LOUISVILLE, KY (CelebrityAccess MediaWire) — Tax revenue from the special taxing district built around KFC Yum! Center are falling short of expectations, leading some to express concern about impact to the city's credit rating.
First opened in 2010, the KFC Yum! Center was built, in part, with an investment from the Louisville Arena Authority that saw the city assume an eventual $573 million in debt over a $349 million bond issuance. The city created a six-square-mile special taxation distract around the venue that was designed to offset the costs with sales tax revenue, however those revenues appear to be falling short of expectations.
The district was expected to generate $6.7 million in 2010 for debt payments in 2011, but instead only produced $2.1 million, leaving the authority with a total of $14.6 million with $19.1 million owed for debt service in 2011, the Courier-Journal reported.
According to the Louisville Courier-Journal, the poor sales tax revenue may force the authority to tap its reserves, including venue maintenance funds, to service the arena's debt payments. Moreover, two credit ratings agencies, Standard & Poors and Moody's have threatened to downgrade the arena's bonds, which would significantly change the calculus for the arena.
Arena authorities however are sure that the revenue shortfalls are transitory and cite the opening of new businesses near the complex and increasing tax receipts from city hotels.
“There’s just so many things that are taking (hold), I think you’re going to see those numbers tick up,” said Larry Hayes, secretary of Kentucky’s Economic Development Cabinet and chairman of the authority’s finance committee told the Courier-Journal.
So far, the Authority has said that they won't look to the city for support, which is fortunate as Louisville is facing estimated deficits of as much as $30 million next year. – CelebrityAccess Staff Writers