LOUISVILLE, Ky. (WHAS11) -- After three years of false starts, the long-awaited rebirth of Kentucky Kingdom is now slated for May 2014 after the Kentucky State Fair Board on Thursday approved a preliminary 50-year lease with a group of local investors.
“It is gratifying to see this project finally coming together," lead developer Ed Hart said. "We’ve been at it for a long time."
Two final steps remain -- the approval of state tourism tax credits and the private financing of a $25 million loan. The private investors are putting up $20 million in cash.
The investors plan to pour $35 million of their $45 million initial investment into the park in the first year, including millions of dollars, immediately.
"We're fully confident we can get it done but only because we're taking that entrepenurial risk now," Hart said.
The deal with the Fair Board gives Kentucky Kingdom, LLLP 90 days to secure the financing. Hart said with the help of city and state incentives and tourism bureau support, he's confident their local bank will approve the $25 million loan.
Kentucky Kingdom LLLP will get a cut of the fairgrounds parking proceeds, roughly $900,000 per year. Incentives from the city, state and the Louisville Convention and Visitors Bureau would bring the level of public support to $2.2 million each year, the same amount Hart expects in debt service on the loan.
"So, we've married the two," Hart explained at a news conference. "This means that Kentucky Kingdom is virtually debt free."
"It's important because it allows us to take our cash and to continue to reinvest it in the facility," Hart continued. "As we all know the very reason why Six Flags Kentucky Kingdom fell on hard times is because they had no money to invest in the facility - all the money went to handle their debt service."
The plan calls for all but one ride to eventually reopen. Hart says the Greezed Lightnin' rollercoaster is obsolete - but two new major thrill rides will be added and the water park doubled in size.
"We will be bringing in additional attractions," Hart said. "You can do an awful lot with $45 million."
The park has been rotting away since Six Flags walked away three years ago - a drag on the Fair Board's balance sheet and an eyesore.
"This is the front door of our facility," said outgoing Fair Board Chairman Ron Carmicle, "quite honesty in some context this is the front door of Louisville."
After previous attempts to reopen Kentucky Kingdown fizzled, the Fair Board's lead negotiator and new chairman, Mark Lynn, said this had to happen now.
"Common sense and reason came to the forefront in every case," Lynn said, "which was very surprising because in a lot of negotiations that doesn't happen. But we all wanted the same goal - wanting the same goal was critical we need the park open."
Representatives of a grassroots group, SaveMyPark.com, which launched a facebook campaign to lobby for Kentucky Kingdom's reopening, attended the news conference.
Rob House said the public support was essential to motivating public officials to seal the deal.
"Absolutely," House said. "It's great to see such wonderful community involvement - we have what - 4500 members to the page and we just want to say thank you to all of them and to everyone involved."
Reaction to Kentucky Kingdom re-opening:
Following the agreement between the Kentucky State Fair Board and the new owners of Kentucky Kingdom in re-opening the amusement park, the city is providing three financial incentives to assist in the redevelopment, Mayor Greg Fischer announced.
First, Metro Government will rebate 100 percent of the occupational taxes collected at the re-opened amusement park for 10 years, which will produce an estimated $100,000 a year.
In addition, Fischer said the city will contribute another $100,000 yearly for 10 years from the city’s
General Fund and the Louisville Convention and Visitors Bureau will provide $100,000 a year for five years.
The total contributions from the city and convention bureau would total between $2 and $2.5 million.
“This is a great partnership and an example of the community stepping up to give new life to a facility that is essential for the jobs and quality of life it brings to our city,” Fischer said.
Fischer, along with Metro Council President Jim King and Councilman Kelly Downard, have been working for months to craft the deal.
“The Kingdom is one of the keystones of our city,” King said. “It’s been missed because of its effect on jobs, tourism and wholesome fun in the region. I’m thrilled the Metro Council could play a role in bringing it back.”
Fischer also said the re-opening is important because of the number of summer jobs for teens that the park will create.
Kentucky Kingdom, LLLP :
Kentucky Kingdom is a limited partnership formed by Ed Hart, Ed Glasscock, Bruce Lunsford, and the Al J. Schneider Company, represented by its President, Mary Moseley. KK is managed by its general partner, Kentucky Kingdom Redevelopment Company.
