‘Misinformation’ frustrates convention center commissioners

Members of the Fort Smith Convention Center Commission are frustrated that more has not been done to communicate to citizens the economic benefit of the center.

And they partially blame the Fort Smith board of directors for the “misinformation” about the convention center.

Commission members gathered for a meeting Wednesday (Oct. 20) to review the 2009 economic impact the convention center had on the regional economy. The report, prepared by the convention center staff, showed an adjusted $20.2 million economic impact in 2009 — well above the about $1.28 million to operate the center.

The impact for the first half of 2010 is estimated at $12.34 million. Revenue for the first nine months of 2010 is $466,872, up 6.19% over the same period in 2009.

The 2009 operating costs were mitigated somewhat by the $632,409 in revenue generated by convention center operations.

It’s that annual deficit the city will have to begin covering in 2012 if the convention center is to remain open.

The Fort Smith board of directors spent most of 2008 and 2009 trying to come up with a solution to plug the annual deficit. 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. A fund balance will allow the city to cover the convention center shortfall in 2011.

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.

The board recently 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, $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.

Commission Member Jim Kolettis said he is opposed to higher taxes, but seemed to voice the opinion of most of the commission when saying a 1% prepared food tax is more of a user fee than a tax. He also said he is working to counter what he believes is a “ridiculous” myth that the convention center should make enough money to support itself.

“These types of places are not designed to be a profit center. They are designed to create economic impact, and I have swayed a number of people in my own little way,” Kolettis said.

Commission Member Salvatore Salamone was more pointed with his criticism as to why the convention center operations are misunderstood by many in the community.

“I think the bottom line is, even two years into this process we still don’t know … how we’re going to pay for it … and what the number is we are trying to hit,” he said. “Frankly I think the public is perhaps, not uneducated, but misinformed, because all they’ve seen in the last two years are starts and stops by what I think is a well-intended but ineffective board of directors on this issue.”

Salamone was especially critical of the city board appointing an ad hoc committee and then being dismissive of the committee’s recommendation. He noted with sarcasm, “God forbid we should listen to intelligent CFO-types” — a reference to the several members of the ad hoc committee with considerable experience analyzing budgets.

Commission Member Fred Allison said misinformation is not the only issue. He believes there are “many people out there” who don’t care about the economic impact or benefit of the center. He said they refuse to support a 1% hospitality tax that would cost an extra 50 cents on a $50 meal tab.

City Director Don Hutchings, who attended the commission meeting, disagreed with Salamone that the board has been ineffective. He also suggested in an interview after the commission meeting that clamor for the city board to hurry and make a decision reflects “needless panic.”

“It’s easy to see why some people would think that, but we have spent hours and hours and hours on coming up with some remedies. And we’re getting closer, so I don’t think there is a need to panic,” Hutchings said. “From what I’m picking up from other directors, we’re going to solve this thing and it’s going to be the most painless solution.”

The convention center funding issue will be discussed during the board’s upcoming 2011 budget sessions, which begin Nov. 8. The budget reviews will be begin at 6 p.m., and will be held in the community room of the Fort Smith Police Department.