Wallace G. Wilkinson - Business Ventures

Business Ventures

Wilkinson opened Wallace's Book Store in June 1965 after a local stockbroker helped him raise the initial capital needed through a public stock offering. By this time, Kentucky had adopted free textbook legislation at the behest of Governor Julian Carroll, so Wilkinson transitioned to selling college textbooks to students at the University of Kentucky. Throughout the 1960s, Wilkinson refused to pay the state sales tax on his transactions; he and Joe Kennedy, the owner of Kennedy Book Store, both claimed that paying the tax put them at a competitive disadvantage with the university's book store, which did not pay state taxes because it was operated by the university, a tax exempt entity. In 1977, the state Board of Tax Appeals ruled that all three bookstores should have been paying the tax, but by this time, the statute of limitations had expired, and none of the three were required to pay any back taxes. Wallace's Book Store continued to expand rapidly, opening retail stores in twenty-eight states and becoming one of the country's largest book firms. In January 1971, he considered issuing more stock to raise capital to buy Providence, Rhode Island-based Barnes and Noble, but the executive committee of Wallace's was averse to purchasing a company so far away and blocked the move. In April 1977, Wilkinson was cited for false and misleading advertisement in conjunction with claims made in radio ads for Wallace's Book Store claiming they were offering the first discounts in history on new college textbooks. In a court filing, Wilkinson admitted the claims were untrue, promised to stop airing the ads, and agreed to refund any money overpaid by customers.

With the success of his chain of bookstores, Wilkinson pursued other business ventures in the fields of real estate development, farming, transportation, banking, coal interests, and construction. He purchased several private aircraft to help him tend to his diverse interests throughout the state, and in 1973, created Wilkinson Flying Service to keep the planes busy when he wasn't using them. After investing in the unfinished Bluegrass Commerce Center in Lexington in early 1977, he purchased one-third interest in the Purcell building on Lexington's Vine Street later that year. The building was only partially occupied, but had become more valuable because of the opening of nearby Rupp Arena in October 1976 and a new Hyatt hotel in May 1977. Developers Donald and Dudley Webb developed plans to construct the Vine Center on the block; by May 1979, they had options to buy every property on the block except Wilkinson's interest in the Purcell building. Unwilling to meet Wilkinson's asking price, they instead formed a partnership with him to co-develop the Vine Center. When Wilkinson eventually sold his interest in the venture at the end of 1981, he turned a profit of at least $1.3 million on his investment. Next, he formed a public-private partnership with the city of Lexington to construct the Capital Plaza Hotel in 1983. The city provided $3 million in capital and another $8.5 million in guaranteed loans to supplement Wilkinson's $1.15 million investment. Wallace's Book Stores was given 95% ownership in the hotel, allowing the company to shield $2 million in assets from federal income taxes and claim over $400,000 in tax credits.

Despite playing a major role in the Lexington real estate market, Wilkinson was fiercely protective of his privacy; for a time, he even refused to allow newspapers to publish pictures of him. His public profile began to rise when he announced plans to construct the 50-story World Coal Center on the corner of Main and Limestone streets in Lexington. When completed, it would be the largest office complex between Atlanta and Chicago. Wilkinson hoped that all the major coal companies in the state would relocate their offices to the center, making it a hub for the international coal market. Shortly after Wilkinson demolished the historic Phoenix Hotel to make way for the building, the coal market experienced a pronounced lull, and the empty lot where the proposed coal center would have stood was derided as "Wally's Folly" and "Lake Wilkinson". In 1984, the Lexington-Fayette Urban County Government secured a lease from Wilkinson to develop a temporary municipal park on the site. Wilkinson conceded that he would not be able to develop the proposed World Coal Center in the near-term, and Lexington mayor Scotty Baesler wanted to improve the property before the city hosted the finals of the 1985 NCAA men's basketball tournament at Rupp Arena. In early 1985, Wilkinson struck a deal with the state and urban county governments to retain the park and build a public library and parking garage while allowing Wilkinson to construct and operate a 21-story apartment complex above the garage. Critics claimed that the city-county government bailed Wilkinson out of a bad investment by purchasing the property from him and by giving him a government-subsidized, low interest rate on his $12 million mortgage for the apartment building.