Lexington council approves resolution backing $250 million convention center project
Beth Musgrave | Lexington Herald-Leader | February 19, 2016 2:43pm
Feb. 18--The Urban County Council voted Thursday to support a new financing plan for a $250 million overhaul of the downtown convention center that would include $10 million in city funds.
The unanimous vote came after a one-hour-plus discussion at a council workshop before the meeting. The tweaked financing plan also includes $60 million in state money and an increase of 2.5 percentage points in Fayette County's hotel and motel tax.
The council's endorsement of the plan with its $10 million pledge was a key step in a long process to secure financing for the overhaul that will include a new 100,000-foot exhibition hall to the west of Rupp Arena and new meeting rooms along Main Street.
The Lexington Center Corp., which oversees the convention center, Rupp Arena and Lexington Opera House, still must convince the Kentucky General Assembly to include $60 million for the project in the state's two-year budget and pass separate legislation that would increase Fayette County's hotel and motel tax from the current rate of 6 percent to 8.5 percent.
Approximately 0.5 percent of the 2.5-point tax increase would go to the state to pay off the $60 million allocation.
Craig Turner, a Lexington Center Corp. board member, said he had spoken with leaders in the Democratic House and Republican Senate about the $60 million allocation and hotel and motel tax increase.
"We have met with House Speaker (Greg) Stumbo, and he appears to be supportive, and Senate President Robert Stivers, who also appears to be supportive," Tuner said during the council workshop.
Turner said a bill that would increase the hotel and motel tax should be filed soon. The House and Senate have until mid-April to pass the two-year state budget.
Lexington Center originally asked for $75 million in the state budget and a 2-point increase in the hotel and motel tax. But Gov. Matt Bevin included only $60 million in his budget for the project -- the only capital project in his budget proposal. Bevin also asked that a portion of the hotel and motel tax increased be directed to the state.
Turner and Bill Owen, president and CEO of Lexington Center Corp., told the council that without the expansion the convention center will continue to lose business. It recently lost a long-time coal convention to Louisville. Mary Quinn Ramer, president of VisitLex, said the convention center also has lost conventions to Owensboro, Chattanooga and Grand Rapids, Mich.
VisitLex books conventions for the convention center. Louisville is currently renovating its convention center.
Turner said a recent study showed that if Lexington does not expand the convention center, it will continue to lose business. Currently, the economic impact the convention center is $42 million. That would drop to $29 million if Lexington does nothing. With expansion, the center could market itself to 90 percent of the available conventions. The economic impact would jump to $59 million.
Some council members questioned whether there were enough hotel rooms to support expansion. A recent study showed downtown would need an additional 400 rooms to support the expanded convention center.
"What good is this going to do for us if we don't have the hotel space to support it?" asked Councilwoman Angela Evans.
Owen noted that after the convention center was renovated and expanded in 2004, there was additional investment in downtown hotels. Ramer said she has received preliminary inquiries from hotel companies interested in coming to Lexington in light of the proposed expansion.
"Private investment typically follows public investment," said Turner, who owns hotels.
Other council members said they supported the $10 million in principle, but the convention center would have to be weighed against other projects when the council debates the budget for the next fiscal year. Mayor Jim Gray will unveil his budget proposal in early April. The $10 million would be included in his budget for the fiscal year that begins July 1. The council typically approves a budget in June.
Finance commissioner Bill O'Mara said the city has never given Lexington Center Corp. a direct allocation for its operating budget. Other cities give money to their convention centers every year. If the city doesn't support the expansion and revenues decline, he said, it might have to start to appropriate money for the convention center.
"I see this as a $10 million investment to make sure that doesn't happen," O'Mara said.
Beth Musgrave: 859-231-3205, @HLCityhall