Jonesboro convention center construction begins; ceremonial groundbreaking set

It’s been about 60 days since dirt work began on the new convention center/hotel on the Arkansas State University campus, and the project is nearing its vertical phase, O’Reilly Hospitality Management CEO Tim O’Reilly told Talk Business & Politics.

Footings have been poured and concrete work is finished, he said. After the project was stalled for more than a year, O’Reilly said there have been no setbacks since construction began, and it should be completed in July 2019. A ceremonial groundbreaking is slated for Thursday.

“It’s well underway … we’re glad it’s started,” he said. “Projects like this are big and complicated. There’s always going to be twists and turns.”

OHM, based in Springfield, Mo., plans to build a 202-bed Embassy Suites Hotel, a 40,000-square-foot Red Wolf Convention Center, and a Houlihan’s Restaurant. The project is expected to cost about $60 million. Records from the Jonesboro Regional Chamber of Commerce and the Arkansas Economic Development Commission show that O’Reilly previously said at least 430 jobs would be created directly or indirectly as part of the convention center project with a $44.418 million impact on the local economy. Of the estimated 430 jobs, 300 would be at the convention center with the rest coming from other sources.

Jonesboro Mayor Harold Perrin has said one of his main objectives was to bring a convention center to Jonesboro. By 2015, two competing projects, one by O’Reilly and another by, Northern Arkansas Hotel and Convention Center (NAHCC) emerged. Originally called the Keller project, NAHCC proposed to build a 78,000-square-foot convention center and 165-bed Hyatt Place Hotel on the property adjacent to Interstate 555 near its confluence with Caraway Road just off the city’s hotel row. It was estimated to cost about $50 million.

ASU approved of the O’Reilly project in February 2016. ASU and OHM agreed on a 50-year lease that can be extended another 40 years. Starting in the fourth year, OHM will pay ASU $250,000 annually, and then starting in year 10 the amount will rise by a positive percentage difference based on the federal consumer price index. The university will also receive other benefits such as yearly room stays and others.

Perrin said several times the city probably couldn’t support two convention center projects, and he went against ASU to place his support behind NAHCC. In a controversial 3-2 vote, the Jonesboro A&P commission voted in March 2016 to give NAHCC $300,000 in $75,000 installments. NAHCC was also expected to get up to $600,000 in hotel tax credits.

OHM was rejected when it asked the A&P for a series of six, three-year contracts for their project, starting in late 2017 or early 2018. The amounts ranged from $157,302 the first year, $177,274 the second year and $200,000 in year three. The proposed agreement would have put a $200,000 cap on hotel tax abatements and would have guaranteed a $200,000 a year payment to help with marketing the convention center.

Groundwork on a 78,000-square-foot convention center and 165-bed Hyatt Place Hotel began in early 2017, but was was stopped later that year after liens were placed on the property. NAHCC CEO Chris Keller returned $71,000 of the $75,000 the A&P had already given to his organization to build a convention center. In a letter to the city, Keller said construction on the stalled $50 million project would resume in the following months and it will be “coming out of the ground” within 120 days. The $4,000 not returned had already been spent on advertising and promotion.

Keller said his legal counsel was working to satisfy the liens and allow work to proceed. Investor issues led to financial problems, but Keller said investor Carl Kaeding should help get the project back on track. The project never resumed.

OHM also had it’s own problems. The company’s plans were subject to city approval and it took months to get the plans approved, O’Reilly said. OHM leased a swath of ground on the ASU campus, and O’Reilly said it was their belief the land is owned by the state, and not under city authority. There’s no specific law or ordinance clearly requiring OHM had to get city approval, but the company decided it was better to work with the city to get the project completed, without controversy, as quickly as possible.

When NAHCC returned the money, it opened the door for the A&P to support OHM. The A&P Commission agreed in November 2017 to give up to $2.5 million in hotel tax rebates for the proposed hotel/convention center. The agreement is for 10 years after the open date, but is capped at $2.5 million.

O’Reilly said his company owns 25 hotels and restaurants, and up to nine of them are the same size as the project on the ASU campus. It was a slower than expected start, but the convention center/hotel will be coming out of the ground soon, he said.

“It’s been, knock on wood, relatively smooth since we started the groundwork,” he said. “If the weather stays good we should be able to have this done on schedule.”