There’s a new report, produced by Denis Frankenberger, set to hit Louisville in a day or so about the arena debacle. To say it’s damning would be an understatement.
The University of Louisville Athletic Association won’t be happy.
The too long, didn’t read of the report? That the KFC Yum! Center will fail and leave taxpayers on the hook:
Over $800 million in Debt
Operating Costs Exceeding $92,000 per Day
Lease Giving Away Millions to Tenant and Others
Losing more than $50,000 per day during 2011, more than $37000 per day during 2012
More than $30 million in losses since opening
Financial Impossibility to Succeed
A Lease that is Choking the Financial Life from the Arena (unless the Lease is renegotiated)
With all of that, there’s little left to wonder about why UofL would fight against bringing an NBA team to town. It’s because UofL would lose its sweetheart deal that’s subsidized by taxpayers under the guise of bettering downtown.
The fact is, after its first two full years of operation the following financial information obtained by the author, including an analysis of the audited financial statements, yields the ugly truth.7 Louisville’s beloved KFC Yum! Center Arena simply cannot survive unless the terms of its lease with it prime tenant the University are renegotiated into a normal lease for a “tenant” as opposed to the existing lease, which resembles an “owner’s lease” – except that the taxpayers pay for the losses instead of the owner. With this knowledge an interesting question arises: How and why was the lease structured in such a manner to begin with?
In fact, the lease between the Arena Authority and the University which extends through September 30, 2044, is so onerous with such enormous disproportionate percentages of revenues going to the University, the Arena Authority with its more than $800 million dollar debt12, laboring under more than twice the Arena’s projected expenses13, has absolutely no chance of financial survival.
In fact, in a September 10, 2012 Board of Directors meeting Metro Council President and Arena Director Jim King pointed out in a recitation to Mayor Greg Fischer that certain payments to the Arena Authority were needed “to prevent a debt service payment default on the Authority’s outstanding bonds.”14
This plea of course was made AFTER “Arena officials have scraped together cash to deal with previous shortfalls nearly emptying a [$3 million] building renovation fund and notifying Louisville Metro government that more city money may be needed as early as next spring” as reported in a December 23, 2012 Courier Journal front page article.
There have been resignations and many changes of the Arena board members since its inception. Even today there are significant inappropriate close ties between Arena board members and the University. Inexplicably there have been directors serving on both the Arena and the University’s Athletic Association boards.
One VIP Private Suite @ no charge, including the cost of its build-out, has been granted to Humana Corp for 20 years valued @ $1.25 million ostensibly for having sold property to the Arena for $11 million (the then market value) and after the Arena paying an additional $3 million to Humana as compensation for it having to move its employees.
[In response to a request to the Arena for a copy of a verified appraisal of the then market value of the real property associated with the 2007 “Property Sale and Relocation Agreement with Humana, Inc”, the Arena’s accounting firm responded on 1-22-13: “We are attempting to locate the Humana appraisal” however they included a copy of the PVA report indicating a $10,090,000 value.46
More importantly the Arena failed to answer a request for the cost associated with relocating Humana employees after the purchase. This is important because the specific stated basis for Humana’s free Arena Suite is for the Arena’s “reimbursement” for the then (2007) “anticipated” additional employee relocation cost over the $3 million paid by the Arena, which had been estimated at $1.8 million.47
However to date, there has been no reconciliation or data provided by the Arena supporting the Arena’s documented $1.25 million gift to Humana of a built-out Arena Suite for 20 years.]48
Arena pays to University 50% of all revenue received by Arena from the sale of the balance (of 90%) of the Signage inside and outside the Arena excluding the 10% of the Permanent Signage reserved for the University of which University receives 100% of the revenues.
The bottom line is Metro Louisville and State taxpayers are subsidizing the millions of dollars of revenues the University of Louisville Athletic Association is receiving from Arena activities at the financial peril of the Arena, and the billion dollars of financial support provided by the taxpayers and the bondholders, while the Arena is struggling for its financial life.
There’s a loophole in insurance coverage in Kentucky that could leave thousands of people unknowingly driving uninsured each day. A Louisville family found out about it the hard way but they’re sharing their story to warn others. Hello, John Schnatter, maybe it’s time for an insurance reality check in Kentucky.
