Convention center, new boss top issues for incoming city directors

When George Catsavis, Philip Merry Jr., and Pam Weber are sworn in as the three new members of the seven-member Fort Smith board of directors, they’ll face two major issues that may indeed cause them to swear.

Up until Tuesday night (Nov. 2), the elephant in the city’s living room was the looming Fort Smith Convention Center funding shortfall.

With a 4-3 vote, the board added another elephant by firing City Administrator Dennis Kelly. Kelly, who had been in the post a little more than two years, was dismissed effective immediately, leaving day-to-day operations in the hands of Deputy City Administrator Ray Gosack.

NEW BOSS SEARCH
When the board hired Kelly, there was an unofficial but prevailing sentiment among the board to not consider hiring from within. The incoming board members do not share that sentiment.

“I hope to have a long talk with Sandy (Sanders, incoming mayor) and others on this. But I’m a big proponent of promoting from within … but if the talent is not there, then you go outside,” Merry said.

Merry hopes the board finds a good communicator who remains calm under pressure and comes to the board with reasonable options to solve problems.

“I look for one to take the ball and run. I’m not a micromanager. The board sets policy and procedures … but then we need to get out of the way and let him do his job,” Merry explained.

Weber also said the next city administrator needs to be a good communicator and able to “build partnerships” within the region. Like Merry, Weber says the board should not micromanage, but allow an administrator to pursue city goals. She also believes internal and external candidates should be considered.

“You don’t want to leave anyone out that would be a good fit for the city,” Weber said. “But what I think we need is a better vision and someone who can do a little bit better in planning for our future and what our city needs to look like.”

Catsavis also believes internal and external candidates should be given equal consideration. In his opinion, the city board should hire a qualified candidate and then support them rather than “nitpicking them to death.”

“I want a city administrator that is going to promote a business friendly atmosphere in Fort Smith. I want someone to take charge and say, ‘We’re going to start doing business different and treat businesses different,’” Catsavis said.

CONVENTION CENTER SOLUTION
As for a convention center solution, the three incoming board members have different opinions.

The Fort Smith board of directors spent most of 2008 and 2009 seeking a solution to plug the annual deficit. A state turnback program ended in June 2010 from which the city received about $1.8 million a year. In 2010 the city will receive only $888,723 in 2010. A fund balance will allow the city to cover the convention center shortfall for most of 2011.

Proposals to fix the funding shortfall include:
• A half-percent prepared food tax to cover convention center costs only, and estimated to raise $900,000 annually;
• A 1% percent prepared food tax to cover convention center costs that would raise an estimated $1.8 million annually. The annual allocation would be $1 million for the convention center, $240,000 for a convention center maintenance fund, $250,000 for Marshals Museum operating costs, $60,000 for various festivals, $50,000 for Bass Reeves monument (2012 and 2013 only), and $50,000 for arts community (beginning in 2014);
• Reallocation of 0.5% street tax funds to cover only the annual costs to operate the convention center. The reallocation is estimated to raise about $943,000 annually.

Prior to being fired, Kelly proposed a plan to cut 20 jobs each with an annual salary of $50,000. He also proposed a 2.26% salary reduction across the board that would save about $1 million. Fort Smith Mayor Ray Baker and most board members immediately rejected the job and salary cut proposals.

Catsavis advocated during his city director campaign to turn the convention center over to a third-party operator. He sticks with that belief.

“I don’t think the city should be in the business of operating a convention center,” Catsavis said, adding that he is “100%” against a prepared food tax.

An ad hoc committee appointed by the city board earlier this year briefly discussed and investigated a third-party operator option. Their initial look found that a third-party operation would not fully address a funding shortfall.

The ad hoc committee first met April 22 and reviewed several options, including a 1% hospitality tax, finding cuts in the city’s roughly $40 million operating budget, reallocating a portion of the city’s 1% street tax, re-instituting a business license fee and finding a 3rd party operator. The legalities of merging the convention center operations and the Fort Smith Advertising and Promotion Commission also were discussed.

On May 26, the committee unanimously endorsed the idea of a 1% hospitality tax (prepared food tax) to fill an up to $1 million funding shortfall related to the Fort Smith Convention Center. The 1% tax would also support the U.S. Marshals Museum and art and entertainment facilities and programs.

Merry and Weber are aware of the ad hoc committee work and aware of most of the previous two years of study on the issue, but they each have a few other angles they want to investigate.

Weber, who says the convention center delivers a “guaranteed payback” in terms of tourism dollars it generates for the regional economy, wants to look more at the center’s business model and a third-party option.

“I’m not convinced that (third-party operator) will work, but I think we owe it to ourselves to look at that more,” Weber said.

And not that it will directly help with the funding issue, but Weber says the city has not communicated well with citizens the benefit of the convention center to the economy.

Merry wants to look at non-personnel budget cuts before deciding on a funding option. He doubts there is enough cuts to offset the convention center funding deficit, but said “the first option is always to cut waste.” He is not opposed to pursuing a hospitality tax, but is not sure a full 1% is necessary.

“I am clearly for the convention center. This town is well-served to have a vibrant convention center,” Merry said. “If it’s for the good of the town, I am for a tax that would cover that need and that hole that comes from having (turnback money) not coming our way.”

However, Merry is not willing to use hospitality tax proceeds for purposes — Marshals Museum, Bass Reeves statue, etc. — other than the convention center.

“I love those other things and in my private life I help raise money for them. But with my city director hat, I will have to be laser-focused on the city and focused on the convention center,” Merry said.

Budget hearings, which are likely to include discussions about the convention center, are scheduled for Nov. 8, Nov. 9 and Nov. 15. Each hearing will begin at 6 p.m., and will be held in the Community Room of the Fort Smith Police Department.

Other critical funding issues include securing debt covenants related to water and sewer project bonds, future funding of fire and police facilities and personnel and ongoing revenue shortfalls primarily caused by declining sales tax collections.