City, A&P to refine convention center contract

Fort Smith city and tourism officials will hammer out “little issues” during the next two weeks and return to the Fort Smith Board of Directors on Feb. 8 with a proposed management contract for the Fort Smith Convention Center.

The contract is part of steps the board is considering that would use an estimated $1.8 million in proceeds from a 1% prepared food tax to have the Fort Smith Advertising & Promotion Commission operate and maintain the convention center. State law allows only an A&P to collect and manage proceeds of hospitality taxes.

A state turnback program ended in June 2010 from which the city received about $1.8 million a year. In 2010, the city received only $888,723. A fund balance will allow the city to cover the convention center shortfall for 2011.

An ad hoc convention center committee formed by the city board met several times in Spring 2010 and reviewed many funding 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.

That group eventually endorsed a 1% prepared food tax.

On Jan. 11, Fort Smith Convention & Visitors Bureau Executive Director Claude Legris presented the board a broad proposal that would use an estimated $1.8 million in revenue from a 1% prepared food tax to consolidate the convention center with the Fort Smith Advertising & Promotion Commission. The operation would also generate an estimated $700,000 in revenue from convention center rental. Estimated convention center revenue for 2010 is around $640,000.

Fort Smith City Administrator Ray Gosack and Legris told the board Tuesday (Jan. 25) during a study session a draft contract could be prepared for the board and A&P Commission to review by Feb. 8. Legris said there were just a few “little issues” that required resolution.

An issue cited by Legris was how to contractually account for the “furniture, fixtures, and equipment” now in the convention center.

Issues cited by Gosack included:
• A contract should require the A&P Commission to have liquor liability insurance;
• Existing maintenance and booking contracts should be honored;
• Removing draft contract language requiring the city provide free water, sewer and sanitation; and,
• Altering lease renewal terms to give the city more flexibility in renewal considerations.

Fort Smith Mayor Sandy Sanders encouraged board members to send their contract notes and questions to Gosack by Friday.

As to the management plan Legris presented Jan. 11, City Directors Pam Weber and Philip Merry Jr. said they have concerns with the opportunity fund concept.

Legris has said the estimated $700,000 in event revenue generated each year by the convention center could be used to create an “Opportunity Fund.” The proposed idea would use 50% of the event revenue to “support festivals, special events and other tourism-related projects” approved by a 9-person committee. The committee would be comprised of three city representatives, three from the A&P and three citizens.

The other 50% would be used to reinvest in the convention center, Legris explained.

Legris said Tuesday he would not let the fund idea “hold up the deal.

“We’re not married to it,” he told Weber.

Convention Center Director Frankie Hamilton said the 1% tax and new management structure is long overdue.

“They need to do the 1% and I’m all for them combining the two (convention center and Fort Smith A&P). It is so nice to have a board that is ready to move on this. In my opinion, it can’t happen soon enough,” Hamilton said.

Some area restaurant owners say they will oppose the 1% prepared food tax.