Lexington's Urban County Council is expected to vote next week on a revised financing plan for the Convention Center overhaul — one that now calls for a $10 million investment from the city and an extra half-percent bump in the local hotel and motel tax to pay back the state.
The initial financing plan for the $250 million project called for a $75 million grant from the state and a 2-percent bump in the local hotel occupancy tax to fund the project. Kentucky governor Matt Bevin’s budget proposal in January, however, included an allocation of $60 million instead of $75 million, with the expectation that the city would also invest and the state’s funding would be repaid to the commonwealth.
The revised plan for the project now includes a request for $10 million in bonded support from the city and a 2.5 percent bump to the local hotel occupancy tax, with the added half-percent used to pay back the state.
“This is an investment that makes sense. It makes sense for the local community of Lexington and the region of Central Kentucky, but it also makes sense for the entire state,” said Bill Owen, president and CEO of the Lexington Convention Center. “What we are trying to do locally is to respond to the governor’s vision that this is not just an appropriation into a capital project at the local level; this is an investment partnership that is going to return revenues back to the state.”
Convention Center officials are currently revisiting the local organizations that had lined up in support of the initial plan, including Commerce Lexington, Bluegrass Hospitality Association and VisitLex, to review the changes and make sure those agencies are still on board, Owen said.
The proposed 2.5 percent increase would raise the local hotel occupancy tax from its current 6 percent to 8.5 percent, not including the state’s additional 1 percent state tourism tax. At a total rate of 9.5 percent, the rate would equal that of Louisville, Owen said.
The request for a hotel occupancy tax increase is expected to be taken up by the General Assembly toward the end of the session, in late March.
Owen said the Convention Center is also taking another look at the estimated economic benefits of the project to account for any additional tangible gains expected for the state.
“We are still working on the details of that return [from the half-percent hotel occupancy tax increase] plus whatever other returns on investment can be tracked and evaluated and accounted for, such as the increase in sales taxes, and what other opportunities there might be to cement this as a nontraditional appropriation,” Owen said.
Owen said the city’s willingness to invest in the project will be an important factor, both as a financial investment and a show of support.
“I think that’s Governor Bevin wanting to be sure that the community is on board with the project and willing to contribute to it,” Owen said.
Owen also pointed out that until the early 2000s, the Lexington Center routinely received a portion of its funding from the city, so the city’s investment in the center would not be unprecedented.
The project, which would include the addition of a 100,000-square-foot exhibit hall along with enhanced meeting rooms, ballroom space and ground-level retail, is currently still in its early design phase, Owen said. If funding is approved, construction would be slated to begin in the spring of 2017, with a building schedule of approximately 24 to 30 months and targeted completion in 2019-2020.