Mayor Jim Gray speaks at a press conference announcing the architect and construction manager for a re-imagined Rupp Arena and Lexington Center as Gov. Steve Beshear, Lexington Center board chair Brent Rice and NBBJ Partner Robert Mankin look on.
Lexington, KY – A “bulletproof” plan to fund a re-imagined Rupp Arena and the adjacent convention center should be released in the next 30 to 45 days, according to Brent Rice, the chairman of the Lexington Center Board and of the original taskforce that examined re-inventing Rupp.
The center’s board entered into an agreement Tuesday with the Los Angeles-based sports division of NBBJ Architects, working locally with Lexington’s EOP Architects, and the Scottsdale, Ariz.-based Hunt Construction Group to overhaul the arena and convention space. Hunt originally built Rupp and the Lexington Center.
“We’ve identified some very creative ways to fund this project,” Rice said during a press conference announcing the architect and construction manager for the project, which has been in the works for more than two years.
Rice said there were 14 possible revenue sources that could be used to breathe new life into the nearly 40-year-old home to the University of Kentucky Men’s Basketball Team and possibly relocate the Lexington Center’s convention facilities, which are currently attached to the arena.
“We’ve identified assets that are a part of this 46-acre complex that have never been tested. We know we have 22 acres on the High Street lot. We think there’s enormous value there for all types of different developments,” Rice said. The property along High Street and behind the arena is owned by the Lexington Center Corporation, a public agency controlled by a board that is appointed by the mayor.
“The High Street lot has been identified as one of the great opportunities. We’ve seen what happened in Columbus and Indianapolis; when you create an iconic venue that is unlike any, activity comes around it,” Rice said of entertainment districts that have sprung up around sporting facilities in those two downtowns.
The High Street property, which is currently a surface parking lot, could provide a multifaceted windfall for revenue that the city and Lexington Center Corporation could use to leverage bonds. Any money that would come in from the sale or lease of the land to developers could pay for work at Rupp and the convention center. In addition, if a Tax Increment Financing (TIF) district is part of the equation – which would require more than a $150 million project, and this is likely to reach that level – any new taxes generated on the High Street lot above current levels could be used to reimburse certain construction costs for the project.
Both Rice and Mayor Jim Gray spoke of the vibrancy other cities have seen around their arenas. Columbus’s Arena District has blossomed since its inception at the end of the ‘90s, when a vacant state penitentiary was demolished to make room for Nationwide Arena across the street from the city’s then seven-year-old convention center.
The arena was built with private money including a large investment from the Nationwide Insurance Company, which was headquartered on the opposite corner of the former penitentiary. The area has become a thriving entertainment district, having grown to include a baseball stadium, multiple music venues, park space and offices built on nearby former industrial sites.
Though constructed and operated privately for more than a decade, Nationwide Arena was purchased by Franklin County, Ohio, in early 2012 as the arena’s main tenant, the Columbus Blue Jackets of the NHL, complained that its lease agreement and sagging attendance meant the team might have to look elsewhere to play. The area around the arena continued to grow despite the team’s poor performance on the ice and multiple shortened or canceled hockey seasons due to labor strife.
The Columbus model does not support the arena with a TIF, though the city of Columbus has been eligible to recoup infrastructure improvements in the area through one.
Other possible sources of revenue could come from taxes that usually do not have an impact on local residents, such as hotel room or rental car taxes, and Rice is waiting to see a consultant’s report on a membership offering for Rupp similar to the stock sold by the Green Bay Packers to pay for renovations to the historic Lambeau Field.
“We know there’s opportunities for membership offering,” Rice said, citing the Packers ability to raise $67 million in six weeks last year by selling stock in the team for $250 a share, according to a March 1, 2012 Associated Press article found on ESPN.com. The Packers organization is owned by it fans, but the shares do not come with ownership privileges. Any membership for this project would be based on the arena, not the team.
Another possibility rests in naming rights. The Lexington Center Corporation released a request for proposals (RFP) for naming rights on the convention center. The arena itself was not included in that RFP, and Rice said if the group decided to offer naming rights for Rupp Arena, the name Rupp Arena would be required to be a part of the title. It would be similar to Denver’s Sports Authority Field at Mile High, a name reached through compromise after protests when the Broncos left Mile High Stadium in 2000 for a new home and fans didn’t want the beloved name to disappear.
One possible source of revenue that is not being counted on, according to Rice, is the local sales tax option. The ability to have voters in localities decide if they want to institute a new dedicated sales tax isn’t allowed under Kentucky law. Though constitutional amendments have been pushed recently in the legislature, that type of change to state and local laws couldn’t happen quickly enough for the pace Gray and Rice are looking to complete the project.
Were the legislature to pass a constitutional amendment during the 2014 session, which isn’t seen as likely, it would have to be approved by a statewide vote that November. If that passed, the Lexington Urban County Council would have to approve a measure that also would likely require a November vote of the county.
“Obviously the state will play some role,” Gov. Steve Beshear said at the press conference.
In 2006, under then Gov. Ernie Fletcher, the Kentucky General Assembly supported what is now the KFC Yum Center in Louisville to the tune of $75 million. What level of support the state may be able to provide for a project that is Rupp Arena, the convention center and a possible adjacent district remains to be seen.
“We believe we can partner with Lexington to add vibrancy to an area that attracts jobs and business investment,” the governor said. “Of course challenges remain, including the question of funding. A financing plan must be fully developed. A number of issues must still be resolved, but I am happy to report that all of the stakeholders have been and are at the table.
“I am confident that at the end of the day we are going to see a new Rupp Arena Arts and Entertainment District,” Beshear said.
One stakeholder that is at the table but did not join in the press conference is Rupp Arena’s main tenant, UK.
“We have pledged to be partners in this process as we believe, along with Mayor Gray, that the futures of UK and Lexington are inextricably linked. We continue to have productive discussions with all of the partners involved about downtown and the role of the university. At the same time, we must continue to balance that partnership with the goals of the university,” UK’s executive vice president for finance and administration, Eric Monday, said in a statement. Monday attended the news conference, though he did not speak.
“We must maintain the strong standards and operations established by our men’s basketball and other programs, and we must continue on the clear path set forth by our Board of Trustees, President (Eli) Capilouto and the broad campus community: Our top priority for scarce state operating and capital dollars continues to be revitalizing our campus infrastructure to enhance the quality of the education, research and service we provide for Lexington and the Commonwealth,” the statement read.
After the press conference, Gray said he feels good about the university’s stance on the project. “UK is coming to the negotiating table with the city in good faith and in good spirits, and for that we can all be optimistic.”
Gray and Rice said the need for the project goes far beyond UK basketball. “We have a facility here that’s economic life is slowing down, and we need to make certain that we continue to have those people come through the various turnstiles -- not just Rupp, but the convention center and the Opera House as well,” Rice said.
The final report of the Rupp taskforce called for the demolition of the current convention center and its relocation to an area behind Rupp Arena closer to the Distillery District. Rice wasn’t sure what the final project will look like, but it will be decided soon.
“As far as the location (of the convention center), we’re narrowing where it would be. It’s fair to say you’re not going to see it on High Street,” he said. “If we’re going to be able to utilize existing convention space, we’re certainly hoping we can, but again, we have been working concepts the last year and a half. Now we’re going to be working toward schematic designs which enable us to price this facility and finalize a design.”