Fort Smith A&P, convention center merger idea moving forward

The Fort Smith Board of Directors could have a plan in front of it by early December that would outline the merger of operations and management of the Fort Smith Convention Center and the Fort Smith Convention and Visitors Bureau.

A task force representing the convention center and the CVB was formed Aug. 4 to tackle the legally and financially complex merger of the two organizations who share a common goal: bring people and groups to Fort Smith.

Claude Legris, executive director of the Fort Smith Convention and Visitors Bureau, said the a draft resolution is being prepared that will express two primary factors. First, revenue from 1% prepared food tax — generating between $1.5 million and $2 million annually — is necessary for a successful merger. No tax, no deal, Legris summarized.

Also, the merger would largely remove convention center operations from city control. While it may be necessary for the city to own the land and buildings and possibly handle the collection of hospitality taxes, the new organization would have sole authority for the day-to-day management of the convention center.

“Again, that is how it is done in those cities (Hot Springs and Pine Bluff) and just about everywhere else,” Legris said.

Legris said the commissions of the two groups may act on the resolution by the end of November. If both groups approve, it could be sent for city approval in early December.

Specific personnel decisions will not be part of the resolution, Legris said, meaning it will be unclear what roles Legris and Frankie Hamilton, director of the convention center, might have in a new organization. However, Legris said it is likely the new organization would have a director overseeing an A&P division and a convention center division.

“It was a very positive meeting. With everybody in the room, there was a consensus that we need to move forward,” Hamilton said.

Hamilton said there will have to be an “good, one-on-one grassroots education” with the public about what is needed with respect to the prepared food tax,

“When you talk to people one on one, when they realize what few cents we’re talking about, they really don’t have a problem with it — specially when, collectively, they see what it could mean,” Hamilton explained.

Driving the merger consideration is a looming financial shortfall for the convention center.

The city’s portion of the state’s tourism turnback funds are set to expire in 2010. The received around $1.8 million annually from the turnback program. Between 2001 and 2007, the city collected $13.23 million in turnback funds, with $4.36 million of that used to help pay down the 1997 sales and use tax bond debt. Proceeds from turnback funds between 2008 and 2010 are estimated at $4.47 million.

On the joint committee are Fort Smith Mayor Ray Baker; Tom Caldarera, Fort Smith restaurateur and member of the A&P Commission; Hamilton; Fort Smith City Director Don Hutchings; Legris; Larry Schwartz, Fort Smith accountant and chairman of the Convention Center commission; and Ronnie Townsend, general manager of the Fort Smith Holiday Inn City Center and member of the A&P Commission. The committee met Thursday (Oct. 29) to further discuss the merger idea.

The cities in Arkansas that have successfully merged tourism and convention center operations have done so with revenue from a prepared foods tax — aka, hamburger tax. Fort Smith has in place a 3% tax on hotels with which the A&P collected $803,591 in 2008. That amount is not near enough to cover A&P and convention center operations. A 1% tax on prepared foods in Fort Smith would generate between $1.5 million and $2 million annually. Fort Smith is the only large tourism city in Arkansas without a hospitality tax on restaurants and other prepared-food providers.

Legris told The City Wire on Thursday that he presented findings from his research into the combined operations in Hot Springs and Pine Bluff. (The City Wire was unable to attend the Thursday meeting, but interviewed Legris after the meeting ended.)

Pine Bluff collects about $1.5 million a year from a 2% prepared food tax and 3% lodging tax. Approximately 83% of that total is generated through the prepared food tax and 17% is generated from the lodging tax, according to research provided by Legris. And in Pine Bluff, 20% of the tax collected is dedicated to funding of the CVB and 80% funds the Convention Center.

The Hot Springs bureau collects about $4.49 million annually, with 63% from hospitality tax collections (a 3% prepared food tax and a lodging tax) and 24% from the convention center operations.