Louisville Arena Authority outlines long‑term capital plan and warns TIF revenue won’t cover debt for years
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Summary
At a February Capital Projects and Bond Oversight Committee meeting, Louisville Arena Authority leaders reviewed a 30‑year capital plan, said the arena supports about 600 full‑time‑equivalent jobs, and told lawmakers that the two‑mile TIF historically has not covered debt service and is not projected to do so for many years absent stronger sales‑tax growth.
Leslie Gohagen, chair of the Louisville Arena Authority, told the Capital Projects and Bond Oversight Committee that the Authority divides its finances into operating revenues and a separate debt‑service/prepayment layer and has developed a 30‑year capital expenditure plan to avoid surprise costs. "We want to be self sustaining on that top line, and we aren't there yet," Gohagen said.
Gohagen and the Authority's financial adviser, Chip Sutherland of Baird, said the arena supports roughly 600 full‑time equivalent jobs annually and that the Authority uses conservative assumptions to forecast Tax Increment Financing (TIF) sales‑tax receipts tied to the two‑mile downtown TIF district. Materials presented to the committee list a required annual payment from the University of Louisville tied to the 2017 refinancing as $2,420,000; other revenue shares (ticket sales, premium seating, concessions and sponsorships) are settled annually and can net to either side depending on the year.
The Authority told committee members it has used pandemic and Metro Louisville funds to prepay debt. Presenters said a combined prepayment of about $30.9 million was applied in recent years to reduce interest costs and shorten the repayment schedule. Gohagen said that once TIF revenue exceeds debt service, excess TIF will be applied to prepayment of principal.
Several committee members pressed the Authority on the projection that TIF receipts would not cover debt service for many years. "I'm also a little disappointed in the revenue figures," said Senator Thomas, who said the projected timeline to break even appeared long. Authority representatives said they intentionally use conservative TIF growth rates (materials noted a 2% growth assumption) and that higher-than‑expected development in downtown Louisville would accelerate prepayment and end the state's and Metro's obligations sooner.
Lawmakers asked about large peaks in the Authority's CapEx schedule; Gohagen said those reflect the estimated life spans of major assets (HVAC replacements, roofs, seating) and that the Authority revises plans every five years to smooth expenditures. Committee members also asked whether falling interest rates would create refinancing opportunities; the Authority confirmed it monitors callable bond dates and prior refinancing included call options that allowed prepayment without penalty on some tranches.
The presentation was informational and required no committee action. The committee thanked the Authority representatives for the briefing.