University of Kentucky

UK’s $500,000/yr President Apologizes for “Confusion”

June 14, 2012

When you get paid half-a-millions dollars a year to run a state institution, serving as its President with no prior experience as President of a University, you’re bound to make some mistakes.

The University of Kentucky’s Half-a-Million-Dollar Man, Dr. Eli Capilouto, recently laid off a bunch of people at UK and then had to write a letter to the UK community in which he said he wanted to “apologize for any confusion.”

He went on to apologize for making half-a-million dollars while claiming that the school was financially struggling.

Also, this:

“We deeply regret — deeply regret — the loss of any jobs here, but we know and feel very confident that we have the workforce, the expertise and the excellence to provide a student the best education they can find anywhere,” Capilouto said Wednesday in an interview with the Lexington Herald-Leader.

Look, both my parents taught at the University and a lot of their friends did and I know a lot of other people who still do and I’m not taking anything at all away from them when I say — with absolute love and affection — that is one of the stupidest statements I’ve read this year.

The University of Kentucky offers great teachers, great employees, some good facilities, a lot of potential, and plenty of opportunity if you want it.

But if Dr. Capilouto truly feels “very confident” that UK has what it takes to “provide a student the best education they can find anywhere” then it’s almost criminal to hand him half-a-million dollars each year… or someone is going to have to redefine the words “best” and “anywhere.”

Or Harvard, Princeton, Yale, Berea, Centre, UNC, UC Berkeley… I mean the list goes on… have all ceased to exist.

On the other hand, if you consider that before he got here the University of Kentucky was flailing about trying to break the Top 20 in anything at all and proclaiming itself “America’s next great university” and now, just one year into his reign, we’re already providing “the best education anywhere,” then Dr. Capilouto has certainly earned his paycheck .

Also, he fired Chester Grundy because he had to keep his $500,000 paycheck in tact:

Outrage over the University of Kentucky’s decision to lay off one of its longest-serving and best-known black employees continues to ripple across Lexington and beyond.

Chester Grundy, who started UK’s first Black Student Union in 1969 and went on to found the Martin Luther King Cultural Center and direct it for more than 30 years, was laid off last week. As the news has filtered through cyberspace, his former students and fans are making their voices heard.

Grundy is one of 140 employees at UK laid off as part of budget cuts. An additional 164 positions are not being filled.

Blackford has all the details on both Capilouto’s letters and numbers and on the Chester Grundy situation.

Why is Mitch Barnhart misleading the Big Blue Nation?

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April 20, 2012

The private John Calipari-inspired plan to re-do the locker rooms at Rupp Arena — a $2.9 million project — is moving forward reports the Herald:

Preliminary work is under way on upgrading the University of Kentucky men’s basketball locker room and related improvements at Rupp Arena, including hiring a construction manager to supervise the project.

As Mr. Ravioli pointed out in the comments previously, this locker room overhaul hilariously undermines Mitch Barnhart’s attempt to position UK as control of larger arena negotiations.

Last week, Barnhart was on Matt Jones’ Kentucky Sports Radio show and said:

We have told [the city] that we are not going to sign a new lease agreement until we find out if it makes sense for Kentucky. And they have not been able to bring us a new lease agreement with any projections or construction at this point. They have some plans…they are interesting…but anything they do to the arena, whether renovated or new is probably two years down the road.

It’s cute of Mitch and the University to pretend to hold some cards in this debate, but it’s quite clear that if absolutely nothing happens to Rupp Arena, if the coal companies and Toyota and IMG can’t pony up the $300 Million for the project and we have to wait another decade or two for a serious change to that end of downtown, that the University of Kentucky will continue to play basketball in Rupp.

Mitch can play pretend or attempt to mislead the fanbase into some unhelpful level of vitriol and out-of-whack expectation, but Calipari’s getting his new locker rooms and the ‘Cats are staying in Rupp.

Which means the University’s big wigs should grow up and start being helpful instead of playing games.

University of Kentucky, Slumlord.

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April 9, 2012

I can’t agree with Tom Eblen’s premise in his Sunday column in the Herald — “After the games, nation got an unflattering look at UK, Lexington” — but the larger point he’s getting at is a good one:

Last week’s mayhem was a wake-up call to both UK and Lexington officials. They must redouble their efforts to clean up neighborhoods around campus that have been allowed to become little more than student-rental slums.

