Highlights of the Fort Smith Board of Directors Meeting 2/25/25

At the Fort Smith Board of Directors study session meeting held 2/25/25 with Director Settle leaving an hour early, the Board heard a presentation from Huddle Up Group regarding sports tourism and from Synergy Sports regarding funding for an indoor sports complex. The proposed complex would feature 8 or 10 basketball courts (which could also be divided to serve as twice as many volleyball courts). The proposed location would be behind the Home2 Suites Hotel on Phoenix Avenue. The funding would be through a public-private partnership. The pre-construction costs and construction costs for the facility, which would cost $31 million, would be paid for in full by Synergy and Huddle Up’s network of private partners and then the private partners would lease it to the City and Advertising and Promotion Commission revenue from the hotel tax and naming rights and sponsorships would be responsible for subsidies that would be needed the first few years. The lease would have a renewal every year for 29 years and then ownership of the facility would turn over to the City after that. The subsidies expected to be needed the first year would be $286,574, and $117,265 the second year. After that, the facility would be profitable, and after about the tenth year would be earning a profit of about $1.2 million per year.

John Schmeider with Huddle Up said that the facility would likely bring in 11 new tournaments, 20,500 tournament attendees, $4.5 million in visitor spending, 9,500 hotel nights, and sales tax revenue of $410,000.

Jason Boudrie with Synergie pointed out that the funding for the facility would require no bonds or taxes. He called it a “self-funded, self-supporting sports asset.”

Fort Smith Convention and Visitors Bureau Director Ashley Bachert reminded that the A&P Commission’s money does not come from the City budget. Its funds come from the 3% hotel tax.

Director Rego asked if the agreement with Huddle Up and Synergy could be written to specify that if there is a shortfall in the A&P’s ability to cover the necessary subsidies in the first years that the “general fund is not to be the first, second, or third option.” Boudrie said that the next step would involve working with the Directors and City staff to craft a Memorandum of Understanding that addresses specific concerns including that.

Director Good said the “scope of this seems small to me” and asked “Is this really sustainable?” Boudrie responded that the data said what size needs to be built. He also mentioned that a smaller facility requires less support from the A&P and can better support its own expenses. Director Good said “If data shows this is what is needed and will be sustainable, I’m all for it.”

Bachert mentioned that she coaches a softball team and that the team will choose to the same destinations every year if they have a good experience there. She said that sports participants will defer other spending to make their sports trips happen.

Director Martin asked how such facilities succeed. Boudrie said that key factors are partnership between the CVB and the private side and the “balance between public use and revenue generation.”

Director Rego mentioned that an indoor sports facility has come up “numerous times over the years” and that big differences he noticed this time is that Huddle Up and Synergy came here and talked to operators of local teams and sports programs directly in person and that they have connections with national sports tournaments. He said that a facility sitting empty “does them no good.” He called the proposed facility a “rare opportunity where so many things are aligning for people who want success to occur.”

Director Christina Catsavis mentioned that the A&P budget is about $1 million per year and that to make the numbers work would rely on doubling hotel stays in 5 years. She asked about the numbers used for the land lease figures. Bachert said that they called the Airport Authority. Director Christina Catsavis pointed out that it is land that the City owns, so they would not need to lease it to themselves. Bachert agreed. Bachert added that there would be a need to replace the hardwood courts in 10 years and that money would be built into the plans to be reserved to pay for that. Director Christina Catsavis asked when the facility could start booking tournaments. Boudrie said that it could be started even before the construction started. He said if the plan is approved soon, the facility could be up and running early 2027. That would give the CVB an “18 month runway” to get tournaments and sponsors for a “full stable day one.”

Director Settle mentioned his daughter playing travel volleyball. He voiced his view that to make the facility work it would need to have more than regional tournaments. He criticized the proposed location. He suggested that the facility instead be built in the middle of Ben Geren Park. He said that every facility that he visits for volleyball that is not a massive one is tied to another park. Bachert said that tournaments happen all over because not everyone can travel to all of them and lower level teams are in the market for a place that is not for national qualifier tournaments. She said that the site was based on data and event organizer requests that want a facility walkable from hotels and near restaurants. She said that A&P also has four or 5 other potential sites “in our back pocket” and could also consider Ben Geren. Director Settle expressed concerns that the new facility would take away from the Convention Center. Bechert mentioned that the facility would not be limited to just volleyball or even just to traditional sports like basketball, but also could host tournaments in less traditional sports like jujitsu, jump rope, teqvoly, and hobby horsing.

