The new owners of Victorian Square said Tuesday that the Explorium of Lexington would have to meet several requirements to remain in the historic downtown mall where it has been for more than two decades.
Dudley Webb, chairman of The Webb Companies, said the children's museum would have to sign a long-term lease and pay its fair share of rent and other expenses. The museum has paid month to month for five years. "They haven't paid their operating expenses for five years, let alone rent," he said.
The Explorium leases 24,000 square feet, Webb said. "For the last five years, they refused to sign an extended lease. The prior director said they were looking around for a new location."
Webb said he would be willing to work on a proposal to allow the museum to stay in Victorian Square.
Webb said the new owners have been under the impression that the Explorium was not planning to stay in Victorian Square long-term and have been actively looking for other tenants.
Lee Ellen Martin, interim director of the Explorium, said her predecessor did not want a long-term lease in Victorian Square. "But I want to sign a lease. We want to stay here," she told the Herald-Leader.
In August, The Webb Companies teamed with Jeffrey R. Anderson Real Estate Inc. of Cincinnati and paid $1.7 million for the block of restored 19th-century buildings across from Rupp Arena.
The new owners plan to spend as much as $10 million to "reinvent" Victorian Square, with approximately 226,000 square feet of space, Webb said. They plan to turn it into a downtown destination with restaurants, entertainment and retail. The block of historic buildings is at West Main Street and South Broadway.
The Explorium, formerly called the Lexington Children's Museum, has been in Victorian Square for 22 years. It has a first-floor entrance at 440 West Short Street.
The museum pays $6.11 per square foot for its space, Martin said. That works out to about $13,500 a month (including utilities), which is considerably less than what other tenants pay.
Bryan Flynn, an owner of four shops in Victorian Square, said that when he and business partner Ron Williams wanted to move into the mall, they were told by Becky Reinhold, who managed the mall for its previous owners, that the minimum rent was $8 a square foot. "That's what it costs just to exist," Flynn said.
He and Williams own Good Scents Bath and Body Shop, Only in Kentucky, Sweet Spot and the Soup Bowl at various locations in the mall.
For a first-floor exterior shop on Main Street (Good Scents), they pay $18 a square foot, Flynn said. An interior first-floor location is $15 a square foot, and a second-floor space is $12 a square foot.
Webb said Victorian Square has to operate as a business, and tenants must pay their fair share of rent and other expenses, including parking, heat and janitorial services.
"Nobody is trying to displace them," Webb said of the Explorium. "But we need an understanding that nobody can be on scholarship anymore. Everything has got to work on a businesslike basis."
In February, the Explorium's board of directors fired executive director Michael Gilmore. His wife, Susan, who did marketing for the museum, resigned.
It came to light about the same time that the Explorium faced other problems.
A week before Gilmore was terminated, it was revealed in a Herald-Leader article that the museum owed the city $197,000.
For some time, the city had paid the museum's bills and provided its accounting work. When the city converted to the PeopleSoft computer program, it was discovered that Lexington-Fayette Urban County Government had paid more of the bills than the museum had money to reimburse the city, spokeswoman Susan Straub said Tuesday.
The Explorium has been working off what it owes through in-kind services, she said. The museum had one day when admission was free, and its staff has presented programs in conjunction with parks and recreation.
Other organizations have been allowed to work off debts to the city through similar in-kind services, she said.
Mark Fallon, vice president of real estate leasing for Anderson, could not be reached for comment. But when the sale of Victorian Square was announced, Fallon said plans included adding "great high-volume restaurants that bring people for lunch and dinner."
Financing has been secured for renovating Victorian Square, Webb said. "We closed on Friday."
EOP Architects of Lexington is completing a space survey of the building. There might have to be modifications to certain parts to accommodate new tenants, Webb said.
"The good news is, Mark has a boatload of great prospects," Webb said.
Beverly Fortune: (859) 231-3251.Twitter: @BFortune2010.