Jonesboro mayor responds to Strong-Turner alumni letter regarding competing convention centers

The plan for one or two convention centers in Jonesboro entered another chapter late Monday as Mayor Harold Perrin sent a letter to an Arkansas State University alumni group about the issue.

In the three-page letter, Perrin also answered critics over his role on the issue.

On Dec. 21, Peggy Wright, who works as the Strong-Turner Alumni Chapter on-campus liaison at ASU, sent a letter to Perrin asking for support on the O’Reilly Hospitality Management project.

Both O’Reilly and Illinois-based Keller Enterprises have announced plans to build convention centers in Jonesboro.

O’Reilly would like to build a 200-room Embassy Suites hotel, a 40,000-square-foot conference center and a Houlihan’s restaurant at the former ASU track complex just off Red Wolf Boulevard.

The Keller project would include a 152-room Hyatt Place Hotel and Conference Center at the former Arkansas Services Center on U.S. 63.

In the letter, Wright asked Perrin and the Jonesboro City Council to answer three questions.

“With further elaboration to follow in subsequent paragraphs, the three S-TAC requests are as follows – 1] that you as our Mayor and the city council immediately pass a resolution of endorsement and support for the Arkansas State University-Jonesboro and O’Reilly Hospitality Management project proposal; 2] that the City of Jonesboro collaborate with Arkansas State University-Jonesboro, to organize a North Jonesboro Anchor Institution Compact to mobilize state, federal, corporate and foundation funds and related resources in support of the A-State/OHM project within the organizational context of the NJNI; and 3] that you as Mayor and the city council use your good offices, influence and authority to have the Jonesboro Advertising & Promotion Commission begin immediate deliberations with A-State/OHM regarding this on-campus project as being proposed,” the letter noted.

PERRIN ANSWERS BACK
In the letter, Perrin responded.

“To address your three requests specifically: (On the first question), I cannot speak for the City Council as to whether it would be willing to endorse and support the ASU-O’Reilly proposal in the form of a resolution. The mayor would vote on such an issue only in the event of a tie. While I could propose such a resolution, I can think of no instance in my time on the council or as mayor where we endorsed one business over another. As to whether Jonesboro is large enough, and its economy is strong enough, to support two hotel convention centers, I can’t really say. I do know that providing economic incentives to both would be difficult for any city government of our size. More on that later,” Perrin wrote in the letter.

“(On the second question), I’m not familiar with an anchor institution alliance compact or how it could involve the NJNI as it is presently constituted. We have been advised in the past by officials of the Winthrop Rockefeller Foundation that the NJNI will not be eligible for further funding unless low-income, minority residents of the district are engaged in their community and in the organization. Further, the NJNI organization, as planned for organizational changes, will have to compete with other nonprofit organizations for Community Development Block Grants because of the lack of resident engagement. Perhaps the Delta Regional Authority would be more helpful, but you don’t explain how that could be tied in with the mission of the NJNI. Of course, ASU officials are quite familiar with grant prospects for such a project.”

Perrin also answered the third question.

“Neither I nor the council have the authority to require the Jonesboro Advertising & Promotion Commission to negotiate with parties representing the ASU-O’Reilly proposal, much less than to tell commission members how to vote on any agreement that might be offered. Aldermen and the mayor can offer advice or an opinion, but once appointed, the commissioners are charged with performing their duties. Any negotiation with two or more commission members would be open to the public, as would any associated documents,” Perrin wrote.

CONVENTION CENTER DEBATE
Perrin also discussed the inner workings of the issue in the letter to Wright.

“I have personally worked for years to bring a convention center to Jonesboro, and I have always said as mayor that I would support in any way possible a solvent proposal. At this point we have two private developers who say they are ready to proceed. At no time in the process that brought us here did I show preferential treatment to one or the other. If asked for a meeting, I attended,” Perrin wrote. “I supported the efforts of both and offered my assistance to facilitate both in securing the necessary financing. On the same day representatives of Mr. O’Reilly and ASU were in my office asking for additional funding from the city, I received word that Mr. Keller had the financing needed. I didn’t choose one project over another; the free market did in that Mr. Keller was the first to obtain a signed land contract.”

In the letter, Perrin also discussed the city’s work in bringing a convention center to town.

“Here’s what that means at this point. Several years ago the City of Jonesboro secured a Delta Regional Authority grant of $404,000 for use on a hotel-convention project that was proposed on Race Street. When that fell through, we were able to gain approval to use the grant on an industrial development. However, it was never requested and may therefore still be available to the city, subject to DRA approval. Developers of the Highway 63 proposal are asking the city to use the grant to build a parking lot for the convention center. The ASU-O’Reilly developers also would like to have the DRE grant, and in addition they have expressed a desire for an incentive package of approximately $600,000 a year for 10 years, possibly to be renewed after that. That would include from the Advertising and Promotion Commission $200,000 a year in rebated taxes and an estimated $200,000 a year to cover advertising and promotion expenses. In addition, Mr. O’Reilly told me he would ask for another $150,000 to $200,000 in incentives for other expenses (not clear the purpose or source),” Perrin wrote in the letter.

The Jonesboro City Council will take up the 2016 budget during a meeting Tuesday night (Jan. 5). Part of the budget includes revenues from A&P, Perrin said in the letter.

“The city budget for 2016 projects $560,000 in total revenue from the Advertising and Promotion restaurant tax of 3 percent. Much of that money is ordinarily committed to other local purposes on a year-by-year basis, and I understand the A&P Commission has agreed to provide $200,000 over the next two years to ASU for promotion of athletic events. You can see the problem. Even if a new hotel-restaurant complex brings in another $200,000 a year in A&P taxes, it would take a large percentage of the A&P budget to fund the ASU-O’Reilly proposal. On the other hand, Mr. Keller has told me that he would be seeking only $150,000 annually in advertising and promotion money from the A&P Commission. The city budget for 2016 does not have room to take a large sum away from other agencies and programs and give it to a private developer. We have already learned that the Arkansas Economic Development Commission has no funds available for a hotel-convention center complex. While it’s possible other grant money might be found to help in the building process, the chances of finding an external source of funding that would continue over at least 10 years are not good. I would anticipate that since it obviously isn’t necessary to use A&P funds to actually attract and build a convention center, the commission would likely wait to see specifically how the operators propose to spend and account for their use of that money once the centers are under construction and assured of opening.”

Perrin said in the letter that he believes both projects can succeed but noted he believes it is up to the free market.

“As to which proposal has a better chance of succeeding financially, or whether both could, that’s not something our city government can or should judge. Essentially, both proposals would benefit private parties, and both would be good for economic development in Jonesboro. I apologize for taking a few days to respond to your letter, but the complexity of the issue along with the holidays dictated such. We are continuing to gather information and studying the possibilities. In your letter of Dec. 30 you posed another issue, suggesting that the City of Jonesboro should pursue an EDA grant for use in the ASU-O’Reilly project. Before committing to such a venture, we would certainly need to do considerably more research. Generally, federal grants require a city match, and that would involve budget action by the City Council at a time when we are producing a tight 2016 budget. We could not dig into the city’s reserve funds to help a private developer build a facility, especially since the city would derive no direct return on its investment. Perhaps ASU, which would presumably receive income from the project, would have a better avenue for something like that. Again, thank you for your interest in this and other matters of the City of Jonesboro. I have always considered you a friend and remain appreciative of everything you do in your work with S-TAC and for the residents of North Jonesboro.”