The problems began in the 1970s, when UK dormitory construction and maintenance began falling behind enrollment growth. About the same time, longtime residents of some nearby neighborhoods built between the early 1800s and early 1900s began dying off or moving away.

Many homes were sold to the university for campus expansion. Others were sold to student-rental entrepreneurs, who either cut up old homes into rental rooms or knocked them down to build boxy apartment complexes.

Once-lovely neighborhoods where many faculty and staff used to live fell into disrepair, as fewer and fewer homes were occupied by their owners. UK’s hands-off attitude reached its zenith in 1998 when officials banned alcohol from campus, which pushed student parties into the surrounding neighborhoods.

Landlords used zoning loopholes to build large dorm-like additions to bungalows and pave over yards, overwhelming those areas with people, cars, garbage and storm-water runoff. Those neighborhoods were not designed for such density.

Diane Lawless, the Urban County Council member who represents those neighborhoods, said the problems have been made worse by spot rezoning and years of building inspection that was “way beyond lax.”

Eblen goes on to look at how these neighbhorhoods are changing, how the city and the University have begun working together to play catch up on getting the situation under some sort of control (or attempt to).

His thoughts on State Street came on the heels of more pointed criticism from the paper’s Editorial Board, which correctly and directly placed the blame for the situation at the feet of the University of Kentucky and years of lax governance from the city… that abusive relationship in which the city has bowed at the feet of the University over and over again as if the one controls the other and not the other way ’round.

If University of Kentucky researchers ever want to study the link between social pathology and failed urban planning, all they have to do is walk across Nicholasville Road.

There, in the shadow of UK’s beautiful new hospital, they would find what once was a pleasant neighborhood of retirees, young families, professors and students.

The neighborhood was destroyed when demand for student housing and UK’s 1998 ban on alcohol at fraternity houses collided with an ineffectual city government, and, voila, Lexington created a slum.

It’s no coincidence that this overcrowded student ghetto is Ground Zero for the vandalism, arson, drunkenness and violence that accompany UK sports events and reached an embarrassing peak after Saturday night’s win over in-state rival Louisville.

As to Eblen’s initial point, that the University’s abuse of its neighbors resulted in a black eye for Lexington on some national scale… I’m not so sure that particularly matters, even if it were true. And it’s probably not true — no one’s talking about UCONN’s “riots” (which weren’t riots either) after last year’s victory. The truth is, six months from now, no one outside the state will care about Lexington or the supposed riots. And the truth is that the real issue isn’t what people might think, but what the University could do better to no longer be a predator on its community but a protector.

And… as we’ve been pointing out, the real story about that celebration wasn’t a few bad apples, but that the “riot” wasn’t a riot at all but instead a pretty remarkable city-wide celebration. As the Fuzz themselves said:

About 60 fires were reported, and more than 20 people, including a shooting victim, were taken to the hospital.

However, police emphasized at a news conference Tuesday that the majority of revelers was well-behaved. Police said crowds at South Limestone, State Street and the intersection of Woodland and Euclid avenues totaled 15,000 to 20,000 people.

“The number of arrests we made and the number of problems we had, we felt like, were relatively small based on the number of people that we had celebrating,” Police Chief Ronnie Bastin said. “I think that speaks volumes to Wildcat fans and the Big Blue Nation.”

UK Prez Capilouto Goes on Media Blitz

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March 21, 2012

The Legislative Research Committee did some studyin‘ of Kentucky’s university presidents and how much they get paid.

Pay increases for university presidents ranged from 5 percent to 34 percent between 2006 and 2010, according to a new report from the Legislative Research Commission. For faculty, the average pay raise was 7.7 percent statewide during the same period, according to the Southern Regional Education Board.

….Meanwhile, public universities and community colleges have lost $105 million in state funding since 2006, bringing cuts to education programs and higher tuition for students. Higher education faces another possible cut, $62 million, over the next two years.

For the University of Kentucky, between 2006 and 2010 the Presidential Salary increased 6.3% to $304,000. Pretty modest, right?

Except that in 2011 when UK hired Eli Capilouto as their new president, they gave him a baseline $500,000 salary. You factor that in and, as the Herald reports, you’ve got a 74% salary increase.

