Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Tourism, Small Business, and Information Technology was held on Wednesday, July 5, 2017, at 10:30 AM, in Room 131 of the Capitol Annex. Senator Alice Forgy Kerr, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Forgy Kerr, Co-Chair; Representatives Diane St. Onge, Co-Chair, and Tommy Turner, Co-Chair; Senators Perry Clark, Rick Girdler, Ernie Harris, Stephen Meredith, Wil Schroder, Reginald Thomas, and Max Wise; Representatives John Blanton, Matt Castlen, Jeffery Donohue, Chris Fugate, David Hale, Chris Harris, Angie Hatton, Toby Herald, Dan Johnson, Kim King, Michael Meredith, Russ Meyer, Robby Mills, Rick Nelson, Sannie Overly, John Sims Jr., and Jill York.
Guests: Don Parkinson, Secretary of Ky. Tourism, Arts, and Heritage Cabinet; Regina Stivers, Deputy Secretary of Ky. Tourism, Arts, and Heritage Cabinet; Donnie Holland, Commissioner, Ky. Department of Parks.
LRC Staff: John Buckner, Chip Smith, and Emma Mills.
Tourism, Arts and Heritage Cabinet FY 2016-17 Performance Highlights
Don Parkinson, Secretary of the Kentucky Tourism, Arts and Heritage Cabinet spoke about the cabinet, its agencies, and the challenges of the cabinet. In overview, he thinks last year was a good year. All of the state funded agencies within the cabinet did better than budgeted and will give back $3.5 million to the state general fund primarily due to improvement in parks. The cabinet met the goal of a 9 percent overhead cut and has improved customer satisfaction scores. He introduced members of his staff and highlighted the accomplishments and hard work of the employees of the cabinet’s various agencies.
Secretary Parkinson discussed the private/public partnerships (P-3), which enable the state and cities to secure capital to get projects completed. Kentucky was the last state in the region to have P-3 legislation. There are 11 active projects, including two private RFPs (Request for Proposal) which would enable private partners use and maintain state property, generating income for the state.
In regards to development in Jefferson County, the secretary mentioned the approved name change of the Kentucky State Fair Board to Kentucky Venues to help solicit new business from around the country and updated on the Louisville International Convention Center’s $207 million renovation and expansion, which will re-open in July of 2018. This has spurred the development of many hotels in the Jefferson County. Secretary Parkinson also mentioned the Kentucky Exposition Center and highlighted some of the events that took place there this past year.
The secretary went on to discuss the Kentucky Horse Park. Revenue is up 5.6 percent at the park and $450,000 ahead of budget. In the future, the park is looking to own events in addition to renting out to outside events such as the Rolex event. The United States Equestrian Federation signed a 40-year ground lease on three acres of land. The lease allows the Federation to construct a two-story, approximately 35,000 square-foot office building; construction will begin in late 2017.
The secretary spoke about the Kentucky Department of Fish and Wildlife. The emphasis of the department is not only hunting and fishing but also conservation. An example of the conservation work done by the department is the elk herd expansion in eastern Kentucky. The department began with a small herd 20 years ago which is up to 10,000 elk now, which will be a big draw to Eastern Kentucky. Besides elk, the Kentucky Department of Fish and Wildlife stocks six million fish per year in ponds, rivers and lakes around the state. The department is also entirely self-funded through fishing and hunting licenses. Among the challenges facing the Department of Fish and Wildlife is dealing with Asian Carp, an invasive species of fish increasingly found in Kentucky waterways.
Regina Stivers, Deputy Secretary of Ky. Tourism, Arts, and Heritage Cabinet discussed the Kentucky Travel and Tourism Agency, the marketing arm of the state. Tourism is the 3rd largest revenue producing industry in Kentucky with $14.5 billion in economic impact in 2016. Tourism provides 193,000 jobs, generates $3.1 billion in wages and supplies $1.4 billion in tax revenue. Deputy Secretary Stivers discussed about Kentucky diverse tourism options, from outdoor recreation to horses to faith based tourism destinations such as The Ark. The fastest growing segment of tourism is international tourism to Kentucky, which the cabinet has aggressively sought.
