Fort Smith board to seek 1% prepared food tax option

With a 5-2 vote, the Fort Smith Board of Directors decided Tuesday night (Jan. 26) to first seek voter approval of a 1% prepared food tax to shore up the Fort Smith Convention Center, and then move forward on a tourism and recreation development plan for the Fort Smith riverfront and Ben Geren Regional Park.

For at least the past year, the city board has discussed several plans to bolster funding for the Fort Smith Convention Center, support development of an 85-acre riverfront property owned by the Robbie Westphal family, partner with Sebastian County on investing in recreational facilities at Ben Geren Regional Park and support various citywide arts and entertainment projects. Some estimates have a tally on all projects exceeding $40 million.

CONVENTION CENTER
The roughly $1.8 million in Arkansas turnback funds received by the city to support the convention center will end as of June 30, 2010. City Finance Director Kara Bushkuhl told the board the city can survive the turnback loss in the 2010 fiscal year, but will not be able to do so in 2011. In fact, Bushkuhl reminded the board that current projections show a $4.2 million shortfall in the 2011 general fund budget.

The impact of doing nothing to shore up Convention Center funding could close the facility. Closure could result in the loss of up to 120 full-time equivalent jobs, Kelly told the board. Also, it would force the Fort Smith Symphony, the University of Arkansas at Fort Smith Season of Entertainment and other groups to seek a new home.

The 1% hospitality tax is estimated to generate $1.8 million annually, and, if approved by voters, will be directed through the Fort Smith Advertising and Promotion Commission. Fort Smith City Administrator Dennis Kelly said the city and A&P commission would agree to a contract on how the money would be used. Once an agreement is in hand, an election date would be set and a voter education campaign would begin.

Kelly said he hopes the city board and A&P commission can meet within four weeks to begin contract negotiations. City staff has recommended an election occur after the summer, which means the first available election date would be Aug. 10. However, the city can set a separate, special election at an estimated cost of $25,000.

BOARD ACTION
Approving the plan to first address the Convention Center shortfall were City Directors Andre Good, Cole Goodman (a restaurant owner), Don Hutchings, Bill Maddox and Steve Tyler. Not supporting the plan was City Directors Gary Campbell and Kevin Settle.

Settle opposed separating the Convention Center funding from a “master plans” that outline new facilities and funding options for the Fort Smith riverfront and Ben Geren Regional Park. He said even if it takes 2-3 months to get the business and design plans for the other projects, it would allow the board to “make a comprehensive decision” about all the possibilities.

Kelly said the $160,000 opportunity analysis study of the Fort Smith riverfront plan is finished, with a business plan and “very strong” cost-benefit analysis required before board consideration.

But Hutchings and Goodman said the board has talked long enough about the Convention Center shortfall and that it must be addressed because it is a clear and present threat. Mayor Ray Baker, who was quiet for much of the meeting, said the board has met repeatedly on the issue and needs to move on.

“It makes us look foolish that we can’t come to a conclusion on this,” Baker said.

Baker also said he believes citizens will support the 1% prepared food tax if a good case is made for it.

“The citizens of this community, and I say this very emphatically, have always supported” projects they can see and understand, Baker said.

BIG PICTURE APPROACH
Prior to the board’s decision, Kelly outlined his plan of attack on the quality of place initiatives.

He recommended approval of the 1% prepared food tax that would generate $1.8 million, with $1.1 million dedicated annually for Convention Center support, $240,000 annually for a Convention Center capital fund (reserve fund), $250,000 annually for U.S. Marshals Museum support and the remainder supporting the Fort Smith Classic, Juneteenth, Blues Festival, Bass Reeves Statue and area arts groups. However, Kelly noted, the specific groups supported may be changed during negotiations with the A&P commission.

“That’s not set in stone,” he said.

If the 1% prepared food tax is approved by voters, within 6-8 months the city would pursue a 10% reallocation of the city’s 1-cent street tax. The funds (about $2 million annually) would be used, presumably, for a water park at Ben Geren, two softball fields at Ben Geren, River Park promenade in downtown Fort Smith and a citywide trails project. Any reallocation would have to be approved by voters.

Then, 6-8 months following that cycle, the city would consider reenacting a business license fee program that could generate $1.9 million a year. Those funds would initially be used to pay for construction and operations of a new fire station at Chaffee Crossing.

One reason Kelly proposed the staggered approach is because the city “doesn’t have enough staff to handle all these at one time.” Also, he said, it might be more considerate to the voters to “take baby steps” in approaching them with the numerous plans and funding options.