Fort Smith city administrator opens the restaurant tax debate (Corrected)

Fort Smith City Administrator Dennis Kelly handed the Board of Directors a big plate of restaurant tax options Monday night (Aug. 17) and asked them to chew on the various ideas he believes will feed the city’s economic/tourism development future.

The bottom line of what was presented is $11.55 million in upfront capital costs, with roughly $3.55 million in ongoing annual costs funded by a 3% prepared foods tax — aka, restaurant tax — that could potentially generate $27.54 million in the first five years. More than 40% of restaurant taxes are paid by those outside Fort Smith, meaning the city generates $1 in tourism-related improvements for about 60 cents.

Kelly’s presentation was made near the end of a three-hour special study session in which the city staff presented preliminary 2010 budget plans to the board and reviewed budget goals for the new year.

Prior to outlining his “Feeding our future” plan, Kelly emphasized that the plan was a starting point intended for further discussion at the Aug. 25 board study session. However, Kelly is on a fast track in his effort to get board and citizen input and hammer out the details of a plan. Kelly told The City Wire after the presentation that he hoped an election on such a plan could be held within six months.

Corrected info: Under the capital expense plan, Kelly proposed the following:
• $1.6 million to acquire the former Flowers Foods bakery adjacent to the Fort Smith Convention Center and build a parking lot for convention center parking.
• $3.25 million for projects — aquatics center, girls’ softball fields — at Ben Geren Park, which is owned by Sebastian County. Kelly noted that Sebastian County might contribute up to 50% of project costs.
• 3.3 million for trails projects.
• $1 million for Creekmore Park pool dome.
• $400,000 for tournament fishing facilities at Fort Smith Park.
• $500,000 for Riverfront soccer fields.
• $1.5 million for a River park promenade.

The promenade plan would extend existing riverfront facilities by relocating Fort Smith Railroad’s switching and maintenance yard and relocating most of the homeless services from the downtown area. Kelly mentioned the former Wal-Mart building on Midland Avenue as a potential site for streamlined social services for the homeless and low income.

Kelly’s ongoing costs included:
• $1.1 million to $1.3 million to support annual operation of the Fort Smith Convention Center. (Link here for looming financial shortfalls at the convention center, and link here for information on a group tasked to study a new tourism and convention center management structure.)
• $1.7 million to support the annual bond payment for $20 million toward the construction of a “Riverfront sports venue.” Kelly described the venue as a baseball stadium. The bond payment would extend 20 years.
• $250,000 to support annual operations at the U.S. Marshals Museum.

Kelly told the board “a lot of work on details” is necessary before a referendum is sent to citizens. City Director Gary Campbell said the city would need a solid plan in place with details covered before he would endorse sending a plan to voters.

Link here to a PDF presentation of Kelly’s proposal.

The board members will discuss the plan further during an Aug. 25 study session to be held at 6 p.m. at the Elm Grove Community Center.

Before Kelly unveiled the restaurant tax options, Fort Smith Finance Director Kara Bushkuhl reviewed the 2010 budgeting goals previously set by the board. The goals included adopting a financing plan for the convention center funding gap, initiate and develop economic growth strategies to boost the number of high-paying jobs in the region, and approve a balanced budget that provides for the 15% reserve balance in accordance with the city’s financial policy.