The district pays local governments 80 percent of the increases in payroll, property, sales and other tax revenue generated by new development within the district. Revenue is devoted to retiring construction bonds, building infrastructure and assisting developers, including the university.

This year the development district, formally called the WKU Gateway to Downtown Bowling Green, will return to the city and county over $2 million in revenue. Over its 30-year life, ending in 2037, the tax district is expected to deliver $200 million to the two governments, said Doug Gorman, a downtown business owner and chairman of the Warren County Downtown Economic Development Authority, which oversees the Gateway project.

“The whole point of what we’re trying to do is to get more people to enjoy our downtown, to live here and work here,” he said. “If you look around now, it’s pretty clear that people get the point.”

Until the Gateway project began to unfold, Bowling Green was largely known for its university, the third largest in Kentucky, after the University of Kentucky and the University of Louisville. Its other claim to fame is the General Motors assembly plant not far away, where Corvettes have been built since 1981. This year a sinkhole opened in a wing of the privately managed National Corvette Museum near the plant, swallowing eight sports cars that were on display and prompting significant increases in attendance.

Some of the museum’s visitors wander into Bowling Green’s evolving downtown. During a tour, Mr. Gorman identifies the steadily expanding galaxy of arts, entertainment, office and housing projects, big and small, that have quickly risen from blocks that just a few years ago were underused or blighted.

Development is focused in three distinct hubs. The university, and its 21,000-student market, is heavily influencing construction at the bottom of the Cherry Hall hill, in the southern section of downtown.