Posted: Aug 7, 2012 1:22 PM
Updated: Aug 7, 2012 1:26 PM
LOUISVILLE (AP) - The KFC Yum Center has used much of a reserve fund earmarked for renovations and repairs to make regular debt payments.
The Courier-Journal cited documents it obtained under the Kentucky Open Records Act in reporting that the reserve account had dwindled to less than $4,000 from a balance in April of more than $3 million.
Arena officials say the action was forced because tax revenues didn't meet expectations. Officials say they expected taxing district revenues of $14.9 million, but received only about $6.1 million.
Renovation funds can be used for debt payments as long as US Bank, the bond trustee, approves the action. Documents show a US Bank vice president did sign off on the transfer.
"We really need to build up one or two reserve accounts, not just for maintenance and future capital improvements, but for other things that might come up," said Dan Ulmer, a member of the Louisville Arena Authority that oversees arena finances. "The reserves are just depleted."
The use of the reserve money isn't a concern, though, according to arena authority leaders and the building's new operator. They say that's because no significant repairs have been needed at the Yum Center since it opened in fall 2010.
A new arena manager, Los Angeles-based AEG, takes care of routine maintenance. The company took over the responsibility last month from the Kentucky State Fair Board.
Arena officials say revenue guarantees from AEG of at least $1 million annually from operations should be enough to increase the amount in reserves.
The Arena Authority set aside the $3 million as part of the agreement with lenders who bought $349 million in bonds to pay for constructing the 22,000-seat Yum Center.
That remains a "goal that we will strive to get," said chairman Larry Hayes, who added that making payments from reserve funds is "not the way we want to do business. . We're going to build those funds up."
Information from: The Courier-Journal, http://www.courier-journal.com
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