Anger and misinformation

There is much anger in this emerging discussion over what to do with the Fort Smith Convention Center. There is even more misinformation.

For the misinformation and anger and financial predicament we have the convenience of having an accurate fount of blame rather than an inconvenienced scapegoat. Which is to say the blame rests entirely (forgiving for the moment the lack of citizen oversight) with the Fort Smith board of directors, both in its present form and in forms dating back to at least 1997.

By way of background and a possibly naive attempt at clarification amidst all the associated white noise, please allow me to posit next a few paragraphs from a failed Feb. 21 essay attempt to clarify amidst the white noise at that time. That I again travel down this explanatory route is either a testament to my persistence or an example of my inability to know when to shut up.

HISTORY AND ECONOMIC CONSIDERATIONS
About 13 years ago city voters approved a $55 million package 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 used more than $5 million in convention center revenue to fund non-tourism related budget expenditures. And 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.

The convention center is a roughly $40 million-plus asset that hundreds of communities our size would all but kill to possess. The about $1 million required post-2010 to subsidize the convention center is, according to my estimates, a small price to pay to keep the doors open on this positive economic engine. The convention center welcomes at least 100,000 visitors a year, with at least 35,000 folks a year visiting from outside the area — meaning they spent money in our hotels, restaurants and shops.

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.

A reasonable annual economic impact of the convention center is as much as $28 million, but so as we don’t get accused of overselling the point, let’s pull that annual impact back to $8.4 million.

The $1.8 million we’d pull OUT of the local economy through a hospitality tax option creates a negative economic impact (using the same factors, and factoring in that as little as 20% of the tax is paid by non-residents) of $2.88 million. (I should note here that the smart people say between 50% and 60% of the hospitality tax will be paid by non-residents, which would reduce the negative impact.) Do we reject a $2.88 million tab to gain a regional economic impact of $8.4 million?

As I noted Feb. 21, only a hardcore libertarian would argue that a broad and positive economic benefit never justifies taxpayer subsidization.

BACK TO THE ANGER, MISINFORMATION
A smart group of citizens appointed by the board of directors recently spent many hours and weeks trying to figure out how to best resolve this convention center problem. You, Kind Reader, should know that several folks on this committee are of the We-Don’t Need-More-Taxes crowd, and part of that crowd includes a chief financial officer of a Fortune 1000 company who can find holes in a budget faster than Emmitt Smith could find holes in a defense.

What did they discover? At great risk of oversimplification, they said the following:
• The convention center is clearly a positive economic engine for the regional economy;
• There is no waste, fraud or abuse in the city budget from which to extract on an annual basis the money needed to keep the convention center adequately funded;
• Therefore, a 1% hospitality tax and merger of the convention center and Fort Smith Advertising and Promotion Commission is the best way to preserve and promote the region’s economic tourism engine; and,
• The city must do one helluva job educating the public about why a hospitality tax is the best option.

It’s on the final point of education to which we return to the anger and misinformation. This anger and misinformation shares a common heritage — the lack of leadership and responsible communication from the city board and top city staff during the past decade.

As a result, we have citizens who believe the millions of dollars in bond revenue for street projects, and water and sewer systems can somehow be redirected to fix the convention center issue. Such a redirection is not only illegal, but would violate the will of voters who approved the specific use of the bond programs.

We have citizens who believe the city budget is a $250 million slush fund geared toward enriching a few local bankers, contractors and developers. We have citizens unaware that instead the city budget is a $42.5 million general fund of which a great majority (69%) feeds the critical functions of police, fire and parks.

We have citizens who see the city able to pony up $20,000-plus to subsidize The Park at West End as a reason why the city should be able to also find the funds necessary to fill the convention center shortfall. Also, we have citizens who see the city’s ability to spend up to $250,000 annually out of its general fund budget to support regional charities and events as another example of why the city should be able to find the funds to fix the convention center shortfall. The lack of fiscal and policy discipline on behalf of the board of directors makes valid these invalid points.

Also, we have a city administrator who has clearly demonstrated an inability to responsibly shepherd this process. His lack of focus and/or inability to read the tea leaves resulted in a more than 12-month waste of time with a wildly speculative and broad quality of place agenda that redirected entirely too much time, energy and public patience away from the REAL convention center funding issue. Also, he is politically inept. He recently suggested in a public meeting that if the voters reject the 1% hospitality tax, he would recommend the city board respond by simply enacting an ordinance to implement a 0.5% hospitality tax. Not only did he thumb his nose at the public’s eventual judgment, but he did so without informing the entire board of how he would respond to a loss at the ballot box. Rule No. 1 in municipal government: When your bosses live and die at the ballot box, don’t disrespect the ballot box.

Overall, we have citizens, angered by the city’s irresponsibility on this one issue, who have posted on The City Wire numerous outlandish reasons to oppose financial support of the convention center. My favorite comment is that the citizens of south Fort Smith — likely the most Republican, anti-tax, anti-government folks in this fair city — who support the convention center are a collective of socialist elites. It’s clear the misinformation-fueled rhetoric has outpaced reasoned consideration when the most conservative part of the state is labeled as a socialist haven.

If the city board is to seek voter approval of a 1% hospitality tax — which would also support the U.S. Marshals Museum and art and entertainment facilities and programs — it will begin with at best 35% citizen support. It will initially face 40% opposition. The challenge will be to capture at least 16% of the 25% undecided who appreciate the benefits of the convention center but don’t necessarily appreciate and/or understand the board’s clear lack of leadership vis-a-vis the convention center funding and management. These percentages are mine and are unscientific, and I’ll stand by them through this process.

I’ve said all the above to say this: The city board has screwed this deal up from Day One. I reject a great majority of the knee-jerk, anti-tax, anti-government reasons to oppose supporting a 1% hospitality tax, but I understand why people espouse such views. It will be a damn shame if we allow our anger at government and past missteps related to convention center funding and management to cause us to do something stupid with a facility that Gives far more than it Takes.