On Sunday, the Herald put out what might as well have been a special Eli Capilouto Issue. The Half-A-Million-Dollar Man sat down with Jerry Tipton, Linda Blackford and Tom Eblen for three separate articles.

Tipton covered the one-and-dones, and Capilouto’s ‘students first’ strategy (someone’s gotta pay that salary), as well as some political Rupp talk:

Q: Why have you spoken in opposition of Mayor Jim Gray’s proposed Arts, Arena and Entertainment District, going so far as to say you’d view any funding for that project as money taken away from your hopes to upgrade UK classroom buildings and dormitories?

A: “Mayor Gray has an exciting vision for our city. I think he made us all realize design matters. … I have the same goals of having newer facilities on campus, renovated classrooms (and) residence halls that lend themselves to modern living and learning. We both share a challenge and we speak about it frequently, and that is how to pay for the new arena.

Q: How much conflict is there between your vision for UK and Gray’s vision for Lexington?

A: “I hope all of our dreams come true.”

Eblen covered Capilouto’s ‘students first’ strategy, his feelings on UK’s history of shirking students off into surrounding neighborhoods, the plan to privatize student housing, and some Rupp stuff, too:

He raised eyebrows by saying he would not request state money to renovate Rupp Arena, as Mayor Jim Gray had urged, because it might compete with academic ­building requests.

In an interview last week, Capilouto praised as ­visionary Gray’s plans for Rupp and the ­surrounding Arena, Arts and ­Entertainment District ­downtown. He just thinks academic projects must come first. UK’s academic and ­housing infrastructure isn’t competitive with peer ­institutions. That makes it hard to attract and retain top faculty and students, and it limits what they can achieve.

“I want to be able to grow what we do here so that we can better support what I want to see flourish in downtown ­Lexington,” he said. “They go hand in hand.”

Blackford’s is far and away the best, a wide-ranging profile covering all corners of Big Prez’s life on campus:

He gets paid $500,000, and it’s clear he understands that if he has to spend a lot more time lobbying, tweeting, making videos and asking people for money than he ever has before, then so be it.

“I get a lot from walking around,” he said earlier in the day, in between taping a “hot seat” segment for basketball Coach John Calipari’s TV show and lunching with a donor. “Building relationships is my job, and it really energizes me to talk to all these people.”

….When you’re a university president, people always want something from you: time, attention, funding. When they don’t want something from you, chances are they’re a legislator or a rich donor and you want something from them, mainly money. The race for private dollars has accelerated at a furious pace just as state funding has declined precipitously. Capilouto estimates that fund-raising — the long slow dance with potential donors to build the relationship that goes on long before they give anyone a check — takes about 20 percent to 30 percent of his time. During this legislative session, he’s spent about one day a week in Frankfort, arguing for more and more flexible state funding.

Keep reading…

It’s unclear why Capilouto is pushing himself so hard (or why the Herald put all three articles together in one weekend) but perhaps the Half A Million Dollar Man is simply trying to take advantage of the March Madness attention to UK (basketball) to get some interest in UK (students first!).


As Danny points out in the comments, NoC has more on the Presidential/University salary scale from a great article from last year:

The first thing you should know is that UK’s Top 20 bonanza, paid for by students and their families, taxpayers and athletic supporters, and janitorial staff and adjunct armies, represents a fairly large redistribution of wealth, a quiet ho-hum moving of public money into private individual coffers. There have been a number of ways this has been done, but the exploitation of scale—moving from local and regional to national and global scales to deflect blame or increase importance and value—has been a much-used, yet little-discussed ripoff tactic.

Public University Trustees Move Forward with Privatization Plans for Housing

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February 22, 2012

The University of Kentucky’s Board of Trustees signed off on the plan to privatize the public university’s student housing. Ms. Blackford of course has all the details, including but not limited to:

EdR vice president Tom Trubiana said his company is accepting low returns on the first dorm “because we wanted to be part of UK for the long term.”

“The uniqueness here is potentially that we could be the sole-source housing for UK for the future,” Trubiana said. “That’s why it absolutely needs to be a home run.”

Cool. A home run! This deal isn’t a single or a bases clearing double or even a ground rule double. It’s a home run!

