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Digging for a diamond.

Digging For A Diamond

Project 2000's Ambitious $100-Million Plan Will Need A One-Cent City Sales Tax For Funding

Two weeks ago, the day before developer Jim Moses, attorney Mark Grobmyer and hotel owner Wally Allen would unveil their ambitious Project 2000 to the city of Little Rock, the trio made a quick flight to Fayetteville to visit Frank Broyles, head of the University of Arkansas' Athletic Department.

Word was leaking out in the press of their $100-million Diamond development project in downtown Little Rock. A competing privately funded athletic/convention/hotel facility in North Little Rock was trying to steal their thunder. Finding out which project Broyles would support was crucial.

"Before we could say too much, he (Broyles) said, |What can I do for you?' "says Allen of the early afternoon meeting.

Broyles told the trio all of Arkansas would benefit if Little Rock was improved and promptly pledged the Razorbacks' support. Broyles even volunteered to fly down the next day for the dedication, where he sat prominently displayed on the front row like a prize trophy.

"We were dancing on the tables about that time," Allen says.

And they've been dancing ever since.

Anticipation For 250

The following day, Project 2000 unveiled its ambitious Diamond project at an afternoon press conference complete with a video promo, theme music from "Rocky" and "Chariots of Fire" and slick graphic displays. The presentation drew a crowd of over 250 attentive businessmen and women and resulted in pages and pages of press coverage (mostly positive), excited business leaders and boosterism gone wild.

"We have phenomenal interest," says project co-chairman Moses. "I've got a hundred phone messages on my desk."

As unveiled, the four-point Diamond project promises to double the Statehouse Convention Center's available space; create a new downtown library, educational complex, new science and history museum and a 12-story, 20,000-seat arena; and provide for a $20-million facelift for War Memorial Stadium. All to begin in the fall of 1991 with a completion date of late 1993.

Over the next 45 days, Moses, Allen and Grobmyer are meeting with groups and individuals all over the city to build a coalition to help finalize plans for the project and, most importantly, gather support for passage of a new one-cent city sales tax beginning April 1.

That dedicated tax is expected to raise $23 million annually and should pay all bills within four years, allowing the operations to be self-sufficient. But to get voters to support the tax, beyond Little Rock's elite corp of business leaders, Project 2000 must convince the man in the street there are no hidden agendas in this deal, and this isn't another malling of Main Street, a dismal failure of the late 1970s.

Plus, the Diamond concept must dispel its current image that it is the brainchild of white, upper-class elitists who secretly cooked it up in country club locker rooms far from the madding crowd.

Some Skepticism, Much Support

So far, things look good.

Columnists John Robert Starr, Max Brantley and Richard Allin have all either openly endorsed the project with limited reservations or avoided trying to shoot it down. The editorial page of the Arkansas Gazette gave it the thumbs up along with Arkansas Business.

Ringing endorsements from civic leaders -- Worthen CEO Curt Bradbury, Katherine Mitchell, chairman of the LR School Board, Rett Tucker representing a committee for Fifty for the Future -- were already written up in handouts by the time of the press conference.

Last week, the Association of Builders and Contractors of Arkansas and the Quapaw Quarter Association climbed on the booster bandwagon Small business owner John Steen of Janitor Supply Co. pledged $100 saying the project would "help our children."

Even the traditional naysayers to tax increases are on their best behavior.

The AFL-CIO isn't too happy about the possibility of funding the project with a regressive citywide one-cent sales tax, but union president Hugh Moore says the union is waiting to make up its mind until after seeing the final funding proposal.

Tom Ferstl, president of the 100-member Pulaski County Taxpayers Council, doesn't like the idea of a sales tax and calls the project a thinly disguised Trojan Horse for the sports arena. But, he says, his group is sitting back and waiting.

"We've done a lot of screw-ups over the past few years," Ferstl says. "One positive thing is that you're seeing these people get together."

Super Bust At The Superdome

What can go wrong with a project like the Diamond? Plenty.

Take New Orleans, for instance.

