* (Story updated below)
Rep. Jim Wayne, D-Louisville, who’s been watching the financing of the Yum! Center like a hawk ever since its very idea was conceived, tells LEO Weekly that he
and the state’s Capital Projects & Bond Oversight Committee are* is examining a possible independent audit of the Louisville Arena Authority, the body responsible for the arena’s debt payments on its construction bonds.
As we’ve covered many times, the Arena Authority has struggled to make these debt payments, largely due to the much less than expected sales tax revenue from its TIF district. With Moody’s downgrading the debt last month, S&P coming out with a new report any day now, and a great deal of shuffling and confusion regarding money owed to the Kentucky State Fair Board, a change in bond trustee, and a not-yet-approved shrinking of the TIF district, Wayne and his committee want transparency to properly gauge the arena’s situation.
“What we’re doing is investigating the proper route to have someone look at the Arena Authority books and find out what’s going on… just get another set of eyes on those books,” says Wayne. “What we’re trying to discern is the best route for the city to do that. And there’s a question about whether the city has subpoena power to do that, or is it best for the state auditor to do that. And then there’s a question about whether or not the state auditor has the standing to do that, because is this a public facility or is it not a public facility? Is it under an independent authority or not? There are tax dollars involved, both at the state level and at the city level. So there is a public interest here. We have two researchers on it right now, and they’re studying the best approach. This isn’t being offensive to anyone, we just think that because the finances are so complex, and because the bonds continue to be downgraded, and because this is such a wonderful facility, we need to do our due diligence to make sure that all the finances are correct.”
As for who would do such an audit, Mayor Fischer recently said the city doesn’t have to do one, since an audit was conducted in 2011. However, that audit was ordered by Jim Host, the so-called “father of the arena” and then chairman of the Arena Authority. At a September meeting of the Capital Projects & Bond Oversight Committee, current chairman Larry Hayes said that while he realizes the city has “a dog in this fight” — as Metro Government once again kicked in the maximum $9.8 million payment this year because the Arena Authority was short — he added “I don’t feel too badly about that, because we’ve always used the maximum amount in our debt service calculation, then the market gave us the money to build that.”
Wayne says that the CPBO committee will meet next week.
“I don’t think anyone needs to be rash in making a decision, or calling on this group or that group to act,” says Wayne. “I think the main thing is we’re all concerned about this. We have some good people that are trying to manage it, but we need to have a lot of transparency — total transparency — and we need to get a different set of eyes on what’s happening there.”
* Rep. Wayne clarifies that he and his own staff are looking into this option, but not the CPBO Committee, as of now.