President Welch Addresses Benefits of A-State's Public-Private Partnerships
01/28/2016
Note: An abbreviated version of this column appeared in the Jan. 29 edition of the Jonesboro Sun.
By Dr. Chuck Welch
President, Arkansas State University System
Much has been written and debated in recent months regarding Arkansas State University’s efforts to establish public-private partnerships as a means of fulfilling its mission, enhancing student educational experiences, and growing the local and state economies.
Unfortunately, many times the initiatives are misunderstood and frequently questioned based on incomplete or inaccurate information. I hope to provide greater perspective on the impetus and rationale for these projects, and how each will significantly benefit the university, our students, and the communities we serve.
Arkansas higher education institutions are challenged to minimize tuition increases, produce more graduates, keep faculty compensation competitive, maintain facilities, and offer competitive academic curriculum and student services. Simultaneously, state general revenue funding to higher education has remained flat for the past five years while reliance on student tuition has increased. In fact, A-State receives $42 million less in annual state funding than the state formula recommends for the university.
Three major initiatives involving public-private partnerships are under way that will ultimately help A-State meet all of our objectives: the hotel and convention center, the New York Institute of Technology College of Osteopathic Medicine additional site, and the new A-State campus in Queretaro, Mexico. Chancellor Tim Hudson and his team have done an extraordinary job of identifying and executing these transformative models of educational entrepreneurship.
Each of these initiatives has been developed to do three things: provide additional revenue for the A-State campus which will not come from student tuition or state funds, construct and renovate student learning facilities at no cost to our students or taxpayers, and meet a significant need of our university and the communities we serve.
Negotiations for Hotel, Convention Center in Jonesboro
We are negotiating a land lease with O’Reilly Hospitality Management LLC, which proposes to build a 202-room Embassy Suites hotel and 40,000-square-foot convention center on Red Wolf Boulevard adjacent to three A-State facilities that are already the biggest drivers of tourism for Jonesboro: Centennial Bank Stadium, the Convo and Fowler Center. O’Reilly will pay for the right to lease A-State’s property at a rate based on an analysis of value from a commercial real estate developer with extensive knowledge of the market. In return, A-State will be afforded learning laboratories for our new hospitality management program, and a large number of visitors will visit our campus and community and experience the many wonderful things happening at A-State and in Jonesboro.
A feasibility study requested by A-State showed rising demand for hotel rooms and larger-scale meeting space in the Jonesboro market. New business attracted by a convention center will more than offset any business lost by other lodging facilities, and total group travel spending in Jonesboro is projected to be $100 million over 10 years. The university and O’Reilly will escalate efforts to attract special events, meetings, and conventions to Jonesboro.
O’Reilly has asked the Jonesboro Advertising and Promotion Commission for financial support for the convention center, and it is very important to understand that most of the request would be funded through new hotel tax revenue generated by the hotel itself. O’Reilly requested $200,000 in tax abatements from actual new revenue generated by the hotel. This tax forgiveness would only be granted if the new tax revenue is generated in the first place.
O’Reilly also requested $200,000 from existing A&P funds for marketing purposes. If granted, A-State would relinquish an existing $100,000 A&P contribution to A-State athletics, resulting in net new expenditures of only $100,000 by the A&P Commission over existing commitments. We believe this to be a relatively small investment for a project that will have such a significant economic impact without any tax burden for city residents. Neither A-State nor O’Reilly has asked for a tax increase of any kind to support the development, nor do we believe one is required.
I want to note that an advertising and promotion commission’s role in almost every major city nationwide is to promote and financially support efforts to increase tourism spending. The $100,000 A&P contribution to A-State athletics is consistent with other college towns that recognize the value of bringing thousands of visitors to the city, and it was substantially smaller than the nearly $2 million offered to us by the city of St. Louis to move the football game against the University of Missouri from Jonesboro. We are willing to forego the athletics marketing funding, however, because we strongly believe that an investment in the hotel and convention center would simultaneously provide significant marketing and publicity for our athletics program, our university as a whole, and the entire community of Jonesboro.
We’re convinced the hotel and convention location on the A-State campus will best serve visitors to university events and students who want to study hospitality management and marketing. It will also generate much-needed revenue for the university without any capital investment and contribute to the continuing growth of Northeast Arkansas.
NYIT Opens Additional Medical School Site This Fall
Speaking of growth, we’re elated that the NYITCOM at A-State will bring 460 new medical students plus as many as 70 faculty and staff to Jonesboro over the next four years, beginning with the first class of 115 in August. A study by Tripp Umbach showed the medical school would have a $70 million annual impact on the region’s economy.
These 460 students – and in many cases their spouses and families – will grow the Jonesboro economy with housing needs, grocery and restaurant spending, clothing and all the other typical spending of new residents. The even greater impact ultimately will be in filling much-needed primary health care services throughout the Delta.
With this NYIT partnership, A-State will expand the Jonesboro economy, enhance healthcare for the region and complete a $12.6 million renovation of historic Wilson Hall with no funds from city or state sources. The university’s short-term capital investment will be repaid through its lease and operating agreement with NYIT within eight years, then we will have 80,000 square feet of modernized space with no debt plus a new revenue stream to fulfill A-State’s mission.
Construction Continues on $75 Million Campus in Queretaro, Mexico
Finally, construction progress continues on the 370-acre, $75 million campus in Queretaro, Mexico, with a projected opening in 2017. A private business foundation is funding the entire development and making A-State the centerpiece of a comprehensive community development plan in a state that is home to more than 1,000 multinational companies in need of an educated workforce.
Campus Queretaro will expand and enhance the A-State brand globally while creating opportunities for international studies, internships and research for our students and faculty. And, once again, this is another growth initiative requiring no local or state funding or allocation of tuition and fees from our students on the Jonesboro campus. And, once again, this initiative will result in enhanced revenue streams which will improve our university and the city of Jonesboro.
We’re incredibly proud of the key role Arkansas State plays in higher education. As the second-largest employer in the region, we are also very proud of our long-standing partnership with the City of Jonesboro. We firmly believe that a stronger A-State makes for a stronger Jonesboro, and vice versa. That is precisely why we have developed the aforementioned projects and will seek further similar initiatives in the future.
I hope you’ll agree that our willingness and ability to develop creative partnerships such as these also demonstrates our determination to enhance the economy of Jonesboro and the entire state. We are committed to operating differently and breaking the higher education mold. Gone are the days of simply relying on taxpayers and our students to bear the burden of paying for a higher education, and I think that is something we can all rally around and celebrate.
