A bid to get $60 million in state funding for a $250 million overhaul of Lexington’s downtown convention center appears to be stalled as House and Senate budget negotiators try to ink a deal on a $21 billion two-year spending plan.
Senate Budget Chairman Chris McDaniel, R-Latonia, said House and Senate leaders hope to have an agreement sometime Thursday, in time for a Friday vote. McDaniel gave no details about Wednesday’s discussions.
Gov. Matt Bevin and the Democratic-led House included a $60 million bond issue for the convention center renovation in their proposed budgets. The Republican-led state Senate nixed the project in its version of the budget. The House has also passed a bill that would allow the city of Lexington to raise Fayette County’s hotel and motel tax 2.5 percentage points to 9.5 percent. Approximately 0.5 percent of that tax would go back to the state to pay off the $60 million bond. The Senate has not given the bill a hearing.
Some senators who opposed the project said they had questions about the financing plan for the convention center.
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Officials with the Lexington Center Corp., which oversees the convention center, Rupp Arena and the Lexington Opera House, remained optimistic early Wednesday the convention center will get state funding. They said they have supplied information about the financing plan to Senate leaders.
“We are optimistic that once a budget agreement is reached on the core issues of pensions and education, that the legislature we be in a position to consider funding for the convention center,” said Bill Owen, president and CEO of Lexington Center. “This project is an economic engine for Lexington and Central Kentucky, and will help generate much needed revenue growth for the state and local community.”
House and Senate leaders have given tens of millions of dollars to other cities’ convention centers and arenas over the past decade.
In 2014, the House and Senate approved $57 million to the Kentucky International Convention Center in Louisville for an expansion. In addition, the General Assembly passed a bill that would allow Louisville to raise its hotel and motel tax to help pay for the cost of the expansion.
The state also gave $75 million in 2006 for construction of the Yum Center in downtown Louisville, home of the University of Louisville’s basketball program.
Convention centers in competitive cities are renovating and expanding, which is leaving us behind — and we are not competitive. If no action is taken this year, we can expect the $42 million in annual economic impact to drop by more than $13 million annually in future years.
Mary Quinn Ramer, president of VisitLex
Northern Kentucky has also received state funding for convention centers and arenas. In 1996, the state gave $30.5 million for the Northern Kentucky Convention Center. In 2005 the General Assembly approved $60 million for the BB&T Arena on Northern Kentucky University’s campus.
Smaller cities have also received state money to build convention centers. The James E. Bruce Convention Center in Hopkinsville received up to $8.1 million in state money in 2005.
Mary Quinn Ramer, president of VisitLex, the city’s convention and visitors bureau, said if Lexington’s convention center is not expanded the city will continue to lose business to other cities. VisitLex books conventions for the convention center. The convention center recently lost a major coal conference to a competitor city due to lack of space. Lexington’s Comic and Toy Convention, which has grown to more than 25,000 attendees, is also outgrowing the downtown convention center.
“The status quo of only 66,000 square feet of exhibit space means Lexington is only able to meet the needs of less than 65 percent of the national meetings/conventions market,” Ramer said. “Convention centers in competitive cities are renovating and expanding, which is leaving us behind — and we are not competitive. If no action is taken this year, we can expect the $42 million in annual economic impact to drop by more than $13 million annually in future years.”
Many convention centers need city or state money to cover operating expenses. Lexington convention center does not. It currently receives a portion of the city’s hotel and motel tax to pay off debt from previous expansions but receives no money from the city’s check book.
The Lexington Urban County Council voted unanimously in February to back the expansion and tentatively agreed to give $10 million of city money for the expansion. Mayor Jim Gray is expected to include the $10 million in his proposed budget, which he will unveil Tuesday. The council has until June 30 to pass a budget.
The proposed financing plan for the expansion would include $70 million from state and local governments and $171 million in borrowing that will be paid off using the increase in the hotel and motel tax. The remaining funds will come from Lexington Center reserves.
The proposed renovation will include a 100,000 square-foot exhibit hall, a new 22,500 square-foot ballroom and an additional 30,000 square feet of meeting and breakout space.