Or it needs to be one. Continuing

If UK and EdR agreed to build a theoretical $10 million dorm, a financial model presented on Tuesday shows that UK would get $239,000 in revenue during the first year of the deal, and EdR would bring in about $239,000. However, the model shows that EdR would not start to make a profit until year 11 of the deal. By year 50, UK would make almost $2 million a year, and EdR would make $1.1 million, an 11 percent profit.

UK and EdR are deciding whether they will pursue an exemption from property taxes on the new dorm. Those taxes are built into EdR’s rates of return, Trubiana said.

“Any benefit would go to UK students in the form of lower rents,” he said.

1) Why would you lower rents when you could make more money? That’s bad business sense.

2) What are the guarantees behind that statement? Is it in the contract?

3) Why does EdR feel no responsibility to the community it seeks to profit off of?

4) Why does the University feel no responsibility to contribute to the upkeep and safety and well being of the city in which it exists?

As Blackford reported the other day:

Property taxes are divided by school systems, city governments and state government, with the majority going to public schools.

Fayette County taxes about 1 percent of a property’s assessed value. Approximately 68 percent of that goes to Fayette County Schools, 13 percent goes to the state, 9 percent goes to the city, 3 percent goes to the public health department, and 7 percent goes to LexTran. Less than 1 percent goes to UK extension services and soil- and water-conservation programs.

Lexington’s PVA David O’Neill estimates the proposed dorm could pay out $280K per year in property taxes.

Poor big businesses and their big tax burden. If corporations are in fact individuals, then should they really be granted tax relief individuals would never get?

In what world could you stop paying your property taxes?

Wouldn’t that be nice? Don’t you give enough back to the community as it is, just by being you?

Here’s another idea: Stop charging homeowners who live in the neighborhoods bordering the UK campus property tax.

If they don’t have to pay their property taxes, these homeowners could invest the money in a scholarship fund or something to reduce student costs and make college cheaper for the kids.

Because they would. They really would.


Read more Blackford.

Read UK’s Press Release.

Read Education Realty Trust’s Press Release.

Buy your EDR stock now!

And read the ground lease draft (PDF). Some highlights:

(b) Commercial Tenants shall occupy the Premises pursuant to a written lease, license or sublease (each, a “Permitted Commercial Lease” and together with the Permitted Residential Leases, the “Permitted Leases”). The terms of all Permitted Commercial Leases shall comply with the Requirements, and all Permitted Commercial Leases shall be on forms approved by Landlord, in its reasonable discretion; provided that Permitted Commercial Leases (i) shall provide that in the event that such Permitted Commercial Lease is assigned to Landlord or this Lease is terminated, Landlord shall have the right to terminate such Permitted Commercial Lease if necessary to ensure that the Premises are exempt from property taxes when owned by Landlord and in compliance with applicable law relating to tax exempt financing and (ii) may provide that such right is subject to payment by Landlord of a reasonable early termination fee.


Section 8.01 Taxes. Tenant shall pay and discharge punctually when due all taxes, any payments in lieu of taxes, assessments, water and sewer rents, rates and charges, vault license fees or rentals, levies, license and permit fees and all other governmental impositions and charges of every kind and nature whatsoever, extraordinary as well as ordinary, foreseen and unforeseen, which shall be charged, levied, laid, assessed, imposed upon, become due and payable out of or in respect of, or become liens upon the whole or any part of the Premises, together with all interest and penalties, under all present or future laws, ordinances, requirements, orders, directives, rules or regulations or the federal, state, county, and city governments and of all other governmental authorities whatsoever as well as and including all payments in lieu of any of the foregoing (the “Taxes”). With the prior written consent of Landlord, in the Landlord’s sole and absolute discretion, Tenant may, at its sole cost and expense, seek a tax abatement or other tax exemption for the Premises. At the option of Landlord, the savings obtained as a result of any tax abatement will either serve to reduce the rent charged to the Residential Residents of the Premises or increase the Rent to the University.


Section 8.05 Right to Refund of Taxes. Any savings, credits, refunds or rebates obtained as a result of any tax abatement or other tax exemption being obtained for the Premises shall belong to Landlord and be allocated in accordance with Section 8.01. Any refunds or rebates of the Taxes paid by Tenant shall belong to Tenant and be used in Tenant’s sole discretion.

