The day after the Kentucky International Convention Center closed for two years of renovations, the Greater Louisville Convention & Visitors Bureau finalized details for financing that will pay for the majority of the $207 million in upgrades.
Bank of America Merrill Lynch will issue a 30-year, $148 million bond to the CVB at a 3.2 percent interest rate, according to a news release. Bank of America Merrill Lynch was one of four bidders who expressed interest in issuing a bond to the organization for the convention center renovation.
“We are very pleased with the results of today’s bond sale and the low borrowing costs we were able to achieve,” the CVB’s CFO Chris Kipper said in the release. “As an integral partner, we look forward to seeing this exciting project come to life over the next two years.”
Raymond James & Associates is CVB’s financial advisor for the bond issuance. Wyatt Tarrant & Combs LLP serves as bond counsel.
“This is an important and critical step as we rebuild a bigger, better convention center,” Mayor Greg Fischer said in the release. “The finance team is to be commended for putting together a strong bonding package that resulted in a great interest rate for taxpayers.”
Although the Kentucky State Fair Board owns and operates the convention center, the CVB agreed to pay for the majority of renovations because of the critical role the center plays in bringing tourists to the city. It is often the site of large conventions and trade shows that bring thousands of visitors to Louisville each year.
“The transient room taxes that the CVB collects will support the debt,” Stacey Yates, the CVB’s vice president of marketing communications, told Insider Louisville in a follow-up interview.
In 2014, the Kentucky General Assembly and Louisville Metro Council approved a measure to raise the room tax 1 percentage point to 9.5 percent. The increase is expected to generate an additional $2.5 million a year in room tax revenue, according to a 2014 story in The Courier-Journal.
The state will pay for the remaining renovation cost — an estimated $59 million, Yates said.
Although some businesses fear they will lose revenue during the two-year closure, tourism and fair board officials have said they are working hard to mitigate the negative impact of the closure and that an improved convention center could result in a 25 percent increase in convention business when it opens in 2018.
“In 2018, Louisville’s tourism experience will be transformed,” Karen Williams, president and CEO of the CVB, said in the release. “An expanded and renovated downtown Convention Center will be a centerpiece to recruit new business, coupled with more than 1,500 new hotel rooms including the expansive Omni Hotel Louisville.”
The convention center closed Tuesday, Aug. 16, and barriers will go up around the building starting at 7 a.m. Aug. 22. Construction will be contained to the block surrounded by Third and Fourth streets between Market and Jefferson streets.
Third Street between Market and Jefferson streets will remain open through the end of 2016, but Fourth Street in front of the convention center will close Monday, along with one lane of Market Street and one lane of Jefferson Street. The two lanes and Fourth Street will remain closed until the convention center reopens.