Convention center issue slated for upcoming budget meetings

Deciding how to best fund the Fort Smith Convention Center will be included in November budget meetings of the Fort Smith board of directors, the board members decided during Tuesday’s (Oct. 12) study session.

The convention center funding options for possible voter approval were on Tuesday’s study session agenda, but City Administrator Dennis Kelly asked the directors to postpone until after Jan. 1, 2011, a decision on a voter referendum.

Although the funding of the convention center has been an issue for almost a decade, City Director Bill Maddox said he was “slightly offended” that Kelly — who was hired in October 2008 — would “blame the board” for a delay in seeking a convention center funding decision.

Kelly’s request to postpone the decision noted: “Based on the length of time it has taken for the Board to get to this point regarding the Convention Center Funding Referendum, the phone calls received regarding the ballot language, the confusion is has created and the fact there will be a new Board in place at the time of the referendum that did not have input into the structure of the Ordinance calling for a referendum or its time line, it is my strongest recommendation that this entire issue be postponed until after January 1, 2011, in order to allow the new Board the opportunity to resolve this matter to their liking.”

The board spent most of 2008 and 2009 trying to come up with a solution to plug the annual deficit with the Fort Smith Convention Center. A state turnback program ends in June 2010 from which the city has received about $1.8 million a year. In 2010 the city will receive only $888,723 in 2010. An Oct. 8 memo from Deputy City Administrator Ray Gosack notes that a convention center fund will have a $1.027 million balance at the end of 2010. The balance and 2011 convention center revenues are “sufficient to fund the center through 2011,” according to Gosack. Barring any unexpected capital outlay, the fund is estimated to have $300,771 at the end of 2011.

Maddox said Tuesday that Kelly has long advocated a 1% prepared food tax to address the funding shortfall, and that Kelly has resisted efforts to look at other plans.

“It’s pretty obvious to me that he (Kelly) wants to hope a partial new board … will see it his way,” Maddox said Tuesday, referring to the fact that the board will have at least three new members in January.

However, the board voted 5-2 on Jan. 26 to seek voter approval of a 1% prepared food tax to shore up the Fort Smith Convention Center. The vote was non-binding because it came during a study session, but Maddox voted for the 1% tax option, with City  Directors Gary Campbell and Kevin Settle opposing the vote because they believed the convention center issue should be considered within a larger quality-of-place agenda.

The board recently instructed the staff to draw up three referendum questions for a special election ballot. A prepared food tax would require the Fort Smith Convention & Visitors Bureau to manage the convention center.
• A half-percent prepared food tax to cover convention center costs only, and estimated to raise $900,000 annually;
• A 1% percent prepared food tax to cover convention center costs that would raise an estimated $1.8 million annually. The annual allocation would be $1 million for the convention center, $240,000 for a convention center maintenance fund, $250,000 for Marshals Museum operating costs, $100,000 for the Fort Smith Classic (PGA professional golf tournament; although the Classic is not likely to return in 2011), $60,000 for various festivals, $50,000 for Bass Reeves monument (2012 and 2013 only), and $50,000 for arts community (beginning in 2014);
• Reallocation of 0.5% street tax funds to cover only the annual costs to operate the convention center. The reallocation is estimated to raise about $943,000 annually.

If two or more of the three options receive a majority of FOR votes, only one of the issues would be enacted. If the reallocation plan is approved by voters, the two prepared food tax options would not be enacted, even if they gain voter approval. Also, the prepared food tax options come with a 10-year sunset provision.

Kelly responded to Maddox by saying Arkansas law is clear — only legal groups like advertising and promotion commissions may collect and administer hospitality taxes — on how the prepared food tax must be implemented. Kelly also said he does not back away from his belief that it is the best option. Kelly also said the Fort Smith Convention & Visitors has had for two months a draft negotiation on how to administer the funds. The law requires the city and bureau to negotiate the terms before a prepared food tax is considered by voters. If it happens after a vote, the city would have no say in how the monies are used.

City Directors Andre Good, Don Hutchings and Kevin Settle said the funding issue should be part of the Nov. 8 budget meeting. The consensus was approved by the board. The board has until Nov. 16 to approve an ordinance if it chooses to seek voter approval in January 2011.

Patrick Jacobs, a Position 4 candidate for the city board, was puzzled with how Maddox could blame Kelly for the delay in a board decision.

“Who is in charge here, the city board or the city administrator? Clearly, the city board is responsible, and they should have already made a decision. This should have been put before the voters years ago,” Jacobs said after the Tuesday meeting.