Fort Smith board asked to postpone convention center vote

Fort Smith City Administrator Dennis Kelly is asking Mayor Ray Baker and the board of directors to postpone until after Jan. 1, 2011, a decision on a referendum to address future funding of the Fort Smith Convention Center.

“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,” Kelly noted in an Oct. 8 memo to the mayor and board members.

The convention center funding options are on the board’s Tuesday (Oct. 12) study session agenda. If the board does not follow Kelly’s recommendation, a board vote on a referendum could take place during the board’s Oct. 19 regular meeting.

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.

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, and then move forward on a tourism and recreation development plan for the Fort Smith riverfront and Ben Geren Regional Park. However, the plan was never developed, and the board learned Aug. 24 they had missed the deadline for the Nov. 2 general election ballot.

During the Aug. 24 meeting, the board instructed the staff to draw up three referendum questions for a special election ballot.
• 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.

An ad hoc committee established by the board in early April 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 for the center. The ad hoc group eventually endorsed a 1% prepared food tax that would also support the U.S. Marshals Museum and other city art and entertainment facilities and event.