Subsidy for luxury housing?

I'm kind of horrified that the city is even considering giving a luxury housing developer a $5,000,000 subsidy.  I just wrote my city councilman Brandon Coan:

Re: $52 million, 272-unit luxury apartment complex in NuLu
Hi Brandon,
Right now housing priced over $500,000 is in excess inventory.  The last number I heard was a 9-month supply.  A balanced market has a six month supply.  Conversely, housing priced under $500,000 has only a two month supply.  A critical shortage.  This would lead me to say that the city needs to be putting its incentive money toward non-luxury housing. I'd love to know if you are aware of any research that shows otherwise.  

As you know, I negotiate real estate daily for a living.  Not needing a deal puts the buyer or seller in the strongest position.  Both parties seem to be trying to own that spot.  Certain council members quoted below have drawn a line.  The developer is likewise saying: “Flournoy Cos. is frankly not able to go forward...”   [without a $5,000,000 incentive package].  

The market and not the government should drive luxury development.  If there isn't enough demand (and profit) the project should go away until there is.

I hope you will add your voice to these:

“I think 18 [lower cost units for workforce housing (teachers, police, firemen, etc)] is the floor,” Councilwoman Barbara Sexton Smith (D-4) said, noting her agreement with a similar comment made by Councilman Bill Hollander (D-9).

Both Hollander and Councilman Brent Ackerson (D-26) said they want downtown Louisville to house people earning a variety of incomes and requiring workforce housing in return for tax breaks is a way to help that.

Hope you're loving the job.   Pete