Section 8.06 Separate Parcel. If necessary or advisable, Landlord shall cooperate with Tenant’s efforts to cause the Premises to be subdivided or re-subdivided to establish the Land and the Improvements as a separate tax parcels.

And some financials…

UK’s Big Chance?

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February 21, 2012

The Herald-Leader editorial this morning looks at student housing, in a way. Inspired by a New York Times article from last week, they call for a big vision while putting aside questions of whether the privatization plan makes real sense.

The NYT article talks of the incremental building up of Madison, WI and its university gateway:

Pieces of the seven-block stretch from Regent Street to Lake Mendota were installed episodically over the decades, including the Memorial student union (built in 1928) along the lakeshore that has long been one of this capital city’s favorite warm-weather gathering spots; a public square one block off the lake; and a collection of campus buildings dating to the 1950s and ’60s.

In the last decade, university architects and administrators, working with Madison’s planners, have been more purposeful. Prompted by trends in urban design that emphasize closer ties between retail stores and cultural institutions, open space, recreation and stronger neighborhoods, the university and the city developed a more definitive construction plan. When it is finished, the 2.45 million-square-foot project is expected to have cost nearly $500 million.

The Herald editorial:

Yes, yes, UK must stay fixated on getting and policing just the right contract terms if it boldly goes where no university has gone before by outsourcing all its student housing to a for-profit company.

But let’s not lose sight of the overarching purpose for launching this ambitious plan to swiftly improve and increase on-campus student housing: Advancing scholarship by enhancing the quality of students’ experience in Lexington.

Where that kind of big-picture thinking could lead is illustrated by what the University of Wisconsin and the city of Madison have accomplished.

So long as we’re thinking big… what would happen if the University of Kentucky could somehow pull together the resources to bring the brightest minds they can find to a central location — let’s call it “a campus” — where really smart people old and young who study economics and business and architecture and engineering and urban design and all sorts of other pursuits can be put to work coming up with truly transformative ideas for how to remake the UK campus and pay for it.

And what if… just what if… half of those attendees actually paid to take part and the other half got paid too little to be there?

What would that meeting of the minds look like?

Or is the message from the University of Kentucky that the school is incapable of attracting such talent?

Dan Savage coming to UK March 6th; UK President endorses homosexual agenda

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February 20, 2012

Hot on the heels of news of Rand Paul’s upcoming trippy speech to the impressionable young minds at the University of Kentucky, it’s come to our attention Dan Savage is coming right behind him.

Savage, who defined Rick Santorum’s presidential asspiratations, is touring in support of his “It Gets Better” campaign, which seeks to combat the virulent homophobia of the extreme Right Wing with compassion, understanding and basic human decency.

The UK event goes down March 6th @ 7PM on the UK campus, just four days after Rand blows through:

In September 2010, in response to the numerous acts of suicides by young people bullied for their sexual orientation, Dan Savage founded the “It Gets Better” Campaign as a way to let young LGBT people know that there is hope, help, and a future despite any hardships–that they are not alone and that it WILL get better. This semester Dan is bringing the now global movement to UK to speak about how the mission of the “It Gets Better” Project is crucially important even on our own campus. A Q&A session will follow the lecture as well as a book signing of “It Gets Better: Coming Out, Overcoming Bullying, and Creating a Life Worth Living.”

Here’s one typical “It Gets Better” message to your kids being transmitted across the internet into their brains and tearing them away from your parental control:

Horrifying, no?

Supporting this homosexual agenda and seeking to turn all your college aged children queer is Eli Capilouto, president of the University of Kentucky:

How long will it take before Lexington’s really talented right wing radio hosts realize this has happened and start calling for Capilouto’s job?

“Ultimately, the university’s desire is to be fair to everyone involved — local and state governments, the university and, most importantly, students.”

no comments
February 20, 2012

From Ms. Blackford’s must-read story on the UK dorm deal:

Under the contract for the first dorm, UK and EdR would sign a 50-year ground lease, meaning that UK still owns the land but the new building would be owned by EdR.

EdR would construct the $26 million dorm, financing it with its own cash and equity. UK would put up no capital in the deal, which was important to them because of the need to issue debt on academic buildings. Rating agencies such as Moody’s have been somewhat vague about whether these kinds of projects might eventually be held against the school’s credit rating.

