Pushing ahead with building plans next to Western Kentucky University, the nonprofit corporation formed to oversee downtown redevelopment agreed Tuesday to borrow $3.8 million from the WKU Foundation at 8 percent interest.

The corporation – the Warren County Downtown Economic Development Authority – intends to build a 432-space parking garage and university alumni center/conference center on a block between Center and Kentucky streets adjacent to campus, an area loosely designated “block 12” in the 50-block redevelopment district. Those are intended to complement a 100-room hotel offered by Louisville hotelier Chester Musselman.

The corporation plans to fund land purchase and construction with federal New Market Tax Credits, which are being obtained through a complicated loan swap between the corporation, a sister entity created just for this purpose, several banks and various bank-connected investment funds.

The amount of tax credits expected is now $33 million, according to Rick Kelley, who holds no official position with the corporation but is one of the sub-developers and has been the primary promoter of downtown redevelopment for several years. The development as a whole is expected to cost $43.5 million, getting much closer to the $150 million threshold needed to gain the release of state tax money to help repay development costs. That threshold of new investment within a 383-acre downtown district, extending from campus to the riverfront, must be reached by 2014 if the state tax money is to be released.

But those New Market Tax Credits aren’t here yet, so the loan will allow the corporation to buy up land for the project, according to attorney Kevin Brooks. If the deal does not go through for some reason – which Brooks said he considers very unlikely – the WKU Foundation would own the land.

Assuming everything works out, the corporation itself will own the land and lease much of it back to the university for use as an alumni center, a bookstore and cafe, according to Mary Cohron, chair of the corporation’s board.

City Attorney Gene Harmon said the last demolition permits needed for the project are being issued. Site preparation work on the block should come around the first of the year, Brooks said. The corporation agreed to pay Arnold Engineering $14,750 for much of that work.

David Butler of master developer Alliance Corp. said the garage is pegged for completion by Aug. 1.

Drainage costs

The parking garage was originally planned for a downtown block adjacent to the new Bowling Green Ballpark, but instead that’s becoming a parking lot underlain with a large runoff-retention basin. Pipes from surrounding streets, which often flood in heavy rain, run into the basin, a joint project between the city and downtown corporation. Pipes were enlarged to handle more runoff from State Street, which cost about $70,000 more than the city had planned to spend, Brooks said, so the corporation took on that cost.

Part of the construction plan for the garage complex next to Western, however, calls for the elimination of one block of 14th Avenue – a street that the city paid about $400,000 to rework just a few years ago, and on which it still owes $350,000. The city has tentatively asked that it be reimbursed for that street cost, and in response Cohron and corporation board member Richard Morgan – also a Warren County magistrate – said the corporation’s expenditure for drainage improvements should offset some of that cost.

“So are you all saying you want us to pay you back for it?” city Chief Financial Officer Jeff Meisel asked.

“That’s what I’m saying, yeah,” Morgan said.