Arena board chair 'extremely concerned' about lack of new Univer - WDRB 41 Louisville News

Arena board chair 'extremely concerned' about lack of new University of Louisville lease

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LOUISVILLE, Ky. (WDRB) – The chairman of the Louisville Arena Authority said Monday he is becoming “extremely concerned” that his board and the University of Louisville have yet to finalize a new lease outlining the school’s use of the KFC Yum! Center.

The arena authority has been negotiating a new agreement for months, hoping to lock in terms that would provide more money for annual debt costs. Arena officials view a revised lease as a key part of a broader plan to refinance construction bonds at lower interest rates as early as this summer.

“I thought that it would be a relatively fast negotiation and we would be able to have an agreement long before now,” arena authority chairman Scott C. Cox said in an interview after a meeting of the governor- and mayor-appointed agency.

“I never give up – and I still think we will have an agreement – but I’m starting to be extremely concerned because the effect of not getting an agreement with the university will be very damaging to the arena, to the state, to the city, to the school,” he said.

But hours later, interim U of L President Greg Postel said in a statement that the university hopes to complete a deal soon and acknowledged for the first time that the university has agreed to make an extra contribution of $2.5 million toward arena debt. 

“We hope to soon finalize what we believe will be a creative solution to the KFC Yum Center’s financial challenges," Postel said. "The university already has agreed to changes in the lease agreement that would return at least an additional $2.5 million to the Arena Authority annually to assist in the payment of construction debt. The university’s goal is to be a team player with the city, state and Arena Authority in preserving the long-term viability of this important community asset.”

Cox said he has begun getting calls from Kentucky state legislators asking why a new lease hasn’t been signed. In March, the General Assembly approved giving the arena board 25 more years to collect sales, property and other tax revenue from a tax increment financing, or TIF, district near the KFC Yum! Center.

Shortly before the legislative session ended, Scott Brinkman, Gov. Matt Bevin’s executive cabinet secretary, told the Senate budget committee that U of L had agreed to pay $2.5 million more per year towards arena debt, in addition to other payments it already makes.

Cox, who was appointed by Bevin, said Monday that the amount is a “bare minimum number” that investment bankers, the arena’s financial advisers and city and state officials believe could get the arena bonds an investment-grade rating and save as much as $60 million in total interest costs, Cox said.

Wall Street analysts now consider the bonds to be below investment grade – commonly known as “junk” status.

The annual debt payments on the arena bonds are set to rise sharply in the coming years. Arena leaders have warned they may not be able to meet their obligations as early as 2020 unless they refinance and secure more affordable payments.

Asked prior to Postel's statement if the university still is committed to the amount referenced by Brinkman, Cox said: “I don’t want to negotiate the lease agreement with U of L in the media. I can only tell you we don’t have an agreement. And it’s time to have an agreement. It’s past time to have an agreement.”

Besides the state action, the Louisville Metro Council has given Mayor Greg Fischer the flexibility to approve a new arena payment from Metro government, which now sets aside $9.8 million a year for the building’s debt.

“Now it’s up to U of L to … come to the table with something that works in conjunction with everybody else,” Fischer said Monday.

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