City officials need to play offense to move Rupp project forward, observers say

bmusgrave@herald-leader.comApril 19, 2014 

Designs released Feb. 10 showed renovations that were proposed for Rupp Arena and the Lexington Convention Center.

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The dream of a $310 million renovation to Rupp Arena and a new convention center could be delayed by another year. And after a contentious fight over funding for the project in Frankfort this past week, legislators and observers say city officials will have to raise their game if they want the new Rupp to become a reality.

Bluegrass legislators pointed to several issues that stymied its success in a Republican-controlled Senate resistant to debt: lawmakers were confused on whether the University of Kentucky, Rupp's main tenant, supported the project; a financial plan for the project was not made public; and they wanted to see more input from the community.

The Democratic-controlled House had supported the plan, but there was not enough support in the Republican-controlled Senate on Tuesday, the final day of the legislative session, to vote on the measure.

If Lexington Mayor Jim Gray wants state money for the project, he will likely have to wait until the next legislative session in January 2015.

The mayor originally said that he hopes to be nearly finished with the project in 2017. It's not clear whether Gray would have to push back the construction schedule if he doesn't get state money until 2015. Gray also faces re-election in November.

Rep. Robert Damron, D-Nicholasville, voted for the project. Still, he said, a year will give the Rupp project more time to gain traction with the public and the legislature.

"He's going to have to build consensus," Damron said of Gray. "It's slower, you have to value people's judgments. If he makes people feel like they're part of the process, he'll have a better project. The public has not been sold yet that this is the right thing to do."

When asked about the concerns expressed by lawmakers, Gray said, "We don't need to dwell on the past."

"UK required that their financial commitment to the project be withheld until the legislative session was over," he said. "So the city was limited in its ability to share a full financial plan, except to the House and Senate leadership, and the Senate believed it was shared too late in the session. I can't argue with their point of view."

Gray said there was plenty of input in the plan — more than 8,000 people responded to a fan survey about the plan, and more than 50 people served on a task force that helped steer plans for Rupp Arena.

"I'm confident in our construction and financial plan," Gray said. "Now that UK has revealed its commitment, I hope confidence in the full plan will develop."

Still, the university's tepid endorsement of the project confused legislators, many said.

Setting priorities

Since 2011, President Eli Capilouto has said he would not lobby for the Rupp project because of fears it would jeopardize state funding for academic buildings on campus. But UK's full support could be a powerful tool for Gray.

Last year, for example, UK sought legislative approval for a $110 million renovation of Commonwealth Stadium. That project used UK funding, not state money; nonetheless, UK launched a statewide publicity campaign that left nothing to chance. A new motto and website, "BBNunited," connected the Big Blue Nation directly to legislators' emails and phones, while a @BBNunited Twitter account attracted more than 10,000 followers within days. UK officials held news conferences with Gov. Steve Beshear and other legislators, and Capilouto personally lobbied state lawmakers in Frankfort.

That project was particularly attractive because it was also linked to two buildings — a $65 million renovation to the Gatton School of Business and a $100 million science building. UK would pay for both buildings, not the state. As an added inducement, Capilouto announced that UK Athletics would pay off $65 million in debt on the science building, the largest such athletic fund transfer in UK's history.

That bill sailed through both houses to the governor's desk with only one no vote.

This time around, UK has remained firmly on message — "academics over athletics — particularly because the athletic venue is owned by the city. UK even asked the Senate for additional money for a research building during the 11th-hour negotiations, multiple legislators said.

Matt Jones, the founder of Kentucky Sports Radio, says there's no doubt UK fans could have made a difference in the Senate's decision, and he still thinks they will.

"The opponents were benefitted by a Final Four run that distracted everybody," he said in reference to UK's run through the NCAA Tournament. "But now it's over, I think people were surprised to hear it didn't happen. Now legislators are hearing more public pushback."

Rep. Kelly Flood, a Democrat whose House district includes both Rupp and UK, said she understands why UK held back from its support for Rupp.

"With the priorities of the university, what occurs downtown is not as critical to the university's immediate priorities, and I think that's why they didn't put their whole weight behind it."

Flood said she has never been fully briefed on Rupp by Gray, partly because of scheduling problems.

"This is where you try to keep our ego out of it," she said. "This isn't about me right now, this is about who has to be in the room. Those contracts have not been signed yet. I thought it was better if we just walked softly and let's see how it unfolded.

"By next session, I intend to be completely informed," Flood said. "With more patience, this will become a reality, I do believe that."

Unanswered questions

Sen. Tom Buford, a Republican from Nicholasville, agreed that many Bluegrass legislators were not kept in the loop about the plan.

When Beshear put $65 million in his proposed budget for the project in January, Senate leaders came to Buford to ask more about the Rupp renovation and new convention center. But Buford said he didn't know enough about it. His Senate district includes Fayette County, and he is one of the most senior members of the Fayette County delegation.

"It kind of caught me off guard," Buford said.

Buford said the financial plan for the project also changed during the 60-day legislative session, which gave the legislature pause. One plan depended on the passage of a bill that would allow the city to increase the hotel and motel tax to help make debt payments on the project. The bill passed the House but never got a hearing in the Republican-controlled Senate, which has been resistant to any bill viewed as a tax increase. On the final two days of the legislative session, city officials presented a new financial plan that did not include the hotel and motel tax but raised the amount of state bond money needed from $65 million to $80 million.

The final plan also depended on more than $35 million in fan support —140,000 fans would buy shares and pay $270 a year apiece to help pay down the debt, he said.

"Can we really depend on 140,000 people to pay off that kind of debt?" Buford said.

To boot, some hidden costs of the project that have not yet been addressed, such as how much it will cost to widen High Street, a state road behind Rupp Arena. Those details also need to be presented to the legislators, he said.

Legislators also were concerned about what would happen to convention center business during the two years the project would be under construction. There are about 17 businesses inside the convention center; legislators never got a clear answer on what would happen to them, Buford said.

"We were never told why a new convention center was needed," Buford said. "I want to see how many conventions they did not book because it was too small."

Sen. Alice Forgy Kerr, a Republican from Lexington, said legislators from Eastern Kentucky and other rural parts of the state also struggled to justify spending $80 million on Rupp Arena and Lexington's convention center when so many people in their districts are unemployed. Kerr pushed for the project in the Senate.

"These are difficult times," Kerr said. "I think people want to spend their money on education."

Rep. Leslie Combs, a Democrat from Pikeville, said the Rupp project had been disliked by rural legislators, particularly from the eastern coalfields, because in 2012 House Speaker Greg Stumbo gave Lexington $2.5 million from coal severance dollars for the design phase of the project. Gray has promised that the city will repay that money.

"Rupp got off to a bad start," Combs said. "I understand why (Stumbo) did it — he made a commitment and went out on a limb to use coal dollars, and it wasn't well received in coal regions."

Combs said that was compounded by confusion over the financing plan, confusion over UK's support and concerns over how much debt the state was in.

"All of a sudden you've got all these issues brewing," she said. "Unless you've got A, B, C, D in place, that's all people see."

Buford and others said that if UK signs a lease agreement; the city advances a firm financing plan; and the city makes its case to the public that the renovation of Rupp and the new convention center is needed, the project stands a much better chance of getting a green light and money from the state.

"But (Gray) needs to bring the plan to the legislature in December," Buford said.

Gray said Friday that the Rupp project was volatile and brought out a lot of emotion and politics.

"I've always said Rupp is a highly visible, high-octane project. There's enormous attachment to it. So, naturally, it brings out emotion and passion and politics," Gray said. "We did the best we could with the constraints we had.

"We live and learn ... and make improvements."

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

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