According to an article by the Tampa, Fla., market research team of Laventhol & Horwath, the Superdome has been a super bust. Cost overruns were 300 percent on construction. Initial operating appraisals were based on getting a major league baseball team that never materialized, and private funding couldn't carry the costs.

The Dome was supposed to double as a convention center, but that never happened, either. In 1984, a separate convention center was finally built several blocks away.

Predevelopment market studies proved to be misleading, and New Orleans lost their NBA franchise and had to cut a sweetheart deal with the NFL Saints to keep them in town.

All that bad news resulted in annual operating deficits in the millions. Plus, Laventhol & Horwath estimated that annual debt service and operating expenses will never be offset by property tax revenues.

But success cases like Indianapolis spur developers on.

The $65-million Hoosierdome and convention center was built with a one-cent sales tax and $30-million private foundation grant from Eli Lilly. So far the complex has spawned major projects on nearby parcels, allowed the city to land the NFL Colts and invigorated the city.

Some question whether the Diamond project has really been thought through, despite a development strategy report prepared by Ronald Copeland of Planning, Management & Development Consulting Services of Little Rock.

"I just don't think they've done their detail work," says one business leader who has seen the plan.

The Copeland study includes a letter from Laventhol and Horwath comparing Little Rock's project to similar-sized city facilities: Rupp Arena in Lexington, Ky.; Birmingham-Jefferson Civic Center, Birmingham, Al.; and Greensboro Coliseum, Greensboro, N.C.

Importantly, all have Division I basketball teams and "the existence of such a team can have a major impact on the attendance and utilization of the facility," the study notes. For Little Rock, Broyles has committed the Razorbacks to a smattering of basketball games and the UALR Trojans are available, but the situation is clearly different.

Little Rock architect Bill Asti, who specializes in urban growth, says a full-blown feasibility study investigating the overall city impact is needed.

"I'm 100 percent behind any facility that can make Little Rock a more magnificent city," Asti says. "But I question whether that arena is doing that."

The triad of Moses, Allen and Grobmyer counter that nothing is solid at this point besides the initial proposal. Over the next few months as supporters for the project are rounded up and final decisions on the tax package clarified, other details can be worked out.

What is clear is when and how the money will be raised to build the Diamond.

Tax Time Next Spring

Copeland's development strategy report comes down squarely on using a one-cent city-wide sales tax to fund the $100 million cost beginning this spring (plus, state and private foundation funding for approximately 20 percent):

"...Only the city sales tax will generate enough revenue to repay $80 million in bonded indebtedness....", and "An election for a sales tax levy for the Diamond after mid-1991 would not represent an increase in sales taxes over what Little Rock residents are now paying."

Currently, Little Rock residents pay 6 cents in sales tax, including the jail tax. Four goes to the state, 1 cent to the county, 1 cent to the jail. An additional 2 cents is added on in restaurants and hotels, the so-called "hamburger tax" for the convention business, bringing that total to 8 cents.

The Dream Of A Better Little Rock

Sitting in a grey-walled conference room at the Resneck Stone Ward ad agency last week, Allen, Moses and Grobmyer have an almost fevered tone of altruism in their voices when discussing the project -- the sound of visionaries talking.

"If you let your core die, if you let its heart get weak, your whole system will fall apart," Moses says when asked why downtown must be supported.

"What this project does is create an image that the city is on the move," Grobmyer says as he talks about bringing 37 delegates from foreign countries to Little Rock this past October.

"We've seen the good of Little Rock and the bad of Little Rock," Allen says of what he perceives as the city's stagnation. "Are our children going to come back here?"

Will the Diamond's sparkle bring children back home, impress visiting diplomats from Brazil and shine a soothing light on the city's decaying core?

No one really knows and the only way to find out is to fund the project and see. That question will be decided by the voters sometime this spring.
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Article Details
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Title Annotation:Little Rock, Arkansas; Project 2000; includes related article
Author:Walker, Wythe, Jr.
Publication:Arkansas Business
Date:Nov 19, 1990
Words:1517
Previous Article:Battle rages over TV turf.
Next Article:Ward-Heiskell update.
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