Lexington could be getting an updated convention center.
The board of the Lexington Center Corp. voted unanimously Thursday to pursue a $250 million expansion and replacement of the building that was completed in 1976. The plan includes an additional 100,000-square-foot exhibit hall, larger ballrooms and additional meeting space at complex on West Main Street.
The construction and renovation is projected to cost $190 million. The remaining $60 million is needed to pay off outstanding debt payments related to previous expansions and renovations as well as financing and other costs, said Bill Owen, the president and CEO of the Lexington Center Corp.
To pay for the expansion, Lexington Center will ask the General Assembly for $75 million in state money and a 2 percent increase in the local hotel and motel room tax in Fayette County. The additional tax will be used to make debt payments on $171 million in bonds. The center will use $4 million from its current reserves to pay for the remaining cost. If approved by the General Assembly, the Fayette County hotel and motel tax would rise from its current rate of 6 percent to 8 percent. On top of that is a 1 percent state tourism tax, bringing the total to 9 percent.
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The Lexington Center Corp. does not receive a direct appropriation from the Lexington Urban County Government. It receives a portion of the current hotel and motel tax.
Rupp Arena, which is undergoing a $15 million technology upgrade and renovation, will not be included in the expansion. The renovation and the addition will be in phases so the center can continue to host conventions during construction. There is no room for the existing exhibit hall to be expanded. The plan calls for a new convention hall to be built west of Rupp Arena next to the Manchester Street parking lot.
Plans for the convention center overhaul have been endorsed by the Bluegrass Hospitality Association — which includes restaurants, hotels and motels — and by VisitLex and Commerce Lexington. The boards of all three organizations have voted unanimously over the past week to support the plan.
“The amount of space in this new plan is driven by recommendations made by three different studies dating back as far as 1986,” said Brent Rice, chairman of the Lexington Center board. “The next Lexington Convention Center will have the same magnitude of impact as the original Civic Center had in Lexington in 1976.”
Mayor Jim Gray had proposed an overhaul of Rupp Arena and the attached convention center two years ago, at a cost of more than $350 million. Those plans stalled in May 2014 after the University of Kentucky — Rupp’s marquee tenant — and the city could not come to an agreement on the extent of those renovations. The General Assembly also did not support the plan.
Gray had also proposed an increase in the hotel and motel tax — called the transient tax — to help pay for that expansion. But the tax increase wasn’t supported by some members of the Bluegrass Hospitality Association. Some members said they weren’t aware of the bill raising the hotel and motel tax until after it was filed in Frankfort.
The Bluegrass Hospitality Association appears to be behind the center’s plans. But the General Assembly — which has been averse to raising taxes — must approve the tax increase.
The legislature has allocated money for other cities’ convention centers in the past.
The General Assembly approved $56 million in state money for the $180 million expansion of Louisville’s convention center. It also approved an increase in Jefferson County’s hotel and motel tax two years ago to pay for debt service on bonds for the convention center.
Owen said Jefferson County’s and Louisville’s hotel and motel tax is currently 9.5 percent. If the General Assembly approved the 2 percent increase, Fayette County’s hotel and motel tax would remain below Jefferson County’s. Most cities in the region are between 8 percent and 9 percent. Owen said he hopes the Kentucky House and Senate will continue to provide support to convention centers.
“The General Assembly provided us support in 2000 and 2002,” Owen said. “They have supported other communities in addition to Louisville — Northern Kentucky, Eastern Kentucky, Murray and Corbin. These types of public assembly buildings create value for the commonwealth. Hopefully they will continue that legacy.”
Numerous studies have shown that to stay competitive and continue to draw conventions to downtown and fill hotel rooms, the convention center has to be updated. A study presented Thursday to the Lexington Center board showed that the total economic impact of the convention center is $42 million — and the bulk of those dollars are spent at hotels and restaurants. If Lexington improves its convention center, that number could grow to $57 million. If the city does not update its convention center, those numbers will continue to drop to below $30 million over time, Owen said.
Marty Rothchild, president-elect of the Bluegrass Hospitality Association, said in a written statement that to remain competitive, the city needs a convention center that is on par with those in Louisville and other nearby cities.
“All of us recognize this is an excellent opportunity to attract new conventions as well as retain existing ones. This reinvestment will certainly bring economic growth to the area. The reality is that our neighboring cities have stepped out ahead of us on this and we must move forward quickly to ensure the continued success of our membership.”