Two Projects Show Louisville
Is Not a One-Horse Town

While the running of the famed Kentucky Derby horse race at Churchill Downs shines the national spotlight on Louisville, Ky., every May, two development projects are hoping to generate more buzz year-round.

Downtown Louisville, just about three miles north of the racetrack, has been undergoing a revitalization in recent years as the city has added thousands of new residential units and seen the opening of such attractions as the Muhammad Ali Center, a museum dedicated to the boxing champion, a Louisville native. Churchill Downs has also worked to keep up with the times, adding suites with views of the finish line with annual lease rates starting at $185,000.

Now downtown boosters hope to continue the momentum and to attract more investors and tourists outside Derby season with a boldly designed $465 million mixed-use project that will include a contemporary-art museum. The city is also moving ahead with an arena that will be used by the University of Louisville's basketball teams. "The goal is not just to have Louisville be a place where people come for two weeks, but a place to come year-round," says Barry Alberts, executive director of the Downtown Development Corp. in Louisville.

Museum Plaza, a mixed-use 62-story grouping of towers that looks something like a three-legged chair, is a particularly ambitious project. Designed by the New York-based architectural firm of REX, led by Joshua Prince-Ramus and Erez Ella, it will also include office space, condominiums and 250 hotel rooms. Construction is set to start in September, though the city still needs to finalize the issuance of bonds that will help pay for about $138 million of the project, Mr. Alberts says.

Museum Plaza overcame an important hurdle in March when Kentucky Gov. Ernie Fletcher signed legislation that paved the way for a maximum of about $20 million generated from a special hotel-room tax on the project's future revenues to be diverted to help repay the bonds, Mr. Alberts says. The Kentucky Hotel & Lodging Association opposed the legislation because it was concerned that the tax should be used as planned to market the region rather than to help finance projects when the Louisville hotel market isn't particularly strong, says Ray Gillespie, executive director of the Kentucky association. But Mr. Alberts says high-profile projects like Museum Plaza are expected to raise awareness of the city and demand, benefiting all properties.

The signature projects come as the Louisville region's economy has struggled to make a transition from a reliance on manufacturing to more knowledge-based industries, according to Glenn Wingard, an associate economist with Moody's Economy.com. Louisville is home to such corporations as health insurer Humana Inc. and restaurant giant Yum Brands Inc. Strengthening tourism and transportation sectors are drivers, helping push nonfarm job growth up about 1.9% in February from a year earlier, ahead of the 1.5% national rate.

The area is also gaining national prominence and local jobs as an expanding national warehouse-distribution hub. Last year, United Parcel Service Inc. said it would invest $1 billion to expand its Worldport air hub at Louisville International Airport.

Lauth Property Group, an Indianapolis-based real-estate company, recently sold a large industrial property and is planning to build another building without a tenant in hand. "You take UPS, the positive demographics of the South, the relocation of a lot of manufacturers and all of a sudden you've got a pretty strong distribution market," says Tag Birge, Lauth Property's Midwest regional director.

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