The deputy secretary reviewed the Heritage Council, emphasizing the impact of the Historic Preservation Tax Credit. Since instituting the tax credit ten years ago, Kentucky has seen $900 million in private investment in historic properties around the state. She pointed out that 2015 saw $300 million in investments due to the Enhanced Tax Credit that applied to Jefferson and Fayette counties only. The Heritage Council recently moved to the Barstow House, adjacent to the Thomas Clarke history center. The move provides income for the Historical Society and better access to preservation and security of historic documents from across the state. In addition, the cabinet will be looking for future funding to digitize documents that the Heritage Council oversees.
The Historical Society has seen a 28 percent increase in revenue, mostly due to facility rentals, proactive marketing, the Local History Trust Fund and revenue from historical markers. Currently the Historical Society has a new exhibit called “The People of Kentucky” to celebrate Kentucky’s 225th anniversary. The Society, amongst other projects, is embarking on a state-wide listening tour to listen to stories about what residents think about Kentucky; the tour will also visit Governor’s scholars at Murray state, Northern Kentucky University and Morehead to speak with students in the program.
Deputy Secretary Stivers discussed updates to the Kentucky Artisan’s Center in Berea. New management under Todd Finley, who is helping to provide income to over 700 small businesses in the region. The center has 60 annual demonstrations and events throughout the year, has seen a 38 percent increase in group tours, and provides $1.57 million in revenue.
Continuing with the presentation, Secretary Parkinson discussed the Kentucky Tourism Development Finance Authority, which focuses on economic development. In the last year the Authority has worked on 10 projects, $157 million invested with a $900 million economic impact to the state. The Authority has helped with financing of visitor centers at breweries and distilleries around the state, the Ark Encounter facility and is active in developing the film industry in Kentucky.
Some of the most substantial improvements this year in the state has been to the park system. Secretary Parkinson reviewed the results of an $18 million state investment to the park system. For FY17, the state sold 9,000+ more hotel rooms than in 2016 and increased revenue by $2.1 million over 2016 with a total economic impact of $889 million despite having two of the largest lodges closed for renovations.
Kentucky State Parks $18 Million “Refreshing the Finest” Update
Donnie Holland, Commissioner of Kentucky Department of Parks, continued the presentation with an overview of state parks. In review, there are 49 state parks, 17 resort parks, 14 golf courses, 785 full-time staff with a $93.1 million generated in tax revenue. Commissioner Holland discussed the $240 million in deferred maintenance costs over the years. The state granted the park system $18 million to help with safety and aesthetic upgrades of which 69 percent has been used. Examples are upgrades to Barren River (electrical repairs, lodge upgrades, pool upgrades), Blue Licks Battlefield (pool upgrades, new museum roof), and Buckhorn Lake (upgrade to Convention Center interior, support beams and roof work, cottage repairs) amongst other various upgrades. Jenny Wiley State Park and Greenbo Lake State Park were shut down to upgrade facilities.
The Department of Parks is trying to invigorate foundations or friends investments groups. In the last year and a half, friends’ groups have raised and invested $1.4 million for park and marina upgrades. For example, Lake Malone’s marina needed to be condemned due to lack of state funding to be able to maintain the marina. A local group raised enough money to build a new marina without needing to use state funding.
With regards to Return on Investments, Commissioner Holland pointed to 9,000+ more rooms sold in fiscal year 2017 over 2016, and customer satisfaction scores have increased 90 percent in the same time period with $50 million in revenue for the state. Commissioner Holland feels that none of these improvements could have been done without the $18 million investment by the state.
The department also partnered with the internet site Expedia.com to improve lodge room sales this year. Room sales improved roughly 8 percent almost immediately with this partnership. Commissioner Holland indicated plans to expand the department’s presence on the internet in the near future. Along with an expansion on the internet, Holland pointed to the hiring of hotel management professionals who brought in up-to-date management ideas and practices as an additional reason for the uptick in room sales across the state.
Commissioner Holland points out that though there have been a number of much needed repairs made to park structures, there are still problems that need to be addressed. The cost of deferred maintenance for state parks now sits at $234 million. For example, Fort Harrod conference center has been shut down due to rotted wood, mold and leaks, and the My Old Kentucky Home amphitheater is in bad shape as well. Currently, the state holds $391 million in insured assets in the park system. Holland recommends that an annual rate of 2.20 percent be put aside for annual maintenance costs in the future.
