City board suggests more study of convention center funding options

The Fort Smith Board of Directors may study further funding options for the Fort Smith Convention Center even after receiving Tuesday (June 8) funding recommendations from an ad hoc committee appointed by the board.

Discussion of more study was not popular with George Moschner, chairman of the ad hoc committee.

“My parting comment is, ‘Folks, let’s move on with this,’” Moschner told The City Wire after the board meeting. “You all (board of directors) have studied this thing for so long that it’s time to move on and make some decisions.”

The ad hoc convention center committee was formed by the board of directors after the board spent more than 18 months trying to come up with a solution to plug an up to $1 million annual deficit when a state turnback program ends in June 2010. The city has received about $1.8 million a year from the tourism turnback fund, but the city will receive only $888,723 in 2010. (Link here for more details on the convention center funding issue.)

Members of the ad hoc committee are:
Tom Caldarera, restaurant owner
George McGill, businessman/insurance
Kevin Moran, Sparks Health System
Lavon Morton, Arkansas Best Corp.
George Moschner, Baldor Electric Co.
Craig Rivaldo, Arvest Bank
Ben Shipley, attorney

COMMITTEE HISTORY
The committee first met April 22 and reviewed several options, including a 1% hospitality tax, finding cuts in the city’s roughly $40 million operating budget, reallocating a portion of the city’s 1% street tax, re-instituting a business license fee and finding a 3rd party operator. The legalities of merging the convention center operations and the Fort Smith Advertising and Promotion Commission also have been discussed.

On May 26, the committee unanimously endorsed the idea of a 1% hospitality tax (prepared food tax) to fill an up to $1 million funding shortfall related to the Fort Smith Convention Center. The 1% tax would also support the U.S. Marshals Museum and art and entertainment facilities and programs. (Link here to read the entire report from the ad hoc committee.)

As part of that endorsement, the committee called for a management merger of the convention center and the Fort Smith A&P. They said the city needs to focus on public education if it wants to gain approval of efforts to support the convention center and other quality of place projects.

The city board has held special meetings and discussed the convention center issue for more than 18 months. The board voted 5-2 on Jan. 26 to seek voter approval of a 1% prepared food tax to fix the funding problem. But there has been no movement since the board vote to push a plan to voters.

RECOMMENDATION PRESENTATION
In presenting the committee’s recommendations, Moschner said research showed the convention center is “an important asset that must be preserved” because it draws tourists and their dollars to the region. He said a more than 7-week review of city finances indicated the “best funding alternative” is a 1% hospitality tax.

“It doesn’t appear to us that the general fund (can fill the convention center funding gap) without cutting other vital services,” Moschner said.

Moschner also stressed the recommendation that the board seek “significant synergies” from the proposed merger of the convention center and A&P. He said measurable goals should be implemented to make sure financial efficiencies are realized.

“Someone should accept the (synergy) responsibilities, because they just won’t happen on their own,” Moschner told the board.

In his closing comments, Moschner urged the board to move more quickly on the convention center issues and other important issues facing the city.

“This matter has festered for way too long. … I encourage the board to act more proactively on these issues in the future,” he said.

BOARD REACTION
But City Directors Bill Maddox, Kevin Settle and Steve Tyler seemed to take issue with the committee’s recommendations. Settle wanted to know why there was not more research into the option of a private operator for the convention center. Maddox argued that reallocation of the 1% street tax to fund the convention center will be an easier sell to voters than the 1% hospitality tax. Tyler said voters are angry and all levels of government and are more interested in sending a message than making a logical vote. That message, he said, would be to kill any new tax.

“I’m afraid the voters will send that message if we put this (1% hospitality tax) up for a vote,” Tyler said.

Members of the committee stuck to their belief that the voters will support the 1% hospitality tax once they understand its benefits to the regional economy. Craig Rivaldo said he agrees we are “being taxed to death,” but the hospitality tax “makes sense” in that it will have a direct boost to the local economy. Ben Shipley professed a “great belief in the citizens of Fort Smith” that they will support the tax once they understand it.

Moschner offered an impassioned plea to the board that support of the convention center is just one part of larger quality-of-place agenda necessary to ensure that the best and brightest of area high school and college graduates will want to stay in the area. Continuing to move slow or not be focused on quality of place issues means “we will lose talent … and that just breaks my damn heart.” (Moschner then apologized for using a curse word, but said if President Obama can get away with it, he would try it. The board and audience roared with laughter.)

George McGill said the lower- and moderate-income people he talks to support the hospitality tax idea once they learn of all the proposed benefits — Marshals Museum support, concerts, regional sports events, tourism economy support, plays, festivals — of the hospitality tax.

“You have to view this as an opportunity. … This is an opportunity and everybody supports it once they understand,” McGill said.

City Director Andre Good said the board should make several “symbolic” budget cuts before going to the voters with the hospitality tax.

But Tyler wasn’t convinced. He said voters “get it” about the benefits of the convention center and tourism industry, but will not support a tax in the present-day political and economic environment.

“It’s going to be a hard sell and I don’t think there’s anyone here to sell it,” Tyler said.

Specifics remained unclear at the end of Tuesday’s study session as to how the board will follow up on the committee’s recommendations.