During the Board of Commissioners’ January regular meeting this week, we voted to advance several items that will help advance our continued efforts to revitalize downtown.
One of those items was the consideration of an Industrial Revenue Bond (IRB) to support the renovation of the Capital Plaza Hotel.
I want to take a moment to clearly explain what the IRB is, what it is not, and why I voted to support it.
First and foremost, the City and County are not borrowing money. We are not giving cash to a private developer, and taxpayers are not responsible for this bond in any way.
An IRB is a financing mechanism permitted under Kentucky law that temporarily places property under government ownership for a set period, in this case, 10 years. Since governments do not pay property taxes, this structure provides a property tax abatement that helps make large private investments financially feasible. After the term ends, the property returns to the tax rolls at a much higher value.
In short, the City is forgoing near-term property tax revenue to unlock a major private renovation that will strengthen our downtown and drive long-term economic growth.
The proposed IRB would support up to $33 million in renovations to completely modernize the Capital Plaza Hotel. Today, the property is valued at roughly $6 million and generates relatively modest tax revenue. Projections show that a renovated hotel would significantly increase activity downtown, bringing higher occupational and transient room taxes, as well as parking revenue, to the City, far exceeding what we receive today.
It’s also important to understand that the Franklin County Fiscal Court has already approved the IRB. Because the property will be county-owned during the IRB term, the City would not receive property tax revenue regardless of our vote. That is the very structure that makes an IRB work. Our participation is about supporting the broader economic development impact, not about assuming financial risk.
The developers have indicated that the IRB is critical to securing private financing. Whether that is ultimately the determining factor, I cannot say. What I can say with certainty is that without a renovated, up-to-date hotel, our downtown and tourism economy will struggle to reach its full potential.
This is especially true as we work with the state to build a new Meeting and Event Center. To attract conferences, events, and visitors, we must have quality lodging that meets today’s expectations. The current hotel simply will not support the level of growth that I envision.
Accountability is essential. We have asked the developers to agree to performance standards tied to job creation and occupancy, with financial consequences if those targets are not met. In other words, the onus is now on the property owner to deliver.
When it comes to economic development, the City is delivering on its part. We’ve built the parking garage, created a TIF incentive district, advanced riverfront planning efforts (more on that below), and are partnering with the state to construct a new Meeting and Event Center. We have put the conditions in place for private investment to succeed.
From a broader perspective, the hotel renovation aligns with our long-term vision for downtown and the riverfront. Also at the January regular meeting, the City Commission voted to hire Sasaki, a world-class landscape architecture and planning firm, to design our riverfront master plan, building on earlier plans from 2009 and the Downtown Master Plan of 2018.
This new plan will guide the next phases of riverfront development. Before any significant investment can occur, however, we must stabilize the riverbank, which continues to erode from repeated flooding. This work will also make our downtown more resilient to future flooding events.
To that end, we are working closely with our congressional delegation to secure funding. Last week, Congressman Comer successfully secured $5.8 million for the Frankfort Riverbank Stabilization Project in the Homeland Security Appropriations bill. I personally traveled to Washington to advocate for this funding and will continue to monitor its progress through the Senate.
The combination of a revitalized hotel, a new Meeting and Event Center, proposed new housing downtown, and a reimagined riverfront is creating real momentum. We are changing Frankfort’s economic trajectory. Now is the time to keep our foot on the accelerator and push through to the next level.
The time is now, and I appreciate your continued support as we move Frankfort forward.