When the state legislature gave final approval Friday for $60 million in state funding for expansion and renovation of the Lexington convention center, that was just one more step toward the day the work begins.
Much more needs to be done before construction can begin on the $250 million project, which will include a new 100,000-square-foot exhibit hall and additional meeting space. The construction is scheduled to start in spring 2017.
The Democratic-controlled House and Republican-controlled Senate also passed separate legislation that would allow Fayette County to increase its hotel and motel tax by 2.5 percentage points for a total of 9.5 percent.
The state’s financial support was key to getting the long-awaited expansion off the ground, convention center officials said.
Tops on the to-do list is the Urban County Council’s approval of $10 million in city bond money for the project and the passage of the hotel and motel tax increase. Mayor Jim Gray recommended $10 million in his budget, but the council must still give final approval. The council unanimously approved a resolution earlier this year backing the hotel tax increase and tentatively agreed to set aside $10 million for the expansion.
In addition to the $70 million in state and local money, $171 million will have to be borrowed for the project. If approved, the increase in the hotel tax will pay the debt on the $60 million in state funding and the $171 million in borrowing.
“We have a lot of things that we will have to do simultaneously,” said Brent Rice, chairman of the Lexington Center Corp. board. “But we want to put this on the fast track.”
Lexington Center oversees Rupp Arena, the convention center and the Lexington Opera House.
In 2014, Lexington Center and Gray pushed for a $350 million expansion of both Rupp and the convention center. But those plans were put on hold after the group failed to get state legislative support for the project and the city and the University of Kentucky, Rupp’s main tenant, could not agree on the extent of the project. Some members of the hospitality community and the Urban County Council also had questions about the project.
Rice said this year the group had the support of the business, tourism and hospitality sectors and local government.
“It truly was a team effort,” Rice said.
Bill Owen, CEO and president of Rupp Arena, said Lexington Center will have to re-engage the original design team of NBBJ and EOP Architects to make changes to the design. NBBJ teamed with Lexington-based EOP on the $350 million design that included an expansion of Rupp Arena and the moving of the convention center. Rupp Arena is not included in the $250 million renovation. Lexington Center is in the midst of a $15 million technology upgrade in the arena.
The remaining funds will come from an assortment of places, including some of Lexington Center’s reserve fund.
Lexington Center Corp. must also start the process of getting private banks to issue the $171 million in private bonds, a process that will take several months, Owen said.
The city must agree to the $10 million and the hotel tax increase before the state will release the $60 million, Owen said.
Councilman Kevin Stinnett is chairman of the Urban County Council’s Budget, Finance and Economic Development Committee and is a member of the Lexington Center’s board. Stinnett said the council is just starting its review of Gray’s budget proposal and has not had extensive discussion on the $10 million bond issue. The council has until June 30 to pass the one-year budget that begins July 1.
Stinnett said although many council members support the convention center overhaul, “I think some council members will want to hear more details.”
Vice Mayor Steve Kay agreed.
“I can’t speak for the council, but there has been no objections to the project as outlined,” Kay said. “And I have not heard any concerns about the bonding of the $10 million, or the city’s direct contribution.”
Owen said the plan has been to keep the convention center open during the construction. But operational issues will have to be addressed.
Rice said the Lexington Center board will meet Thursday to begin discussions on design and start the process to obtain financing for the $171 million in bonds.
If the council approves the hotel tax increase and the $10 million, construction will likely begin in the spring of 2017. Construction will likely take 24 to 34 months to complete, convention officials have said.
We are in our 40th year of operations. We are taking steps right now to expand our facility for another 40 years.
Bill Owen, CEO and president of Lexington Center
Three different consultants over the past several decades have recommended expanding the convention center so it can remain competitive with other cities and keep current convention center business. The convention center recently lost a coal-related conference because of lack of space.
“We are in our 40th year of operations,” Owen said. “We are taking steps right now to expand our facility for another 40 years.”
The last time the convention center expanded in 2004, private money followed the public investment. Two downtown Lexington hotels were remodeled after the 2004 expansion.
“Last time it was between $25 and $30 million in private investment,” Owen said. “It will be interesting to see what type of private investment this expansion will create.”