A group suing over the Ohio River Bridges Project alleges that the government broke federal law when it failed to consider greenhouse gas emissions as part of an environmental report. At this point, CART needs to stop wasting taxpayer dollars because there’s no way the Bridges Debacle is going to be stopped. The bad decisions have already been set in stone. [C-J/AKN]
The Jeffersonville Police Department Drug Investigation Unit and the Clarksville Police Department Narcotics Division have arrested one man after searching a Jeffersonville apartment where there was suspected narcotics trafficking on Friday, according to a news release. [WDRB]
Five homes slated to be torn down to make way for Big Four Station and the Ohio River Bridges Project have found a new life. [News & Tribune]
The first draft of the budget for the 2013-2014 school year includes the projection of a reduced budget deficit to $6 million, but part of the money saved is coming from a change in the job descriptions of resource teachers helping in student instruction, which is being met head on by the Jefferson County Teachers Association. [WHAS11]
An independent panel tasked with reviewing case files of children who have been killed or nearly killed from abuse or neglect agreed Monday that they needed complete case files and that the panel’s meetings should be closed to the public. [Bluegrass Politics]
A Meyzeek Middle School teacher is teaching her students a valuable lesson that goes beyond her normal seventh-grade curriculum. Buffy Sexton is answering the call to be a living organ donor to a man she had never met. [WLKY]
Despite their objections, new GOP lawmakers enrolled in pension plan. Campaigning for the Kentucky House last year, Brian Linder said state lawmakers do not need public pensions. [John Cheves]
A Kentuckiana restaurant has stepped up to help people caught with gift cards to Lynn’s Paradise Café after its sudden closure. [WAVE3]
Louisville Metro Government departments are urging gun owners to use common sense now that firearms are allowed in city-owned buildings. [WFPL]
The Kentucky Tourism Development Finance Authority on Wednesday will hear a request for preliminary approval from Kentucky Kingdom LLLP for tourism tax credits that will help the group reopen the shuttered amusement park at the Kentucky Exposition Center. [Business First]
The Metropolitan Sewer District board has rewarded its new executive director with a 10 percent raise in base compensation and other benefits, including deferred compensation and potential performance-based bonuses. Greg Heitzman, who has been running the Louisville Water Co. and serving as MSD’s interim director since December 2011, will have a base salary of $252,000 when he takes over at MSD full-time in May. [C-J/AKN]
Life begins at conception, according to the Catholic Church, but in a wrongful death suit in Colorado, a Catholic health care company has argued just the opposite.
A fetus is not legally a person until it is born, the hospital’s lawyers have claimed in its defense. And now it may be up to the state’s Supreme Court to decide.
After about two years of litigation, defense attorneys for the hospital and doctors entered an argument that shocked the widower.
They said that under state law, an embryo is not person until it is born alive, according to court documents. The Stodghills’ twins were deceased when they were removed from their mother’s lifeless body.
The court agreed with the argument, and Stodghill lost the suit. The court also ruled against Stodghill in the case of his wife for other legal reasons.
The hospital and doctors then sued him for over $118,000 legal fees and attempted to garnish his wages, according to a legal document filed on his behalf.
Refused to provide reproductive services to people in Kentucky… while claiming in a lawsuit that a fetus is not a person.