Once the dorm was up and running, UK would receive 10 percent of gross revenues. After EdR receives a 9 percent rate of return from rents, then UK would get 25 percent of the net income. At the same time, EdR would receive a 4 percent management fee for operations in addition to the remaining net income.

That deal’s coming down on Tuesday.

There’s a lot of cheerleading going on, what a deal. Turns out UK decisions to spend decades not building dorms and investing that money elsewhere was a solid business decision. See green!

Corollary, from Ms. Blackford: UK’s decision to lease the ground to a private company (in the best interests of the students, of course, not the bottom line) does come with a significant silver lining:

As a government entity, UK doesn’t pay property taxes. But once the school enters into a ground lease with Education Realty Trust, any new dorms would probably be considered private property that is subject to taxation.

“I intend to put those buildings on the tax rolls,” said David O’Neill, the Fayette County Property Valuation Administrator. “UK and other government-owned properties are tax-exempt but, since they are signing a ground lease to another company, my position is, the company would have to pay taxes.”

UK officials said they hope EdR would not have to pay property taxes because the increased cost would probably be passed on to students.


You really have to give UK credit.

Also especially enjoyable:

“We had a very positive discussion with the PVA as part of our efforts to keep everyone informed about this important issue,” [UK spokesman Jay] Blanton said. “As to property valuation and assessment, we’re still studying what the potential impact would be. Ultimately, the university’s desire is to be fair to everyone involved — local and state governments, the university and, most importantly, students.”

Love it.

Rupp Funding, UK’s Response & UK Housing

February 6, 2012

The Big Sunday editorial heaped praise on Mayor Gray and the Rupp Area Task Force, then called for realistic numbers in the financing phase:

However, in the next step, estimates and ideas must give way to hard numbers.

Here again, history produces a credibility gap. Painful examples of big ideas drowning out bad numbers are close at hand.

Just down the street from Rupp some of Lexington’s most historic buildings were destroyed because of promises of a huge hotel development financed by a mysterious foreign investor. Instead there’s a block of grassland.

The CentrePointe debacle also included a financial feasibilty plan that contained projections that defied reality.

Down the road in Louisville The KFC Yum Center is struggling to pay its bills because a TIF is not producing the revenue that had been anticipated, leaving the city holding the bill.

Even in these tight times, there are worthy public investments. But both the state and Lexington have little to spare and UK President Eli Capilouto has rightly made it clear he’s going to argue in Frankfort for funding education before athletics.

On that last point, of President Capilouto’s decision to focus his energy on taking state money to sell student housing to a private corporation and not get behind the city’s plans for Rupp, Dan Rowland writes:

I understand and applaud Capilouto’s desire to contrast his aims symbolically with those of his predecessor, notable for the Wildcat Coal Lodge, and other distortions of UK priorities. But to insist repeatedly and forcefully that UK places all its priorities on its own campus and none on the fate of Lexington is a symbolic statement of its own kind — and one that is badly mistaken.

Lexington has a visionary mayor and the best council I can remember. The task force working on the Rupp Arena plan has functioned smoothly, creating a strong consensus around the plans approved Jan. 31. The plan itself is outstanding, the best example of downtown planning by far that I have seen in over 30 years of sitting on downtown planning committees. These opportunities do not come around every day, and UK needs to be on board.

I am one of the most unlikely people to support a renovation of Rupp.

When my wife and I moved to Lexington in 1974, I was appalled by the plan to create a 16-acre parking lot for Rupp.

Continue reading Rowland’s piece here…

Now, while Rowland and the Ed. Board applaud Capilouto for his campus privatization plan (or, make a show of applauding him), one of the paper’s most excellent reporters takes a closer look at deal, prospects, realities and more:

U of L officials, along with those at other schools that have used EdR, call the process largely positive. But UK’s proposed deal is so much bigger and more sweeping — managing all student housing and spending as much as $500 million to replace most of the school’s 6,000 existing beds and add 3,000 more — that it largely covers uncharted territory.

….Although the EdR Web site now features a picture of all its employees in blue UK T-shirts holding Wildcat banners, a contract between the company and UK is not supposed to be approved by the UK Board of Trustees until Feb. 21.

