Ky. lawmaker makes subpoena threat in fair board, arena dispute - WDRB 41 Louisville News

Ky. lawmaker makes subpoena threat in fair board, arena dispute

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FRANKFORT, Ky. (WDRB) – The co-chairman of a Kentucky legislature investigative panel has threatened to subpoena Louisville Arena Authority members to answer questions about a financial dispute with the Kentucky State Fair Board.

Sen. Chris McDaniel said arena officials “refused” to attend Thursday's meeting of the General Assembly's Program Review and Investigations Committee, which reviewed a staff report on the fair board. The arena authority did submit a statement to lawmakers.

“We're going to ask one more time to have the arena authority come back with us, but we stand ready to use the subpoena powers granted this committee to compel their testimony if that would need to be the case,” said McDaniel, a Taylor Mill Republican and gubernatorial candidate James Comer's running mate.

"I cannot express enough my exceptional disappointment in their lack of attendance today," McDaniel said.

Arena authority chairman Larry Hayes, who is Kentucky's economic development secretary, was traveling out of the country on Thursday, his office said.

"The timing of the chairman being out of the country made it pretty rough," said William Summers V, the authority's vice chairman. "When he gets back from out of the country we will definitely talk to them."

At issue is $7.5 million that represents revenue the fair board lost when the University of Louisville's basketball teams moved four years ago to the downtown KFC Yum! Center from Freedom Hall at the Kentucky Exposition Center. The fair board, which operates the exposition center, believes the money is owed under its reading of arena financing documents, said Clifford "Rip" Rippetoe, the fair board's president.

Arena officials have argued that they aren't obligated to pay the money. The authority, which is appointed by Kentucky's governor and Louisville's mayor has agreed to pay the fair board $1.47 million to settle costs related to the board's management of the arena, which ended in 2012.

As of August, the authority had paid $250,000 of that amount, according to the committee report released Thursday. Rippetoe told lawmakers that arena officials have said they'll pay the remaining amount "sometime in the future."

The arena authority has struggled to meet its annual debt payments on the construction bonds for the building at Second and Main streets. A tax increment financing district, which sought to provide a cushion of cash, has failed to meet earlier projections, although revenues from the area around the arena increased last year.

Previous: Arena authority deflect concerns over bond downgrades

The legislature's capital projects and bond oversight committee has asked Attorney General Jack Conway's office to decide whether the arena authority must make the full payment to the fair board for the lost business. Conway's office hasn't yet issued an opinion.

Most of Thursday's meeting centered on the broader financial health of the fair board, which oversees the exposition center near Louisville International Airport and the Kentucky International Convention Center downtown and has had financial deficits in six of seven recent years. The committee requested the review, which included comparisons of other convention-type facilities, last December.

Among the report's findings: More than 80 percent of the 77 similar operations in the U.S. had net income of less than $1 million last year, and 64 percent reported losing money. In addition, the ownership and management of the fair board's buildings are "typical of U.S. event facilities."

Compounding the loss of U of L basketball, the fair board saw the Kentucky Kingdom amusement park lay dormant until re-opening under local ownership earlier this year.

Rippetoe, responding to lawmakers' questions, said the payment to the fair board from Kentucky Kingdom operators will be less than the current $475,000 due to a revenue-sharing agreement based on parking. The attendance of 600,000 during the recently completed season means "that number comes down in the amount of profit that we made," Rippetoe said.

He didn't have an exact estimate.

Although plans have fallen through for a hotel at the exposition center, Rippetoe said the fair board isn't abandoning the project. "We have clients who ask for it. FFA in particular is very interested in being able to have a hotel on the property," he said.

Old Cardinal Stadium, which was declared unsafe in 2013, "needs to be razed," Rippetoe said. The future use of area at and around the stadium, once home to college football and minor-league baseball, will be part of an upcoming master plan for the exposition center property that also will look at a future hotel, he said.

Meanwhile, the state Finance Cabinet is interviewing architects for an expansion of the convention center, a $180 million project that is being paid for with state funds, a contribution from the Convention & Visitors Bureau and a hotel room tax increase, Rippetoe said. Construction is tentatively set to start in the summer of 2016, he said.

"We're a long ways away from a solidified schedule," he said.

Reporter Marcus Green can be reached at (502) 585-0825 or on Twitter @MarcusGreenWDRB.

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