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City to consider convention center

4/6/2014

By MATTHEW KENWRIGHT

By MATTHEW KENWRIGHT

mkenwright@dailynews.net

A new Hays convention center has graduated from the drawing board to a proposal expected to go before the Hays City Commission later this month.  

A task force appointed by the Ellis County Coalition For Economic Development has finalized its vision. The $8.2 million, 20,000-square-foot facility would be located south of the Holiday Inn Express Hotel and Suites north of Interstate 70 in Hays.

If approved by commissioners, approximately 30 businesses within a community improvement district would apply a special 0.65-percent sales tax, and the transient guest tax would increase from 5-percent to 7-percent to pay for the facility.  

Combined, the funding mechanisms are projected to collect approximately $1.2 million annually, said Aaron White, executive director of the coalition. The CID would bring in $820,000, and the transient guest tax would raise $300,000.

Funds from this community improvement district are projected to retire the debt in 10 years. Kansas law states a CID can exist for 22 years or until the debt is repaid, whichever comes first.

Economic benefits

Although collections from the transient guest tax increased 26 percent between 2009 to 2013, White said traffic from a convention center further would benefit the local economy because  the transient guest tax is a limited revenue measurement.

"These are not the visitors that stick around and spend money in the community," he said. "Our trade pull factor for retail sales has actually slipped from 1.91 to 1.85 over the last year, which means there are fewer people shopping and spending money in our retail businesses and across the community."

The coalition is gathering signatures from the CID businesses before it approaches the commission. Although state law allows the special tax to be applied on businesses, only agreeing businesses will be inside the district.

Walmart officially will be neutral because its corporate policy states its stores do not choose sides.

Jana Jordan, director of the Hays Convention and Visitors Bureau, said the number of convention visitors has fallen by nearly half during the past eight or nine years to approximately 6,000. The figure is tallied by the number of welcome packets distributed during conventions.

White said the project could affirm the area's economic viability to outside groups. It also would author a new chapter in Hays' story of growth.

"The shelf life of an expansion in business is really about three years," White said.  

"When a site consultant comes to me and says, 'Who's expanded in the last three years, who's closed in the last three years,' you know, we've had a great story with the university expanding and Hays Medical expanding, but those are getting to the point where those are no longer taken into account."

Educational partnerships

The coalition's subsidiary non-profit group would own the facility, and Fort Hays State University would run operations. Students from the Tourism and Hospitality Management program would use it as a learning laboratory, and North Central Kansas Technical College would operate a culinary program in Hays and use the building's kitchen. FHSU's international students would be eligible for work-study at the facility.

FHSU President Edward Hammond said the building enables students to work and learn in a variety of roles such as event management, hospitality customer service and banquet service.      

"It'll be a good co-op center for their opportunities to learn on-the-job training, to put into practice what they've learned in the classroom," he said.  

The length of the university's agreement to operate the convention center is being finalized in a contract. The agreement would not change under a new FHSU president.    

Stacey Smith, director of FHSU's hospitality program, said the venture also could provide students lessons in tourism marketing and service operations.  

"It lends itself to a lot of classroom activities and learning and service-learning initiatives, so not only do we talk about it in the classroom, but it allows students to actually apply their skills," Smith said.

Don Benjamin, dean of the NCKTC's Hays campus, said the culinary program in Beloit is moving to Hays because its instructor will retire. A new instructor, Philip Kuhn, has been hired.

Finding a site is underway, and working within the convention center is an option.

"With a new facility, it's always very attractive to students ... it would give students the opportunity to do things for our campus here, but also be able to gain real world experience from events that would take place at the convention center," Benjamin said.

A destination place

White said there is not a name for the convention center, but naming rights for private donors is an option.  

Jordan said there have been complaints about a current site hosting conventions, the Hays Ambassador Hotel and Conference Center at 3603 Vine -- formerly the Ramada Inn.

The hotel has a 2.6 of 5 stars guest rating on Expedia.com. Common guest reviews criticize the smell of cigarette smoke in rooms, mold, the lukewarm hot tub and excessive noise.

Jordan said a convention center would make Hays a "northwest Kansas destination" for many travelers rather than a stop along Interstate 70. Although Dodge City's events center and casino might be attractive to convention groups, the culture in Hays is a compelling draw, she said.  

"Once the people have been there, then they're willing to look at something else and they can remember how unique their visit was from three or four years ago, and think of coming back to Hays," Jordan said.  

The Volga German heritage, Wild West history and downtown area define the local experience, she said.

No market research has been done to identify potential conventions, but the CVB has close ties to many groups.

"We know the market," Jordan said. "This fall, I'll be here 27 years. A lot of those association execs are personal friends of mine. We don't need to hire somebody from the outside to come in because we know what we're doing. We'll know how to sell the facility."  

Conventions would not immediately reserve space in the facility, because most of them book two to three years in advance. The facility will target smaller gatherings because it can hold approximately between 400 to 550 attendees seated at tables.  

"Our meat and potatoes really has been in the pas,t and will be again, to target groups from that 150 to 250, even 300 (range)," Jordan said.

Jordan said she was familiar with the plan for a boutique hotel in downtown Hays proposed by Chuck Comeau, president of Liberty Group Inc. It was her opinion the facility would appeal to a different market.  

Community leaders react

Tammy Wellbrock, executive director of the Hays Area Chamber of Commerce, said she delivered a letter in support of the convention center to commissioners Thursday.

"We encourage you to move forward with support for a convention facility and urge other supporting businesses to communicate their wishes with you as well," stated an excerpt from the letter. "This facility would provide numerous benefits to the community and have a lasting impact on our businesses for years to come."

Vice Mayor Henry Schwaller IV said there is need for a convention center because the current one is old and "poorly managed," and he appreciates the effort behind a possible convention center proposal. However, he does not agree with the sales tax.

"I absolutely, as a commissioner, will not support any sales tax on food or over the counter medicine to support a convention center," Schwaller said.

The tax is regressive because it hurts the poorest people in the community, he said. It also makes the sales tax at Walmart approximately 9 percent and could discourage customers outside the area from shopping at the store.    

His other concerns include who will operate the facility if FHSU pulls out and the lack of a business plan.

"The proposal that we have seen, although we've yet to formally receive it, is not workable and probably will not happen," he said.  

Mayor Kent Steward said he has been a proponent for applying the transient guest tax to the project, but he generally opposes the CID funding approach.

"In this case, I have come to grips with it, because I think this is somewhat akin to building a park or municipal swimming pool or those kinds of general community improvements, and so I'll kind of grit my teeth and go along with that," Steward said.  

Commissioner Eber Phelps said he is concerned about the special sales tax because of the state's finances following the income tax cuts and discussions about other sales tax initiatives. He said he still is weighing all the facts.

Commissioners Ron Mellick and Shaun Musil both said they are waiting to see the details of the plan before they voice an opinion.