Let the sun shine in: Is the Arena Authority a public entity? No one seems to know.

Mar 7, 2006 at 8:05 pm

Sunshine Week is not about journalists, it’s about the public and the importance of protecting and promoting open government. Sunshine Week is not about protecting journalists’ rights, it’s about the right of all citizens to know what their government is doing — and why.
—From www.sunshineweek.org

As the rest of the nation observes national Sunshine Week from March 12-18, Kentucky’s largest city and its state capital remain shrouded in a thick fog of distrust, disinformation and disingenuousness. The culprits are the high-powered political and business leaders who have formed an unlikely, unprecedented and unholy coalition on behalf of the LG&E site for a downtown Louisville arena.

They are The Gang That Can’t Shoot Straight — at least as far as their dealings with the public are concerned. Oh, sure, they pay lip service to the concepts of transparency, full disclosure and total accountability. In truth, however, they have gone to incredible lengths to do their work behind closed doors, to taint the selection process and to willfully and irresponsibly discredit the viable alternative at the old Water Company site.

Their unofficial motto is “In Host We Trust.” Almost to a person, from the Governor’s office to the Mayor’s office to the University of Louisville president’s office to The Courier-Journal editorial office, they have abdicated their individual responsibility and lined up behind Jim Host, the mastermind who has whipped and driven support for the LG&E site to the point that it has reached an almost evangelical frenzy.

Only last week, in what surely must be a first in state-government history, Gov. Ernie Fletcher, wearing a black U of L sweatsuit, literally came off his sick bed to lead a pro-LG&E-site pep rally in the capitol rotunda.
Never mind that the commonwealth is facing problems of almost crisis proportions in education, health insurance, energy costs and social welfare programs. And never mind that the exact same arena can be built at the old Water Company site for at least $114 million less than it will cost at the LG&E site.

All that matters is that, for reasons still unclear, the LG&E site must be selected. If it’s not, and if the legislature supports a House budget proposal that calls for the arena to be built at the old Water Company site, the Governor, the Mayor, Host, U of L, and The C-J all will, in effect, take their balls and go home. It’s their way or the highway, no room for compromise.

Host said as much last week when he unilaterally halted the work of the Louisville Arena Authority until the question of the arena site was resolved in the General Assembly. It was the most heavy-handed sort of power play, designed to strong-arm the Jefferson County legislative delegation into lining up behind the LG&E site.
What in the name of Enron is going on here? Why have so many powerful political and business leaders drawn this line in the sand?

Their P.R. people say they all want only what’s best for the city and state. Puh-leeze. That’s simply another insult to the public’s intelligence. Doesn’t it make you wonder?
The way Host and Co. have reacted makes me think there’s much more at stake than almost anybody realizes. Does Eon, the German-based corporation that owns LG&E ($6 billion in profit last year), have something to do with this? Only Host knows how all the pieces fit, and he parcels out information, even to his supporters, on a need-to-know basis.

Happy Sunshine Week, Kentucky.

Jim Host: a study in power
and politics

Due to a devilishly brilliant strategy devised by Host, he and the Louisville Arena Authority have thus far circumvented the state laws regarding open meetings and open records. That lack of information and candor breeds suspicion.

The reason David Jones Sr., co-founder of Humana, and John Schnatter, the founder of Papa John’s Pizza, dug into their deep pockets for $220,000 to commission an independent analysis of the two sites wasn’t so much because they opposed the LG&E site as that they distrusted the integrity of the process and the accuracy of the information they were receiving. Sadly, the results of their analysis only confirmed their suspicions — and raised questions about how Host has run the process.

Host is the sort of glad-handing dynamo who probably knows more Kentuckians, border to border, than any politician in either party. He learned his politics while serving in the Republican administration of Gov. Louie B. Nunn (1967-71). The youngest member of Nunn’s Cabinet, Host impressed so many with his unique combination of charm, intelligence, confidence and work ethic that he was nominated to run for Lieutenant Governor in 1971 on the Republican ticket headed by Tom Emberton.

They were buried in the landslide that carried Wendell Ford and Julian Carroll into office, but, as Host often says, that was the best thing that ever happened to him. Forced back into the private sector, he started his own public relations and marketing firm. He immediately became one of the guiding forces in the construction of the Lexington Civic Center, which includes Rupp Arena, and the Kentucky Horse Park.

He also landed the radio rights to UK basketball and football games, which he parlayed into a business partnership with the NCAA. By the late 1980s, Host Communications was the national leader in collegiate sports marketing.

But, faced with cash-flow problems, Host took his company public in the 1980s. By the late 1990s, stockholders forced him to sell the company he had founded and built. The new owners eventually pushed Host out the door despite his ties to UK and the NCAA. Then, after Mitch Barnhart became UK’s athletics director, Host lost his clout there because Barnhart saw him as a leader in the so-called “good ol’ boy” network that wanted to run the athletics department behind the scenes.