This week President Barack Obama discusses his nomination of Mary Jo White to lead the Securities and Exchange Commission and Richard Cordray to continue as Director of the Consumer Financial Protection Bureau:
Retailers now have the option to charge a checkout fee when you use your credit card. The new checkout fee would offset the fee retailers pay credit card processors. [WDRB]
A military veteran who was confronted by Louisville police last year at Mid City Mall has filed a lawsuit over the incident claiming he was wrongfully detained and assaulted by officers. [H-L]
The Floyd County Coroner has identified a woman’s body discovered on the Indiana shore of the Ohio River on Friday. [WHAS11]
House Education Committee Chairman Carl Rollins said Friday that arming teachers should be a last resort as Kentucky legislators consider ways to improve school security after last month’s deadly shooting in Newtown, Conn. [C-J/AKN]
Family and friends are still searching for answers after a Louisville man was murdered on Christmas Day. The body of Charles Fambrough, 20, was found on Portland Avenue near North 24th Street in the early hours of Christmas morning. [WAVE3]
Sales of new, single-family houses fell more than 7 percent nationwide in December from a month earlier, according to a news release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. [Business First]
Local officials said a prime piece of property in west Louisville is ready to attract new jobs. [WLKY]
During the month of January, WFPL aired nine features on the issues posed in regulating toxic air emissions in Rubbertown—and the past, present and potential health concerns of residents. Here’s a collection of those stories. [WFPL]
Despite a request from Gov. Steve Beshear to put off redistricting until later this year, state House Speaker Greg Stumbo is moving forward with getting proposals on the divisive issue. [WTVQ]
Amendments to two bond resolutions were again approved by the Jeffersonville Redevelopment Commission. The bond resolutions were previously approved by the commission in December and updated the bond for the Falls Landing TIF to total $3.5 million, and for the Inner City Roads TIF, the bond amendment totaled $9.5 million. [News & Tribune]
The Americana Community Center showed off its renovations to the former Holy Rosary Academy campus in an open house Thursday morning. [WDRB]
Louisville Mayor Greg Fischer touted the city’s strides under his leadership, laid out a series of goals and lobbied for a local-option sales tax during his annual State of the City address Thursday. Will the local option tax be just like the library tax and flow directly into the general fund, never to be used for its intended purpose? [C-J/AKN]
The Zoo is seeking to hire seasonal positions in various departments including Admissions, Education, Gift Shop, Guest Services, Horticulture, Membership, Rides and Attractions and Splash Park. Just don’t drive the train! [WHAS11]
A pension fund for Chicago public employees has voted to divest its holdings in three companies that manufacture assault weapons, an official with the fund confirmed on Thursday. [Reuters]
Businessman Ed Hart and his fellow investors are promising to bring Louisville a first-class and safe amusement park when they reopen the long-shuttered Kentucky Kingdom. [WLKY]
Studying the costs and benefits of school closures and outsourcing various services have been outlined as bullet points by Greater Clark County Schools’ strategic planning committee. [News & Tribune]
The University of Kentucky has rehired Chester Grundy, a long-time civil rights activist whose dismissal from UK last year prompted publicity and protest letters. Interesting how that works. Interesting timing, as well. [H-L]
The Louisville Downtown Development Corp. has hired a team of consultants to develop a 10-year plan for development of downtown Louisville. Just what the city needs, right? More consultants. [Business First]
A warning to parents about their children’s health care. At the beginning of the year, Kentucky increased the options of Medicaid managed care providers and it could mean some of the biggest hospitals in the city are no longer in network. [WAVE3]
Eboni Cochran says there’s a lot to like about her neighborhood in Louisville’s West End. “You make a right and you will hit lots of green space, beautiful parkway with beautiful tall trees, with nice houses,” she says. [WFPL]
Approval of a new lease agreement today by the Kentucky State Fair Board moves the reopening of Kentucky Kingdom to as early as spring 2014. The investors, Kentucky Kingdom LLLP, now must secure the final private loans – worth $25 million – before the park can open.
The investors have agreed to initially invest $45 million in the park, which has been closed since 2009.
“This agreement is great news for the families who will visit Kentucky Kingdom and will certainly be a shot in the arm for local and regional tourism,” said Gov. Steve Beshear. “This lease will also mean hundreds of jobs as well as much-needed income for the Fair Board. We are pleased that we were able to reach a mutually agreeable lease so the park can reopen as quickly as possible.”
The Fair Board and Kentucky Kingdom investors agreed to a 50-year lease after the state issued a request last year seeking proposals to reopen the park. Kentucky Kingdom LLLP was the only entity to submit a proposal. The lease includes a provision that will allow for the expansion of the water park at Kentucky Kingdom. The state’s Finance and Administration Cabinet negotiated the lease.
“This lease agreement is a fair deal for both our state taxpayers and for the investors seeking to operate the park,” said board chairman Ron Carmicle. “The lease protects taxpayers from shouldering private debt and ensures that the park operators have every opportunity to succeed. As soon as the private financing is finalized, the countdown begins to a reopened and reinvigorated tourist attraction.”
The rental income starts at $475,000 the first year for the Fair Board and will increase by $50,000 a year for the first 15 years of the agreement.
Kentucky Kingdom is required to spend $13 million in 2013 and 2014 to get the park open. It must spend another $7 million on the park through the 2016 season. After 2017, it must spend at least $1 million annually on the park.
Kentucky Kingdom will seek state tourism development incentives through the Kentucky Tourism Development Finance Authority.
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