CFK Hospitality is increasing the size of its proposed convention center project in Jonesboro to 78,000 square feet in hopes of qualifying for state sales tax and income tax credits under the Arkansas Tourism Development Act.
Established in 1997 and amended five times since, most recently in 2009, the act is focused on increasing out-of-state tourist traffic. To qualify for the incentives, developers must, among other factors, operate hotels connected to convention centers of at least 75,000 square feet and develop marketing plans aimed at drawing 25 percent of their visitors from out of state.
CFK Hospitality initially planned a 35,000-square-foot convention center. Developer Chris Keller said the possibility of qualifying for tax credits on the $37 million project and a desire to accommodate perceived demand for the space led to the decision to more than double original plans for the convention center.
"I think we've got to do it," Keller said. "From the responses we're hearing, the demand is there. I don't want to wind up selling vendor space in our hallways and hotel lobby. We don't want to be undersized."
Earlier this month CFK Hospitality submitted a letter to the Arkansas Economic Development Commission. If the developers meet the qualifications outlined in the act, including total investment and size of convention center, the Arkansas Economic Development Commission will make a recommendation to the state Department of Parks and Tourism. Credits are issued through the Department of Finance and Administration.
Arkansas Economic Development Commission spokesman Scott Hardin said in an email that the application and approval process could take anywhere from a few days to a month "if there is quite a bit of dialogue and additional information is needed."
All expenses for the project must be documented through the state Department of Finance and Administration. If approved through that agency, CFK Hospitality would qualify to receive 15 percent of its approved investment, Hardin said.
Other hotels and convention center projects that have qualified for tax credits under the act include the John Q. Hammons Center/Embassy Suites in Rogers; Little Rock's Marriott and Statehouse Convention Center (formerly the Peabody Hotel); Fort Smith's Holiday Inn and Convention Center; both Embassy Suites and Hotel Hot Springs and Spa (formerly the Austin Hotel) in Hot Springs; and 21c Museum Hotel in Bentonville.
While the 21c development has only 12,000 feet of convention space, it qualifies because it includes museum space.
City leaders in Jonesboro have been working to find a developer to build a convention center since 2005. Past efforts stalled because of funding and financing difficulties, including a previous attempt in 2012 by CFK Hospitality to build a 75,000-square-foot space.
"I am extremely pleased to hear they are increasing the convention center to over 75,000 square feet," Mayor Harold Perrin said in an emailed statement. "The very first convention center we looked into 10 years ago was approximately that size, and I believe every square inch will be utilized. It will be a wonderful addition to Northeast Arkansas."
A second convention center project also in the works is on the Jonesboro campus of Arkansas State University. O'Reilly Hospitality of Springfield, Mo., is planning to open a $45 million, 45,000-square-foot convention center with a 202-room Embassy Suites hotel on the campus in the spring of 2018.
Developer Tim O'Reilly said his team had looked at the possibility of increasing the size of the on-campus project to secure the tourism incentives, but did not believe it to be financially feasible. O'Reilly's development is said to be on schedule, and work is to begin on the site Monday.
"We looked at that and there was no way we could get it to pencil out," O'Reilly said of the incentives. "We couldn't make it work. Maybe they can. Those questions are for them to answer.
"We are in a race to get our facility open," he said. "It's a competitive advantage to get open and begin marketing as soon as we can."
That the city has two competing projects will not factor into the Arkansas Economic Development Commission's decision, Hardin said.
"AEDC would give the same consideration to any project if it met the qualifications as defined in the Tourism Development Act," Hardin said. "Should another project meet these requirements, AEDC would be happy to work with them. We don't support one project over another."
Business on 09/15/2016