Against the West Louisville TIF

l believe that we can develop our communities by making them safer, happier, and more supportive of the people who live there now. 

The West End Opportunity Partnership is a scam to extract value from our communities while pretending to take action on racial justice. It is a tool for gentrification.

On May 17th, we can hold the politicians who inflicted the West End TIF on our communities accountable.

Pamela Stevenson accepted a $2000 donation from Steve Poe, the millionaire developer behind the TIF. I reject all campaign donations from developers and will always choose the side of the people over corporations and developers.

1. What is a TIF?

TIF stands for “Tax Increment Financing.”  The idea behind a TIF is to use public tax dollars in order to fund public, public-private, or private projects that purport to serve the public good.  A TIF will always be located within a certain district, and the public tax dollars used the revenues generated within that district.  The tax dollars used here are “incremental” tax dollars — those tax dollars that exceed the amount of revenue generated within a certain geographic area after the date of the project.

A TIF may serve certain types of projects; you may be aware that a downtown TIF was instituted to help fund the construction of the YUM! Center.  However, TIFs can also be instituted to fund “mixed-use redevelopment in blighted urban areas.”  The logic behind such TIF districts is that the development would not happen without the use of public funds, and that the investment will increase property values, resident incomes, and commercial activity, and thus property, income, and sales taxes.  Most of the increases in those taxes — largely paid by the residents of the district — can be used to fund private redevelopment projects under the TIF.

TIFs are highly complex laws, which can be very difficult for the public to understand.  But citizens need to understand that TIFs can and do take tax dollars from the public coffers and direct them to non-governmental actors.  This means that money that could be used to improve and build infrastructure like schools, roads, and public transportation are being used to increase the value of properties owned by large corporate investors.  Effectively, our tax dollars end up lining the pockets of developers instead of funding public services that would benefit all residents.

2. What does the West End TIF do?

The footprint of the West End TIF covers an area encompassing nine West End neighborhoods: Algonquin, California, Chickasaw, Park Duvalle, Park Hill, Parkland, Portland, Russell, and Shawnee.  80% of all increases in state and local tax revenues year over year will be available for development projects within the footprint of the TIF district.  These funds will be given over to the West End Opportunity Partnership (WEOP), a corporation created by the state legislature, for oversight and distribution.  

WEOP is slated to have 21 board members, 12 of whom were appointed from various governmental and corporate stakeholders and 9 of whom will represent the 9 neighborhoods of the TIF district.  The members of the board are not chosen by the residents of the TIF district, but by the WEOP itself.

WEOP is tasked with managing the incremental state and local funds set aside for development projects within the TIF.  It will work with developers to draw up agreements about projects and their schedules, including how much tax money these private developers will receive to fund their projects.  WEOP will also work with Metro Louisville’s government and the state to release the specific funds to each project.

3. Who is behind the West End TIF?

The legislation that created the West End TIF, 2021’s HB 321 passed quickly through the Kentucky legislature with bipartisan support.  Republicans like Senate President Robert Stivers of Manchester and Sen. Julie Raque Adams supported the measure, along with Democratic members of the Senate Gerald Neal and Morgan McGarvey.  At the time of its introduction, Stivers claimed that the measure “arose from nine months of work”  and “listening to people involved in the community it would affect.”  Morgan Watkins, Louisville Courier-Journal, “Bipartisan legislative plan would create economic development district in west Louisville” Feb 23, 2021.  But who are the people Stivers listened to in crafting this legislation?  We do not know.

State Representative Attica Scott immediately noted her skepticism about Stivers’ intent in creating the West End TIF.  Id.  In a WEOP meeting in October 2021, former WEOP board member Sadiqa Reynolds of the Urban League urged her fellow WEOP members to be forthcoming about the proponents of the measure.  Andrew McNeil, Bluegrass Institute, “Center for Open Government: Who was involved in creating the west end TIF remains an open question” Nov 2, 2021.

What we do know is that major developers spent significant amounts of money lobbying the state government to pass the West End TIF.  Kentucky Legislative Ethics Commission records show that Republican donor and real estate megadeveloper Steve Poe and his Poe Companies, LLC spent significant money lobbying for the bill.  Id.  Mayoral frontrunner Craig Greenberg, who has interests in development projects, has acknowledged he was involved in writing the TIF legislation.  Marcus Green, WDRB, “A West End investment plan is advancing.  Some residents want to stop it.” Dec 5, 2021.  

4. What kind of oversight do the people of the West End have over the West End Opportunity Partnership?

The WEOP suffers from a heavily top-down approach to the management of TIF funds, and has nearly no democratic oversight from West End residents.  While the WEOP board is obligated to have 9 local members, one from each of the TIF district neighborhoods, they are not chosen by the people of the neighborhood.  Instead, they are elected to the board by the other board members, the vast majority of whom represent powerful monied interests.

The legislation also creates a West End Louisville Advisory Council as a subcommittee of WEOP, to consist of 9 members from each of the neighborhoods in the TIF district.  Like the WEOP board itself, the Council does not provide any meaningful form of democratic oversight over the tax dollars pledged to the TIF.  The Council is initially appointed by the Governor and will be self-perpetuating as members’ terms expire.  The Council has no effective mechanism for power over WEOP.

So while the TIF’s proponents laud “community participation,” the WEOP does not actually share any power with community members.  The actual makeup of WEOP clearly demonstrates that the players behind its adoption had no interest in true co-governance to build community resilience.  Here, WEOP has all of the power, and residents and their neighborhood organizations have no say in how their tax dollars are given over to private developers.  WEOP reflects a growing trend in so-called “public-private partnerships” where existing government and business interests are given a seat at the table, while the community is left out in the cold.

5. Is the West End TIF a Good Deal for Louisvillians?

No.  As stated above, the West End TIF and WEOP serves only to divert tax dollars to private developers rather than the public good.  And even its main selling points fall short.

TIF proponents point out that homeowners within the TIF district are effectively “locked-in” to their 2020 property tax rates.  While the TIF legislation does provide for tax credits for any increases in property taxes from January 1, 2021, looking solely at homeownership as a benefit to residents ignores the reality of many who live in the West End.  

The West End is home to a significant population of renters, who may face rising rents in the face of a flurry of private development spurred on by tax dollars that could otherwise fund public infrastructure and social services.  These renters face a realistic threat of displacement as property values and rents increase, which is likely to result in gentrification.  Case studies on gentrification and displacement have shown us that systematically marginalized communities like Louisville’s West End are the most vulnerable to gentrification and displacement.

TIF proponents also claim that the enacting legislation contains guarantees for jobs and affordable housing for current West End residents.  While the legislation does contain language concerning these two matters, it is far from a guarantee.  KRS 65.502(2) lists the purposes of WEOP.  Subsection (c) states that WEOP must “[e]nsure that all projects  include the employment of area residents, both in short-term construction jobs and long-term employment in businesses locating within the development area.”  Subsection (d) requires it to “[e]nsure that all housing projects include the creation of housing that is deemed affordable in accordance with federal guidelines for low-income families.“

These clauses are far from a guarantee, as the language is unenforcably vague.  How many jobs need to be created in construction or for long-term employment?  How many affordable housing units will be created?  The answers to these questions are left entirely to WEOP and West End residents are left wondering whether their tax dollars, pledged to private developers, will really help revitalize their community.

Pamela Stevenson supported the West End TIF.  Did she know what was in it?  I do not think she did her homework.  District 43 and the West End deserves to have a representative who will fight for its working residents and pledge its tax dollars to projects that truly serve the public good, rather then make rich developers even richer.