Fort Smith considers options for facility

Sale, lease of convention center among ideas proposed to city directors

FORT SMITH — The city administrator suggested that city directors consider leasing or selling the Fort Smith Convention Center as part of their discussion about whether to continue subsidizing the facility.

In a recent email to Mayor Sandy Sanders and city directors, Carl Geffken wrote that while convention center staff members have done a good job of operating the 40,000-square-foot convention center and 1,300-seat theater in downtown Fort Smith, the city still has to contribute $770,000 this year from the general fund to help cover its expenses.

“We all want economic growth and prosperity for all of Fort Smith, which means we have to review and consider all options — these and others the board may come up with during discussion and study — to decide on the smartest course of action,” Geffken told the Arkansas Democrat-Gazette.

He said the convention center will be one of the topics discussed in an upcoming but as-yet-unscheduled strategic workshop.

Geffken mentioned in the email that SMG World, a large venue manager based in Pennsylvania, has thousands of employees and more than $1 billion in revenue. The convention center under its management would draw on

its experience and ability to book events.

Under a lease, a company would operate the convention center and Fort Smith would pay for capital upgrades and any operating deficits.

If city directors considered selling the convention center, Geffken wrote, officials could couple it with a deal to include the adjacent Doubletree Hotel in the sale.

Two directors responded to the email. City Director Tracy Pennartz simply wrote, “Really…!” City Director George Catsavis wrote: “Great idea to lease or sell it. It would free up the general fund money. Personally, I would support either option, even offer a one-time cash payment to work a deal.”

Sanders said Thursday that he did not favor leasing or selling the convention center but said it was worth talking about. Other city directors asked for comment on Geffken’s email did not respond.

Sanders said the convention center was well-managed and operated and hosts many state and regional conventions, volleyball tournaments and meetings. A wide variety of local organizations also rely on the convention center.

He referred to a report last year, which city directors heard during their April 10 meeting, that said major out-of-town events at the convention center had a financial impact of $7.8 million on the local economy and generated nearly $200,000 in sales tax for Fort Smith.

The convention center report said total income from

rentals, beverage sales, concessions and catering for last year was more than $788,000. The report showed income rising each year for the past four years.

But the income was just more than half of the nearly $1.46 million in convention center expenses, the report said.

No convention center is designed to make a direct profit, said Claude Legris, executive director of the Fort Smith Advertising and Promotion Commission, which operates the convention center.

The convention center’s mission is to make as much economic impact on the city as it can and lose as little money as possible, Legris said.

City Director Mike Lorenz said at the April 10 meeting that subsidizing the convention center from the general fund was the wrong way to fund it. It needed a dedicated funding source to cover the expenses and relieve the general fund of the burden.

“I truly believe that in order for our convention center to move forward, we need that dedicated funding source, and it’s going to come from a prepared food tax,” Pennartz said.

City directors called on residents to vote in 2011 to support a 1 percent prepared food tax that, at that time, was estimated to generate $1.8 million a year.

After a campaign by restaurant owners against the tax, voters rejected the proposal 5,619-3,341 in a Nov. 8, 2011, election.

Sanders said he agreed that a dedicated funding stream is needed for the convention center but said, “I don’t think the climate is right for implementing a prepared food tax.”