Emails Show Jonesboro City Efforts To Recruit Convention Center From Two Developers

by Michael Wilkey (mwilkey@talkbusiness.net) 106 views 

The city of Jonesboro has worked at least six years to bring a convention center project to the city through several key twists and turns, according to records obtained by Talk Business & Politics.

On Thursday, the city of Jonesboro responded to an Arkansas Freedom of Information Act request seeking any and all correspondence between the city and two groups seeking to build separate convention center projects in Jonesboro.

The groups, Illinois-based Keller Management and Missouri-based O’Reilly Hospitality Management, have both expressed interest in building a convention center in Jonesboro.

Keller is working independently on a a 152-room Hyatt Place Hotel and Conference Center would be built along U.S. 63. Keller had previously worked with ASU on their project but it fell through. The land is where the former Arkansas Services Center is located.

O’Reilly is working with Arkansas State University to locate a 200-room Embassy Suites, a 40,000 to 50,000-square-foot conference center and a Houlihan’s restaurant where the former ASU track and field complex sits on the school’s campus.

Jonesboro city leaders have long recognized a definite need for a hotel/conference center, citing population growth as well as a burgeoning tourism market.

The city of Jonesboro provided Talk Business & Politics with 18 pages of correspondence between the city, Keller and O’Reilly as well as ASU officials. The records include everything from letters written to the principals in both projects, as well as a March 2009 note about a similar project in Russellville that was approved by voters.

KELLER CORRESPONDENCE
According to the records released Thursday, the correspondence between the city and Keller began in June 2009 with a letter from Jonesboro Mayor Harold Perrin to developer Chuck Keller.

“We needn’t remind you that Jonesboro is a place to do business and serves as the regional hub of Northeast Arkansas,” Perrin wrote in the letter. “In fact, Jonesboro is the largest city in a triangle between Memphis, Little Rock and St. Louis. In addition to numerous conventions that will be held in Jonesboro there are many large events that happen yearly. We have supplied a list of those events and estimated attendance for your information. Many of these organizations would consider a change of venue to the new convention center.”

The letter noted that the city proposed to contract with Keller to provide “convention and visitor recruitment services” for $150,000 a year. Also, the city’s Advertising and Promotions Commission would refund 50% of the 3-cent hotel tax collections for the lodging facilities, the letter noted. An October 2009 letter also spelled out a proposal if an actual agreement was reached.

On Jan. 20, 2010, Perrin sent another letter to Keller about the project, which eventually fell through. Perrin said in the letter that he had support from federal and state officials including then-Rep. Marion Berry, D-Gillett as well as then-Gov. Mike Beebe, D-Ark. Also, Perrin said he had support from federal and state economic leaders, as well as ASU, Jonesboro Airport Commission, the FAA and local leaders.

“First of all, let me say that we have been working tirelessly amidst all of the challenges of declining budgets and shrinking resources to be as creative as possible and to involve as many of the strategic partners as we can solicit so that we can put this deal together,” Perrin said. “My office has invested hundreds of man-hours into this project; and not a day goes by that we aren’t engaged in some capacity to try to bring it all together. In fact, we have had conversations with the heads of two local lending institutions that are both very interested in talking to you about financing for this project.”

In the letter, Perrin said officials had secured $3.5 million in funding to help buy the land for the convention center, as well as $3 million in sales tax incentives, as well as tax credits.

“What is extremely exciting is that we obtained another nearly $2 million dollars in tax credits for you based on the total cost of development,” Perrin wrote. “In other words, we got the state of Arkansas to agree to incentivize 15% of the TOTAL COST (including engineering, etc.) of both the Convention Center AND the adjoining hotel property … that will generate almost $5 million dollars in sales tax dollars you keep in your coffers as opposed to remitting to the state. You have up to 10 years to collect and use the sales tax.”

The correspondence with Keller continued through summer 2011, with city officials traveling to Illinois to meet with Keller, the records showed.

ASU/O’REILLY CORRESPONDENCE
The city’s correspondence with O’Reilly began Jan. 8, 2014 when Perrin sent a letter to the company’s CEO, Tim O’Reilly.

