UK spokesman: There are 'outstanding issues' to resolve for lease agreement in Rupp project

bmusgrave@herald-leader.comApril 13, 2014 

This rendering shows proposed Rupp Arena renovations. Legislators said releasing the financial plan could open the door to $65 million in state funding.


University of Kentucky officials say a tentative 30-year lease between it and Rupp Arena has not been signed and will not be released before the legislature returns Monday.

"No lease agreement has been signed because there are outstanding issues that have not been resolved," Jay Blanton, a UK spokesman, told the Herald-Leader.

Legislators have said the release of the financial plan for the $310 million redesign and redevelopment of Rupp Arena and an attached convention center was key to securing $65 million in state bond money for the project.

The legislature returns from a two-week recess Monday to complete its 60-day session.

In addition to the $65 million in state bond funding, a bill that would allow the Urban County Council to increase the local hotel and motel tax so it could generate money to pay off additional bonds for the project is awaiting a vote in the Senate.

Still, Senate leaders said they were open to talking about the possibility of restoring the $65 million.

Jodi Whitaker, a spokeswoman for Senate President Robert Stivers, said Stivers would discuss the Rupp project with the Republican caucus when the Senate returns Monday.

The House and Senate approved a compromise budget in late March that included just $1.5 million in state money for the project. The money would not be released until the city agreed to put in $1.5 million. The legislature said that if an agreement was inked with UK — Rupp's marquee tenant — and the financial plan was made public, the city could return as early as 2015 to request the $65 million.

The compromise budget bill says money from the state's rainy day fund has been set aside to make debt payments on the $65 million. The budget does not say how much money has been set aside.

After the legislature left for its two-week break, Gov. Steve Beshear — who has supported the Rupp project — asked the legislature to reconsider its decision, arguing that it was an issue of fairness. The legislature gave $75 million for the construction of KFC Yum Center, the home of the University of Louisville men's basketball team. The Yum Center opened in 2010.

The two-year compromise budget passed in March also included $56 million for a renovation of Louisville's downtown convention center.

Beshear convened legislative leaders, city and university officials at a meeting in Frankfort on April 2 to discuss the Rupp project. Stivers and Beshear had another "brief conversation" about the project after that meeting, Whitaker said.

House Democrats have backed the plan. The House included $65 million for Rupp and also passed the hotel and motel tax.

Mayor Jim Gray, who has pushed the Rupp redesign as part of a larger downtown redevelopment plan, has said he has not made the full financial plan public because UK does not want the tentative lease agreement released. Legislative leaders have seen the confidential financial plan, however.

Blanton said last week that more details needed to be discussed.

"As a matter of course, the university would not generally disclose the terms of an agreement before it is final," Blanton said. "And, in this case, there are still a number of moving parts to the financing of this project. We did not, for example, disclose the specifics of leasing arrangements with respect to new residence halls before they were finalized."

Susan Straub, a spokeswoman for Gray, said the mayor or his representatives have continued to talk to state leaders during the two-week recess. She said Gray remained optimistic that the legislature would agree to fund the project.

During his city budget address Tuesday, Gray proposed using $40 million in city bonds for the project. The debt payments — roughly $2 million a year — would not have to be made until 2016, he said.

The Urban County Council has not voted on the proposal.

Gray has said that other parts of the financial plan include tax increment financing — which uses taxes generated from the project to pay off loans — fan contributions and naming rights. However, Rupp will always be part of the name of the arena, he said.

The mayor has said he hopes to start construction in 2015, and the new Rupp and convention center could open in fall 2017.

Gray has argued that the Rupp project could create thousands of jobs and re invigorate downtown Lexington. The state needs to invest in projects such as Rupp to generate additional tax revenue for critical needs, such as education, he argues.

"This isn't either/or. We need to invest in both, in economic opportunities that create jobs, like Rupp, and we need to invest in critical needs," Gray said. "Without investing in jobs, we don't have the resources to invest in critical needs like education, and our state will forever be behind and never get ahead."

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

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