Phillip M. Bailey, and Tom Loftus

The Courier-Journal

The state is taking its first steps toward resolving the KFC Yum! Center's financial problems in a long-awaited bill that could be approved as soon as Tuesday.

House Bill 330 would extend the life of a tax increment financing, or TIF, district program in Louisville Metro from 20 years to as long as 45 years. The TIF district is a critical part of paying off the Yum Center's $690 million debt but it has struggled to meet expectations.

"The arena authority is basically in a position where they’ve got to refinance," said state Rep. David Osborne, R-Prospect, who filed the measure. "In order to refinance they’ve got to show a revenue stream over a period for the life of the bonds, and the only way they can do that is with the TIF."

HB 330 is scheduled to receive a hearing in the House Budget Committee on Tuesday. It is being co-sponsored by House Speaker Jeff Hoover, R-Jamestown, and state Rep. Joni Jenkins, D-Shively.

The Louisville Arena Authority has warned stakeholders it will be unable to cover the outstanding construction bonds beginning in 2020 unless the deal is renegotiated between the city, state and University of Louisville. For its part, the Metro Council approved a resolution giving Mayor Greg Fischer authority to negotiate new terms for the city’s financial contribution.

Scott C. Cox, chairman of the arena authority, who has been juggling the negotiations, said the state's Economic Development Cabinet also will have a role in addressing the debt by deciding whether or not to raise the TIF's revenue cap. "We're hoping that will be raised or eliminated," he said.

The mayor's office confirmed it is currently in discussions with Gov. Matt Bevin's administration on how much more the city's contribution will be and for how long. For the past several years the city's has paid the maximum of approximately $10 million.

Metro Council President David Yates said his members understand the economic importance of the Yum Center but that they will not approve payments at the expense of other important matters.

"My number one priority in dealing with our budget is public safety," Yates said. "So any amount that no longer leaves discretionary income to be take care of those tenants of government would be too much."

In recent months, council members have openly criticized the arena deal as one that favors the U of L athletics association at the expense of Louisville taxpayers. Cox did not elaborate when asked about U of L's specific increased contributions other than to say those talks are ongoing.

U of L athletics department spokesman Kenny Klein said U of L pays about $4.5 million annually toward the arena debt. He would not comment when asked if the university has been asked by the city, state or arena authority to increase its payments.

Klein said whatever deal is made would have to be approved by either the U of L board of trustees or the athletics association's board of directors. "I can’t specifically address the TIF, but I’m sure any positive move from the state would be appreciated," he said.

Yates, who serves on the arena authority, said U of L is wiling to make certain concessions from the discussions he's had with them. "Whenever you're having contract disputes there's a back-and-forth," he said. "It will be a combination in a variation of arena dates and direct revenue. What the final number will be has yet to be determined because we haven't reached the end yet."

Reporter Phillip M. Bailey can be reached at (502) 582-4475 or pbailey@courier-journal.com. Reporter Tom Loftus can be reached at (502) 875-5136 or tloftus@courier-journal.com.