Jonesboro hotel and convention center project pushed by Keller on track for state tax credits

Jonesboro has two ongoing convention center projects, and one of them may already expand before the dirt work is even finished. It’s a move that could save the project millions of dollars in tax credits.

The Hyatt Place Hotel and convention center wants to expand its convention center from 40,000-square-feet to 78,000-square-feet, according to the Arkansas Economic Development Commission. The project could qualify for up to $7.5 million in tax credits under the Arkansas Tourism Development Act, AEDC spokesman Scott Hardin told Talk Business & Politics.

“At this point it looks like they will meet the qualifications,” Hardin said.

To qualify for the tax credit, the convention center has to be at least 75,000-square-feet, must be attached to a hotel, and the company building the project, CFK Hospitality, has to spend at least $1 million on the project. The project is expected to cost about $50 million. State officials will examine the project once it’s complete to ensure the project qualifies for the tax credits.

The AEDC and the Arkansas Department of Parks and Tourism must jointly approve the application. A decision will be rendered in the coming days, Hardin said. If approved, the project will get a 15% sales tax credit on its state approved expenses, which will more than likely include most, if not all, the $50 million price tag, he said.

“It can’t be completely calculated until all the receipts are turned in,” Hardin said.

The convention center/hotel is under construction just off Caraway Road near Interstate 555. The 165-room hotel and convention center are expected to be completed in early 2018.

A second hotel-convention center project is also in the works. Hilton Worldwide approved plans in July to build a 202-bed Embassy Suites Hotel, a Houlihan’s Restaurant, and a 40,000-square-foot Red Wolf Convention Center on the Arkansas State University campus. Jonesboro Hotel Partners LLC and its management company, O’Reilly Hospitality Management LLC, of Springfield Mo., is the proprietor of the second, $50 million hotel and convention center. Repeated calls to CEO Tim O’Reilly were not returned.

In February, the Jonesboro A&P Commission voted 3-2 to give the Keller Family Hyatt project group, which is now CFK, $300,000 in advertising revenue to support their hotel and convention center project. CFK also received a hotel tax forgiveness of $200,000 per year for up to three years once the project is complete. The decision to choose CFK over the O’Reilly proposal was contentious. O’Reilly said previously that a moratorium has been put into place for at least another 16 months until they can return to the A&P to ask for tax incentives. The company plans to petition the commission once the moratorium ends. Jonesboro has a 3-cent hotel tax that funds A&P.

Before 2011, the state only required a convention center to be 12,000-square-feet to merit tax credit consideration. Other factors such as the county’s median household income, unemployment rates, and other criteria are considered when assessing the $1 million investment. Convention center projects in poorer counties may only be required to have a $500,000 investment and can receive up to 25% in tax credits, Hardin said.

Following is a list of the convention centers that have received the AEDC tax credit:
• John Q. Hammons Center in Rogers;
• Marriott (former Peabody) in Little Rock;
• Holiday Inn and Convention Center in Fort Smith;
• Embassy Suites and Austin Hotel in Hot Springs (both the Embassy Suites and Austin Hotel are connected to the convention center);
• 21c Museum Hotel in Bentonville; and
• Holiday Inn and Convention Center in Texarkana.