City Directors seek change in convention center, tourism operation

Opinions from city board of directors during Saturday’s (Jan 9) board retreat suggest a change in how the Fort Smith Convention Center will be funded and managed.

After a spirited discussion about the convention center, the city board of directors requested the city staff provide the board recommendations about the future funding and management of the center. The recommendation is due no later than April 15.

The city of Fort Smith is the only large city in the state — if not nation — that operates its convention center separate from its Advertising and Promotion commission. Most directors said that should change.

“At one time, that might have made sense, but it’s time to bring them (convention center and A&P) together,” said City Director Cole Goodman. “This city council doesn’t need to be in the convention center business.”

The biggest problem facing the city is that its portion of the state’s tourism turnback funds are set to expire in 2010. Between 2001 and 2007, the city collected $13.23 million in turnback funds, with $4.36 million of that used to help pay down the 1997 sales and use tax bond debt. Proceeds from turnback funds between 2008 and 2010 are estimated at $4.47 million.

A second problem created from the expiration of turnback funds is that convention center expenses are considerably higher than convention center revenue. Convention center expenses in 2006 ($1.46 million) and 2007 ($1.87 million) were 58.6 percent higher and 66.7 percent higher, respectfully, than revenue in those years.

And it gets worse. With no turnback funds and no money in the bank, there is no reserve fund for capital improvements for a large facility that will be 10 years old in 2011.

(The City Wire has a detailed two-part report on the convention center issue. Link here to Part I, and here to Part II.)

City Director Gary Campbell complained about the low utilization of the convention center and about how convention center expenses rise faster than convention center revenue. He also said he hears from too many constituents about how they are treated when trying to use the center.

“I think we have a customer satisfaction issue, also,” he said.

But Deputy City Administrator Ray Gosack and Frankie Hamilton, director of the convention center, explained how city policies prevent the convention center from being more flexible in how it makes money and deals with the public.

Existing city policy does not allow the convention center to sell tickets, alcohol, run concessions, lease decorations to users and many other services other large convention centers are allowed to sell.

Two “easy things” the city could do to make more money at the convention center would be to run its own ticket office and sell alcohol, Hamilton said.

City Director Kevin Settle agreed, saying that city policies are “handcuffing” convention center management and that Hamilton “needs the flexibility” to run the place like a business.

However, Mayor Ray Baker said he would oppose any actions that increased the cost for citizens to use the center.

“I don’t care whether it makes money or not,” Baker said. “It’s the community’s clubhouse.”

Claude Legris, executive director of the Fort Smith Advertising and Promotion Commission, said A&P commission members should “be part of any discussion” about combining the administration of the center and advertising and promotion efforts. He also suggested to city board members that the other Arkansas cities that combine the A&P and convention center also have a restaurant and hotel tax to support the total operation. Fort Smith has only a 3% hotel tax.

“These other cities have a financial model that makes it feasible,” Legris said.