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City to temporarily close convention center

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The city of Roswell will temporarily close the Roswell Civic & Convention Center in April due to lack of funding from low hotel occupancy, City Manager Joe Neeb said at Thursday night’s City Council meeting.

Furthermore, the city will not budget for operations of the center in its fiscal year 2022 budget, which starts in July, Neeb said.

Neeb said the city informed Spectra, the company contracted to manage the center, on Jan. 20 about terminating the agreement as of April 20. The contract stipulates a 90-day notice for termination.

A daycare center that had located in the convention center has moved out, as their contract ended Feb. 8, Public Affairs Director Juanita Jennings told the Roswell Daily Record on Friday.

The center, which underwent a $6.3 million renovation and expansion from 2017 to 2019, will still be used for City Council and committee meetings because those don’t constitute convention center activities, Neeb said.

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Jennings said the decision to close the facility to events was not an easy one.

“It’s heartbreaking. We were doing so well at that facility before COVID. We took great strides to change the model, reset how we operate,” she said.

Jennings said prior to the onset of the pandemic, the convention center had booked more events in 2020 than it ever had.

A revenue loss report from Spectra included in the Feb. 4 Finance Committee agenda packet shows that from March to December, 42 events booked for the convention center were canceled or postponed at a loss of $244,287 in revenue.

The closure of the facility is based mainly on hotel occupancy figures, which have been low since public health orders imposed restrictions on lodging facilities.

“The hotels are down about 35% capacity and they need to be over 75% capacity in order to generate the revenue that we need in order to keep everything operating that relies upon lodgers’ tax and the bed fee,” Neeb said.

Chaves County is in the very high-risk Red Level of the state’s Red to Green COVID-19 risk assessment system, which restricts places of lodging at 40% of maximum occupancy for those that completed the state’s Safe-Certified training and 25% for those that have not.

The 5% lodgers’ tax imposed on rentals at hotels, motels and short-term rentals are used by law to promote tourism and conventions. Since the health order restrictions were imposed, collections are down about 35% from last year, according to the city’s collection reports.

The bed fee, or convention center fee, imposes a $2.50 fee per room per day and by law is used for improvements to a convention center. Both Neeb and Jennings said the bed fee is expected to cover the city’s debt service on the center, which is budgeted at $555,094 for fiscal 2021. The debt is paid in August of each year.

In the first six months of fiscal year 2020, the city collected $264,844 in bed fees, a decrease of 28% from last year.

The announcement of the center’s temporary closure comes when data suggests an improvement in the state’s COVID-19 risk. Since the introduction of COVID-19 vaccines in January, daily case counts and hospitalizations have decreased across the state and on Wednesday, Gov. Michelle Lujan Grisham announced the state will no longer require self-quarantine for visitors from high-risk states. The city will also be restarting its tourism marketing next month.

Jennings said the city had been in talks with Spectra about suspending the management agreement, but it did not appear that would be in the city’s best interests.

“From the numerous meetings we’ve had with the state, it did not look likely that meetings and conventions would be coming back all of 2021. With that in mind, and looking at where the numbers were at for ‘heads in beds,’ it just didn’t make financial sense to continue to pay out on this facility that wasn’t bringing in revenue,” Jennings said.

Under the agreement, the city pays $8,000 a month for Spectra to manage and staff the center.

Even when Chaves County advances to the medium-risk Green Level, it won’t be enough to bring back convention business, Jennings said.

At that level, 75% hotel occupancy is allowed for safe-certified lodging businesses, but mass gatherings are limited to 20 people.

“For a building of our size, the cost to operate versus the cost of what revenue could be, it won’t align correctly. That facility is really built for a large gathering of people,” she said.

Jennings said, ideally, lodging businesses would have to reach between 60% to 70% occupancy and sustain that level for at least one quarter, along with lifting of mass gathering restrictions, before the city considers reopening the convention center.

When that happens, the city will look for a third party to manage the convention center again, she said.

“One of the decisions that we’ve made, we know we want to have a third-party company manage the facility, like Spectra. Hopefully, they will be willing to be good partners with us again, and if not then maybe someone else,” Jennings said.

City/RISD reporter Juno Ogle can be reached at 575-622-7710, ext. 205, or reporter04@rdrnews.com.

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