Questions surround contract obligations

By ANTHONY WARREN,

Revenues are down, attendance is down, and on top of that, SMG World, managers of the Jackson Convention Complex, appear to be failing to fulfill all of the requirements under its management contract.

Even so, officials with the Capital City Convention Center Commission, the center’s governing body, either were unaware of the reporting requirements or wouldn’t comment on them.

Since 2014, attendance and revenues for the center have declined dramatically, with the number of event days dropping from 293 that year to 133 last year.

Meanwhile, SMG has failed to fulfill at least two reporting requirements under its 2016 management agreement.

The contract requires the Pennsylvania-based agency to submit an annual event recap report, capital improvement recommendation plan, and an annual benchmarking report to the commission.

The benchmarking report would compare activities of the convention center to other centers of similar size. The event recap report would outline the center’s number of events and their profitability.

However, copies of the reports received by the Sun had incomplete information or were only completed after the Sun filed an open records request seeking the information.

On February 19, the Sun requested event recap reports and benchmarking reports for fiscal year 2016 to the present.

In a letter dated March 1, Commission Administrator Rosemary Maxey wrote that “after diligent search and inquiry, please be advised that no documents responsive to your request for records … have been located.”

However, on March 7, the commission said the records did, in fact, exist, and turned them over.

SMG only released the documents after the Sun contacted Commission Chair Fred Banks.

Alan Walters, chair of the commission’s finance committee, asked SMG about the reports after speaking to the Sun and was told by SMG that they were working on providing them.

Prior to the Sun’s inquiries, he didn’t know the reports were required under the firm’s management agreement. He referred further questions to Banks.

The Sun reached out to Banks multiple times after receiving the documents, but calls were not returned.

Commissioner Duane O’Neill also didn’t know that the reports were a requirement.

 

SMG staffers gave several reasons why the documents weren’t initially released.

Convention Center Manager Al Rojas said he was confused by the Sun’s request.

For the benchmarking data, Rojas “assumed” the Sun was seeking third-party benchmarking reports, done independent of SMG. For the event recap reports, he didn’t know if the Sun was requesting individual event recaps or a grouping of event recaps.

When asked what third party the Sun would be inquiring about, Rojas said he didn’t know.

“I should have picked up the phone and called,” he said. “The error was on my part.” 

Maxey, though, said Rojas was confused because a word on the open records request form had been scratched out. The hand-written request was submitted on February 19. In it, the Sun requested all “event recap reports and annual benchmarking reports for the center for fiscal years 2016 to present.”

Terms used in the request were the same found in the commission’s 2016 letter to SMG renewing the firm’s management contract.

One word, capital, was scratched out.

For the event recap reports, SMG provided pie charts found in the center’s annual reports.

The charts shows the number and type of events held at the complex, as well as net revenues for the events, but did not show event costs, as required under SMG’s current contract.

As for the annual benchmarking report, SMG provided the Sun with a document that did not exist prior to the Sun’s request.

“Al began working on it about a year ago – comparing JCC to other convention centers in the south,” Maxey said. “He said he worked on it, but never finished it.”

The one-page document compared the Jackson complex with similar-size complexes across the United States for fiscal year 2017.

Rojas said the benchmarking report wasn’t required for fiscal year 2016, the last year before the contract was renewed, and that document for budget year 2018 wouldn’t be completed until data from the other convention centers was made available.

“Different places have different closeouts,” he said.

 

The 2017 benchmark report compares the Jackson complex to unnamed centers in the mid-east, southeast and southwest.

According to the report, JCC is being outpaced by all three centers in terms of event days, attendance, and direct and indirect income.

For fiscal year 2017, JCC had 207 event days and 131,910 people in attendance. By comparison, a similar center elsewhere in the southeast had 224 event days and 161,155 attendees. The center in the southwest had 433 event days and 411,385 attendees for budget year 2017, while the center in the Mid-East had 499 event days and 307,000 visitors, the report shows.

Similarly, incomes were less for Jackson as well, with total event and ancillary revenues for FY 2017 totaling $1,881,299, compared with $2,090,120 for the Southwest center, $2,167,345 for the Southeast center, and $2,803,414 for the facility in the mid-east.

All facilities were similar in size to the Jackson complex, ranging from 95,000 to 128,000 square feet.

SMG refused to release the names of other convention centers, but said they were all managed by SMG.

It was not known at press time what states were in the mid-east region.

 

Jackson’s convention complex opened in 2009, five years after residents in the capital city approved a ballot referendum to fund its construction.

Prior to the vote, the center was sold as an economic development tool, and was projected to generate $66 million a year in new spending for Jackson businesses.

However, economic impact has fallen well short.

According to annual reports posted on the center’s website, since 2012, the center’s average annual economic impact has been just over $26 million, with a high of $34.4 million in fiscal year 2014 and a low of $18.8 million in fiscal year 2017. Figures for 2018 weren’t available at press time.

The center is overseen by a nine-member commission made up of members of Jackson’s hotel, restaurant and business communities. Eight members are appointed by the mayor and one member is appointed by the governor.

The center is managed by SMG World, which has overseen the Pascagoula Street facility since it opened in 2009. The firm was hired in November 2008, and the contract was renewed in 2011, 2013 and June 2016. The contract is up for renewal again this year.

Officials with the city of Jackson hadn’t responded to a request for comment at press time.

Click here to read a copy of the letter: https://www.northsidesun.com/media/6257

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