Director Kemp asked why not fully privatize the facility. Boudrie answered that the private funders would not be receiving the benefits of the economic impact so the rate of return of about 2.5% per year would not be attractive enough for purely private interests, they would make more money if they were just to “go build a hotel.” Director Kemp asked “Why not improve the Civic Center and privatize it?” Bachert answered that the Convention Center is still needed and generates economic impact in the convention market and the cheer and dance market. Director Kemp asked if the public would pay a fee to come in and use the facilities when a tournament was not going on. Boudrie answered that while the City would have total control under the lease to do whatever they wanted with it, the plan was modeled with the public being able to use the facility for free like a community rec center during the 40% of all hours the facility could expect to be open. It would likely be available for free local public use Monday-Thursday while Friday-Sunday would be booked for revenue generating tournaments. Director Kemp mentioned that he has spoken with a leader of a local sports organization who has expressed a desire for the facility to be located in Ben Geren. Director Kemp expressed a desire to have more things to do in Fort Smith, but also expressed concerns about the consent decree.

Director Rego voiced his view that while the Board “have to be prudent”, in addition to whole cost cutting, “penny pinching”, and “tightening the belt”, they also have to find ways to increase revenue and that sports tourism generates revenue. He said that the facility does not require the City to generate revenues itself or require a new tax. He called it something they “should very seriously consider.”

Director Settle asked if any of Synergy’s facilities have still needed subsidies after the first 5 years. Boudrie answered “not that I can think of off the top of my head.”

Director Christina Catsavis asked if the funds could just be guaranteed by the A&P only, not also guaranteed by City funds if it came to it. Boudrie responded that it could not be because the funding has to be “investment grade” and requires an “independent bond rating” that A&P does not have by themselves. Bachert added “We tried it. We sent financials.”

Entering into a memorandum of understanding between Synergy and the A&P will be added to the agenda of the March 18th meeting. There will be no request for funding allocation included at that time. The issue to be voted on 3-18-25 will only be whether to support the MOU and then A&P will return to the Board with a fully vetted business plan sometime after May.

The Board discussed the vacant positions of Director of Internal Audit (whose duties are currently being contracted out to the firm Baker Tilly) and City Administrator (whose duties are currently being done by Acting City Administrator Dingman).

Acting City Administrator Dingman said that there are a total of 7 or 8 applicants for the Director of Internal Position and that 5 were identified by the recruitment firm contracted to help in filling the position as “Tier A” applicants who are “meeting qualifications of an ideal candidate.” One of those Tier A applicants has already been interviewed and was not selected, so 4 are left.

Director Christina Catsavis voiced her desire for the Board to “sit down together and interview them and knock it out.”

Director Settle asked about continuing to use Baker Tilly. Director Martin, who was chosen by the Board to be the liaison between the Board and Baker Tilly, said “Baker does do this” (handle all the Internal Audit supervision for municipalities). He said “In my brief interaction with” the representative from Baker Tilly doing the job that she “seems to know what she’s doing.”

Director Christina Catsavis said that Internal Audit is “our waste, fraud, and abuse department.” She expressed her desire to have someone accountable to the Board that they can speak to. She expressed concerns about “putting it all on” Director Martin to communicate with Baker Tilly and communicate with the Board regarding Internal Audit matters when it is “everyone’s responsibility equally.” She said “We’ve got some quality candidates.”

Director George Catsavis asked how much Baker Tilly is being paid for their services. Director Martin answered $10,000 per month. Director Settle added that the budget for the Internal Audit Department is $601,000 if fully staffed. Director Christina Catsavis added that $120,000 per year is about what the City would be paying an Internal Audit Director. Director George Catsavis asked Finance Director Richards about his interactions with Baker Tilly. He said that since the contract, other than paying the bill, he has had “zero” communication with Baker Tilly. While he acknowledged that it would not change their pay structure, Director Martin requested that the Board be provided with how many hours Baker Tilly spends on their work for the City.

Director Kemp expressed his desire to schedule interviews for the 4 remaining Tier A candidates as soon as possible. He asked if there could be an executive session held to evaluate Baker Tilly’s work so far. Dingman answered that because it is a contract issue rather than a personnel issue that it could not be an executive session, but had to be held publicly. Director Kemp said that the Internal Audit Department is to “figure out how we don’t fail an external audit from a federal agency.” He said that we need a “policy, best practice, project list” to “define success” for Baker Tilly.

Director Dingman said that SGR could do a series of selected questions on video for the Board and those responses could be used for the Board to select who to interview in person. Rego mentioned that SGR has already been paid.

The Board concurred to use the video interviews and then decide who to interview and schedule interviews as quickly as possible, no later than the end of March.

Director Rego said “I am comfortable with” Dingman fulfilling the role of City Administrator. Director Settle voiced agreement. Director Good agreed and said he is “confident in Mr. Dingman serving in that role.”