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September 24, 2005
Follow the money, Louisville edition
The Louisville Arena Task Force financing committee, an appointed body made up of local and state officials, has proposed a financing plan for a new $299 million basketball arena that, they say, could end up paying for itself.
Sounds intriguing, no? Especially considering that Louisville has no pro basketball franchise, and would have to rely on the University of Louisville as its anchor tenant. So how would the public earn back its money?
The answer is: It depends what you mean by "earn back." The task force anticipates that arena bonds would cost between $25 million and $29 million a year to pay off, while the arena would bring in $34 million in annual revenues. But that includes $15 million a year in rebated state and local taxes - in other words, the government would kick back tax money, then let the arena managers count it as "new revenue" when they paid would they would have anyway. Take out this "tax increment" - I hope I've explained well enough before why TIFs are bogus - and the Louisville arena promises to be a money-loser, as is usually the case.
As usual, Louisville's major daily The Courier-Journal is cheerleading the downtown plan. Hardly a word of criticism has been uttered by the increasingly hack-tacular rag.
The most outspoken critic of the project is ironically Mr. Papa John himself, John Schnatter, who paid millions a couple of years ago for the naming rights of UofL's football field, Cardinal Stadium.
When presented with a far-cheaper just-off-campus proposal, the arena committee immediately scrapped it for a downtown site that involves little space to build and lots of infrastructure (like a giant power transformer) to move around. I'm sure someone is going to make lots of money from this project, but it won't be the city.
Posted by Joe in Louisville on October 5, 2005 01:56 AM