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Published September 22 2013

As Fargo mulls convention center, Bismarck rushes to complete expansion

BISMARCK – As Fargo debates adding convention space to the Fargodome or building a new convention center downtown, the Bismarck Civic Center is charging ahead with a project that will double its Exhibit Hall’s trade floor space and give it an edge when competing for conventions, Fargo-Moorhead’s top tourism official said.

“It’s going to give them a little bit of an advantage in that regard,” said Charley Johnson, president and CEO of the Fargo-Moorhead Convention and Visitors Bureau.

Bismarck voters rejected a ballot measure last November that would have increased the city’s hospitality taxes to generate nearly $70 million to help pay for a $90 million

expansion of the Civic Center.

But Mayor John Warford said city commissioners “still felt that we needed to do something” because of a consultant’s studies that found the city was leaving convention business on the table. Officials also were concerned about possibly losing the lucrative Williston Basin Petroleum Conference, which drew about 4,000 people to Bismarck in May 2012.

Commissioners voted unanimously in March to proceed with a scaled-back project that will double the Exhibit Hall’s trade show floor space from roughly 50,000 to 100,000 square feet using revenue from Bismarck’s existing 1 percent lodging and restaurant tax.

Construction started in July and is expected to be “substantially completed” in time for the Williston Basin Petroleum Conference on May 22-24, Civic Center General Manager Charlie Jeske said.

The conference, which alternates between North Dakota and Canada every year, generated $1.9 million worth of business in the community last year, according to the Bismarck-Mandan Convention & Visitors Bureau.

The conference needed additional space, and Warford said the city was told by the North Dakota Petroleum Council that if Exhibit Hall wasn’t expanded, the conference wouldn’t be returning to Bismarck.

In fact, in an email that Randy Hansen, then the board chairman of the Bismarck-Mandan CVB, shared with city commissioners four days before their vote to expand Exhibit Hall, he warned that 11 groups were “maxed out” with the current Civic Center space.

“A number of them could increase their attendance with a larger facility and are obviously at risk of relocating,” Hansen wrote.

Jeske said since the expansion was approved, organizers of events on the verge of leaving Bismarck “actually are pretty excited now.” One event that previously took its business elsewhere is looking at returning because of the additional space, he said.

“We’re getting more calls and more inquiries,” he said. “We really haven’t marketed it or pushed it too much yet because we want to make sure everything’s completed before we get too far out there.”

Space needed

Johnson said Fargo-Moorhead lacks a big convention space with adequate breakout rooms. He supports the idea of adding on to the Fargodome or building a convention center downtown.

“I think we need it to compete, not only with the other cities in the state but other cities regionally of our size that have convention facilities that are more conducive to actual conferences and conventions instead of what we have here now,” he said.

The Fargo Civic Center has a maximum of 27,000 square feet of exhibit space and seven meeting rooms.

The Fargodome has nine meeting rooms totaling 13,000 square feet and about 115,000 square feet of exhibit space: 80,000 on the arena floor, 20,000 in the concourse and 15,000 in the lobby.

Fargodome General Manager Rob Sobolik said conventions and conferences must compete for time with football games, concerts, theater shows and other events.

Johnson said the dome would be a great place for conferences.

“But the truth about the Fargodome is that it’s awfully busy,” Johnson said. “It’s hard to book conferences in there.”

Johnson said the CVB lost out on a five-year contract this spring with a state association that wanted the Fargodome for an annual convention that draws more than 1,000 people and requires outdoor exhibit space.

“And we couldn’t find five years of dates that suited them. We couldn’t give them the same month even, five years in a row, because the dome is so busy and booked out so far,” he said. “So we lost that business to somewhere else in North Dakota.”

Fargo has hired a consultant to study a Fargodome expansion, as well as potential downtown sites for a convention center. The study by HVS Convention, Sports and Entertainment Facilities Consulting of Chicago is expected to be completed in early October.

Sobolik said the expansion, which he expects will be recommended at 50,000 to 80,000 square feet, would give the dome a dedicated space for exhibits, conventions and conferences, and allow it to offer 160,000 to 170,000 square feet of floor space and additional meeting/breakout rooms.

“All we’ve got to do is find a way to pay for it,” he said.

Financing options differ

So far, that discussion has centered on using the dome’s reserve fund, which stands at about $37 million.

Bismarck’s failed measure to support a $90 million Civic Center overhaul would have increased the city’s lodging and restaurant food-and-beverage tax by 1.5 percent and its lodging-only tax by 1 percent for 20 years.

Bismarck now has a 2 percent city lodging tax and a 1 percent city lodging and restaurant tax. The city plans to use proceeds from the 1 percent tax to pay off the nearly $27.7 in bonds for the expansion project. The City Commission is scheduled to receive bids and consider selling the bonds on Tuesday.

With an estimated annual payment of $2 million, it’s expected to take 20 years to retire the bonds, city Finance Director Sheila Hillman said.

Fargo, Grand Forks, Minot and Valley City all have a 3 percent lodging tax.

In Fargo, the tax supports the CVB. One-third of the tax is dedicated to the CVB’s capital fund, generating about $600,000 to $700,000 annually, which helps pay for projects that draw visitors to the community, Johnson said. That wouldn’t be enough to support construction of a convention center, he said, adding the hope is that the city can tap Fargodome reserves to help fund the project.

Entire state benefits?

Johnson said he doesn’t have a strong opinion about whether additional convention space should go downtown or at the Fargodome.

“It would be great to have it downtown, there’s no doubt about that,” he said, citing the proximity to shopping and restaurants. “But we could work with it at the Fargodome, too. It has certain advantages by being out there, especially if you can get a hotel attached to it.”

That’s one advantage of the Alerus Center in Grand Forks, which is attached to the Canad Inns.

The Alerus Center offers nearly 55,000 square feet of convention space, including five ballrooms and 12 meeting/breakout rooms, plus 100,000 square feet of exhibit space on the arena floor. The city-owned facility hosted the Petroleum Council’s annual meeting last week.

There currently are no plans to expand the Alerus Center. Executive Director Cheryl Swanson said she doesn’t know how an expanded Exhibit Hall in Bismarck will affect competition for conventions.

“Without having a crystal ball, I don’t know if it will have a direct impact,” she said. “I think the more business that North Dakota can attract, the better it is for the entire state.”

With more competition from Bismarck and other cities that have recently upgraded their convention facilities, including Sioux Falls, S.D., Johnson sees the need for Fargo-Moorhead to step up its game.

“I think Fargo needs a true convention space to compete with its state and regional competitors,” he said.

Not that Exhibit Hall will have a perfect setup: Jeske said after the expansion, the 16 or 17 meeting rooms between the hall and Civic Center may not be enough in proportion to the expanded floor space, especially if the facility is handling more than one event at the same time.

“We’re going to struggle for the time being with that,” he said.

Jeske, who managed the Alerus Center from 2000 to 2007, noted that the hosting facility isn’t the only factor convention planners consider in deciding where to go. The price and availability of hotels, shopping choices and, especially for national conventions, air travel options all figure into it, he said.

With western North Dakota’s booming oil business and airports adding more flights, “I think the convention business is going to be a positive for the whole region,” he said.

Readers can reach Forum reporter Mike Nowatzki at (701) 241-5528