Jackson's Convention Complex projects to again operate in the red.

Mayor proposes meeting with all center stakeholders

Center faces several challenges, including competition in Flowood

Questions arise over center's business model

Fresh off a request for an immediate cash infusion to cover payroll, a larger issue looms over the future of the Jackson's Convention Complex.

Can it survive?

A decade after it opened, the center's attendance continues to plummet, the parking lot across the street remains undeveloped; a soon-to-be-opened conference center in Flowood threatens competition; and little has been paid on its debt.

And, it calls into question whether the push for an attached hotel and other amenities — long seen as a panacea — can continue to take center stage.

The City Council on Tuesday, on a 4-2 vote, agreed to cover the center's payroll for the rest of the fiscal year, which will keep the doors open and employees paid. The council agreed to cover $63,000 in payroll, down from the original $131,000 request.

Still, the center again projects to operate in the red, opening up the possibility it will return to the City Council at some point for additional funding.

Jackson still trying:A convention center in search of a complex

Center officials continue to argue the woes of the center stem from its lack of an attached hotel, while Council members suggest a new business model is needed.

The back and forth is the opening salvo of what is expected to be continuing discussions between stakeholders on what direction to take with the struggling center.

That includes the center's overseers, the Capital City Convention Center Commission, the city's main tourism board, the Convention and Visitors Bureau, the center's management company, SMG, and the mayor's office.

Time for a new business model, management company?

Several council members Tuesday questioned if the business model of SMG is suited to Jackson's needs. The company, which manages convention centers in bigger cities such as New Orleans and Houston, has been managing the Jackson convention center since it opened. An agreement in October 2013 called for two additional three-year extension options after the initial term.

Councilman Kenneth Stokes, who voted against the bailout, said the rates set by the center are too high for most groups in Jackson and the surrounding area. Stokes proposed an increase and refocus of marketing to be aimed at smaller in-state church and business groups, rather than appealing to organizations outside the state.

"You need to appeal to the people here in Jackson or nearby. They can't afford to pay the high rates, but they would love the opportunity to use the convention center for events," Stokes said.

Councilman Ashby Foote, who also voted against the bailout, asked if SMG's business model was the right fit for Jackson.

"I think at some point you've got to ask if the business model after this many years is working," he said.

Mayor Chokwe Antar Lumumba echoed the same thoughts. His administration plans to issue a request for proposals to consider bringing in another management company, although he said it's too soon to say if replacing SMG would make the situation better or worse.

"Everything's on the table at this point. We may find that the current management company is exactly what we need, but we might find a smaller, more boutique type of company makes better sense for us," he said.

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But Bob McClintock, SMG's senior vice president of convention centers, said while Jackson has a state-of-the art facility, it lacks economic expansion of the complex area to the north of the center which has been undeveloped for a decade.

Convention participants are greeted by a crumbling parking lot and no attached hotel, which for most out-of-town attendees is a deal breaker, he said.

In short, it remains a convention center in search of a complex. That remains the case despite several efforts over the years by the city and the Jackson Redevelopment Authority, which owns a share of the undeveloped complex property.

Deals to attract hotel fail, again and again

The city and JRA have failed three separate times in more than a decade to land a development deal that would bring in a hotel.

In 2010, the city and JRA negotiated a deal to cosign a $90 million hotel proposed by Dallas-based Transcontinental Reality International.

Later, former Mayor Harvey Johnson Jr. again attempted to bring in a hotel, but negotiations broke down.

Most recently, JRA in 2017 decided to drop Washington, D.C.-based Engineering Design Technologies' proposed 300-plus-room hotel.

The landscape has also changed since the convention center opened, with the Westin hotel opening in downtown in 2017, only blocks from the convention center.

Attendance keeps dropping every year

In many cities, convention centers often operate at a loss. The goal is to bring event participants into the city where they will spend money at hotels, restaurants and other businesses.

That was the original goal of city planners in 2009 when the center opened. But projections turned out to be rosier than the reality.

When the center opened in 2009, a consulting firm predicted it would host 164 events with an estimated 79,600 attendees in its first year of operation. The same study projected 279 events a year with over 175,300 attendees annually, which would boost business for hotels, restaurants and businesses in Jackson.

In 2012, the first year the center produced an annual report, it hosted 295 events with 141,000 participants.

