Bill to raise hotel, motel tax for Rupp project faces an uphill battle, senators say

bmusgrave@herald-leader.comMarch 27, 2014 

Designs released in February show the renovations of Rupp Arena and the Lexington Convention Center. This is an exterior view of Rupp Arena from Main Street.

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A bill deemed "critical" to pay for the $328 million reinvention of Rupp Arena is not dead yet but faces an uphill battle in the Republican-led Senate, senators said this week.

With only days left in the 60-day legislative session, Senate President Robert Stivers did not say Wednesday whether the Senate would vote on House Bill 544.

Instead, Stivers was critical of Lexington leaders for waiting so long to file House Bill 544, which would allow the city to raise the hotel and motel tax to generate $3.5 million a year — money that could be used to pay off loans for the project.

"We're talking about a $300 million deal that they want us to make a decision on in three days," Stivers said. "Tell me what prudent business person or steward of taxpayers' dollars would do something that silly?"

The bill was filed on March 4, the deadline for House bills to be filed. The measure would allow the Urban County government to increase the local hotel and motel tax from 6 percent to 8.5 percent.

The Democratic-led House approved the measure on March 21, and it wasn't available for the Senate to consider until Monday, Stivers said.

City leaders brought the architectural model of the redesign to show the Senate and the staff earlier this month. But it wasn't until after the Senate pressed the city that they were told how many Urban County Council members supported HB 544, Stivers said.

Stivers said that they had asked to see the financing plan at the beginning of the session but got it only recently.

"We got an embargoed copy of the financial plan two weeks ago," he said. "But before we could even see it, we had to agree to an embargo and not release it to the public. ... It's a comedy of errors."

The financial plan has not been released publicly for the project that includes expanding Rupp Arena and moving and expanding the current convention center.

Mayor Jim Gray said the city was waiting on an agreement between the University of Kentucky, Rupp's marquee tenant, and Rupp Arena before filing the hotel tax bill. A tentative agreement was hammered out in late February, although it has not yet been finalized and likely won't be released until mid-April, officials said.

"Without this agreement, a major gap would have existed in the financial plan and there would have been no reason to file the transient room bill," Gray said. "That said, we met the legislature's ... filing deadline for bills."

Gray, who was in the Capitol Annex lobbying lawmakers Thursday evening, said the financing plan involves multiple sources of revenue and has not been finalized.

"Like any complex project, the financial plan is still developing," Gray said. "When it is final it will be released in full, and it will demonstrate a solid, conservative funding partnership. I am always available to brief legislators and staff."

Stivers has also questioned why the city would need to increase its hotel/motel tax when it has had surpluses the past two years and a sizable rainy day fund.

Gray said the city will make a contribution to the project.

"We asked the state for help because we need it," the mayor said. "The city will be a major contributor to the project. But Lexington's general fund commitment must be at a responsible level, so that it does not compromise basic services."

Despite multiple concerns, Stivers wouldn't say that the measure was dead.

"Until we adjourn, nothing is dead," he said.

Friday is scheduled to be the 57th work day of the 60-day legislative session.

Sen. Alice Forgy Kerr, R-Lexington, said she has not seen the financing plan for the project.

"At this point, I don't sense any push by leadership to move the bill forward," Kerr said.

Senate leaders also cut $65 million of state bonding for the project from its version of the state budget, which the Senate passed on Monday. Gov. Steve Beshear and the House had included the $65 million for the project in their respective budget proposals.

House and Senate negotiators were working on a compromise budget late into the night Thursday.

Kerr said it's possible that some of that $65 million will be restored.

"There's a lot of room for creativity in (the budget negotiation) process," Kerr said.

As Gray waited for an opportunity to speak with key lawmakers Thursday night, he said he remains an "unshakable optimist" that the legislature will side with him.

"Three years of work is coming down to three days," he said.

Sen. Reginald Thomas, D-Lexington, said he is still trying to move HB 544 forward. "I'm working hard to try to bring it to the floor and get approval. I am not giving up on it."

Beth Musgrave: (859) 231-3205. Twitter: @HLCityhall.

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