Looking ahead to FY2017, Commissioner Holland is upbeat about trends and events affecting the state park system. In August 2017, thousands of tourists are expected in western Kentucky to experience the full solar eclipse. The parks expect strong bookings and occupancy rates at lodges around the state. Along with the expansion of sponsorships/naming rights as well as the expansion of using online booking options. Commissioner Holland also pointed out how impressed he has been with the employees of the park system since starting with the park system last year.
Responding to a question from Representative Donahue regarding golf courses around the state, their self-sufficiency or continued economic viability, Commissioner Holland acknowledged the state loses about $3 million a year on the state’s 14 golf operations. Two golf courses have been closed in the last year due to low utilization (2 percent utilization); a third will be closed due to 7 percent utilization as well. Given the national downward trend of interest in golf as a sport, the park system is closely evaluating each individual remaining golf course. The Department of Parks is putting more resources into golfing, including a Director of Golf to attempt to revitalize interest in the state’s golf courses.
Representative Donahue mentioned newspaper articles regarding cancelled conventions with the Louisville International Convention Center due to passage of SB17 and queried the panel about the cabinet’s plans to address possible loss of tourism and conventions. In response, Secretary Parkinson confirmed two cancelled conventions due to SB17 but didn’t know what the long term effects to the state’s tourism would be, but acknowledged that if the trend continued it could be a problem for state tourism since the industry is so reliant on the convention center in Louisville.
In response to a question from Senator Schroder about transient room tax and Airbnb and who enforces collection, Secretary Parkinson said the Department of Revenue would enforce those laws.
Responding to a follow-up question about the cancelled conventions asked by Senator Schroder asked, Secretary Parkinson confirmed the two conventions were cancelled specifically because of SB17.
In response to a question from Senator Thomas, Secretary Parkinson discussed the naming rights regulations that had just taken effect June 30th, 2017. He said there have been no discussions about individual naming rights for buildings, but the cabinet is not in the business of renaming parks, rivers, or roads. He emphasized it was more about renaming lodges or events but will expect to see progress on this in the next three months.
Commissioner Holland, responding to a question from Representative Hale, confirmed there were 9,000+ additional room sales for FY2017 over FY2016 at state run lodges. The average rate for a room went up $5.00 to an average daily rate of $99.00 around the state (rates vary by season).
Representative Hale followed up with a question regarding the usage of golf courses around the state. Commissioner Holland explained that capacity at a golf course would be 40,000 rounds per year; My Old Kentucky Home course averages 21,000 rounds per year, the most in the state.
In response to a question from Representative King about the demographics of park visitors, Kristin Branscomb, Commissioner of Tourism, indicated that the cabinet’s target demographic is women, ages 25-54, household income of $75,000+. Women in this group tend to make the traveling plans for families. Additional visitor profiles are available from the commissioner upon request.
In response to a question regarding The Ark Encounter from Representative Blanton, Secretary Parkinson felt the park is exceeding the expectations of the owners, though he did not have any numbers available. Commissioner Branscomb noted that Grant County (location of the park) had 128 percent increase in economic impact from the first six months of the park’s opening.
Responding to a questions from Representative Meredith, Commissioner Holland says that the third golf course in the state slated to close is the Kincaid Lake State Park course and the locations of the stand-alone courses in the state are Mineral Mound, Yatesville Lake, Grayson Lake, Lincoln Homestead, and My Old Kentucky Home.
In a response to Representative Meredith’s query about the status of federal assets that had been passed to Fish & Wildlife in Western Kentucky, Commissioner Greg Johnson with Kentucky Fish & Wildlife updated the committee on the plans for these decommissioned dams in question. Green River dam number 6 has been removed and is undergoing a feasibility study.
Announcements
Per Co-Chair Turner, the next meeting of the Interim Joint Committee on Tourism, Small Business and Information Technology will be August 18th, 2017 at 1:00 p.m. at the Knott County Sportsplex, pending approval.
Adjournment
There being no further business, the meeting was adjourned at 11:59 a.m.