Increased lodging tax one idea to fund convention center

Springfield city officials are brainstorming methods to pay for a proposed $175 million convention center that they believe has the potential to bring in $1.3 billion in local spending and more than $68.7 million in tax revenue over a 30-year period.

The officials are referring to the 125,000-square-foot facility as an event center – one that can serve visiting convention and meeting attendees as well as local needs – and it comes recommended by Chicago-based consultants Hunden Strategic Partners in a market and feasibility study released July 8.

Prior to the release of the study, Missouri Gov. Mike Kehoe included $30 million in the state’s current budget to fund a convention center – but those funds are designated as restricted and can only be deployed with the governor’s say-so. The funds also require a one-to-one match by the city.

To convince Missouri Gov. Mike Kehoe to release the $30 million, the city of Springfield has to show it’s ready to roll.

Mayor Jeff Schrag said that will require the city to show that it’s serious about a center – something that has been discussed for decades in the Queen City.

“I think the hardest lift in Jefferson City was convincing people that Springfield, Missouri, had the will to move this forward,” Schrag said.

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

“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.”

At a luncheon meeting July 22, City Council members heard a presentation by Amanda Ohlensehlen, director of Workforce & Economic Vitality, on possible funding measures for the proposed $175 million center.

The main mechanism proposed to help cover construction and operational costs is a 3% addition to the city’s 5% lodging tax, which is collected from guests to the city’s hotels, motels and short-term rentals.

The existing 5% tax was passed by voters in April 2023 with half of its proceeds funding arts, sports tourism and Visit Springfield, Missouri, the city’s convention and visitors’ bureau. An additional 3% tax, if formally recommended by council and then approved by voters at the polls, would be for the promotion of attracting tourism more generally and for construction of the facility, according to proposed ballot language. Like the 5% tax, it would be permanent.

“This ballot measure is a key component of an overall financing package and plan showing the state we’re ready to deliver,” Cameron said.

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.

Councilmember Craig Hosmer raised concern about rushing the vote with the emergency process.

“I just always think it looks a little presumptuous for us to do a one-reading bill,” Hosmer said. “No matter what public comments we receive, whether favorable, negative, we’re going to vote anyway.”

Hosmer suggested going through the normal two-reading process in two consecutive meetings.

Cameron said those two weeks will be important in the city’s communication effort, which is scheduled to get off the ground immediately upon council approval.

The ballot issue would appear in the Nov. 4 general election, if council OK’s the plan.

The city’s current lodging tax rate is 13.1%, according to Ohlensehlen. By comparison, Memphis, Tennessee, has a rate of 18.75% plus $2 per room, per night – the highest among cities in the region, according to a list provided to council by city staff. The top five are 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 new 16.1% rate would place it just after Kansas City’s rate of 16.48% plus $3 per room, per night.

In a news release from the city, 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.

Also in the funding stack
Council’s July 22 meeting covered a number of funding mechanisms for the convention center, including use of other voter-approved tax funds.

The $30 million budgeted as restricted state funds must be matched by the city, and for that, council is considering funds from the 3/4-cent sales 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-year 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 SGF. 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 estimated $30 million in half-cent 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.

She added that this was not the public’s expectation for the use of tax funds.

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,” he said. 

Rusty Worley, co-chair of the Citizens Advisory Board, said the group has yet to discuss the proposed use of half-cent tax funds as a match for the state allocation.

“We’re just in the early stages of meeting as a group,” he said.

The board’s next scheduled meeting is July 30.

When asked if the board received advance notice of the proposal from city officials before it was announced at the council luncheon, Worley replied that he was aware of it because of media coverage.

“Most everyone has been keeping up with the information about the convention center and state funding for that,” he said. “(July 30) will be our first chance to talk about it as a group.”

Also in the proposed funding stack, according to Ohlensehlen, is 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 directed, 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.

Cameron called the funding model a rough draft while noting council is moving quickly to formulate a plan.

“We are only 17 working days after the governor signed the budget,” he said.