Thu January 24, 2013
Kentucky Kingdom Lease Plan With Hart-Led Group Gets Approval; Re-Opening Targeted for 2014
The Kentucky State Fair Board voted today to approve a 50-year lease could lead to the spring 2014 re-opening of Kentucky Kingdom, the amusement park at the Kentucky Fair & Exposition Center that's been shuttered since 2009.
Details are below.
In 2012, the fair board issued a request for new proposals after the owners of Holiday World in Santa Claus, Ind., abandoned their plans to re-open the amusement park under the name Bluegrass Boardwalk.
Only one proposal was submitted — from a group led by Ed Hart, a former Kentucky Kingdom operator.
In October, when the proposal was made public, WFPL reported:
The group--Hart, Ed Glasscock, Bruce Lunsford and Mary Moseley-- has proposed accepting a 30-year lease, which the state previously offered to another group--the Bluegrass Boardwalk--that backed out of negotiations this year.
Further, it would invest an additional $70 million over the lease term to bring the total to nearly $120 million over 30 years.
Hart said if the state acts soon the park could be open in May 2014, but its unclear how willing the state is to negotiate with Hart or his group. The group needs to know sooner than later or else the reopening date could change, said Hart.
The initial 53-page proposal from Hart's group, the Kentucky Kingdom Redevelopment Co., is included in the story.
Today, WFPL's Devin Katayama is covering the fair board meeting and other developments with the expected re-opening of the amusement park. You can follow his updates on Twitter @DevinWFPL. We'll keep this story updated with the latest developments, as well.
And catch up on the how this story has developed so far with this timeline of Kentucky Kingdoms's history.
Update 10:30 a.m.: Closed Session Called
The Kentucky State Fair Board committee meetings are on-going and have gone into executive session until this afternoon.
The full board is scheduled to meet at 1 p.m.
Update 11:15 a.m.: Lease Details Emerging
Under the lease the fair board is expected to consider this afternoon, the new operator would have 90 days to put together its financing package.
The lease would be for 50 years and require an initial $45-million investment from the operator. All rides and improvements paid for with the $45-million investment would become state property.
The investors would put in $20 million directly; $25-million would come from a bank loan.
The operator would have the ability to back out of the lease within 90 days of the lease being signed by all parties.
A motion to approve the lease plan will be made this afternoon. Stay tuned.
Update 1 p.m.: Open Date 2014?
A couple more details. If the proposal is approved, the park would likely open in May 2014.
And, if the property became insolvent, the fair board would have the right to maintain control of the park's operation.
Update 1:41 p.m.: Fair Board Approves Plan
The Kentucky State Fair Board has approved the 50-year lease described above, which would require a $45 million investment from the Ed Hart-led group.
The plan targets 2014 for Kentucky Kingdom's re-opening.
Hart has scheduled a news conference for 2:30 p.m.
We'll have more details soon.
Update 2:15 p.m.: Hart's Group Now Must Provide the Financing
Hart's group must get that $25-million loan for the lease to go into effect.
Here are some more details from the fair board: The operator group's rent will be $475,000 per year starting in 2014. It increases $50,000 a year for 15 years with a $1.2 million cap for the rest of the years. But the fair board will give $1.25 per parking visitor capping at $450,000.
The operator group must invest $13 million in 2013 and 2014.
All of the investments — including $20 million from Hart's group — become property of the fair board.
The lease includes 57 acres plus possibly four more for water park expansion; the 50 year lease has four additional five-year renewal options.
The lease can also be sold to an "experienced park operator" with the fair board's approval.
"This lease agreement is a fair deal for both our state taxpayers and for the investors seeking to operate the park," said fair board chairman Ron Carmicle in a statement. "The lease protects taxpayers from shouldering private debt and ensures that the park operators have every opportunity to succeed. As soon as the private financing is finalized, the countdown begins to ra reopened and reinvigorated tourist attraction."
We're awaiting word from Hart. Should speak soon.
Update 2:35 p.m. Here's the Fair Board's Summary of the Terms
1. Kentucky Kingdom LLLP to invest $45 million to improve amusement park with
opening in spring 2014.
$20 million in equity investment and a $25 million loan. All improvements become
property of Kentucky State Fair Board (KSFB).
$13 million to be invested in 2013 and 2014, of which $3 million going into debt reserve fund as required by Lender; $2 million invested upon completion of 2014 season; $2 million invested upon completion of the 2015 season; and $3 million invested upon completion of 2016 season. Development plan set out in No. 6 commences after 2017 season.
2. Lease is for a 50 year initial term with four additional five-year renewal options.
3. 57 acres plus a potential four acres for expansion of the water park.
4. Rent starts at $475,000 per year beginning in 2014 and increases $50,000 a year for 15
years until it caps out at $1.2 million for the remainder of the initial term. KSFB receives 5 percent of the gross revenue in excess of $25 million for each operating year.
5. Parking -KSFB to pay Kentucky Kingdom $1.25 per visitor up to $450,000.
6. Kentucky Kingdom to spend at least $1 million per year (for the remainder of the initial term of the lease) and capping out at $2.5 million a year or somewhere in between based on a formula that is based on projections. All funds must be spent on park during initial term. If park is sold (after KSFB approval), then KSFB gets all funds in maintenance reserve account.
7. All rides/improvements purchased with $45 million will become the property of the state. Kentucky Kingdom may lease future rides with other development funds in order to leverage more new rides to increase attendance. When the leased rides are paid off, they also become the property of the KSFB.
8. Mortgage will be placed on property to secure a portion of the $25 million loan taken out by Kentucky Kingdom with bank. This is pursuant to KRS 56.515.
9. Lease can be sold with the consent of the KSFB to experienced park operator.
Update 4:10 p.m.: New Group Has What Six Flag's Didn't
Hart said that although the state will not guarantee the loans, the public investment expected in the final plan covers the annual debt the group will owe. This includes a five-year commitment of $100,000 annually from the Louisville Convention and Tourism Bureau for marketing while the park reopens. It also includes the fair board's parking fee that will be paid to the Kentucky Kingdom group and local and state tax incentives that have yet to be approved.
“That allows us to take our operating cash and constantly reinvest it in the facility," Hart said. "That’s what Six Flags didn’t have, that constant reinvestment. That’s why this will be a different experience."
Hart says he must wait for state approval of tourism tax credits before securing the loans. But he says the group plans to invest in the park before that and will be on the ground in February.
Update 4:54 p.m. What Rides Will Be Open
Hart tells the media all the rides will eventually be open except the Shuttle Loop steel rollercoaster which can't be refurbished. Also, Twisted Twins will not be open in the first year, he says. That could be opened in the first two or three years, he says. Further, the group is investing in two additional thrill rides; what those will be Hart did not say. Lastly, the group plans to double the size of the water park.
"I assure you we will have plenty of attractions to make Louisvillians and Kentuckians and our neighboring state, people visiting us, very very please and happy to visit the facility," he said.
Update 5:25 p.m.: Hart Promises Attractions
“I assure you we will have plenty of attractions to make Louisvillians and Kentuckianas and our neighboring states, people that visit us very very please and happy to visit the facility," Hart said.