Mary Moseley responded to the affirmative vote by the Fair Board with the following statement, “The Fair Board’s approval of a 50-year lease with our company means that a crucial step toward the reopening of Kentucky Kingdom has been taken.”
Ed Glasscock remarked, ”We are pleased that the various parties involved in this process have joined together to make the reopening of Kentucky Kingdom the public/private partnership we always thought it could be. Through the efforts of the Kentucky State Fair Board (KSFB) and the Kentucky Finance and Administration Cabinet, the financial incentives and support pledged by the Mayor’s office, the Metro Council, and the Louisville Convention & Visitors Bureau, we can now pursue completion of the financing package we have been working on to bring Kentucky Kingdom back to life. The next step in this process will be to receive approval from the state of our request for tourism tax credits, which we understand the Tourism Development Finance Authority will soon be considering.”
KK’s initial investment totals $45 million and consists of $20 million in equity provided by the partners in KK and a bank loan for $25 million. Of that total, $42 million will be devoted to improvements at the park and at least $3 million will be used as a debt reserve fund, which is required for the bank loan. The lease terms stipulate that, of the $42 million to be invested in improving Kentucky Kingdom, $35 million will be funded immediately and no less than another $7 million will be funded between 2014 and 2016. Thereafter, KK is committed to investing as much as $2.5 million (and never less than $1 million) each year for the duration of the 50-year lease. Ed Hart commented, “Of course, nothing prevents us from investing even more if business conditions warrant. Our track record in this regard speaks for itself.”
In addition, Metro Louisville and the Louisville Convention & Visitors Bureau have pledged approximately $250,000 per year toward support for the project’s financing.
Terms of the lease agreement also include the resolution of a $1.4 million lawsuit filed against the KSFB on behalf of Ed Hart more than a year ago.
Hart remarked, “It is gratifying to see this project finally coming together. We’ve been at it for a long time. We are beginning immediately to mobilize our staff so they can get started on the tremendous amount of work that must be done to prepare Kentucky Kingdom for a May, 2014 opening. We believe we are up to the task – and speaking on behalf of my partners and our management team, we look forward to the challenge.”
Kentucky State Fair Board:
Approval of a new lease agreement today by the Kentucky State Fair Board moves the reopening of Kentucky Kingdom to as early as spring 2014. The investors, Kentucky Kingdom LLLP, now must secure the final private loans – worth $25 million - before the park can open.
The investors have agreed to initially invest $45 million in the park, which has been closed since
“This agreement is great news for the families who will visit Kentucky Kingdom and will
certainly be a shot in the arm for local and regional tourism,” said Gov. Steve Beshear. “This
lease will also mean hundreds of jobs as well as much-needed income for the Fair Board. We
are pleased that we were able to reach a mutually agreeable lease so the park can reopen as
quickly as possible.”
The Fair Board and Kentucky Kingdom investors agreed to a 50-year lease after the state issued
a request last year seeking proposals to reopen the park. Kentucky Kingdom LLLP was the only
entity to submit a proposal. The lease includes a provision that will allow for the expansion of
the water park at Kentucky Kingdom. The state’s Finance and Administration Cabinet
negotiated the lease.
“This lease agreement is a fair deal for both our state taxpayers and for the investors seeking to
operate the park,” said board chairman Ron Carmicle. “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 a reopened and
reinvigorated tourist attraction.”
The rental income starts at $475,000 the first year for the Fair Board and will increase by
$50,000 a year for the first 15 years of the agreement.
Kentucky Kingdom is required to spend $13 million in 2013 and 2014 to get the park open. It
must spend another $7 million on the park through the 2016 season. After 2017, it must spend at
least $1 million annually on the park.
Kentucky Kingdom will seek state tourism development incentives through the Kentucky
Tourism Development Finance Authority.
Details of the lease agreement are below.
Summary of Kentucky Kingdom LLLP Lease Agreement
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
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.
10. Lease may be terminated by either party within 90 days after execution if the financing
package is not acceptable to either Kentucky Kingdom or KSFB. Finance and
Administration Cabinet and KSFB will be involved in negotiations with bank to ensure
that the financing details are known to them during the financing acquisition phase.
11 After lease is signed, if park requires major unforeseen work not covered by Kentucky
Kingdom’s projections, it may terminate lease within 90 days of execution of lease.