Lexington mayor crashes legislature's budget negotiations to make pitch for Rupp funding

jcheves@herald-leader.comMarch 29, 2014 

FRANKFORT — Lexington Mayor Jim Gray crashed Day Four of the legislature's budget negotiations Saturday to plead for state assistance for his proposed $310 million renovation of Rupp Arena and the attached convention center.

If the 2014 General Assembly adjourns this month without providing the aid, Gray told a panel of lawmakers, it will drive "a stake through the heart of the project. ... You don't put Humpty Dumpty back on the wall again."

"What this project represents to the brand of our state is enormous, and it will bring jobs," Gray said.

Gray wants the $20.3 billion, two-year state budget to include $65 million in bonds for Rupp Arena, and he wants a bill passed to allow the Lexington-Fayette Urban County Council to raise the local hotel room tax enough to yield about $3.5 million a year for the project.

Both items are supported by the Democratic-led House but face an uncertain future with the Republican-led Senate. The Senate wants less debt and fewer projects in the budget than the House and Democratic Gov. Steve Beshear have recommended. As of Saturday afternoon, a conference committee of legislative leaders had not publicly reached significant agreements on the budget.

Gray had to elbow his way into Saturday's budget talks, which typically do not involve outside witnesses asking for money, and he received no assurances after his pitch.

House and Senate leaders first quarreled over whether it was proper for Gray — whom nobody was expecting to appear at the Capitol — to address them at all, with House leaders backing the mayor.

After he won the right to speak, Gray declined to give the budget negotiators many details they wanted about the Rupp Arena project, such as exactly how Lexington plans to pay for it, and how much the University of Kentucky will contribute through a lease agreement that allows the men's basketball team to continue to play there.

The three major funding sources for the project would be the hotel room tax, UK's payments and naming rights to the rebuilt arena, Gray said, although the name of former UK basketball Coach Adolph Rupp would remain part of it. The hotel room tax would be 21 percent of the total necessary funding, Gray said.

UK wants its lease terms kept secret for now, Gray said, adding that it has not yet signed a new deal for Rupp Arena.

"There is no signed agreement with UK. There is a firm understanding," Gray told the lawmakers. He later added, "I know where this project is. I know how secure the numbers are."

Senate President Robert Stivers, R-Manchester, said he was leery of the massive project putting the state, the city of Lexington or UK at financial risk if it did not generate enough revenue to pay for itself.

Stivers had additional questions about parts of the planned entertainment district project that have not gotten much attention, such as improvements to adjacent West High Street.

Haunting Lexington's ambitions for Rupp Arena are the financial problems bedeviling the KFC Yum Center in downtown Louisville. Opened in 2010, the Yum Center has failed to produce the revenue its backers predicted, leading credit agencies to downgrade its bonds and forcing the city of Louisville to dramatically boost its contributions toward paying off the project's debt.

"I would love to put an arena in every town and economic opportunity wherever we can," Stivers told Gray. "But we have to deal with certain fiscal restraints and economic realities."

Gray repeatedly offered to tell lawmakers more about the project in secret if they would go into a closed-door executive session. The budget committee did not take Gray up on it, with several lawmakers saying a project involving public funds should not be handled privately.

After Gray departed Saturday afternoon, the budget conference committee talked for a few minutes about education funding and preschool expansion and then went into executive session.

The legislature is scheduled to meet Monday, then take a two-week break and return April 14 and 15 to consider any possible vetoes by Beshear. By law, it must end its annual session on April 15.

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog: bluegrasspolitics.bloginky.com

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