Hospitality tax an option with annexation of Ben Geren

An annexation of Ben Geren Park by the city of Fort Smith would allow the city to fall under a state hospitality tax provision of which North Little Rock is the only eligible city.

Existing Arkansas law requires a city to have a city park of more than 1,000 acres before it can directly levy a 1% tax on prepared foods — also known as a restaurant tax or hamburger tax — and direct the proceeds to the city’s parks and recreation department. Cities without 1,000 acres must direct a tax on prepared foods through an Advertising & Promotion Commission, and then contract with the commission if it seeks proceeds for support of city parks and recreation facilities and services.

Rep. Tommy Baker, D-Osceola, filed HB 1317 earlier in the ongoing 87th General Assembly in an attempt to remove the 1,000-acre provision from a tax levy law. The proposed bill would effectively allow cities to enact a 1% hospitality tax without having to funnel the proceeds through an advertising and promotion commission.

However, the Arkansas Hospitality Association used its lobbying influence to stifle the bill. HB 1317 now sits on the deferred agenda with the City, County & Local Affairs committee. With less than five weeks remaining in the regular session of the 87th General Assembly, HB 1317 has a slim chance of passage.

Fort Smith board members have said they would only support an increase to the city’s hospitality tax if the city could control the funds. A 1% tax on prepared foods in Fort Smith would generate between $1.5 million and $1.75 million annually. Fort Smith is one of the few active tourism cities in Arkansas without a hospitality tax on restaurants and other prepared-food providers.

Fort Smith has a 3% tax on lodging that is collected and administered by the Fort Smith Advertising & Promotion Commission. Collections of that tax in 2008 totaled $803,591, 11% more than the $723,548 collected in 2007.

CITY, COUNTY COLLABORATION
Fort Smith and Sebastian County officials met Monday (Mar. 16) to talk about “a better way to meet the recreation needs of people in our region,” said Ray Gosack, Fort Smith’s deputy city administrator.

He said the hospitality tax is not a factor in the discussions and was not mentioned at the Monday meeting.

“We’ve realized that it doesn’t make sense for the county and city to duplicate services and facilities. We shouldn’t be in competition with each other. The cooperation will benefit our shareholders (citizens) in many ways,” Gosack noted in an e-mail interview with The City Wire.

Sebastian County Judge David Hudson said it is the goal of the two governments to “coordinate and cooperate on improvements and enhancements” for all users of city and county recreational facilities.

Gosack and Hudson stressed that discussions are in the infancy stage, with the county about three months away completing a strategic review of its recreational facilities, programs and future options. A joint decision may occur in six months, or it could be two years, Gosack said.

“At this time, there are far more questions than answers. And, there’s probably some questions no one has yet thought to ask,” Gosack noted. “That’s the way new ideas are at the infancy stage. (Monday’s) meeting was giving birth to some new ideas. Some of those ideas will survive and thrive; others may not.”

POSSIBILITIES, ANNEXATION
Some of the ideas and possibilities discussed include:
• The immediate need for girls’ softball fields to replace those lost at Andrews Field for expansion of the National Cemetery.
• Coordination of the city’s and county’s trails plan so that they interconnect seamlessly.
• Available land at Ben Geren Park and the fact there’s no other park that has space for significant new facilities.
• Annexation of Ben Geren Park into Fort Smith.

It’s this last possibility about which Gosack and Hudson believe holds the most promise. However, any annexation would require a “joint use and operating agreement” between the city and county, Gosack noted.

In an note to The City Wire, Hudson appeared supportive of annexation.

“Fort Smith annexation of Ben Geren would open the door for cooperation and collaboration between the City and the County for the County Park System,” Hudson wrote. “The county and city already have a number of interlocal agreements and a history of successful cooperation and collaboration.”

Fort Smith City Director Andre Good said he is encouraged by the open dialogue between the city and county on the issue of finding a way to enhance area parks.

“This is another indication that the board and the city and county are moving in the right direction,” Good said.