Sunday, May 27, 2001

State tax break spurred N.Ky. attractions

By Patrick Crowley
The Cincinnati Enquirer

        NEWPORT — Northern Kentucky has been the clear beneficiary of a state tourism tax break that has spurred construction of nearly half a billion dollars worth of attractions: a riverfront aquarium, an elaborate entertainment complex and a motor speedway.

        The Tourism Development Act passed in 1996 allows developers to receive a tax rebate of 25 cents of every dollar spent at a tourist attraction for up to 10 years.

        Only four projects have qualified in the five years since the law's passage — three in Northern Kentucky, one in Louisville.

        But state officials are hoping the tax credit - part of a bill passed by the Kentucky General Assembly with hopes of helping struggling mountain counties - now will help bring tourism projects and development to rural parts of the state.

        To be eligible, a project must cost at least $1 million, draw at least 25 percent of its visitors from out of state and be open to the public a minimum of 100 days a year.

        Private developers are considering using the tax credit as an incentive to construct lodges and possibly cabins at two eastern Kentucky state parks where tax dollars are being used to build golf courses, said Rep. Rocky Adkins, D-Sandy Hook, one of the original sponsors of the tax credit legislation.

        “The whole tourism tax incentive program has worked really well in a place like Northern Kentucky, where you already have a great infrastructure for tourism with all the people coming into that area and other attractions for them to visit,” Mr. Adkins said from his statehouse office in Frankfort.

        “But the act really hasn't gotten into the rural areas like we wanted it to,” Mr. Adkins said. “So we've made some changes over the last few years and hopefully that's going to make a difference.”

        Developers are also exploring using the incentive at three other state parks elsewhere in the state, said David Lovelace, deputy secretary of the Kentucky Tourism Development Cabinet in Frankfort.

        Mr. Lovelace would not name the locations, citing the confidentiality of the developers' proposals.

        “But I think it's pretty safe to say that without the incentives the state is now offering,” Mr. Lovelace said, “we wouldn't have the interest in these projects.”

        The incentives have helped fuel Kentucky's growing tourism industry, said state Rep. Jim Callahan, D-Wilder, a co-sponsor of tourism tax credit bill.

        The Tourism Development Cabinet reported earlier this month that in 2000 statewide tourism spending had its largest increase in seven years — 7.6 percent — at $8.8 billion, $624 million more than in 1999.

        Spending by tourists in the 13-county Northern Kentucky region jumped 11.8 percent last year to nearly $727 million, the largest increase of any part of the state.

        Those figures were fueled by the $150 million Kentucky Speedway in Gallatin County, which opened last year, and the $40 million Newport Aquarium on the Ohio River in Campbell County.

        The speedway and the aquarium, along with the Newport on the Levee entertainment project - a $200 million complex of movie theaters, shops, restaurants, night spots and a hotel being built next to the aquarium - were the first three projects to qualify for the tourism tax break.

        The levee is expected to open this fall.

        “I really don't think any of these projects would have happened as soon as they did, or maybe not at all, without this tax break,” said Tom Caradonio, president of the Northern Kentucky Convention and Visitors Bureau.

Louisville project in works
               That's definitely the case with the fourth project that has qualified for the tax break, The Louisville Glassworks Lofts, according to Bill Weyland, the developer of the project.

        The $11 million project includes art studios, a cafe, a gallery, a glass-blowing workshop and 81 loft apartments.

        Because the apartments don't qualify for the tourism tax credit, only $3.9 million in tax breaks have been approved for the Glassworks project.

        “But this project wouldn't have been feasible without the tax credit we'll receive from the state,” Mr. Weyland said. “It takes a substantial investment to make a tourism attraction work on a regional basis.

        “This tax break gave us the incentive we needed to make our project happen,” he said.

        As a member of the Kentucky House budget committee in 1996 that oversaw funding for state tourism, Mr. Adkins said he and other lawmakers were looking for way to increase tourism in Kentucky.

        They decided to use an approach similar to the state's Economic Development Cabinet, which has used tax and other financial incentives to lure businesses to Kentucky.

        “We thought by giving developers an incentive to build in Kentucky, they would come here,” Mr. Callahan said. “And at least so far I've been real happy with how its turned out, especially here in Northern Kentucky.”

Rural areas targeted
Lawmakers revisited the act in 1998 and again in 2000, making adjustments that would funnel more attention and hopefully development to rural areas.

               Last year, the state approved $11 million to build golf courses at two eastern Kentucky state parks - Yatesville Lake in Lawrence County and Grayson Lake in Carter County.

        Developers are now looking at building lodging in those parks because of the state-funded golf courses, Mr. Adkins said.

        The lodges could then be eligible for the tourism tax credit, he said.

        Another change made last year was the establishment of a $1.5 million loan fund that could make funding available to some of the smaller developments and projects in rural areas, Mr. Lovelace said.

        “I think at one time tourism wasn't a big industry for Kentucky,” Mr. Adkins said. “People passed through but didn't stay.

        “Now, we're looking at ways to increase tourism, and it appears we've gotten on the right track,” he said.


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