Fort Smith board set to consider convention center, A&P merger

The Fort Smith Convention Center Commission on Wednesday approved a plan to merge the operations and management of the Fort Smith Convention Center and the Fort Smith Advertising and Promotion Commission.

The move now pushes a joint memo to the Fort Smith Board of Directors for possible consideration at a Jan. 26 special meeting of the board to discuss quality of place initiatives.

At the heart of the plan is a 1% prepared food tax — estimated to generate up to $1.8 million a year — that would stem a looming shortfall in convention center funding. The city’s portion of the state’s tourism turnback funds are set to expire in 2010. The city received around $1.8 million annually from the turnback program.

The cities in Arkansas that have successfully merged tourism and convention center operations have done so with revenue from a prepared foods tax — aka, hamburger tax. Fort Smith has in place a 3% tax on hotels with which the A&P collected $803,591 in 2008. That amount is not near enough to cover A&P and convention center operations. Fort Smith is the only large tourism city in Arkansas without a hospitality tax on restaurants and other prepared-food providers.

City directors have two options in enacting a prepared food tax. They can create the tax by a board vote, or they can place the measure on a ballot.

However, Arkansas law mandates that control of prepared food tax revenues lies solely with an A&P Commission. The joint memo to the board clearly notes the restrictions of state law as it applies to the relationship between the tax and an A&P Commission.

The memo also points out key advantages of a merger.

“We feel that the resulting organization would result in a wide range of advantages consistent with those currently enjoyed by our competition such as: Independent funding source places no burden on local government; More flexibility with marketing; Increased flexibility with rate negotiation,” according to the memo.

(Link here for a more detailed report by The City Wire on the emerging funding problem with the Fort Smith Convention Center.)