Fayette County courthouse board that once kept its records secret gets overhaul
A board that oversees the $33 million remodeled former Fayette County courthouse has been expanded to include five community members and will no longer be managed solely by current and former city employees.
The move to expand the makeup of the Lexington Historic Courthouse General Partner Inc. was driven in part by calls for greater transparency over the management of the renovated former courthouse that was paid for using $22 million in city money and $11 million in federal and state historic tax credits.
The Historic Courthouse General Partner Inc. board and Historic Courthouse LLLP, a limited liability partnership, were created by the city in March 2016 so the renovation could qualify for historic tax credits. Governments typically cannot receive those credits.
Lexington Historic Courthouse General Partner Inc. is a majority partner in Historic Courthouse LLLP. Historic Courthouse LLLP answers to Lexington Historic Courthouse General Partner board. Before the change, the two boards had largely the same membership.
In July, the Lexington Herald-Leader sued Historic Courthouse LLLP, which includes four current and former city employees, after it failed to disclose all financial records about its construction and day-to-day operations. The Herald-Leader dropped the lawsuit after Historic Courthouse LLLP agreed to release underacted records.
Historic Courthouse LLLP had argued that it was a private entity despite receiving the majority of its funds from taxpayers and its board members were city employees.
“We needed to expand this board and we needed to remove it from city perspective and city employees. We need to expand the decision-making,” said Sally Hamilton, the chief administration officer for Lexington, who serves on the Historic Courthouse General Partner board.
Courthouse records will remain open
One of the newspaper’s arguments in its lawsuit was the majority of the board were former or current city employees. Under the state Open Records Act one of the ways to determine if an agency is public is whether its board is appointed by an elected official or the majority of that board are government employees.
Hamilton said the board’s expansion was not designed to circumvent the state’s Open Records Act.
“We’re open,” said Hamilton.
The courthouse’s day-to-day finances are not approved by the Lexington-Fayette Urban County Council. The council did not approve any of the leases or construction contracts. The council can and does receive yearly updates on its finances.
According to documents released this summer, the courthouse and its leases generate $510,000 a year. The expenses to run the courthouse are $362,527, according to Historic Courthouse LLLP’s 2019 annual budget. Some of the big-ticket expenses include $50,600 for utilities, $83,940 for cleaning and $24,300 for security.
That still leaves $148,120 in revenue at the end of the year, according to its operating budget. All but approximately $1,481 will go back to Old National Bank, the city said at the time.
Old National Bank is the tax credit investor for the project. That means for the first five years — roughly until 2023 — Old National receives 99 percent of the profits.
But at the end of the five years,Old National, the tax credit investor— which receives the majority of the profits for providing up-front money in exchange for the tax credits —withdraws from the project.
Most of the leases for the courthouse are for five years.
The courthouse is now leased to The Thirsty Fox, Zim’s Cafe, the Breeders’ Cup, VisitLex, and Lex Effect, which runs the events space on the top floor.
By 2023, courthouse oversight will change
After the five years, the structure of the boards could change. That could also mean that some profits could go back to the city. But none of that has been decided, Hamilton and other city officials said.
Councilman Richard Moloney, who has been the most vocal about increasing transparency of the courthouse’s finances, said he supports any effort to bring more accountability over its finances.
“What I hope is that when the tax credit investor leaves in five years, this board will look similar to the (Blue Grass) airport board or the Lexington Center Corporation board,” Moloney said. The Lexington Center Corporation oversees Rupp Arena and the Lexington Convention Center.
Hamilton, former general services commissioner Geoff Reed, Deputy Chief Administrative Officer Glenn Brown and Finance Commissioner Bill O’Mara will remain on the board. O’Mara will serve as treasurer and is the only city employee board member who is an officer.
Officially rededicated and opened in November 2018, the former courthouse has won several historic preservation and other awards. The project has been lauded for turning the once-dark and vacant building in the center of downtown into restaurant, bar, event and office space.
Chris Frost, a University of Kentucky law professor, has been tapped as the new board president. He and the remaining board members will serve for two year terms with the option to serve additional terms. The newly-expanded board met Dec. 3.
“Decisions will have to be made on how we move forward once those five years are up,” Hamilton said.
Frost said the board’s first meeting was largely spent being brought up to speed on finances and the leases with the tenants and CRM, which manages the courthouse
If there is an issue with the courthouse — such as a major maintenance problem — it will be up to Frost and the board to sign off on any changes.
The new board members were selected and appointed by the existing Historic Courthouse Board. They were not appointed by the mayor or vetted by the council.
New board members include downtown business owners
In addition to Frost the new board members and officers include:
- Abdul Muhammad, vice president. Muhammad is a vice president at WesBanco Bank and a former board chair of the Lyric Theater
- Linda Carroll, secretary. Carroll is a long-time preservationist and serves on the Kentucky Heritage Council. Carroll has worked for Morgan Worldwide Consultants Inc.
- Iesha Allen, board member. Allen is co-owner of Creaux in downtown Lexington and is a digital marketing specialist.
- Salvador Sanchez, board member. Sanchez is owner of A Cup of Common Wealth, Chocolate Holler and Magic Beans Coffee Roasters.
Hamilton said they are searching for an additional member. Mary Noble, a retired former state Supreme Court justice and former Fayette Circuit Court judge, had agreed to serve on the board. Earlier this week, Gov. Andy Beshear appointed Noble as the new Secretary for the Justice and Public Safety Cabinet. Noble had to resign from the board given her new position in state government.
This story was originally published December 13, 2019 at 11:14 AM.
