property along Muhammad Ali Boulevard.

Tentatively called the Center City District, the project would cost 3 ½ times as much as the nearby 4th Street Live entertainment complex and stretch over parts of six city blocks.

Metro Mayor Jerry Abramson said in an interview yesterday that Center City would create an "epicenter of energy" that hasn't been seen in downtown Louisville since the 1950s.

"It's a neighborhood rather than a project," Abramson said, noting that the Metro Council and state officials still must approve a funding plan. "It's a continuation of the last 20 years of planning, developing, and now implementing a center city that we can all be proud of."

The area proposed for Center City currently includes parking lots, office buildings, city property and a few small shops.

The core of the district, often called the Louisville Water Co. block, was once a top candidate for a downtown arena and is bounded by Second, Third and Liberty streets and Ali Boulevard. An estimated 500,000 square feet of buildings would be created there -- including at least one structure with more than 15 stories.

Construction is expected to start next year and be substantially complete by 2010.

Cordish would provide the entire $250 million investment in Center City upfront. About half of that money, or $130 million, would be returned to the company over the next 30 years in the form of local and state tax rebates from the 23-acre area.

No retailers have been selected for the project, but Blake Cordish, a vice president with Baltimore-based Cordish Co., said initial reaction from prospective tenants has been positive.

Also included in the plans is a major renovation of The Gardens. The city-owned property would be leased to Cordish and turned into a 6,000-seat venue for concerts and possibly a minor-league hockey team.

Blake Cordish declined to identify the league in which the team would play, but he said the Louisville squad would be an expansion team, not a franchise moved from another city.

Cordish Co. owns 4th Street Live, which opened in 2004 on the site of the Galleria mall and now draws about 4 million people annually. The company also has created urban mixed-use projects in Baltimore and other U.S. cities, and is working on similar efforts in Kansas City, St. Louis and Toronto.

The city already owns about 40 percent of the 6.2-acre Louisville Water Co. block. Cordish has an option to buy the rest.

Private landowners elsewhere in the Center City District would benefit from the public upgrades, Abramson said, and possibly invest additional money in their property. One of them, Florida developer Eric Bachelor, already plans to buy the Hilliard Lyons Center that once housed the Stewart's department store and turn it into an Embassy Suites Hotel.

Funding from the tax rebates over the next three decades would be funneled exclusively to public improvements such as sidewalks, lighting and improved alleys. About 1,000 new parking spaces also are planned.

The Metro Council will hear a formal presentation about Center City tomorrow. A measure to approve the taxing district is expected to be introduced Thursday. Cordish and Abramson both said Center City is merely a working name for the project and a permanent name would be selected later.

Democrat David Tandy, the 4th District councilman who represents downtown, and council President Rick Blackwell, D-12th, said they expect the council will approve the tax rebates to Cordish. The taxing district would still need approval by a state commission. Abramson said he hopes to have the proposal to the commission by next month.

The development would be the latest in a burst of downtown activity in recent years. In addition to 4th Street Live and the arena, planned at Second and Main streets, a 62-story skyscraper called Museum Plaza is to open in 2010 and a $50 million development called Iron Quarter is in the works along Main just east of the arena.

Jim Host, chairman of the Louisville Arena Authority, said the arena wouldn't be a good match for a minor-league hockey team that could perhaps average 4,000 fans per game. He said the arena, with 22,000 seats, would charge much higher rent than The Gardens, and there would be scheduling conflicts with the University of Louisville's basketball teams, which have priority for games and practices.

Although a final design for Center City has not been adopted, it will most likely feature a mix of buildings, parking and some open space. Retail would most likely be on the lower floors of most buildings, with offices and housing above. Cordish declined to say how much housing would be included, but he said there would be "multiple hundreds" of units.

The vacancy rate for Class A office space in the downtown area was 9.8 percent for the second quarter of this year, down from 13.4 percent a year ago, according to figures from CB Richard Ellis Louisville.

Managers of some 4th Street Live venues have reported steady traffic in the last year or so, but many have been clamoring for more retail options to compete with suburban malls.

Andre Bradford, general manager at Maker's Mark Bourbon House & Lounge, predicted that the additional shopping and housing planned at Center City would boost traffic at 4th Street Live.

"Anything and everything that can be put downtown is going to help," Bradford said.

Hogan Real Estate will be a local partner in the Center City project, and Cordish said the design team will include architects from Louisville.

Cordish Co. previously announced plans to put new restaurants and other tenants in the first floor of the Starks Building, at Fourth and Ali, which also is part of the 23-acre Center City area.

There are several older buildings in the Water Co. block that may have some historic or architectural significance. Abramson said it is not yet clear if they would be torn down or incorporated into Center City.