UK officials say going this route gets them out of the costly and complicated business of construction, allowing them more time and money to focus on instruction. Modern and expanded student housing will help recruitment and allow more students to live on campus, which usually helps retention and graduation rates. In addition, UK says, it won’t have to put up any capital in the deal.

But until the details are made public, it’s hard to judge how good a deal it will be for UK and its constituents, said Lou Marcoccia, a vice-president at Syracuse University, who has worked successfully with EdR on much smaller projects.

“The question is, how can EdR put up the capital and operate it and make a profit, and why couldn’t UK do the same thing?” Marcoccia said, referring to UK’s proposal to turn over all its housing stock to EdR. “If it’s such a good idea, why isn’t everyone doing it?”

The piece goes on to examine a number of smaller deals at campuses around the country, looking at financials, and the struggle for transparency as UK works with the private company — Read It.

Rupp Area Task Force Final Meeting

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January 31, 2012

The big show started with this video from Bullhorn Marketing:

You can read the executive summary here (PDF) and Beverly Fortune’s rundown here.

All in all, it was a rehash of where we’ve already been, with Bates and crew again going through the plan as it exists.

[Read about the previous meetings here, see images of the redesign concepts here and here]

The Highlights come from the Executive Summary. There was little new information outside of it (though there were some new images, it seemed.) and almost all the new information comes in the financials (or, very preliminary financials) that come toward the end.

Here we go:

Transformation of the Lexington Center itself, including Rupp Arena, the Lexington Convention Center, the Civic Center Shoppes and immediate environs, is estimated as a $250 to $300mm project that catalyzes all other investment. This important project will require a mix of local, state and private funding for construction. Possible major funding sources include new revenue from premium seating, advertising, sponsorship, concert/event promotions, concessions and parking associated with proposed plans. It will also likely need local and state funding to create a new economic engine. Private fundraising and federal grants and tax credits should be fully explored. The plan also anticipates the establishment of a Tax Increment Financing (TIF) District to support needed infrastructure and civic facilities.

So the school, the arts place, the sports fields and everything else is outside that funding figure and goal (including Town Branch/Commons/Central Park). No surprise there.

Three year funding and design schedule:

2012: Organization, Business Plan, Survey/Environmental
2013: Concept Design/Engineering, Pre-Construction Estimation & Schedule
2014: Completion of Schematic Design, Confirmation of Construction Funding

If Beshear’s $3.5 Mil and Lex’s $1.5 Mil come through, they get spent like this:

If that $5 mil works out and the $250 to $300 Mil in overall funding for Arena, Convention and Shops is secured (or however much it turns out to be after schematic design alters cost and timeline) by 2014, then…

The construction schedule anticipates an approximate 3 ½-year construction period:
Site Work/Lexington Convention Center Construction (Spring, 2014 – Fall, 2016)
Rupp Arena, Town Branch Park Construction (Spring, 2015 – Summer, 2017)

New Rupp comes by 2017 at this most ambitious pace.

Here’re the 14 avenues of funding they will investigate:

There was quite a bit of talk about TIF financing and it is spread throughout the document. It would be the third Tax Increment area in Lexington joining the Distillery District and the Webb’s failed hotel project (which, if government actually functions, should be forced to go back through the TIF approval process since it’s now a different project… or a non-project).

TIF districts, especially for arenas, have come under increased scrutiny as the Yum! Center Arena district in Louisville is losing money, not generating what was projected (see here, here, here). It will be fascinating to see how the Rupp folks plan to accommodate for more realistic TIF projections.

As the Courier reported:

The taxing district “will become self-sufficient again when the economy recovers, but this is way too much risk for Louisville to have taken from the beginning,” said John Vrooman, a sports economist at Vanderbilt University. “This volatility should have been anticipated before the debt was issued.”

He said in an email that tax-increment financing is “very risky” for financing sports arenas and should not exceed 10 percent of the total debt. The tax plan makes up 35 percent of the KFC Yum! Center’s annual debt.

Also… it’s worth noting that the timeline proposed in this plan, which they admit is a best case, predicts a completed Rupp by 2017, while the University of Kentucky’s lease with the Lexington Center, re-upped in 2001, runs through the 2017-8 season. It’s unlikely UK would try to move at this point (but who knows what lurks in the hearts of the UK powerclass), but the projected timeline may not be purely coincidental.




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