General Assembly allows tax increase to fund Lexington Convention Center expansion

The General Assembly sent a bill to Gov. Matt Bevin Friday to let Lexington increase its hotel tax by 2.5 percentage points to pay for a $250 million overhaul and expansion of the Lexington Convention Center.

The Senate voted 26-11 to pass House Bill 55, which gives Lexington officials the authority to raise its hotel and motel tax to 9.5 percent. The House later concurred with changed made to the bill by the Senate and sent it to Bevin for his signature or veto.

“If we do not do this, it will put the city of Lexington at a competitive disadvantage,” said Senate President Robert Stivers, R-Manchester.

Sen. Reginald Thomas, D-Lexington, said the expansion of the convention center will make a “$100 million difference” in Fayette County.

“This is absolutely critical for Lexington,” he said.

Without the expansion, Lexington will continue to lose convention business to competitor cities, he said.

Lexington lawmakers who voted against the bill included Republican state Reps. Stan Lee and Robert Benvenuti.

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 Senate Friday. The city would contribute another $10 million to the project.

Stivers said the city has negotiated a deal with Gov. Matt Bevin to use city land as collateral on the state’s $60 million bond in case the project fails. That is part of a separate agreement between the city and the state and not included in House Bill 55.

Bill Owen, president and CEO of Lexington Center Corp, said he’s still waiting for further details about the deal, but the state already owns some of the land used by the convention center. He said the state Finance and Administration Cabinet owns 1.7 acres of the Rupp Arena and convention center complex. Much of the planned improvements to the convention center “will go on that 1.7 acres,” Owen said.

The state has owned that portion of the complex since the convention center’s Heritage Hall, which faces Main Street, was expanded in 1995, he said.

Lexington Center oversees the convention center, Rupp Arena and the Lexington Opera House.

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 only market to 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 isexpanded, that economic impact — which includes spending on hotels and restaurants — could grow to $57 million, according to the study. Without improvement, it predicted a drop of $13 million in future years.

Brent Rice, chairman of Lexington Center Corporation, said the project “will have a transformational impact on downtown and benefit the entire community through increased jobs and investment.”

“The Lexington Center Board and staff will proceed next week to start this project,” Rice said in a statement.

This story was originally published April 15, 2016 at 3:35 PM with the headline "General Assembly allows tax increase to fund Lexington Convention Center expansion."