Second convention center project in Jonesboro delayed; Officials eye fall 2018 completion date

by George Jared (gjared@talkbusiness.net) 494 views 

A proposed convention center/hotel/restaurant project on the Arkansas State University campus has been delayed.

O’Reilly Hospitality Management of Springfield, Mo., is waiting for the city of Jonesboro to approve construction and architectural plans for a 202-bed Embassy Suites Hotel, the 40,000-square-foot Red Wolf Convention Center, and a Houlihan’s Restaurant, company CEO Tim O’Reilly told Talk Business & Politics. The project is expected to cost about $50 million.

“Once we get the final approval we’ll be ready to go,” he said.

City of Jonesboro Communications Director Williams Campbell told Talk Business & Politics the city has tentatively approved those plans, but fire and storm water inspections still need to be completed. A timetable for completion was not released.

The project was originally slated to be completed in early 2018, but now it will probably be done by the start of the fall semester next year, he said. When the project was first proposed, OHM officials didn’t think it had to be subject to city approval, he said.

OHM has leased a swath of ground on the ASU campus, and O’Reilly said it was their belief the land is owned by the state, and not under city authority. There’s no specific law or ordinance that clearly states OHM had to get city approval, but the company decided it was better to try and work with the city to get the project completed, without controversy, as quickly as possible.

The delay comes after another convention center project has stalled in Northeast Arkansas’ hub city. Northern Arkansas Hotel and Convention Center’s plans to build a 78,000-square-foot convention center and 165-bed Hyatt Place Hotel just off Caraway Road along the city’s hotel row, but a primary investor has not allocated funds. Construction on that project has stopped after footings were poured.

Jonesboro’s A&P Commission dedicated $300,000 towards advertising revenue, and up to $600,000 in hotel tax credits towards that project. Since it has stalled, a scheduled $75,000 payment this year has been rescinded, and A&P commissioners have sent a letter NAHCC CEO Chris Keller asking that an already paid $75,000 installment be placed in a city controlled escrow account until the investor problems are resolved.

OHM was denied when it asked for tax credits and other considerations from the A&P Commission. OHM initially asked the Commission for almost $1 million in hotel tax credits and other considerations, and commissioners at the time said it was too big of a commitment. O’Reilly said his company plans to petition the commission again before construction starts. Any proposal to the A&P could be modified, he said.

ASU and OHM have an initial 50-year lease agreement that can be extended another 40 years. Starting in the 4th year, OHM will pay ASU $250,000 annually, and then starting in year 10 the amount will rise by a positive percentage difference based on the Consumer Price Index. The university will also receive other benefits such as yearly room stays and others.

NAHCC’s problems might benefit, OHM, O’Reilly admitted. Two convention centers would vie for the same customers and events. If that project falls through, his convention center might reap the rewards, he said.

“This could be a hyper-competitive situation,” he said. “We feel really good about our model. I don’t know how it will impact us if they are delayed, but there will be an impact.”

OHM is moving forward with construction plans, O’Reilly said. The company is hiring subcontractors, and the hope is that the price will stay in the $50 million range even though construction costs have jumped significantly this spring, O’Reilly said. It will take up to 15 months to complete once construction begins.

There is a termination stipulation between ASU and OHM, ASU Communications Director Jeff Hankins said. Both parties have to be notified a year in advance. There is no way this project will be terminated at this point, O’Reilly said.

“It’s a done deal. We’re moving forward … there’s no turning back at this point. We’re too far in,” he said.

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