City details funding history of Fort Smith Convention Center
by September 19, 2011 4:49 pm 243 views
The city of Fort Smith on Monday (Sept. 19) released a seven-page document that “clarifies” the funding history of the Fort Smith Convention Center between 2001 and the present.
Tracy Winchell, communications manager for Fort Smith, said Monday’s release was not spurred by any request or commentary, but is part of the city’s effort to “explain as clearly as possible” the finances related to the convention center.
On Sept. 12, the Fort Smith Advertising & Promotion Commission unveiled a detailed 6-year plan on how revenues from a proposed 1% prepared food tax would be spent if voters approve the funding mechanism for the Fort Smith Convention Center.
A 1% prepared food tax was originally enacted by the board in February as a solution to an annual deficit with Fort Smith Convention Center operations predicted to occur when $1.8 million in annual state turnback money dried up. The state turnback program —which supported expansion or construction of tourism facilities — ended for Fort Smith in June 2010. The center has since operated on a reserve fund. A 1% prepared food tax is estimated to raise about $1.8 million annually.
The board changed direction on the tax after months of public uproar. In a July 28 special meeting, the board unanimously voted to repeal the original food tax ordinance, re-enact the tax, and send the measure to voters in a Nov. 8 special election. Fort Smith board members have said the tax, if approved Nov. 8, would be brought before voters again in five years to give them a chance to approve of how the effort is being managed.
“First and foremost, state tourism turnback funds have always been used to fund convention center operations,” noted the city’s statement released today (Sept. 19).
The reported noted that revenue from the convention center were used for parks projects and for library and senior citizens services.
“Between 2004 and 2009, the City of Fort Smith reinvested $1.28 million of convention center rental revenues in the Fort Smith Public Library,” according to the report.
For a more detailed report on the funding history of the convention center following its expansion, see the following links.
• History of the emerging funding problem with the Fort Smith Convention Center (May 2009)
• Part I of the original series
• Part II of the original series
Following is the complete statement from the city of Fort Smith.
Convention Center Funding Explained (Link here for the PDF on which to view the financial documents.)
Questions about how state turnback funds and revenue proceeds have been used have long-been a source of confusion and have resulted in misunderstanding the source and destination of revenue streams.
First and foremost, state tourism turnback funds have always been used to fund convention center operations.
Attached is a statement of revenues, expenditures, and changes in fund balances for the fiscal years ended December 31, 2001 through December 31, 2011.
This document shows that, between 2001 and 2010, the convention center received a total of $17,705,960 in state turnback funds. During 2001 and 2002, 100% of those funds were used to pay down the bond debt approved by voters in 1997. This leaves approximately $12.5 million to account for and each year’s expenditures are itemized among personnel, operating costs, and capital improvements. Capital expenditures included completion of restrooms, remodeling the façade of the Arkansas Best Performing Arts Center, enclosing the HVAC system, and a number of additional improvements designed to enhance the marketability of the space and to provide a quality visitor experience.
Please note that in 2009, operating expenses were $1.78 million and significantly higher than previous, or subsequent, years. This is a result of the 2008 hail storm. The line item titled “Insurance proceeds from hail storm” reflect a reimbursement of $979,421 for storm-related repairs.
The second financial statement attached shows how the convention center’s operating income was used between 2003 and 2011. From 2003 through 2009, the funds were used for parks projects and for library and senior citizens services since all of the convention center expenses were covered by the tourism turnback funds from the
state.
Between 2004 and 2009, the City of Fort Smith reinvested $1.28 million of convention center rental revenues in the Fort Smith Public Library.
"This supplemental funding came at a crucial time for the Fort Smith Public Library," Library Director Jennifer Goodson said recently. "After an unexpected and almost total loss of state funding, the library had already reduced hours, cut staff, reduced our materials budget, and begun to tap reserves to maintain a basic level of service. These funds enabled us to avoid further cuts in materials and services and gave us a measure of stability while we adapted the library budget for this new fiscal environment."
From 2003 through 2009, $1.241 million in rental income from the convention center was invested in Fort Smith Parks & Recreation facilities, including the Carol Ann Cross dam and walking trails, and Elm Grove Community Center at Martin Luther King, Jr. Park.
Also between 2003 and 2009, $910,824 was invested in SRCA, Inc. (Sebastian Retired Citizens Association) so that senior citizens could continue to receive low-cost, nutritious lunches at senior centers in the City of Fort Smith.
The Area Agency on Aging, which provides in-home health care for Fort Smith seniors, received $540,000 between 2003 and 2010.
Project Compassion, during the same time period, received $13,700. This is an organization of more than 300 volunteers who provide one-on-one visitation with residents of Fort Smith nursing homes.
When state turnback revenue ended in 2010, financial support for these organizations ended and all convention center operating revenues for 2011 have been utilized to continue operating the facility.
City administrator Ray Gosack explains, “It is the position of the Mayor of the City of Fort Smith, and the Board of Directors, that the convention center provides financial benefit to private enterprise and to the local tax base, and that economic benefits can be enhanced when the facility is operated by Fort Smith’s independent destination
marketing organization – the Advertising and Promotion Commission. This entity is charged with increasing tourism and bringing new money to Sebastian County and our entire region, and the convention center is an important resource for fulfillment of that mission.”
According to The City Wire’s Compass Report, the region’s hospitality sector scored an “A,” and “continues to show gains. June 2011 saw 9,500 jobs in the regional hospitality sector – up considerably from the 8,900 jobs in June 2010.”
Revenues from the prepared food tax will provide the fuel necessary to fund capital projects that will make the space more marketable for event organizers, and the marketing budget to recruit out-of-town convention business in the next 5 years.