So Host was in a sort of political and professional exile when Fletcher asked him to be Secretary of the Commerce Cabinet, despite the fact that Host had supported Steve Nunn, son of the former Governor and his old boss, in the Republican primary. Born again in the political arena, Host interjected his tentacles into so many facets of state government that some observers believed he had more power and influence than the Governor. Host did nothing to discount that perception.

Under Fletcher’s realignment of the state’s cabinets, Host was given control over a wide array of important state agencies, including the State Fair Board, the Kentucky Horse Park, the Parks Department, Tourism, Fish & Wildlife, and the Kentucky Center for the Arts.

In addition, Host orchestrated the formation of the Governor’s Office of Energy Policy and the Kentucky Sports Authority, both of which were placed in the Commerce Cabinet. He also got an ex-officio post on the State Horse Racing Authority by virtue of his friendship with LaJuana Wilcher, Secretary of the Environment and Public Protection Cabinet. She and Robbie Rudolph, Secretary of the Finance Cabinet, both regarded Host as their political mentor.

But when the Louisville arena movement sprung up again in the wake of the Cardinals’ trip to last season’s Final Four, Host virtually lost interest in his other major projects, including the branding campaign (“Kentucky’s Unbridled Spirit”) that he ruled with an iron hand from day one.

Bad numbers, meaningless vote
Although Host was officially vice chairman of the Governor’s Arena Task Force, he ran the operation instead of the nominal chairman, Lt. Gov. Steve Pence, who deferred to Host because of his vast experience with sports, marketing, Rupp Arena and the NCAA. Host named the working groups, set the agendas, ran most of the meetings and had the last word on virtually everything.

The LG&E site didn’t materialize as a viable option until mid-June. And when Host became sold on the LG&E site, the other three finalists — old Water Company, silos near U of L, and State Fairgrounds — quickly receded in importance.

“The first time he came to see me,” said David Jones Sr., “he told me it was going to be at the LG&E site.”
That would have been mid-to-late June or early July. Unconvinced that the LG&E site was best, Jones repeatedly urged Host, the Mayor and the Governor to treat the old Water Company site with equal consideration. However, his pleas fell on deaf ears.

Because of his power over the Fair Board, by virtue of his position as Secretary of the Commerce Cabinet, Host had no trouble dissing the Fairgrounds and the silos — even though both U of L and Rep. Larry Clark, D-Okolona, the House speaker pro tem, lobbied strongly for one or the other. Clark pointed out that his constituents — most of South Louisville, in fact — are opposed to going downtown.

Undaunted, Host upped the ante at the LG&E site by tying a new hotel into it. He was taking a page out of his old Lexington Civic Center playbook, where the Hyatt Regency built a hotel to make it happen. Never mind that the Louisville hotel association says that downtown doesn’t need another new hotel at this time, that the old Water Company site already has a new hotel next door (the Marriott), and that the new Museum Plaza project will include a hotel on Main Street.

Belatedly, Task Force member John Schnatter, founder of Papa John’s Pizza, became concerned that Host was driving the Task Force to the LG&E site by withholding, suppressing or discrediting information that reflected positively on the other sites, particularly the one at the old Water Company. So Schnatter hired a financial expert to analyze the numbers that Host was bandying about.

The expert concluded that Host’s numbers were faulty and testified to that effect at the last Task Force meeting. But it was too late. Told by Host that an arena at the LG&E site would cost $299 million and that the revenue streams would work based on 158 usage dates, the Task Force voted 16-1 in favor of the LG&E site.
Less than six months later, the Governor’s office announced that the Host numbers were, in fact, faulty. The arena at the LG&E site would actually cost $349 million and the revenue streams were based on only 113 usage dates.

The number of dates is crucial to making the revenue streams work. Revenue projections are based on the assumption that the arena’s 22,000 seats will be mostly filled for each of the 113 dates. But other than U of L mens’ basketball games, what events — and how many of them — can fill up a new arena?
But rather than reconvening the Task Force to consider the LG&E site based on the new numbers, Host pushed onward. He had the vote he wanted. Who cared if it was based on bogus numbers?

After Jones and Schnatter hired some consultants to do a relative analysis of the two sites, Host embarked on a disinformation campaign in which he claimed the old Water Company site is too small, has too much traffic congestion and may have acquisition problems because of historic properties on it.
He conveniently ignored that fact that last summer U of L economist Paul Coomes told the Arena Task Force that none of those issues would be a problem with any of the four sites then under consideration, including the old Water Company site.

Arena Authority: private or public?
When Host surprised everyone in state government — including his personal secretary — by announcing his resignation as Secretary of the Commerce Cabinet, effective Oct. 14, he said he was leaving because of health reasons. However, that didn’t prevent him from going to work almost immediately on the two projects nearest to his heart — the Louisville Arena Authority and the task force that will bring the 2010 World Equestrian Championships to the Horse Park.

Unlike the Arena Task Force, which was attached to the Commerce Cabinet through the Kentucky Sports Authority, Host saw to it that the Arena Authority was set up as a private, non-profit organization. One of the advantages, as Host saw it, is that such organizations aren’t considered to be public agencies and, therefore, aren’t subject to the state’s laws regarding open records and open meetings.

