Hotel and motel stays in Fayette County will cost more this fall.
On Thursday, the Urban County Council voted unanimously to increase the Fayette County hotel and motel tax by 2.5 percentage points to pay for a nearly $250 million overhaul and expansion of the Lexington Convention Center. That means hotel taxes will rise to 9.5 percent.
The ordinance takes effect Sept. 1. The increase will appear on bills after Sept. 1.
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Money generated from the 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.
The General Assembly also approved a bill allowing Fayette County to raise its hotel and motel tax. Each percentage point increase in the tax is expected to generate about $1.6 million a year.
Lexington tourism officials have said the new rate of 9.5 percent is in line with competitor cities including Louisville.
Mayor Jim Gray’s proposed budget for the fiscal year that begins July 1 includes $10 million in bond money for the project. The council has not yet voted on the budget. But a council budget subcommittee has recommended allocating the $10 million.
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.
Tourism officials have said they can market to only 65 percent of the available convention centers due to a lack of space. A recent study showed the economic impact of the convention center was $42 million per year. If the convention center is expanded, that economic impact — which includes spending on hotels and restaurants — could grow to $57 million, according to the study.
Thursday’s vote was the final step in securing state and local funding for the long-awaited project. Lexington Center Corporation officials say they hope construction will start next spring. The overhaul will be done in phases, and the convention center will remain open during construction. Construction will likely take 24 to 34 months, officials have said.
Lexington Center Corp. oversees the convention center, Rupp Arena and the Lexington Opera House.
Rupp Arena is currently undergoing a separate $15 million technology upgrade that will include a new center-hung scoreboard and better wi-fi in the arena.
Also on Thursday, the council approved borrowing $22 million for the renovation and restoration of the former courthouse on Main Street. Earlier this week, the city announced a restaurant, a bourbon bar, the Lexington visitor’s and convention bureau and the Breeders’ Cup were in talks to lease space in the building when renovations is completed.