LR board to decide hotel tax

‘Yes’ sends museum, park fund plan to voters in February

Little Rock board members will decide tonight whether to increase the city's hotel tax to fund expansion of the Arkansas Arts Center and improvements to MacArthur Park and the MacArthur Museum of Arkansas Military History.

If the vote passes, the 2 percent tax increase will be collected starting Jan. 1.

But it would take voters' approval in a February special election to designate the money toward those specific projects and for a 30-year bond to be taken out in order to get the revenue upfront.

If voters rejected the ballot measure, the money would still be collected and would then be used in accordance with state law -- half for parks and the other half at the discretion of the Little Rock Convention and Visitors Bureau.

The city board will vote on three separate ordinances dealing with the possible tax increase at its 6 p.m. meeting tonight at City Hall.

One ordinance would increase the Advertising and Promotion tax levied per hotel room night by 1 percentage point to the maximum 3 percent allowed under state law.

A second vote would add another 1 percent tax dedicated to parks, which is permissible under the law.

With all state and local taxes included, the hospitality tax increase -- if passed -- would raise a hotel customer's tax rate from 13 percent to 15 percent in Little Rock.

The third ordinance would set a Feb. 9 special election for voters to authorize the issuance of bonds.

Officials estimate that a bond could be taken out for between $35 million and $37 million. About $1 million of that would go toward upgrades to the military museum and park. The rest would help fund a $60 million expansion of the Arts Center, which would also need to raise private funds for its project.

The bond would be paid back over 30 years with the yearly collections from the new portion of the hotel tax.

Mayor Mark Stodola said the plan is the ideal way to pay for improvements to the Arts Center, the park and the military museum because the burden isn't on squarely on city residents. Only someone renting a hotel room will pay the fee.

Dedicating the tax revenue to the Arts Center and the museum and park would put off a previous proposal to use those funds to build an indoor sports complex.

In March, the Little Rock Convention and Visitors Bureau explored the economic impact that a new sports complex would have on the city and state.

Hired consultants determined that there's a demand for such a facility because Little Rock doesn't have an indoor venue that can host the large-scale basketball tournaments that might otherwise be scheduled in the city.

The consultants said the complex would bring visitors to Little Rock to spend money on hotels and restaurants, generating up to $654,000 for the city in taxes and up to $2.1 million in tax revenue for the state each year.

But the study also determined that such a facility would do good to break even with revenue and expenses.

Stodola wasn't keen on the idea of publicly funding the sports complex at the time. He shared the same concerns Monday.

"It's a money loser, No. 1. ... And also the State Fairgrounds is embarking on a major fundraising project for their master plan, and they are going to be building a 120,000 square-foot facility, as I recall, adjacent to the Barton Coliseum. We do not need to duplicate those kinds of facilities in a community of 200,000 people. We just simply don't," Stodola said.

Members of the city's Advertising and Promotion Commission -- on which Stodola serves -- were hesitant in recommending the hotel tax increase for the Arts Center expansion to the Little Rock board. But commissioners did so nonetheless, with only one abstention from the vote and the remaining members approving it.

A study has not been done to find out what expanding the Arkansas Arts Center would do economically for the area.

Americans for the Arts, a nonprofit advocacy organization, has estimated that the center now makes a $21 million impact upon the local economy. A presentation that included that statistic didn't give an explanation of what factors that number includes.

Currently, the Arkansas Arts Center sees about 339,000 visitors per year to its facility at 501 E. 9th St. inside MacArthur Park. Another 40,000 visited the center's Children's Theatre last year.

Arts Center officials say an additional 301,000 people were reached through either statewide educational touring programs or by participating in classes at the museum school.

Arts Center Executive Director Todd Herman said in a presentation to the Advertising and Promotion Commission that 78 percent of leisure travelers include arts and culture activities in their trips. They stay longer and spend more money than other tourists, he said.

A year after the Crystal Bridges Museum of American Art was opened in Bentonville, the city's hotel tax receipts were up 23 percent and its restaurant tax receipts up 12 percent.

"I think you could draw some strong parallels," Stodola said of Crystal Bridges and the proposed expansion of the Arkansas Arts Center.

"It's a good example of what could be done with the right kind of facility. When you think of Crystal Bridges, the first thing people talk about is the facility. The second thing is the art."

Arts Center officials have said the center needs to improve its vault storage to keep accreditation when it is reviewed next year. Center officials have also said they want to make improvements to the center's heating and air system and buy new seats for the Children's Theater.

Beyond maintenance needs, Herman pitched an improved Arts Center that is more visually appealing to visitors and does more to connect people in the park with the artwork inside the building.

"Great architecture attracts people and makes people feel enlivened and really engages a space. Right now, it looks inward and turns its back on the park. We want to turn the whole thing inside out, embrace the park it is in, move people from the park into the Arts Center and from the Arts Center out in the park.

"We want a design that engages that whole area," Herman said.

"That's when you'll find people come to the park and people in that neighborhood engaging with the park, as opposed to a brick building with no windows to the outdoors."

Metro on 12/01/2015

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