Lexington council OKs new financing for troubled $275 million convention center expansion
The Lexington-Fayette Urban County Council agreed Tuesday to allow the organization that oversees the Lexington Convention Center and Rupp Arena to refinance, so it can make payments on loans for an ongoing $275 million expansion.
At a Tuesday work session, the council voted unanimously to proceed with a debt restructuring plan that would allow the Lexington Center Corporation to use $34 million in new borrowing to make payments on two loans totaling $218 million for the construction center expansion, which includes changes to Rupp Arena.
The council will take a final vote on the new financing at its July 9 meeting.
Also part of that agreement is a separate $2.75 million short-term loan that will allow the the Rupp Arena and convention center complex to continue operating.
That loan is not secured by the city. It will be used for payroll for some staff, utilities and other contracts, said Bill Owen, CEO and president of Lexington Center Corp.
The Lexington Center Corp. has been hit hard by the coronavirus-related shutdowns with every event in the convention center, Rupp Arena and Lexington Opera House either canceled or postponed. Lexington Center Corp. announced last week that it would permanently lay off 53 staffers on July 30. It had previously furloughed all but eight of its more than 120 staff members.
The council had to sign off on the new financing plan because the city could be on the hook for $1.6 million in interest payments if Lexington Center can’t make those payments. The Lexington Center Corporation is a subsidiary of the local government but does not receive a direct allocation from the city’s general fund.
Those $1.6 million in additional interest payments are not due for three more years.
If the city did not approve the new loan, the Lexington Center Corp. could have defaulted on an $8.5 million payment on the two loans due in September. If that happened, the city of Lexington would have had to replace money Lexington Center took from a bond reserve account to make those payments.
The new borrowing also saves the cash-strapped city from having to replace the Lexington Center’s bond reserves, city and Lexington Center officials have said.
Restructuring its debt payments will give Lexington Center an additional three years to build back its business after temporary coronavirus-forced crowd size restrictions, Lexington Center officials have said.
As part of the city’s sign off on the new financing, Lexington Center has also agreed to update the council quarterly on its finances and bills that have been paid. Lexington Center also agreed to put the city’s finance commissioner on its board.
This story was originally published June 24, 2020 at 7:22 AM.
