The Fort Smith Board of Directors agreed to a contract that will allow Los Angeles-based Oak View Group (OVG) to manage the Fort Smith Convention Center. OVG approached the city about managing the convention center in spring 2019. In June 2019, the group presented to the board.
OVG Facilities provides “venue owners and operators with customized services that addresses the specific needs of their entertainment, sports, performing arts, conference and expo, civic, and city venues,” according to company provided information. The company provides strategic planning and consulting services as well as private management of public facilities.
They made a proposal to the board in July. At that time, OVG proposed a comprehensive approach for increasing business and events at the facility, including using its nationwide network of resources to attract programming, shows, events and other offerings, said Deputy City Administrator Jeff Dingman in a memo to the board concerning the contract.
During Tuesday’s (Nov. 10) regular meeting, the board unanimously approved a resolution allowing the mayor to execute the agreement. The contract will go into effect Jan. 1 for an initial 3-year term, with options for up to seven subsequent one-year terms. A Transition period will exist from Dec.1-31.
The city will pay a management fee of $8,500 a month, subject to annual CPI adjustment, plus commission on food and beverage sales. There also will be possible performance and sales commission incentives.
OVG will invest up to $500,000 to put a full-service commercial kitchen in the convention center. They would recoup that expense through $50,000 annual installment payments for 10 years that would come from the facility’s operating fund. That rate would be prorated over the number of years the agreement was in effect if the contract is terminated before 10 years, the agreement states. OVG also will make a $25,000 investment for an initial “Solicitation of Events” fund.
The city will continue to own the convention center, including the use of designated rooms for public meetings and as an emergency facility in support of the city’s memorandum of understanding with the Arkansas Department of Health.
OVG will hire staff such as a facility manager, sales director or sales manager, who will become OVG employees. This will affect three current employees, Dingman said in the memo,noting that the city’s existing operating staff will continue to be city employees “in all regards until attrition (resignation, transfer, retirement, etc.) creates a vacancy.” New hires will be OVG employees.
The resolution specifies that approval of the OVG agreement is conditioned upon the A&P Commission agreeing to the early termination of its 2012 lease for the facility. That item will be on the A&P Commission’s Nov. 24 meeting agenda.
The convention center brought in $912,661 in total revenue in 2019, a 9.49% increase from the $833,546 generated in 2018, said Tim Seeberg, general manager, when presenting the convention center’s annual report June 9. Convention center expenses rose marginally in 2019. Expenses last year came in at $1.611 million, up 0.13% from the $1.608 million in 2018.
“With the overall expenses increasing by only a fraction and almost 10% revenue increase in 2019 along with overall tightening of the budget, we were able to reduce the operating subsidy (from the city) by $77,000, almost 10%,” Seeberg said.
Even though the convention center needed $77,000 less in subsidized help from the city in 2019, the city still budged the $777,000 to the center. What wasn’t used went into the convention center’s fund balance. The center now has approximately $750,000 in its reserve account, Seeberg said.
Dingman said one of the objectives of the agreement was to “whittle down” how much the city puts into the convention center from the general fund.