Great expectations
The bad news continues for the financially troubled Yum! Center, which remains unable to meet its projected goals to repay their $349 million in construction bond debt.
The Louisville Arena Authority has so far only been able to collect $6 million in sales taxes from the taxing district downtown — far short of the $15 million projected — that goes toward paying its debt. With arena profits also well below projections since its opening, the authority has had to find other means to avoid default — an outcome that is not far-fetched, according to Moody’s Investors Service, who downgraded their credit rating to junk status this spring.
Last month, The Courier-Journal reported the Arena Authority almost raided the arena’s entire maintenance fund of $3 million in order to make their June debt payment. And while a package of securities owned by the authority has increased dramatically — bringing in more than $740,000 per year — they are now weighing whether to sell them for a $7 million windfall.
While such actions might be a quick fix to avoid default, they leave the authority in a weaker financial standing over the long term.
But that’s where we taxpayers come in.
At last week’s board meeting, the authority approved a request to Metro government for an additional $3.3 million next year, on top of the $6.5 million that is paid every year. Under the terms of the deal originally reached between the city and the authority, this additional request is possible in the event that revenue falls short.
While that worst-case scenario appears to be well upon us, Metro Council President Jim King — a non-voting member of the authority’s board — told the C-J there’s no need for panic, as the arena’s “finances will eventually take care of themselves.”
People such as King point to the new operators of the arena, AEG — who took over from the not-so profit-driven Kentucky State Fair Board — and their promise to boost profit.
Last month, King told Business First he is “not concerned” about the lagging tax revenue, and he does not “feel we are in any kind of crisis situation here.”
While an NBA team could certainly boost those revenues — and the Sacramento Kings are looking to possibly move — the arena’s main tenant, the University of Louisville, hasn’t been all that receptive to the idea of sharing the space. And as Insider Louisville reported last month, U of L would have first dibs on buying the arena in case of default due to a clause in their contract.
Meanwhile, Goldman Sachs — who largely orchestrated the financing deal — is sitting in wait, sniffing around to see if their vampire squid blood funnels can suck out any more tax dollars if the arena continues to fail.
What, me worry?
Poll position
The Courier-Journal poll from this weekend told us what we already assumed: Mitt Romney is well on his way to blowing out President Barack Obama in Kentucky this November. But the poll also shed some more light on politics within the state and gave Sen. Mitch McConnell a giant sigh of relief.
McConnell’s approval rating is at a comfortable 51 percent in Kentucky, with 42 percent disapproving — far better than his numbers last year, and nothing to sneeze at considering Congress currently polls near 10 percent.
But McConnell’s biggest relief from the poll might be the support from within his own party, as he desperately tries to avoid becoming the latest establishment Republican purged by a Tea Party candidate in his 2014 GOP primary race. Both Republicans and conservatives gave McConnell a 76 percent approval rating, nearly identical to that of their new flavor-of-the-month, Sen. Rand Paul.
The poll also came on the heels of news that McConnell had hired Jesse Benton to be his campaign manager for his 2014 race. Benton was formerly the campaign manager for both Ron Paul and Rand Paul, and McConnell hopes to quell any lingering suspicions about him among the Tea Party base.
However, the poll revealed some potential weaknesses, as 21 percent “strongly” approved of McConnell, but 28 percent strongly disapproved, meaning more than half of voters are not firm in their beliefs.
Additionally, while McConnell continues his transformation toward the Tea Party, the poll found that only 6 percent of voters now identify themselves as a member of the Tea Party, a dramatic decline from 20 percent last summer.
And despite his great week of news in Kentucky, the news outside the commonwealth did not bode well for McConnell’s longtime goal (pre-dating his newer No. 1 goal of defeating Obama): becoming Senate majority leader.
Whereas earlier this year the odds were strongly in favor of Republicans gaining at least four Senate seats to reclaim a majority, recent polls have shown Republican candidates sliding behind their Democratic challengers in six states.
Observers are beginning to wonder whether Republican Super PACs should divert their money from Romney — who is sliding in the polls — and direct them to congressional candidates to preserve a firewall against Obama in his second term.
All of which makes us wonder what McConnell’s “No. 1 goal” would be if asked to choose: Majority Leader McConnell or President Romney?
