3% lodging tax proposed to fund convention center project 

A 3% addition to the city’s 5% lodging tax is being considered to fund a proposed convention and event center. 

Springfield City Council held a luncheon meeting July 22 to learn about funding mechanisms for the estimated $175 million facility, which received a $30 million boost from the Missouri legislature in the state’s current budget. The state funds are designated as restricted by Gov. Mike Kehoe, who can release them to the city at his discretion. 

Council is scheduled to consider the additional lodging tax at its July 28 meeting. It will be an emergency measure, with a public hearing followed by a council vote on the same night. Typically, council bills are assigned a first reading and public hearing at one meeting and a second reading and vote at the next one, usually two weeks later. 

A public education campaign is scheduled to begin the day after the vote and to run until it is voted upon in the Nov. 4 election, if council decides to go forward with its plan, according to the timeline presented at the meeting by Amanda Ohlensehlen, the city’s director of Workforce & Economic Vitality. 

New tax details
The ballot language being considered by council is as follows: 

Shall the City of Springfield, Missouri, impose an additional three percent (3%) license tax on the business of renting, leasing or letting living quarters, sleeping accommodations, rooms or a part thereof, in connection with any hotel, motel, tourist court or short-term rental, derived from or paid by transient guests for sleeping accommodations for the purpose of attracting travel and tourism, including the construction of a regional convention and event center? 

The city’s current lodging tax rate is 13.1%, according to Ohlensehlen. This puts it near the bottom of a list of comparable cities in the region. That list is topped by Memphis, Tennessee, with a rate of 18.75% plus $2 per room, per night. The top five was rounded out by Overland Park, Kansas, at 18.35%, St. Louis, at 17.93%, Oklahoma City, Oklahoma, at 17.88%, and Omaha, Nebraska, at 17.5%. 

Nearby, Branson has a rate of 14.36%, while Joplin is at 13.97%. 

With the proposed increase, Springfield’s 16.1% rate would move it from 19th on the list of comparable cities to ninth, just after Kansas City’s rate of 16.48% plus $3 per room, per night. 

In a news release from the city, Mayor Jeff Schrag called the proposed tax an important step in determining how Springfield invests in its future. 

“A convention and event center would be a transformational project that drives economic growth, supports local jobs and positions Springfield as a premier destination for regional and national events,” he said in the release. 

Recent tax in play 
The July 22 meeting covered a number of funding mechanisms for the convention center, including use of other voter-approved tax funds. 

The $30 million in state funds must be matched by the city, and for that, council is considering funds from the 3/4-cent tax approved by voters in November 2024. Voters agreed at the time to dedicate a quarter of that tax to public safety, including police and fire pension obligations, and the other half cent – roughly $30 million annually for its 10-yeare period – for projects aligned with the city’s comprehensive plan, Forward SGF. 

An eight-member Citizens Advisory Board has met twice so far. Its mission is to provide recommendations to council on the use of the half-cent portion of the tax funds, referred to on the city’s website as Spring Forward FG. The ballot language said the half-cent portion was to include capital improvements, community and neighborhood initiatives and park projects. 

Councilmember Monica Horton raised concerns about putting this year’s entire $30 million in tax revenue toward the convention center and nothing else. 

“I feel as though that that’s something that we still need to parse through, in terms of 100% of that half-cent going towards this one project, when we know that the ballot measure said neighborhood projects, park projects – and none of that encompasses what we’ve got going on here today,” she said. “I don’t know that that was the expectation in the first year for that particular tax, and so that’s something that we’re going to all have to really chew on for the next few months leading up to this.” 

Councilmember Brandon Jenson said he also struggled with that part of the funding model. 

“Where I’ve made my solace with it is a part of the tax is also talking about investing in the next generation, and that’s a really broad term – kind of squishy,” he said.  

He added that he thinks about the types of things that can happen in the space – he cited a possible Chappell Roan concert as an example – that would serve the needs of multiple types of people. 

Councilmember Derek Lee suggested using $15 million this year and $15 million next year, since the taxing period straddles the state’s fiscal year. It’s a solution he referred to as low-hanging fruit. 

Schrag replied, “I think the hardest lift in Jefferson City was convincing people that Springfield, Missouri, had the will to move this forward. I believe that by doing it this way telegraphs to folks in Jefferson City that we have the will to move this forward.” 

In the city’s news release, City Manager David Cameron also stressed the importance of demonstrating its will. 

“The governor and state leaders have made it clear that Springfield has a significant opportunity, but also a responsibility — to bring a credible match and be ready to act,” Cameron said in the release. “We’re at a pivotal moment. This ballot measure is a key component of an overall financing package and plan showing the state we’re ready to deliver.” 

Funding stack 
Ohlensehlen outlined other parts of the funding stack besides the proposed 3% lodging tax and the half-cent sales tax. 

They included reallocation of the existing lodging tax revenue, part of which goes toward Jordan Valley bond debt that retires in 2028. The revenue will be freed up and could be reallocated, in full or in part, toward the convention center project. 

Additional public-private partnerships are also under development, as are future incentive and revenue strategies, city officials say. 

“This is very much a rough draft working funding model that considers new and existing resources in a responsible way, leveraging tourism-related revenue streams and fulfilling the interest residents told us in approving the Spring Forward SGF sales tax for transformative project,” said Cameron.  “We are only 17 working days after the governor signed the budget.”