“It was certainly good to have you in Jonesboro this past week concerning our convention center project. I also certainly appreciate your comments about the airlines. We will get the information from Joplin and begin work on that immediately. I don’t have to tell you what economic impact this will have on our city as well as surrounding areas,” Perrin wrote. “We will definitely be glad to work with you in any way to make that project a reality. I enjoyed meeting you and look forward to our next meeting,”

Two days later, Perrin sent a letter to ASU-Jonesboro Chancellor Dr. Tim Hudson.

“I, along with all of my administration, am thrilled that ASU is going to make the convention center project happen for the city of Jonesboro. This has been a long time dream of mine that Jonesboro have a convention center for its citizens not only for their enjoyment, but for economic development opportunities. If I, or any of my staff, can be of assistance during the entire process, do not hesitate to call upon us at any time.”

Perrin also credited ASU with working on the project.

“Again, we are overwhelmed that the city of Jonesboro is getting a convention center and that ASU is taking the lead to make this happen. Congratulations on this huge accomplishment,” Perrin said.

O’REILLY RESPONDS
Mayor Perrin, who has thrown his assistance to the Keller project claiming that they secured their financing for their convention center deal first, responded to several questions from Talk Business & Politics on Wednesday.

Late Thursday, Tim O’Reilly responded to a series of questions posed by Talk Business & Politics earlier in the week regarding the ASU project.

The following are the questions as well as O’Reilly’s responses to each.

1) What drew your company to the Jonesboro area to build a convention center?

O’Reilly: I have had Jonesboro and Arkansas State University on my radar for several years as a growing and vibrant community that might be able to benefit from an upper upscale hotel and significant meeting space. We participated in an RFP process a couple of years ago with a firm called Wallace Bajali where we were the hospitality piece of the development, and we made a good connection with the University during that process.

2) Has the community and its leaders been receptive to the project?

O’Reilly: Arkansas State University has been an absolute pleasure to work with. Their team of professionals led by Chancellor Tim Hudson and Chief of Staff Shawnie Carrier understands the significant financial and cultural impact that a facility such as the one we are proposing will have on both their institution, the City and the region. ASU actually commissioned a study by HVS that supports the success of the Embassy Suites convention center, and have performed their own internal economic impact studies that illustrate the enormous tax and revenue benefits of the project to the area, as well as the fact that such an upper upscale hotel and convention center facility can be a great recruiting tool and draw for students, faculty and staff. These factors also mean that Jonesboro is a great place to own and operate a successful hotel for our company. The Chamber President Mark Young has also been very helpful and supportive.

Mayor Perrin pledged his full support for our project a few weeks ago when we met in Little Rock at the ASU office, but I understand that he is now supporting another project, which was somewhat of a shock based on our recent conversations. Most similar projects that our team has been involved in has financial support from the City because the tax and community revenue that is gained from a large conference/convention center is substantial – most Cities see the investment in such a project as extremely positive for the community because it creates jobs and substantial tax revenue. This can be a great partnership and a “win-win” for a City and a private developer.

3) What is the timetable to build the convention center as well as construction time? What would you say would be the economic impact of the project to Jonesboro and Northeast Arkansas?

O’Reilly: We would like to get started with the project in 2015 or early 2016, and the construction will require 16-18 months from start to finish.

4) What do you see as the market for the convention center? Tourism, meetings, providing hotel space near ASU, which hosts baseball, basketball and football games through most of the year?

O’Reilly: All of the above – the University with all of its demand will be a huge driver for the facility, along with the hospital, youth sports programs in the City, the corporate presence in the area of many successful companies and significant industry, as well as the draw and business created by a large convention and conference center. These have been the recipes for success for many similar projects that our team completed both within our company and while many of them were with John Q. Hammons Hotel company. The HVS study illustrates this market opportunity very clearly.

5) Can the market support two convention centers? Also, a five-story hotel is being built on Stadium Boulevard near NEA Baptist Hospital and there is currently the Hilton Garden Inn, which also hosts events.

O’Reilly: I honestly do not believe that the market can support two large convention/conference centers being built at the same time. The fact is that one or both of the facilities are not going to be successful. However, we are proceeding with our project and I like our chances based on the power of the Hilton/Embassy Suites and Houlihans brands, as well as the combination of our development, operations, sales and marketing teams, the Jonesboro Chamber, and the substantial support that Arkansas State University can provide. We have a few details to work out with ASU and some other stakeholders, but we can definitely deliver the financing, investment, Hilton Embassy Suites flag and Houlihans franchise to make this project a reality.

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