The city of Fort Smith will not be reducing its subsidy for the Convention Center just yet — but some city directors said it's time to establish a more stable way to fund the Convention Center, such as a prepared food tax.
At-large Director Tracy Pennartz had requested that the board cut the city's contribution to the Convention Center by 10 percent, which would reduce the $777,000 subsidy planned for this year to $699,300.
The city owns the Convention Center, and about half of the center's funding comes from the city while the rest comes from money it makes from rentals, ticket sales and concession sales. Money in the general fund can essentially go anywhere with board approval, but is largely used for the police and fire departments. The subsidy is decided on an annual basis.
Ward 3 Director Mike Lorenz said at the Board of Directors' study session Tuesday that the Convention Center needs a dedicated funding source instead of relying on the general fund. Other cities fund convention centers with a prepared food tax.
"My issue is not, 'We need to cut $75,000 here and there.' We need to fund the thing appropriately," Lorenz said.
In 2011, voters turned down a proposed 1 percent prepared food tax intended to help fund the Convention Center.
"The $777,000 subsidy we have in the general fund is needed elsewhere ... I truly believe that in order for our Convention Center to move forward, we need that dedicated funding source," Pennartz said. "And it's got to come from a prepared food tax, and I would think that all of the restaurants downtown would consider that to be very important because of the money generated and the financial impact that is generated for hotels and restaurants."
Lorenz said that the Fort Smith Convention Center, like other convention centers, is a community service that is not intended to make a profit in terms of expenses vs. revenue like an ordinary commercial entity would. Instead, it generates money for Fort Smith by people eating at restaurants and staying in hotels.
"This center supports hundreds of businesses around town," Lorenz said.
Ward 2 Director Andre Good said he agreed with Pennartz and Lorenz.
"I'll do what we have to do to work for that dedicated funding source for the Convention Center. I see the value in it," Good said
According to General Manager Tim Seeberg's presentation to the board, the Convention Center generated $203,684 in sales tax for the city in 2017 and a total financial impact of more than $7.8 million. The center made $788,713 in revenue in 2017, topping itself for the fourth year in a row. The center had $1,459,558 in expenses.
At-large Director Don Hutchings, before other directors mentioned a prepared food tax, said he would like to increase the city's subsidy to $800,000.