This afternoon, the Hot Springs Board of Directors heard a presentation from Dan Martin of Market & Feasibility Advisors, LLC (MFA) of Austin, TX and Chicago, IL, the firm that was engaged last year to complete a feasibility study for the development of a performing arts center in Hot Springs, Arkansas. MFA officially released their findings in a 104-page study. In conclusion, the consultants told the board that the project is “market feasible” but not financially feasible.
The primary measure of feasibility is whether the center’s user groups could pay facility-use charges in full in full support of the facility’s operating costs, while a blended source of government and philanthropic support would provide the initial capital development costs.
A potential site for a performing arts center was identified directly across the street from the Arkansas School for Mathematics, Sciences and the Arts, assuming all of the facilities could fit on-site. The school could play a small role in ongoing support but not with initial development capital. The potential site was that of the historic Majestic Hotel, where Whittington Avenue, Park Avenue, and Central Avenue meet. The hotel, closed years ago, was largely destroyed in a recent fire.
To complete this study, MFA:
• Ascertained demand from many local arts groups through profiles and interviews
• Investigated local and regional comparable facilities for operational lessons learned
• Reviewed facilities in other tourism communities that drew similar tourism markets
• Reviewed tourism trends in Arkansas and in Hot Springs
• Identified and reviewed national arts participation trends
• Used this data to assess the potential feasibility of a proposed facility for the performing arts in Hot Springs
MFA’s analysis determined the need to support an annual operating deficit of between $1 and $2 million, as well as full development cost support. Community interviews did not indicate that sufficient philanthropic and government support would be available for initial capital costs or support an ongoing deficit.
Proposed new investment in a performing arts center might be justified when it substantially supported Hot Springs’ thriving tourism industry. With that in mind, MFA noted the needs of existing community groups and developed programming for a facility most likely to succeed. The facility would include two theaters, one 250-seat and the second 600-seat theater, and an amphitheater with a capacity of 1,000. The theaters would not be able to support theatrical presentations.
The proposed package of facilities would serve local musical groups but also larger versions of existing Hot Springs film and musical festivals (to allow for growth), a larger version of the current invitational youth music program, and a few new festivals. With the exception of the local groups, the plan would be designed to draw tourism, especially in the November to March time period when tourism is at its lowest.
While such a facility would support tourism and be consistent with the other thematic tourism draws to the area, the lack of initial facility funding and an annual operational deficit suggest that the project, while “market feasible,” is not financially feasible. According to MFA, “We would recommend against an expectation that building user fees would include payback of the initial capital development costs of the facility as this is rarely possible.”
The study was funded by a grant from Arkansas Department of Parks & Tourism, with assistance from the Hot Springs Advertising & Promotion Commission. It is available for review on the Board of Directors page of the City of Hot Springs’ website, www.cityhs.net .