Fort Smith Convention Center subsidy again questioned by city board

by Aric Mitchell (amitchell@talkbusiness.net) 396 views 

The Fort Smith Board of Directors are not ready for a consensus on cuts to Convention Center funding, but city directors at a recent study session did appear to agree the city’s General Fund is not the right place to draw the $777,000 subsidy keeping the facility’s doors open.

On Tuesday (Feb. 13), at the request of Director Tracy Pennartz, the Board resumed discussion of a possible 10% cut to the Convention Center’s funding. Until the 2018 budget cycle, Pennartz noted, city employees had to do without raises for a few years while police equipment grew more outdated.

“When we have a police vehicle breaking down on the way to a call, tasers that don’t work, and can’t afford body cameras for our police officers because of this (subsidy), it’s time to think about doing something else,” Pennartz said, adding that the Center needed a “dedicated funding source to continue being a viable competitor with other markets. There is no General Fund flexibility.”

Director Keith Lau said the Center was not doing “prudent business” by not setting a fee structure based on the needs of its expenses, subsidy, and capital improvements.

“We need to know the real truth about what it costs to run the center, not just what’s going to get you another $777,000 to make it through another year,” Lau said to Tim Seeberg, the facility’s general manager, and Claude Legris, executive director of the city’s advertising and planning commission.

Lau said he wanted to keep the discussion “positive” and “solutions-oriented,” but noted that the Board needed to know the “brutal truth,” so it could put the matter before the citizens and let them decide the Convention Center’s fate, be it a “hamburger tax,” continuing to subsidize the Center, or removing it as a liability.

A previous try at a prepared food tax to help run the Convention Center failed in November 2011 with 62.7% of voters rejecting the proposal of a 1% tax, which was estimated to raise $1.8 million. The Convention Center was expanded in the late 1990s without a dedicated funding source. Failure on the 2011 vote resulted in the current subsidy.

The 2018 budget calls for an estimated $1.635 million to run the facility with $843,915 in salaries to the 13.5 employee positions — this includes regular salaries, overtime, retirement, Social Security, insurance costs, and workers’ compensation — and $673,595 in operating expenses.

Seeberg suggested that “one way to make this a more break-even or for-profit enterprise … is if we had a dedicated, exclusive food and beverage source in the building.” Legris noted that as part of the decision to subsidize the Convention Center in lieu of a prepared food tax, the Center had agreed to forgo kitchen equipment and give caterers the ability to work events.

As for how much the food-beverage source could help reduce the subsidy, Seeberg said, “I could cut it in half overnight if I had that, but there is an initial investment requirement and an agreement this Board needs to come to on whether we want to phase out the whole catering option.”

Seeberg and Legris also addressed a common community refrain — why not invest more into drawing bigger events to the Convention Center? Legris said he was not sure about the legality of risking tax dollars on such events, “but it certainly wouldn’t be wise.” Seeberg agreed, noting that while one event could do well enough to fund a venue’s expenses for the entire year, “you could go underwater on the next five.”

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