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Texarkana Convention Center Showdown Ends in Dueling Developments

6 min read

It was the best of times; it was the worst of times – but mostly the latter. In the mid-2000s, Texarkana’s economy was slumping, and city leaders were searching for ways to prod it back to life. What ensued was a development race yielding two convention centers, multiple hotels and a full-sized water park.

“Basically, we were bleeding, to say the least,” said Kenny Haskin, director of economic development for the city of Texarkana on the Arkansas side of the state line. “We were bleeding from all sides. Being caught in the middle of a four-state region, it was very difficult for us to compete in the state.”

“We were trying to find a way to jumpstart Texarkana, Arkansas,” said City Manager Harold Boldt.

The answer, it seemed, lay in unmet demand for a large meeting space in the region.

“We fielded calls for 10 years from groups and individuals wanting to have large groups and meetings in the Texarkana area,” said Jack Daugherty, principal of Daugherty Property Group LLC, which owns several hotels in the Texarkana area. “We did not have the facilities for 400, 500, 800 people in close proximity of hotels to make those large events doable for those groups. We were losing visitors.”

Texarkana, Ark., began plans to build a combination hotel and convention center. Boldt said Partners in Development, a consulting group led by two former hotel executives, performed a study to find the best spot for the project. It eventually indicated an area north of Interstate 30.

By 2006, the city government of Texarkana, Ark., had managed to scrape together a few million dollars to acquire almost a dozen acres of the land and created a tax increment financed district. Best Western and Holiday Inn Express hotels went up near the area planned for the convention center.

The Arkansans began discussion with Daugherty, who also owned the Best Western, on building the convention center. Boldt said the city was prepared to offer tax incentives to Daugherty for the construction.

“We did a big pep rally,” Boldt said. “After we got the study done, we provided the incentive to [Daugherty’s group]. Then they walked away.”

Daugherty declined to say specifically what caused him to reject the Arkansas option.

“Unfortunately it did not work with our property and our business model for that location,” Daugherty said. “It just didn’t work from a business standpoint for us.”

It turned out that a convention center and an attached Hilton Garden Inn, owned by Daugherty, was already in development on the Texas side.

The $24 million, 25,000-SF Texas convention center opened Oct. 5. It has a 12,000-SF ballroom, and the attached Hilton Garden Inn has 154 rooms. Daugherty said it was funded mostly by money set aside from revenue created when a hotel and motel tax was increased from 5 percent to 7 percent.

“That additional 2 percent was set aside for the building of a convention center,” Daugherty said. “So the convention center was built with that money and the money bonded from that. There was no burden on local citizens: The entire convention center was funded through that 2 percent. It was paid for by visitors to Texarkana.”

The Race

Boldt and Haskin, meanwhile, were not fazed.

“When you have a partnership, and one walks away, you could lie down and say, ‘Woe is me,’ but that’s not my mentality, and it’s not Kenny’s mentality,” Boldt said.

Years of competing against Texas laws had hardened them to businesses fleeing across the state line.

“This was the best location all along,” Boldt said. “You can begin to understand why Kenny and I always use the word ‘stealthy.’ That’s what we had to be, with all the development occurring on the Texas side for so many years.”

They began seeking a local investor to fund the Arkansas convention center.

“I was determined – we were both determined to make something happen,” Boldt said. “Being able to pursue this, and believe in it, is as important as having an investor. But a lot of people didn’t think we would ever get it done.”

They were convinced the city would have enough traffic to warrant two distinct convention centers.

“We’re extremely confident in the fact that we will be able to do what it takes to make sure we’re very comparable,” Haskin said.

In 2008, the pair found an investor.

“We found one locally,” Boldt said. “We were trying to keep him quiet, since we have this competition between Texas and Arkansas. We were afraid if we let out this proprietary information, [Texas] would try to influence that person not to do it.”

But the investor – Hiren Patel, a doctor of internal medicine – didn’t go to Texas.

“He agreed,” Boldt said, and Patel’s investments were leveraged with the city’s 3 percent advertising and promotion tax. But the majority of the funding for the site, Boldt said, came from Patel’s pockets.

“If we were trying to finance this on our own, there’s no way we could do it,” Boldt said.

The 27,000-SF, $18 million Holiday Inn and convention center is now under construction and expected to be completed by May 2013. It’s already surrounded by several hotels, including the aforementioned Best Western and Holiday Inn Express, and more hotels are popping up in the vicinity. A Copeland’s restaurant opened nearby, and property around the convention center is being marketed to businesses.

Then there’s the water park: Holiday Springs Water Park, a $40 million project attached to the convention center business park, broke ground this month and is slated to be completed by May 2013. Boldt called the park a “game changer.”

According to Patel, the park’s capacity will be around 3,000 visitors, and it will have features like a wave pool, a lazy river, a ride tower with five water slides and a capsule launch system.

“It will help the area tremendously,” Patel said in an email. “It will be surrounded by six hotels and that will help it further!”

The Competition

Now that both sides are prepared for convention-goers, the question is what a city competing against itself for events will look like.

“We … feel our packages for conventions and such are very competitive,” Haskin said of the Arkansas side venue. “We feel we will be extremely competitive. So much so, that, let’s say we don’t want to hurt them, but it will be difficult for them to meet the package that we will put together.”

The Arkansas convention center will be the venue for the 2014 Governor’s Conference on Tourism, which Boldt said would bring between 600 and 1,000 visitors.

The Texas side’s convention center isn’t as easily accessible from I-30, but it’s close to Central Mall and Christus St. Michael Health System as well as several hotels and public parks.

Daugherty, developer of the Texas venue, distanced himself from the rivalry and said the competition would boost business on both sides.

“We’ve been in the hotel business a long time,” Daugherty said. “We’re good friends with Patel. We currently compete with his other hotels. There is competition there, but you have that in any city. Quite honestly, we don’t see a dividing line.”

He said about 120,000 people are scheduled to use the Texas convention center, and numerous events have already taken place since its opening.

“And competition is good,” said Paul Contomanolis, general manager of the Texas convention center. “It makes us strive for a higher standard.”

So will the demand in the area be able to sustain two convention centers?

Daugherty: “I hope so.”

Haskin: “Oh, absolutely.”

The city government on the Texas side chose to remain tight-lipped on the competition. Boldt said there’s no ignoring it, though.

“There’s always going to be a rivalry down here on the border. Big time.”

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