Metro Council panel delays KFC Yum! Center measure - WDRB 41 Louisville News

Metro Council panel delays KFC Yum! Center measure

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LOUISVILLE, Ky. (WDRB) – After nearly 90 minutes of sometimes spirited discussion, the Louisville Metro Council’s budget committee postponed acting on an ordinance that would lay out the city’s role in a revised financing plan for the KFC Yum! Center.

The panel voted 6 to 4 to table the measure until it meets again late next week, said council member Kelly Downard, one of the ordinance’s three sponsors.

Downard, R-16th District, told reporters after Thursday’s hearing he is hopeful the plan ultimately will be approved.

“I think it will,” he said. “And I think if there were questions, we’ve got till our next meeting — another nine days – to figure some of those questions out. I think that’ll happen.”

At issue is a strategy meant to avert a looming crisis for the Louisville Arena Authority, which faces a series of ascending debt payments on the Yum! Center in the years to come. It needs approval from the city, state and the University of Louisville.

The arena authority -- the politically-appointed board overseeing the project -- likely won’t be able to cover its debt obligations by 2020, authority chairman Scott C. Cox told council members. He said arena officials hope to refinance the construction bonds within three to six months, taking advantage of lower interest rates.

The terms of a refinancing aren’t yet know, but at least one estimate at Thursday’s meeting put the savings at $175 million.

The ordinance seeks to lock in $240 million in Metro government payments for the Yum! Center until 2039 – or about $80 million more than the “minimum” payments under a deal currently in place. The city already has approved paying up to $240 million; the ordinance would forego the possibility of the minimum payments.

The city’s commitment, however, would first need the University of Louisville to alter its lease and pay more towards retiring the Yum! Center’s debt. State lawmakers also would need to add an extra decade to the taxing district near the arena and allow it to generate more money.

Under the ordinance, it would be up to Louisville Mayor Greg Fischer to decide whether a new U of L lease is “sufficient” to help retire the arena debt.

Council member Bill Hollander, D-9th District, told council members that ceding that power to Fischer is one reason he can’t support the ordinance as it’s written.

“I don’t think that the council should do that,” said Hollander, a Fischer ally. “I don’t think that’s something that a legislative body should do. I don’t think we should give anybody that much discretion.”

But Downard, a frequent critic of Fischer, told council members that the mayor needs the flexibility to negotiate.

For now, the question is who acts first.

Because the 2017 Kentucky General Assembly won’t consider a budget, two-thirds of the legislature must approve changes to the tax increment financing district, which sets aside a portion of annual increases in sales and property tax revenues to pay off debt.

Cox, who was appointed chairman of the arena authority by Gov. Matt Bevin this year, told the council he has had discussions with the governor’s office and lawmakers in both chambers.

“They all say, ‘We think we can get this through if the city and U of L have acted,’ and I think they’re going to tell me, ‘When the city acts, we’ll get serious about this,’” Cox said.

He called the council’s action a “bump in the road” and said after the meeting: “We’re going to see if we can find a solution and get it done.”

The ordinance was introduced last Thursday and got its first hearing a week later, prompting council member Brent Ackerson to allege it was filed “under the radar.”

Ackerson, D-26th District, urged the council to take its time and not feel pressured into acting. "This financial train wreck has been written on the wall for some time,” he said.

U of L has declined to comment in detail about possible changes to the lease, which gives the university control over dates at the Yum! Center and how revenues are split. Critics have called it a “sweetheart deal” that uses taxpayer funds to subsidize a public university’s athletic department.

Cox said U of L would have to contribute “quite a bit more” than $1 million a year more toward arena debt to be acceptable.

Council member Dan Johnson, D-21st, who has worked to bring a National Basketball Association team to Louisville, said the Yum! Center needs at least 200 events a year and another team or sport in the arena.

He called on a new lease to eliminate preferences that give U of L scheduling control the day before, during and after its events. That provision, Johnson said, “has to go.”  

Council member Rick Blackwell, D-12th, said it’s time for U of L to renegotiate its lease, but he warned the council not to have “revisionist history.” He recalled that, at the request of city officials, the university agreed to be the anchor tenant of a downtown arena that would attract concerts and NCAA tournament events alike.

“Let’s also remember this arena doesn’t get built without U of L. We don’t do the bonding without U of L,” he said. “U of L was being a team player at that point, too. … Let’s be careful not to be too critical, because without their team playing at the time, we don’t have an arena.”

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