Jonesboro to provide hotel tax forgiveness to one of its proposed convention projects

by George Jared (gjared@talkbusiness.net) 153 views 

The Jonesboro A&P Commission has agreed to give up to $2.5 million in hotel tax rebates for a proposed hotel/convention center to be located on the Arkansas State University campus. Jonesboro Communications Director Bill Campbell told Talk Business & Politics that O’Reilly Hospitality Management will keep the hotel taxes collected after its 203-bed Embassy Suites hotel, Houlihan’s Restaurant, and the proposed 40,000-square-foot Red Wolf Convention Center open. The agreement is for 10 years after the open date, but is capped at $2.5 million, he said.

OHM CEO Tim O’Reilly had previously asked the city to give his group $300,000 to market and advertise the project in addition to hotel tax incentives but that isn’t part of the deal, Campbell said. OHM has 90 days to begin work on the project or the agreement will be voided.

“There’s no upfront money. It’s strictly based on what they earn,” Campbell said.

Construction is expected to begin in the coming weeks and the completion date is slated for mid-2019. OHM was denied hotel tax rebates and other monetary considerations in 2016 when the commission opted to support a separate hotel/convention center project.

In February 2016, the 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 located near the city’s hotel row along I-555. CFK also received a hotel tax forgiveness of $200,000 per year for up to three years once the project was complete.

CFK began dirt work on its project earlier this year, but financial problems forced a work stoppage. Contractors are suing CFK for about $1.5 million in unpaid construction work that has been completed, and the company had to return about $70,000 to the A&P. The city lost a few thousand dollars on the CFK deal to this point, and A&P commissioners agreed several months ago no more money will be doled on the project until significant construction in complete. How this could impact CFK is uncertain.

Jonesboro Mayor Harold Perrin has supported the CFK project and it caused some consternation among those in the public, especially those who supported a convention center on the ASU campus. Perrin previously told TB&P he threw his support behind the CFK project because it would require less hotel tax rebates from the city. Perrin has been working on a hotel/convention center project since 2005.

This past week, Perrin has been attending the National League of Cities convention in Charlotte, North Carolina. He issued this statement on the A&P’s decision.

“One of my earliest goals as mayor was for Jonesboro and Northeast Arkansas to have a convention center. As you know, it’s been quite a journey. But I am extremely pleased to find out today that we will have an Embassy Suites and convention center coming,” he said. “So many of our state associations have wanted us to host their conventions. But the only places capable of hosting such large events were Central and Northwest Arkansas. So in the near future we will be able to bring them to Jonesboro, which will showcase our city and contribute significantly to our growing economy.”

O’Reilly initially believed the project would cost about $35 million when it was first proposed in 2015. Since then, the price has steadily grown to an almost $60 million price tag. Permitting and cost issues delayed the project, but O’Reilly previously told TB&P the project will move forward.

“We’re too far down the road on this project … we will complete it,” he said.

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