It has seen a sharp decline since.

Four years later in 2016, the center hosted 223 events and had 180,000 guests.

And the numbers from 2017 showed even more of a plummet. The year saw 151 events, due in large part to a church group's decision to not use the space for its Sunday worship, which accounted for 45 separate events, or roughly 30% of the total of all events from October 2016 to September 2017.

A recently released report for 2018 confirms the downward trend. There were 135 events in 2018 which brought in 107,967 visitors, a decline of 23,943 visitors from the year before.

Crippling debt despite hotel tax

Records show the center has operated at a loss since it opened. Between 2011 and 2016, for example, the center has had net income losses of more than $9 million, averaging about $1.5 million in the red every year, according to annual reports.

In 2006, the city assumed $65 million in bond indebtedness to pay for the convention center.

To help pay the debt, the city passed and pledged a specialty tax on hotels and restaurants. But the tax revenue hasn't been enough to pay down the bond debt. And previous administrations have put the bill off or have been unable to pay, leaving more than $63 million in debt for the new administration, said Charles Hatcher in 2018, before resigning as the city's director of finance and administration.

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The city collects about $4.5 million from its special tax. However the debt service on the center is "backloaded," meaning four years from now the debt will rise to about $5 million.

Center officials Tuesday night said their most recent projections show a $67,000 deficit every month headed into the new fiscal year, which starts Oct. 1. By the end of the fiscal year, the amount would total $804,000.

Marketing game plan getting a close look

Another problem with the center's attendance, which legislators raised during a Senate hearing in December 2018, is tied to what has been called inadequate marketing.

Legislators threatened to cut off funding to the city's main tourism and marketing arm, the Convention and Visitors Bureau, in part due to this reason. The bureau is tasked with marketing the city, including the convention center.

Consultant Steve Powell at the time called the center one of the city's greatest assets and said it should be bringing in more events from outside Jackson and more prominent events from inside the city — even without an attached hotel. He said the complex is generating about a third of the revenue it should.

Foote, during Tuesday's Council meeting, questioned if the center's commission and tourism board, both sharing similar goals and funded by the city's hotel tax, might better operate as one entity.

"The city needs a convention center but the current setup is not a successful business model. It would take legislative change, but we need to look at how that money is funneled to them and whether or not it would be better for us financially to merge those two," he said.

Competition in Flowood on the horizon

The center faces another dire obstacle. The city of Flowood is on track to open its own $50 million conference center in Rankin County, about a mile from the Jackson airport, by next summer.

Some Jackson council members fear the Flowood conference center will siphon even more clients away.

Flowood's big move:What will $50M conference center, hotel do for city, and to Jackson?

"Usually, these kind of developments are meant to benefit everyone involved, including the neighbors, but I have to wonder if there's enough supply for their center and ours, or if having two would actually hurt both," Foote had said earlier this spring.

Flowood's conference center will have all the amenities officials say Jackson has needed for years, such as an attached luxury hotel, resort-style pool, golf course, a 15-acre lake with walking paths and a lawn adjacent to the lake capable of accommodating weddings and other outdoor events, as well as a spa and culinary school.

Mixed-use? Hotel may not be a deal breaker

The mayor said his administration has been working on a comprehensive plan for the center since taking office in July 2017.

The city commissioned a feasibility study by the Chicago-based Hunden Strategic Partners to again determine the viability of a long-sought hotel, as well as possible residential and office space.

His office in recent months has issued multiple RFPs to land potential developers.

This time around, the mayor said the city is looking at possibly converting the center into a "mixed-use" facility, which follows the vision of the city's former director of Planning & Development, Mukesh Kumar.

Despite the conventional wisdom, not having a hotel isn't a deal breaker, Kumar said at the time. Instead, he said the city is taking a more comprehensive and layered approach, which considers bringing in a restaurant, residential, retail and office space and a covered multiple-storied parking garage.

All things considered, the mayor said he remains optimistic, even though "no contract has been signed yet."

"We have a very clear vision. This is the first administration to say let's make it a mixed-used facility, one with retail and entertainment...It's true we've seen things have failed over time. We're being very meticulous and in this case, I think it's important to get the input of everyone involved, a collective vision, and see where everybody can play a role," he said.

Contact Justin Vicory at 769-572-1418 or jvicory@gannett.com. Follow @justinvicory on Twitter.