A proposal to be pitched today would increase Little Rock's hospitality tax levied on hotel visitors by 2 percent to fund significant renovation of the Arkansas Arts Center, as well as pay for improvements to MacArthur Park and the MacArthur Museum of Arkansas Military History.
Little Rock Mayor Mark Stodola said he and others on the city's Advertising and Promotion Commission plan to present the funding option for a vote of the full commission today after Arts Center Executive Director Todd Herman makes a presentation about the center's need for expansion and improvements.
The commission meets at 3 p.m. in the Pope Room at the Statehouse Convention Center, 101 E. Markham St.
The proposal would increase the total tax levied on hotel rooms in the capital city from 13 percent to 15 percent, which includes state and local taxes.
"This is a great opportunity to get out-of-town tourists to help fund improvements in the city's first park. We have two wonderful museums there, both in dire need for major improvements and upgrades," Stodola said Monday. "This is a very effective way to try to take care of the pressing needs that we have. When you look at what the Arts Center has done over the years for culture of our community and state, I'm excited."
Both the Advertising and Promotion Commission and the Little Rock Board of Directors would have to approve the hotel tax increase before voters have the final say in a special election, currently pitched to take place in February.
The Arts Center wants to embark on a $60 million expansion of its current facility within MacArthur Park at 501 E. 9th Street.
Increasing the hotel portion of the Advertising and Promotion tax by 2 cents is estimated to raise about $35 million through a 30-year bond. The remainder of the Arts Center's expansion costs would be funded through private donations and fundraisers.
The hotel portion of the Advertising and Promotion tax -- currently at 2 cents -- is only applied toward hotel room purchases. This proposal would increase that to the state maximum of 3 cents and add another 1 cent for park improvements, which is allowed under state law.
The increase would not change the 2-cent Advertising and Promotion tax charged on restaurant purchases, often referred to as the "hamburger tax."
Stodola said Monday that there is support for the hospitality tax increase from several of his fellow Advertising and Promotion Commission members.
The president and chief executive officer of the Little Rock Convention and Visitors Bureau -- which is overseen by the commission -- isn't as optimistic about the full commission's support.
"My gut feeling is that the commission is going to be divided," said Gretchen Hall, the bureau's top executive. "We've heard from hotel partners that are not supportive. I feel that it will probably be mixed on support and those that have concerns."
Little Rock ranks No. 77 on a list of the nation's top 150 cities ranked by highest hotel tax levied. Increasing the hospitality tax by 2 percent would move the city to No. 31 on that list.
"Right now, we're right around the same percentage as North Little Rock and most of northwest Arkansas. This will put us, I think, slightly above everyone else in the state. But it would still be somewhere around the average on a national level," Hall said.
North Little Rock levies 13.5 percent on hotel room purchases, with the exclusion of lodging properties with less than 50 rooms.
Stodola said Monday that three cities which he considers to be competitors of Little Rock all have higher hotel taxes.
"Nashville is 16 percent, Kansas City is 17 percent and Chattanooga, which is smaller than we are, is 17.25 percent," he said. "This is a way to fund tremendous improvements without having to look at local citizens to expense it. This is not a tax imposed on residents. This is only on hotel customers."
As to whether an increase in the hotel tax would divert conventions and sports tournaments from booking in the city, Hall said it's too soon to speculate.
"It's really hard to say. You never want to be the highest in the state for state conventions and state groups, but on a national level when we're recruiting regional and national conventions, it may not come into the equation. But that's somewhat of speculation because we haven't had those conversations," she said.
The city's hospitality tax raises about $2.4 million now, according to Stodola.
He said the $35 million expected to be raised with the 2-cent increase would mostly benefit the Arts Center, but about $1 million would go to improve the MacArthur Military Museum and funds would also be used to improve park grounds.
The building that houses the Military Museum was built in 1850 and some of its wood is deteriorating, Stodola said. Improvements to the park and the two city-owned buildings in it -- the museum and arts center -- would help further the growth and development of that area, he said.
While the Arts Center is owned by the city and is run by a city-appointed commission, the collection it displays is privately owned by the independent Arts Center Foundation.
The Foundation threatened earlier this year to move across the river to North Little Rock under expectations that the city would vote in a sales tax increase that would pay for a new building and provide yearly maintenance allocations.
The proposal set to be presented to the Little Rock Advertising and Promotion Commission today is substantially different from Foundation Chairman Bobby Tucker's earlier statements that the foundation was looking to take on a $100 million project solely funded with public money.
Almost half of the Arts Center's planned $60 million expansion under this proposal would be raised in private funds.
Herman, the Arts Center executive director, has said the Arts Center is at risk of losing its accreditation if improvements are not made to its current building. The center is scheduled to be re-accredited next year.
One factor of the planned renovation is additional vault storage, which is important to accreditation because there are rules on temperature and other conditions that the artwork is kept in, Herman has said.
The planned renovation also calls for significant expansion to the square footage of the building. The Arts Center is about 110,000 square feet and officials have said they need 140,000 to 160,000 square feet.
Stodola made several pitches to keep the Arts Center in the capital city after it announced it was considering a move. Earlier this month the Little Rock Board of Directors approved a maintenance contract that commits $700,000 in city funds yearly toward maintenance of the Arts Center building.
When the board approved the yearly maintenance contract Nov. 3, Herman said the commitment was a relief. Tucker, the foundation's chairman, confirmed at the time that the Arts Center would stay in Little Rock now that the contract was in place.
Since staying in the city meant either expansion of the current facilities or a new building, Tucker's statement was a clue that a request for some sort of tax increase was imminent.
Stodola said the Arts Center Foundation polled Little Rock voters on the possibility of paying for an Arts Center expansion through several funding options, including an increase to the hospitality tax. The results were "very, very favorable," Stodola said, but neither he nor Arts Center officials have made those results public.
Metro on 11/17/2015
Print Headline: Panelists to pitch LR hotel-room tax for art center, park