If the General Assembly agrees to the project when they meet in 2016, Lexington could have a new 100,000-square-foot downtown convention center by 2020.
Joining the boards of the Lexington Center Corporation, the Bluegrass Hospitality Association, VisitLex and Commerce Lexington, the Lexington-Fayette Urban County Council recently put its unanimous support behind the proposed $250 million Lexington Convention Center expansion and replacement.
The council voted in early December to support a resolution to ask the General Assembly for a 2 percent increase in Fayette County’s hotel occupancy tax, which would fund the plan for a new exhibit hall. The project also calls for the construction of larger, enhanced ballrooms and meeting space along West Main Street, in the space currently occupied by Heritage Hall, and repurposed ground-level retail space as well.
“This is essentially the convention center portion of the project that has been imagined for the last four years,” said Bill Owen, president and CEO of the Lexington Center Corporation. But unlike the plan for relocating and expanding the Convention Center brought forth and later tabled by Mayor Jim Gray in 2014, the current proposal does not include any changes for Rupp Arena, aside from a $15 million video and audio upgrade that is currently under way.
In addition to the 2 percent bed-tax increase, the Lexington Center Corporation also will request a $75 million grant from the legislature to help fund the capital budget. The proposed increase in the hotel occupancy tax would raise it to 8 percent from its current level of 6 percent. The state also includes an additional 1 percent state tourism tax, which would bring the total tax to 9 percent, if the increase is approved by the legislature. Owen pointed out that this rate would still be lower than Louisville’s current occupancy tax rate of 9.5 percent.
If the project’s funding is approved, construction would be slated to begin in the spring of 2017, Owen said, with a building schedule of approximately 24 to 30 months and targeted completion in 2019-2020. The project would be phased to create as little disruption as possible, he added, with the demolition of Heritage Hall to occur after the new convention center is completed in the space currently used as a parking lot to the west of Rupp Arena. The last phase of the project, Owen said, would be the modifications in the retail shops and restaurants in the area near Triangle Park.
“It probably will have some impact on attracting meetings for that period, but the whole concept is for our clients to have equal or superior space before we remove the existing space,” Owen said.
Heritage Hall, which was built at 36,000 square feet in 1976 and expanded to 66,000 square feet in 1994, was not a candidate for further expansion, because the structure is bounded by Rupp Arena, Main Street and the Mary Todd Lincoln House, Owen said. As it currently stands, the Heritage Hall facility is too small to accommodate the larger conventions that the city could otherwise attract, Owen said.
“This is an optimistic project that, at its heart, is about economic development. Lexington’s hospitality industry is experiencing robust growth, and we must capitalize on the momentum our destination is attracting. To remain competitive, the reinvestment in our convention center is critical,” said VisitLex President, Mary Quinn Ramer.
The advisory and planning firm Convention, Sports and Leisure has estimated the total economic output from Lexington Center meetings and conventions, separate from Rupp Arena entertainment, at $42 million annually, Owen said. The company’s analysis projects that the proposed expansion would increase that annual output to $57 million.
“Perhaps more importantly, they also estimated that if we don’t do anything and just stay the current size, the $42 million would begin to erode, as our competitors are building new and bigger facilities, to just under $30 million,” Owen said.
In addition, a recent survey of event planners and organizers conducted by Conventions, Sports and Leisure indicated that of those who would consider locating their event in Lexington, the city’s convention facilities fit the requirements of only about 60 percent. The planned expansion would increase the city’s event-hosting opportunities by making Lexington a viable choice for 85 percent of those event planners, Owen said.
“You go after the business that you know you can get,” Owen said. “Gaining that additional 25 percent ... simply by building the larger exhibit hall, that’s a pretty big step in terms of market share capability. That’s what this is all about.”