LOUISVILLE, Ky. (WDRB) – Kentucky Gov. Matt Bevin said Wednesday that the University of Louisville’s lease at the KFC Yum! Center may need to be changed in the future, calling it “not necessarily a great deal for the taxpayer.”
Bevin said in an interview with WDRB News that a state legislative committee’s request for an audit of the Louisville Arena Authority, which oversees the downtown venue, is “appropriate.” Bevin and Louisville Mayor Greg Fischer appoint the panel’s board of directors.
But the governor said Auditor of Accounts Mike Harmon ultimately will decide how to proceed.
Last month, the General Assembly’s capital projects and bond oversight committee voted to approve a formal letter at its November meeting seeking a review of the arena authority. For years, the committee has raised concerns about the authority’s ability to make escalating debt payments on arena construction bonds.
“We owe it to the taxpayer and if the taxpayer’s on the hook – and they are in this instance – for making balloon payments when they come due, then we owe it to them to know exactly what’s coming,” Bevin said.
A tax increment financing district near the Yum! Center has failed to produce an expected windfall, leaving the arena authority to struggle at times to cover its debt. The payments are set to increase, from the $22.3 million in principal and interest owned during the year ending Dec. 1, 2015, to a peak of $37 million in 2029.
Other funds, including nearly $10 million a year from Metro government, also help pay the arena debt.
Wall Street rating agencies have singled out the authority’s lease agreement with U of L – whose men’s and women’s basketball teams play at the Yum! Center – as an obstacle to more money for debt payments. U of L keeps the bulk of some arena revenues, such as 88 percent of private suite sales.
“I would not have struck that deal,” said Bevin, a Republican. “It’s very generous from one direction.”
“It’s not necessarily a great deal for the taxpayer and there needs to ultimately be some equilibrium, some reconciliation between the receivers and the givers,” the governor said. “So I think there will need to be adjustments. I don’t know at what point in the contractual process, but in the days ahead -- no question.”
Bevin said he has no plans at the moment to ask Scott C. Cox, the Louisville attorney whom he appointed as arena authority chairman earlier this year, to push for changes to the lease. Cox told Insider Louisville recently that the arena faces “financial challenges” in meeting future debt payments.
“Let’s let this thing start to follow its natural progress,” the governor said. “Let’s start by looking under the hood and getting a true understanding. When we account for how successful it is, let’s not look simply at revenue but actually look at this accruing debt interest.”
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