“It’s our opinion that we don’t have to have open meetings,” Host said at the Arena Authority’s first meeting on Jan. 30, “but I’m going to open them, anyway, just so nobody can say we aren’t being transparent.”

That had to elicit a giggle from anyone who has tried to follow Host’s actions throughout the arena debacle. Although he admittedly has held countless meetings with various individuals and corporations since leaving state government, Host says that because he’s a private citizen working for the Arena Authority as a volunteer, the records of those meetings, along with his phone records and other related data, are nobody’s business but his.

The state Attorney General’s office appears to disagree. It claims Host tacitly admitted that the Arena Authority is a public agency. But the AG has issued no official ruling, leaving Host free to run the Arena Authority as he chooses, without accountability except to himself and his board members.

Moreover, Host the private citizen and volunteer also has used at least two Commerce Cabinet executives — financial chief Jerry Miller and communications director Chris Gilligan — to conduct business on behalf of the Arena Authority, even though, as Catherine York, the Cabinet’s deputy general counsel, said in response to an open records request, “… it (the Louisville Arena Authority) is not attached to the Commerce Cabinet for any purpose. The Commerce Cabinet, therefore, is not and has never been the records custodian for the Louisville Arena Authority Inc.”

So who is?

“I believe that W. James Host is the Chair of the Board of Directors for the corporation and as such, your request would be more properly addressed to him,” Ms. York wrote to LEO.

So here’s Host, dealing with a publicly financed project that may cost upward of $450 million without having any accountability to the public. And here we have Host, engaged in private meetings with all of the major players — LG&E, U of L, Humana, The C-J, the Mayor, the Governor, the NCAA — without having to let the public know what deals have been made and how the arena might (or might not) be related or tied to other big-ticket issues.
If anything, the absence of transparency only plays into the hands of conspiracy theorists. The public is well aware that LG&E wants the state’s help in building a new power plant in Trimble County, and that Humana, which received a huge state contract to supervise the state employees’ health insurance plan, owns buildings on the LG&E site and apparently is a bidder for the arena naming rights.

In addition, it’s interesting to speculate on whether Host has talked with Eon, the German-based conglomerate that owns LG&E, about some type of sponsorship deal regarding the 2010 World Equestrian Championships at the Horse Park. It will be the first time that event has been held outside Europe, and it presents an excellent opportunity for multi-national corporations to do a lot of cross-promotion.

Is there any connection between the arena site debate and these other issues? Maybe so, maybe not. But Host is so well-known for putting big deals together, for seeing potential partnerships that others don’t, that, in a sense, he is a victim of his own reputation. It would be in his best interests to address these questions forthrightly and candidly, if only to silence the conspiracy theorists who are inevitably attracted to the smell of big money.

Honoring the spirit of
‘Sunshine Week’

Unfortunately, the battle for the public’s hearts and minds has been clouded by a lot of sideshows. So what better time than Sunshine Week for everyone to come clean?

For example, U of L Athletics Director Tom Jurich and Abramson need to quit dissembling about the hard feelings that existed — or perhaps still exist — between them. It goes back to the last effort to bring an NBA team to Louisville, when Abramson was perfectly willing to cut U of L out of the loop and apparently told Jurich to go … well, you get the idea.

Now, both deny they ever exchanged harsh words, which simply isn’t true. If they can’t shoot straight about something so simple, how can they be trusted to shoot straight about anything else?
Abramson also should explain why he’s now so in love with the LG&E site when he initially pushed the old Water Company site and was still so enamored with it that, at the last Task Force meeting, he orchestrated a 9-8 vote in favor of reinstating it as an alternative site if the LG&E deal fell through.

Manassah should say whether the LG&E site was really his idea, what promises he made on behalf of The C-J if the LG&E site was selected and whether he attempted to influence the newspaper’s arena coverage on behalf of the LG&E site.

And then there’s Gov. Fletcher, bless his indecisive heart. He initially pledged $75 million of the state’s money to the project, no matter where the arena was built. But now he’s militantly threatening to veto any budget that specifies any site other than the LG&E site. What turned him into an LG&E partisan?

Finally, somebody needs to explain why the wishes of the residents of southwestern Jefferson County have been totally ignored. Rep. Clark was absolutely correct when he said 82 percent of his constituents want a new arena only if it’s built at the State Fairgrounds. Yet The Gang That Can’t Shoot Straight treats the South Enders with something far darker than benign neglect.

The only way to get the facts out in the open is for the legislature to conduct hearings on the process — the process, mind you, not the sites.

The leaders in the stampede toward the LG&E site — Host, most obviously — are powerful men who believe with unshakeable confidence that they know what’s best for the public. They are certain that when all is said and done, the end will justify their means. Of course, that’s the kind of arrogance that led the Fletcher administration into the merit system scandal that has crippled its work, compromised its integrity and clouded its future.
Regardless, the public’s right to know trumps all. At least, it should. The only good government is open government. It is time to throw open the heavy dark curtains surrounding the arena process and let the sun shine in.