by Phillip M. Bailey, @phillipmbailey –
Mayor Greg Fischer’s administration wants to funnel a $7 million federal loan — provided to the city more than 20 years ago to create businesses and jobs in western Louisville — to the West End FoodPort project.
The proposal comes just five months after the city sold a 24-acre site in the Russell neighborhood worth $1.57 million to the food hub’s developers, Seed Capital Kentucky, for $1. It also includes a provision saying that the city would repay the loan if the developers do not.
Community advocates and entrepreneurs argue that the shift underscores a pattern of city officials denying West End businesses and nonprofits access to money promised to revitalize their neighborhoods.
“We’ve been shut out of this process historically, it’s just so obvious now that it’s pathetic,” said Joe McNealy, a tech entrepreneur who lives in the Russell neighborhood and had sought part of the funding. “There’s no real money being given to any low- or moderate-income initiative, and specifically, none that are controlled or owned by a low- and middle-income individual that the money is supposed to help.”
The Fischer administration plans to ask the U.S. Department of Housing and Urban Development to approve the proposal Sept. 1 after a month of public comment, which began last month.
The city obtained the Section 108 loan guarantee from HUD in 1995, when Mayor Jerry Abramson was in office, to stimulate business and create jobs in western Louisville. At the time, the city’s plans for the money included a small business incubator, job-placement facility and expansion of an industrial park, but officials said they found alternative funding to complete those projects.
Caroline Heine, who co-founded Seed Capital along with philanthropist Stephen Reily, said Monday that they first learned about the HUD loan during a meeting with Fischer and his team. She added that financial projections indicate that the FoodPort will be able to cover its debt service, starting in the first year of operation.
Reily did not respond to email and phone requests seeking comment.
City spokesman Will Ford said the administration is discussing using the HUD money for other projects but that “to date, the West Louisville FoodPort is the only project that has the necessary property in hand, zoning in place, and committed additional financing that makes up a majority of the project’s funding.”
McNealy said that earlier this year, he proposed using $1.6 million of the HUD loan for his “WiFi Expressway,” providing a 92-page business plan to bring better internet access to the West End. He said he continued to follow up with the city until he learned in a newsletter last week of the city’s plans to award the $7 million to the FoodPort project.
Councilwoman Cheri Bryan Hamilton, D-5th District, who supports the FoodPort project, said she had not read the city’s HUD proposal, but echoed the administration’s viewpoint that the loan is meant for large-scale projects that can revitalize entire neighborhoods.
“Some of the smaller projects that may think they qualify or may try to look at this for a source of revenue, this may not be the right source depending on their financing or ability to repay,” she said.
Other council members, such as Mary Woolridge, D-3rd, said constituents will be furious to learn that wealthy developers are receiving the $7 million deal after being given a large plot of land for $1.
“We continue to give to the people that have the most,” she said. “It absolutely is favoritism, and it is money for west Louisville that the city’s been sitting on for 20 years.”
Councilman Kelly Downard, R-16th, said incentives that come through City Hall are scrutinized but “are nowhere near as sweet as this.” He said the council should have a role in overseeing this loan if HUD agrees to the changes.
“This is audacious,” he added. “The FoodPort is a wonderful idea, and I support it. I don’t know if I support it for 8 million bucks.”
Fischer administration officials said changing the use of the loan does not require council approval.
The mayor has said the FoodPort will help transform Russell. It seeks to create more than 250 jobs, according to the city, and at least half “will be held by, or be available to” low- to moderate-income individuals. The city’s HUD proposal notes that a FoodPort goal is to make 75 percent of the jobs available to people in those income brackets.
“As one of the largest development projects in this area proposed in more than a decade, the FoodPort transforms a 24-acre brownfield from a barren and unused area to an economically vibrant project that brings new jobs and attracts new and expanding businesses to west Louisville,” Heine said.
But some who’ve been working closely with FoodPort executives to connect the project to residents said the nonprofit has resisted signing a binding agreement on hiring practices.
“They sound good on the surface and the numbers are high and laudable, but by saying ‘may be available’ it creates a giant loophole that could provide any excuse for not reaching those goals,” said Andrew Kang Bartlett, a food justice advocate who sits on the FoodPort’s 100-member community council.
HUD defines low- to moderate-income persons as those making 80 percent or less of the area median income, which in Louisville would be $37,550 for an individual and $53,600 for a family of four.
Heine said there are no binding agreements between the city and the FoodPort regarding the possible HUD loan or hiring standards, such as where the workers live. But she said they have been working with partners and potential tenants to best serve the communities that surround the project.
“All prospective tenants have agreed to hire as many people from the surrounding neighborhoods as possible for the positions at the FoodPort,” Heine said. She added that if the FoodPort does not receive the $7 million HUD loan it would need to identify another lender for that portion of the debt.
The city has received two public comments thus far, and they are being accepted until Aug. 26. Those wishing to comment can submit an email to firstname.lastname@example.org or mail to Housing and Community Development, 444 S. Fifth St., Louisville, KY 40202.
City officials also plan to discuss the proposal at Hamilton’s neighborhood advisory board meeting at 6:30 p.m. next Monday at the Yearling’s Club, 4309 W. Broadway and the council’s economic development committee meeting Tuesday at City Hall, 601 W. Jefferson St. The time for that meeting has yet to be announced.
Reporter Phillip M. Bailey can be reached at (502) 582-4475 or email@example.com