Fort Smith directors to consider convention center ad hoc committee

Fort Smith City Director Cole Goodman proposed Tuesday (Mar. 23) to create an ad hoc committee of private sector citizens to review and advise the city board on options to fix a looming funding shortfall with the Fort Smith Convention Center.

Goodman’s recommendation, which also includes the review of “other designated projects,” was accepted and placed as an agenda item for the April 6 regular board meeting.

The “other” projects could include support for development of an 85-acre riverfront property owned by the Robbie Westphal family, partnering with Sebastian County on building recreational facilities at Ben Geren Regional Park and supporting various citywide arts and entertainment projects. Some estimates have a tally on all projects exceeding $40 million.

The city board has held special meetings and discussed the convention center issue for more than a year. The board voted 5-2 on Jan. 26 to seek voter approval of a 1% prepared food tax to fix the funding problem. But there has been no movement since the vote to push a plan to voters.

“We’re going to have to make a decision about what we’re going to do with the convention center,” Goodman said emphatically to the other board members.

More than 13 years ago city voters approved a $55 million package — through a half-cent sales tax — to build a modern convention center, modern library facilities and to build the first phase of a master riverfront plan. One of the selling tools was that the state would funnel about $1.8 million a year in turnback funds to the newly expanded center through 2010 to pay off bond debt and support operations.

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.

A partial solution to the issue is to merge the management of the convention center and the Fort Smith Advertising and Promotions Commission. That process is underway with both parties tentatively agreeing to the merger.

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.

Goodman said the ad hoc committee should be made up of 5-7 people, with one person being a hotel owner or operator, and another person representing the restaurant industry. He said the group can then advise the city board on funding options and even on options related to the merger of the convention center and A&P. A handout Goodman provided said the bottom line “would be to provide the Board of Directors an objective business assessment as to the feasibility of conveying the convention center operations.”

Once a committee is in place, Goodman suggested the group report back to the board within no more than 6 weeks.

Goodman stressed that any option requiring a tax change or increase should be placed before the voters.