Mayor Gray says it's too early to predict how lack of funding will affect Rupp project

bmusgrave@herald-leader.comApril 16, 2014 

Mayor Jim Gray said Wednesday that he plans to push forward on a $310 million proposed reinvention of Rupp Arena and attached convention center, but it's too early to say how a lack of state funding will affect the timetable for the project.

Gray's comments came a day after the legislature failed to vote on $80 million in state aid for the project. The mayor originally said he had hoped that part of the project could be completed as early as 2017.

"It's a setback," Gray told the Herald-Leader on Wednesday. "The absence of the state funding definitely affects the schedule."

But Gray said he is confident that the project will move forward.

"The plan is solid," he said. "Modernizing Rupp isn't an option, it's just a matter of time. To stay competitive, Rupp must be modernized, and a totally new convention center must occur."

Gray and Gov. Steve Beshear had pushed the legislature to approve funding for the project, which Gray has said will be key to transforming downtown and could add more than 3,000 new jobs. But even a revamped financial plan did not get enough support to get a vote in the Republican-controlled Senate on Tuesday, the last day of the 60-legislative session.

State Sen. Alice Forgy Kerr, a Republican from Lexington, on Tuesday said Senate members felt that they did not have enough time to go through the latest financial plan that was delivered on Monday.

Kerr, who said there was some confusion on Rupp's financial plan, said delaying the project for a year would allow the city an opportunity to further lobby the legislature, nail down its financial plan and gather more support in the community.

Gray could return as early as 2015 to secure funding for the project.

Beshear could call a special legislative session for legislators to address Rupp. But Senate and House leaders said Wednesday that they didn't want to return to Frankfort solely to discuss Rupp. Special sessions cost taxpayers $65,000 a day.

Beshear said on Wednesday that "it's too early to determine if a special session on any topic is prudent or needed."

Still, the project did get some state funding.

As part of its compromise budget passed in March, the legislature approved $1.5 million in state money to keep the project going. But the city must come up with $1.5 million in matching money. Gray did not include that $1.5 million in his proposed 2015 budget, which he unveiled April 8.

In addition, the legislature passed a measure Tuesday that requires the city to repay $2.5 million given by the state for the design phase of the project in 2012. That money came from the coal severance taxes — a tax on coal as it leaves the ground. After the funding source of the $2.5 million was revealed, coalfield legislators said they wanted the money to be repaid.

Gray previously said the city would repay the $2.5 million to the coal severance fund. So the city could have to pay $4 million to keep the project going.

On Wednesday, Gray said it's too early to say how the city will pay the $4 million. The Urban County Council must sign off on the $4 million before it's spent.

Financing for the Rupp project has been questioned many times.

State legislators had said they wanted to see a full financing plan and a signed lease agreement between Rupp Arena and the University of Kentucky, Rupp's main tenant.

The university has agreed in principle to a 30-year lease, but some details of the lease have not yet been worked out. Gray has said he could not publicly release the plan because of UK's concerns.

Jay Blanton, a spokesman for UK, said the university, as the anchor tenant of Rupp Arena, has "worked with the Mayor in good faith for a year to help achieve his vision for downtown Lexington" and looks "forward to continuing those conversations with our partners to find a path forward."

At the same time, Blanton said, UK President Eli Capilouto's top priority is "state operating and capital investment in our campus."

"Such investment is critical to creating the best possible experience for our students and for creating the kind of infrastructure needed to advance discoveries in areas like cancer and heart disease that are, unquestionably, among Kentucky's most intractable challenges," Blanton said.

Meanwhile, the Rupp project looms large over Gray's re-election campaign. He has pushed the Rupp Arena project for more than three years, saying it was key to downtown revitalization efforts.

Both of his opponents — Anthany Beatty and Danny Mayer —have attacked the Rupp project.

Beatty, a former Lexington police chief who is now an administrator at the University of Kentucky, called spending on downtown projects "elitist" at his Tuesday kick-off campaign event. Mayer, an English professor, has previously said renovating a sports arena and convention center to stimulate downtown revitalization is antiquated and outdated. The primary is May 20.

Rob Dible, Gray's campaign manager, said the project is far from elitist. It creates much-needed jobs in Lexington's downtown and has the potential to attract new jobs to Lexington.

"Mr. Beatty is wrong," Dible said. "This project will create thousands of good-paying jobs for all of Lexington, and Mayor Gray is proud to stand up for that."

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

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