Lexington Center Corp. is exploring selling naming rights for the complex and developing the High Street parking lot across from the Rupp Arena and convention center complex.
The naming rights would be for the entire complex that includes the convention center, retail and restaurant space as well as Rupp Arena. But Rupp, the storied home of the University of Kentucky mens’ basketball program, will not be renamed, said Bill Owen, president and CEO of Lexington Center, which oversees the convention center, Rupp and the Lexington Opera House.
The development of the nearly 20-acre High Street lot has long been discussed. At a meeting last week, the Lexington Center board gave its approval to take the first step — soliciting qualifications from developers who have interest in the property either in smaller tracts or the entire lot.
In addition, the board agreed to solicit bids for the naming rights of the Lexington Center complex that takes up an entire block between Main and High streets in downtown Lexington.
Money from the development of the block and the naming rights could then be used to pay off bonds for a $250 million renovation and expansion of the Lexington Convention Center. That renovation will include adding meeting rooms and an expanded exhibit hall.
Both ideas — to develop the High Street property and sell the naming rights — have been floated before.
But during Thursday’s meeting, financial advisers hired to help Lexington Center sell bonds for the upcoming convention center expansion recommended that the group at least explore both options.
Money generated from a 2.5 percent hotel tax increase would pay off $240 million in bonds issued for the convention center project, including more than $60 million in state money that was included in a compromise budget bill approved by the General Assembly this year.
In addition, the city of Lexington has pledged $10 million. The hotel tax increased to 9.5 percent on Sept. 1.
The renovation and expansion of the convention center, which has 66,000 square feet of exhibit space, would include a 100,000-square-foot exhibit hall, a 22,500-square foot ballroom and 30,000 more square feet of meeting and breakout space. Lexington Center hopes to have initial designs by December.
Board members backed the plan. Determining if there was interest in developing the High Street lot or the naming rights was a first step. The board does not have to commit to anything until it sees proposals, many said.
“The more potential revenue sources that we can define, the more we can bond,” said John R. Farris, founder and partner of Commonwealth Economics, which is advising Lexington Center on the convention center financing.
“We will not know if there is a potential interest there until we have a request for qualifications,” Farris said. “A ground lease payment could be used as a potential source of revenue.”
A request for qualifications is different than a bid. A request for qualifications would solicit ideas from developers. Some developers may want to develop only parts of the property. A parking structure to accommodate parking at Rupp Arena could be part of the proposals.
“We would certainly have to have a vertical parking structure,” Farris said.
A recent study showed that when the convention center expands, additional hotel rooms will be needed.
“That’s created a lot of inquiries” said Brent Rice, the chairman of the Lexington Center board. “It’s a tremendous asset. We have nothing to lose.”
Craig Turner, a board member and developer, agreed. There are likely developers with ideas for High Street that the board has not yet considered, he said.
Commonwealth Economics and Lexington Center staff are working on the wording for the requests for qualifications for developers, Owen said Monday. A definite date for its release has not been set.
“We are not talking about the naming rights to Rupp Arena,” Rice said during Thursday’s meeting. “We are talking about naming rights for the entire complex. There has been tremendous interest in the past.”
Naming rights were discussed as part of financing a much larger joint renovation of Rupp Arena and the attached convention center that was proposed two years ago. The more than $350 million project was suspended in June 2014 after the group failed to get state money for the much larger project. The project was then scaled back.