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Coal severance spending called into question with Rupp Arena renovation project stalled

By: Tanner Hesterberg, Jerrika Insco Email
By: Tanner Hesterberg, Jerrika Insco Email

When plans to renovate Rupp Arena were put on hold Wednesday, people began asking questions about the money already spent on the project.

Coal severance funds were used as seed money. Now some leaders from coal-producing counties in Eastern Kentucky are worried that debt will not be repaid.

The General Assembly this year provided $2.5 million in coal severance funds to the city of Lexington. The city matched that amount in order to invest five million dollars in planning the Rupp Arena renovations.

Mayor Jim Gray promised to repay the coal counties for their investment. A spokeswoman for the mayor's office said Friday that promise still stands, but right now they don't have a plan in place to do so.

House Speaker Greg Stumbo, D-Prestonsburg, said Friday he is confident the money will be repaid.

If Lexington does not reimburse the coal counties, the money will come from the state's "Rainy Day" Fund, Rep. Stumbo said.

"It was never intended or designed, nor anticipated that money would not be repaid," Stumbo said. "We said if they want it, it's got to be repaid. And everybody was okay with that."

Stumbo said he does not support investing any more coal severance funds in the project.

Original story, 6/18/14

Lexington Mayor Jim Gray is putting his controversial quest for a $350-million renovation of Rupp Arena and a new convention center on hold.

The move came after the University of Kentucky withdrew its support for a proposed annual $10.7 million lease for 30 years at Rupp Arena, beginning in 2018.

"When the university made that decision, that meant we really can't go forward with the plan that we've been working on for the last few years," said Mayor Gray.

Mayor Gray says in recent meetings along with Governor Steve Beshear, UK relayed the decision it had changed its mind about the lease. “We designed this arena based on what UK said they needed. But I understand timing and pacing are everything, especially with major projects like this. So we'll adjust and adapt,” said Mayor Gray.

It's a disappointment for some and a nice surprise for others. After the mayor's decision to suspend work on the project, that means Rupp Arena and the convention center won't be getting a face lift anytime soon.

"When the time is right, the plan is ready," said Mayor Gray.

And that time is not now for Mayor Gray. It's a renovation project city leaders have been planning for more than three years.

"The need for improvements remains," said Mayor Gray. "It's just as we're going forward we need to remove the uncertainty and make it clear that our convention center is open for business and moving forward."

While Gray, the governor, and arena supporters said it would be an economic boom for Lexington, some council members and critics questioned the expense and financing. A Bluegrass Poll in May found the majority of Kentucky adults don't want the state to help foot the bill for a renovated Rupp Arena.

The poll was conducted for WKYT-TV, the Lexington Herald-Leader, the Louisville Courier-Journal, and WHAS-TV and found 75 percent say Lexington should find some other way to finance the project than ask for state money. 18 percent of those polled said the state should help with the costs while seven percent were unsure.

A request for the state to provide $80-million in state funds to help renovate the arena and attached convention center failed to get approval in this year's legislature.

The measure passed the House but stalled in the Senate where leaders said they didn't get the financial plans early enough for the estimated $351-million renovation.

The debate over renovating the arena has become a key issue in the upcoming Lexington mayor's race.

"It's become obvious to the mayor and his staff that public support has not been built for using taxpayer funding for the renovation," said WKYT political editor Bill Bryant. "It has become an early thorn in his re-election bid, so it appears he's decided regroup and come back with a revised plan."

Mayoral candidate Anthany Beatty has been vocally opposed to the pricey renovation from the start. And on Wednesday evening, he expressed to WKYT's Jerrika Insco that he feels strongly that money could be spent on other pressing needs and priorities in the community, like public safety.

Another concern is what happens now to the $4-million already spent on this renovation project. WKYT's Jerrika Insco asked Mayor Gray about that, and he said it's not money wasted but a good investment, saying the project is a good plan that can be used in the future.

Before Wednesday's announcement, council members planned a June 23 meeting to address budget concerns. One of those council members with lots of questions about the project is Chuck Ellinger, who spoke with us Friday.

"Everyone feels a little kinship to Rupp Arena. We all have something near and dear to us with the Cats and with Rupp," said Chuck Ellinger.

The mayor says he still hopes in time that the nearly 40-year-old facility will be renovated, but right now the timing is not right.

As for UK, officials there are not commenting at this time.

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