The University of Arkansas at Fayetteville has been planning to build a hotel and conference center on its campus for at least the past two years.
But it is running into one roadblock: financing it.
The 107,000-square-foot hotel is estimated to cost about $38 million in construction, furniture and startup. FLIK International Corp., a company that will manage the property, is set to invest $4 million, and consultants say $28 million to $30 million would come from either a commercial loan or a bonding process. That would leave the university to raise about $6 million.
Officials have planned the new hotel and conference center for a site near the Sam M. Walton College of Business on the UA campus. The building, tentatively dubbed the "Executive Education Hotel and Conference Center," could serve conferences sponsored by an academic college in the university, alumni events, corporate events, training and workshops, and even orientation, said David Davies, UA's assistant vice provost for finance and administration in the Student Affairs Division.
The center would bring UA in line with other out-of-state universities, including the University of Texas at Austin, Washington University in St. Louis and Northwestern University. The three have an on-campus hotel and conference center tied to its executive education programs, which focus on business and leadership skills in master's degree programs.
Arkansas State University in Jonesboro also has an on-campus hotel and conference center in the works.
Currently, the Walton College's executive education program uses the Reynolds Center for Enterprise Development facilities. The campus is also home to an on-site hotel, Carnall Hall, but it has 49 rooms, one big and a small meeting room.
In 2011, Matt Waller, the interim dean of the Walton College, said he began prioritizing executive education at the Fayetteville campus after the business college added a new department. In talking with officials from J.B. Hunt, a national trucking firm based in Northwest Arkansas, the parties decided to bring the company's top 300 salespeople to a three-day workshop at the Reynolds Center, Waller said.
"Have you ever been in the Reynolds Center?," Waller asked. "The capacity is 300 and so, as a neophyte, I brought in 300 people. That was a mistake. It got hot. The good news is that the content was so good and so relevant that they said it was the best corporate event they ever had."
Most of the salespeople had no experience with executive education, he said.
"But the top 5 [percent], they've been to Penn State, they've been to Ohio State, they've been to Michigan State, UT-Austin, and they're used to being able to go in, park, go into the hotel and then have the conference facility over there," he said. "Everything's catered. Everything's nice and neat. We didn't have the right facilities to be able to do this."
Donna Wang, vice president of sales and marketing at FLIK International, said the project would be "a game changer for the university."
Last week, UA officials -- along with architects, consultants and other partners -- unveiled more design plans for the proposed hotel to the University of Arkansas System board of trustees at a retreat.
The hotel would have either 120 or 128 rooms depending on the bed configurations; 20,500-square-foot areas for meetings and banquets, including a ballroom; 731-square-foot areas for guest amenities, such as an exercise room and a business center; and a 7,743-square-foot area for dining, kitchen and hospitality.
It would abut the Harmon Avenue garage, which consultants said has enough capacity to house vehicles for future events at the hotel.
Because the site is on a slope, the plans show the building would have a ground floor up to a sixth floor. The ground floor has one entryway, while the "first floor" would provide the main entryway for conferees. The second floor would house most of the conference rooms, while the third through sixth floors would just have rooms.
The design of the hotel and conference center, though, is further along than the financing, Davies said.
Of FLIK's $4 million investment, $3 million would be paid back over 15 years but without interest. The repayment would come from hotel revenues. The remainder is what the company called "non-reimbursable."
UA System trustees will later decide whether to go about the $28 to $30 million through classic construction loans or through tax-exempt bonds. Repayment would also come from the center's revenues.
"From the get-go, we have represented to everybody that this project can be structured to pay for itself and should not involve a university subsidy in any way," said David Ong, president of Acquest Realty Advisors, Inc., the developer for the project.
Through the bonding process, UA System trustees would either piece together a board -- or allow Fayetteville officials to do so -- for a nonprofit entity. In doing so, center revenue can be used for university programs that don't have dedicated funding, Davies said.
The remaining $6 million is up in the air, Davies said.
UA-Fayetteville officials had been looking at the federal New Market Tax Credits Program to help fund the center. The site of the project would have to qualify for the allocations.
Under the program, Community Development Entities apply for tax credit allocations. The Arkansas Capital Corporation, one of those entities, applied last year for the tax credit allocations, but didn't receive any, said Sam Walls, the president and chief operating officer of the corporation.
The entity has received about $200 million in tax credits since 2003, he said. The competition for the allocations is fierce. Last year, he said, the federal government allocated $3.5 billion in tax credits nationwide, while the requests from 263 different Community Development Entities totaled some $19.9 billion.
An arm of the U.S. Treasury Department hires reviewers to score and rank the applications. Each is ranked by three different reviewers, and the federal agency allocates the tax credits until there are none left.
"Unfortunately, this year, it's literally down to ... your score could be one point off and that could be the difference between getting it and not getting it," Walls said.
Had the entity received the allocations, the Arkansas Capital Corporation would have gone to its advisory board with recommendations of which projects to fund and how much each project would receive. For each project, the Arkansas Capital Corporation would then have sold the tax credits to different financial institutions and used the money from the sales to help fund a project.
Still, the university could look to other Community Development Entities that might have an Arkansas footprint.
"We're willing to work with them and help them to go do that," Walls said.
But the competition there is high, too, he said. It's a matter of UA-Fayetteville getting on other Community Development Entities' radars.
The university was hoping to get $6 million in allocations from the tax credit program, but now it will have to look at raising that amount -- if not more, Davies said. The donations or investments could be tied to naming rights of meeting rooms or the banquet hall, he said.
"If we can be successful in raising the money, then we can move forward with it," said UA System board chairman Ben Hyneman of Jonesboro. "If we can't be successful in raising the money, let's put the brakes on it."
Trustee Cliff Gibson of Monticello said while he supported the project, he was concerned with some of the costs of the project, particularly the cost per square feet. The $28 million construction budget shows it will cost $261.50 per square foot for the building, he said.
"That just seemed kind of high to me," Gibson said. "It's probably because of where I'm from. I know hospitals that are built for less money per square foot than this, and they got a lot of hot stuff in them."
Building in the center of the campus costs more, Davies said.
Gibson added he wanted to be absolutely certain that issuing bonds for this project would not affect the university's ability to get credit for other projects. Tim O'Donnell, UA-Fayetteville's Interim Vice Chancellor of Finance and Administration, said he thinks the campus has "adequate coverage" to complete the project.
Trustee John Goodson of Texarkana said he was in a tough position.
"It's very difficult to justify to the General Assembly when we send our president down there, our chancellors down there to explain why we go ask for more money, why we face an annual tuition increase," Goodson said. "And they'll ask, 'How are we being good stewards of the state money?' We need some hard numbers and projections on how this will benefit the Walton school."
Several trustees echoed Goodson's thoughts.
"What John said, I think the same thing," Trustee Reynie Rutledge of Searcy said. "We don't have an understanding how to monetize the training that you're doing and how this will enhance it."
Hyneman added that he thought having greater equity -- a downpayment -- would ease his concerns. A larger downpayment would lower the debt service payments of the hotel.
"I share John's concerns," he said. "But if you got more equity into it, I think when those questions are raised [by the General Assembly], you'll have a good, solid response to it."
Metro on 08/10/2015