House passes bill allowing tax increase for Lexington Convention Center

The Kentucky House approved a bill Thursday that would let Lexington’s Urban County Council raise its hotel tax by 2.5 percentage points to help expand the city’s convention center.

The Democratic-led House voted 77 to 13 in favor of House Bill 441, which now goes to the Republican-led Senate.

State budget director John E. Chilton has previously said Republican Gov. Matt Bevin is “very much in favor” of the measure.

The $250 million renovation and expansion of the Lexington Convention Center would include a 100,000-square-foot exhibit hall, a 22,500-square-foot ballroom and an additional 30,000 square feet of meeting and breakout space.

The bill, sponsored by Rep. Ruth Ann Palumbo, D-Lexington, would allow the council to increase the hotel and motel tax in Fayette County by 2.5 percentage points, bringing it to 9.5 percent.

On Feb. 18, the Urban County Council passed a unanimous resolution asking the state legislature to allow the council to authorize and pass the room tax increase. The council also would commit $10 million in city funding to the project.

Originally, the proposed financing plan for the renovation included $75 million in state money, $171 million in bond money and $4 million from Lexington Center reserves and other revenue. Debt payments on the $171 million would come from revenue generated by a 2 percentage point increase in the hotel and motel tax for Fayette County.

But Bevin included $60 million instead of $75 million in his proposed budget for the project. As part of the new financing plan, Bevin’s administration wanted an additional 0.5 percent increase to the local hotel and motel tax, which would go back to the state to pay for debt payments on the $60 million.

Work on the project would take place in two phases over two years, and the center would remain open and continue hosting conventions and trade shows during the construction.

Under former Gov. Steve Beshear, the legislature approved a $57 million direct allocation to Louisville for an expansion of its convention center in 2014. The legislature also approved an increase in Jefferson County’s hotel and motel tax for debt payments on bonds for that overhaul.

This story was originally published March 3, 2016 at 3:40 PM with the headline "House passes bill allowing tax increase for Lexington Convention Center."