Officials with the Jackson Convention Complex likely will have to seek help from the city this year to keep operations going, thanks to canceled events and down sales tax revenues due to the coronavirus.
So far this year, 13 events have been postponed and another 10 have been canceled since mid-March.
At the same time, revenues from the city’s convention center tax, a funding stream that pays for the convention center’s bond and is used to supplement center operations, is expected to take a major hit due to COVID-related shutdowns.
In March and April, convention center tax collections were down nearly 31 percent, from $825,526 for the two-month period last year to $571,266 this year.
“This is going to be a very serious issue the city has to confront,” said Ward One Councilman Ashby Foote. “The groups that rely on the hospitality taxes to cover their expenses, whether its Visit Jackson or the convention center, are going to be challenged financially.”
The news comes months after the center had to be bailed out by the city, citing decreased revenues. In September, the city council approved giving the center around $63,000 in general fund monies to help the facility make it through the end of the 2019 fiscal year.
Mayor Chokwe Antar Lumumba said an allocation from the general fund is likely not an option this year.
“We started the year off with some areas that we had to balance, so we didn’t have the surplus we had last year,” he said.
Typically, the center is funded by event revenues and funds generated through the convention center’s one-percent hospitality tax. The sales tax is placed on restaurant and hotel sales in the city.
Revenues from the tax also are used to repay a $65 million bond issued to finance the convention center’s construction.
Prior to COVID, revenues were already falling short.
Payments on the bond are due each year on March 1 and September 1. The city made a $3,075,968 payment in March, which was slightly more than the $3,049,443 in convention center tax revenues Jackson had brought in at the time.
Since then, taxes have dropped, with total collections through April being down by more than $230,000. The decrease is a sign that the city might not have enough to make its September payment of $1.2 million or have any extra income left over to supplement convention center operations.
“It’s one of the major areas of loss for the city,” Lumumba said. “We’ll probably need help from the state.”
Cities across the country are facing similar challenges. According to an April 14 article in the New York Times, the Center for Exhibition Industry Research estimated that “as much as 80 percent of the 2,500 business-to-business conventions held from March 1 to May 15 have been canceled.”
Those events generated $3.6 billion in convention center revenues, as well as $22 billion in broader economic activity, the center reported.
The decrease in economic activity translates into a drop in hospitality tax revenues, meaning municipalities will have to repay convention center bonds with general fund monies.
Jackson’s convention center closed in mid-March, when the local and state government began handing down orders limiting the size of public gatherings.
The initial orders said no more than 50 people could gather. That number was later revised down to 10.
“When fewer than 10 people can gather, you can’t hold your event in compliance with the executive order,” said Convention Center General Manager Al Rojas.
Events scheduled for April and May would have generated approximately $130,000 for the center, which would have been used to cover operational costs.
The events also would have brought thousands of people to the city, who would have purchased food at local restaurants, rented hotel rooms and bought gas.
At least 10 of those events, which included high school proms, and events scheduled by the state, will not be rescheduled.
“Those are the events that are not going to be rebooked, at least not the 2020 events,” Rojas said. “We just lost that window, because of the type of event.”
Rojas said organizers of other events, including a cheerleading competition held at the Jackson facility annually, are looking to move their events to later this year.
However, he said it was too early to tell when those functions would be put back on the calendar. “As more locations start to open up and governments loosen their stay at home orders, things will start to change,” Rojas said. “We’re all mandated by the state and local orders, so we follow those to the letter.”
The center has been working to rebook those events as well as new events for the fall, all while trying to cut operating costs. Since March, 10 employees there have been furloughed. Rojas hopes those employees will return once the center is re-opened. “That’s the plan. We want to get people back working,” he said.
The convention center is governed by the Capital City Convention Center Commission and is managed by ASM Global. The Los Angeles firm bought out the previous management group, SMG, which was merged into ASM in late 2019.
The group manages some 300 event venues across the United States and the globe. The convention center commission is currently reviewing proposals for a new management firm, and is expected to make a decision by July 13.