You want me to support what?

What follows will be a series of observations, lists and explainers all presented in a possibly naive hope they will clear the fog of misinformation, poor information and no information about the present and future management and financial health of the Fort Smith Convention Center. We do this because officials with the city of Fort Smith either won’t or can’t.

Let’s first note that what follows will be a waste of time for three groups of folks.
• There are the persons who are so against any increased tax or city expenditure that any discussion of the merits of a tax/expenditure are pointless.
• There are the persons who point to past failings of city government to oppose any attempt to rectify the problem resulting from a past failing.
• There are persons who, for whatever reasons, never supported the idea of the city operating a convention center and they never will.

English author Samuel Johnson best described folks in the three groups when he noted: “There will always be a part, and always a very large part of every community, that have no care but for themselves, and whose care for themselves reaches little further than impatience of immediate pain, and eagerness for the nearest good.”

A LITTLE HISTORY
Back about 13 years ago city voters approved a $55 million package — through a half-cent sales tax — to build a modern convention center, modern library facilities and to build the first phase of a master riverfront plan. One of the selling tools was that the state would funnel about $1.8 million a year in turnback funds to the newly expanded center through 2010 to pay off bond debt and support operations.

Unfortunately, the city failed to treat the convention center as a stand-alone enterprise and began to use convention center revenue to fund non-tourism related budget expenditures. Between 2003 and the end of 2010, the city will have drained more than $4.8 million away from the convention center to fund non-tourism related projects and organizations — more than $1.125 million to the library system, more than $1 million to the city’s parks department and more than $1.3 million to senior citizens programs.

Dumb. If that money had been kept in an account for the convention center, we would have more than four years of money — estimating the center costs about $1.7 million annually to operate and generates between $600,000-$700,000 a year in revenue — beyond the 2010 end of state funding. Which means we would have the luxury of not tackling a funding shortfall in the midst of a deep national recession.

But here we are, near the end of the turnback funding in June and facing a funding shortfall by the end of 2011. Solutions to the shortfall include a 1% hospitality tax that would raise about $1.8 million annually, reallocation of street sales tax (10% allocation would raise about $1.93 million annually and would require voter approval), and a business license fee that would raise about $1.9 million annually. (Many months ago The City Wire published a decent primer on the issue. Link here for Part I and here for Part II of that primer.)

ECONOMICS AND POLITICS
Now let’s outline two broad considerations.

First, let’s outline the fundamental economic reasons we should seek and support a financial solution to the looming convention center shortfall.

Second, let’s outline the the political reasons to oppose a financial solution to the looming convention center shortfall.

Yes, we will support and oppose within the same essay. We’re going to move fast on this part, so keep up.

ECONOMIC CONSIDERATIONS
The convention center is a roughly $40 million-plus asset that hundreds of communities our size would all but kill to possess. The $1 million to $1.2 million required post-2010 to subsidize the convention center is a small price to pay to keep the doors open on this positive economic engine. How do I come to that conclusion? Glad you asked.

The convention center welcomes at least 100,000 visitors a year. Now, let’s say that only 35,000 folks a year are visitors from outside the area, meaning they spent money in our hotels, restaurants and shops. That is a safe assumption considering that just two events combined in 2009 — Jehovah’s witness convention and Battle at the Fort volleyball tournament — to draw a little more than 30,000 to the city.

The Fort Smith Advertising and Promotion Commissions estimates the average visitor spends about $200 a day (hotel room, shopping, meals, etc.). But let’s say that figure is 40% too high and the average visitors spends only $120 a day. Multiplying 35,000 people by $120 gets us a direct and conservative economic boost of $4.2 million. The commonly accepted economic rollover factor is four, meaning we should safely be able to multiply $4.2 million by four to get a sense of the direct economic impact ($16.8 million) that filters through our regional economy. But let’s cut that in half, and say the rollover factor is instead $8.4 million.

Still with me?

In summary, a reasonable annual economic impact of the convention center is as much as $20 million, but so as we don’t get accused of overselling the point, let’s pull that annual impact back to $8.4 million.

But what about the $1.8 million we’d pull OUT of the local economy through a hospitality tax option? Another good question. Estimates are that about 40% of that is paid by out-of-towners. But let’s say it’s just 20%, meaning that Fort Smith residents pay $1.44 million of the $1.8 million. A rollover impact on that amount is $2.88 million.

Which brings us to this question: Do we reject a $2.88 million tab to gain $8.4 million? Only a hardcore libertarian would argue that a broad and positive economic benefit never justifies taxpayer subsidization.

POLITICAL CONSIDERATIONS
But maybe this is your response to the previous paragraphs: “OK, Mr. Tilley, I get your point on the economic considerations and I agree that we must keep the convention center open and viable, but do you seriously want me to trust the folks who got us in this mess to get us out of this mess?”

Uhhhhhh, damn. Sure wish I had a good and clever retort, but you got me there.

Unfortunately, the city administrator and the city board are doing little — if not a whole lot of nothing — to help me out with an answer that would potentially assuage your concerns about future mismanagement of funds. As much as it pains me to admit this, I’d be forced to vote NO on a new tax or tax allocation for the convention center that didn’t include some clear and binding rules preventing the future redirection of convention center funds to other city projects.

HOPE V. EXPERIENCE
Following are a few things the city board might do to give us all some economic AND political confidence to support an option for financial support of the convention center.
• Legally merge the management and budget of the convention center through the Fort Smith Advertising and Promotion Commission, or create an enterprise fund or some other sort of transparent accounting mechanism.
• Shut up about all other quality of place projects until the convention center funding problem is resolved.
• Separate the city board from the convention center funding solution process. Sure, the city board is the only body that has the power to authorize a ballot action. But create a task force and give them 6-9 months to come up with a solution they can then present to the board. The most successful voter initiatives in city history were those that funneled up through a private sector task force to the city board.

Johnson, who was quoted earlier, also told us that second marriages were “The triumph of hope over experience.”

Renewed support of the convention center will be a second marriage of sorts, and it’s up to the city board to get to the altar those of us whose hope is unable to overcome experience.