By Shelby Brown–
U of L’s board of trustees heatedly debated the reworked KFC Yum! Center lease agreement before it passed 7-2 with four abstentions, one being John Schnatter.
The revised lease agreement asks U of L pitch in to pay off arena debts. Seat sales at the arena aren’t generating enough money to cover the payments, which are due in 2019. Despite ULAA and the Louisville Arena Authority passing the revised lease, trustees’ uncertainty nearly tabled the deal.
“This was set up to be doomed from day one,” Schnatter said, referring to the original lease agreement, via video conference. Schnatter and other trustees said the past could repeat, eventually forcing U of L to pay more.
When asked what his ideal solution would be, Athletic Director Tom Jurich said he would sell the Yum! Center.
The Yum! Center was financed in 2007 before the economy crashed. With that downturn, the arena’s projections for tax increment financing (TIF) fell short. Attorney Mike Herrington said future TIF projections must be more realistic.
Trustee Nitin Sahney said there’s no assurance Herrington’s numbers will work out.
“I think this is a bad deal. I think we’ve been put into a very bad situation and I think there’s no assurance this will get solved in the future,” Sahney said. “Here we are counting pennies for the university and the staff and everyone else. It’s not the $2.4 million a year, it’s the term of the lease and that accounts for a lot of money.”
Trustees eventually passed the revised lease when reminded of it is time-sensitive nature.
Trustees publicly disclosed conflicts of interest before board agenda items were addressed. Trustees Bonita Black and Jim Rogers recused themselves from the arena agreement vote, saying they worked on the arena.
Last week the ad hoc committee for board governance met to revisit the university’s conflict of interest policy.
“We’re excited about doing some updates and keeping the university on solid footing in that regard,” Black said.
In SAC’s latest letter, the investigation’s scope widened to include conflicts of interest. U of L currently faces up to nine possible violations.
In an effort to be in compliance, trustees must attend six hours of training in fiduciary responsibility. Fiduciary responsibility involves stewardship over funds, namely between beneficiaries and trustees. Black says SACS looks for independence in trustees, making sure they’re without “undue influence.”
Postel said U of L is in the process of completing reports to send to SACS, nine reports are due, two of those by the end of July. Postel and Board Chair David Grissom will travel to Atlanta in August to touch base with SACS before the September site visit. U of L will receive a report after the September visit the following month and will have the opportunity to respond before the final decision is made in December.