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Festival Fairbanks backs out of merger with Downtown Association

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Posted: Sunday, November 4, 2012 12:00 am | Updated: 11:55 am, Mon Jan 21, 2013.

FAIRBANKS — A proposed merger between two pro-downtown business entities stalled Friday morning after Festival Fairbanks’ diminished board of directors backed out of joining forces with the Downtown Association of Fairbanks.

Festival Fairbanks’ board voted 2 to 2 to hold off on the merger, citing concerns about revenue from the two groups’ gaming licenses.

“The reason we are waiting is because two board members were very concerned that if we merge we might jeopardize some of our funding sources, which might jeopardize either organization,” Festival Fairbanks Executive Director Julie Engfer said. “We would like to have a little time to investigate those funding concerns.”

The merger would have put Festival Fairbanks and the Downtown Association under one umbrella, but each group would retain its separate business and gaming licenses, which bring in revenue to each agency. However, under the terms of the tentative agreement, both groups would have been able to share resources. Though both entities have gaming permits allowing them to draw revenue from state-sanctioned games, “board members were concerned we might lose our gaming permit,” Engfer said. “Those things have to be looked at by the state board of games.”

Immediately following Friday morning’s vote, two of Festival Fairbanks board members resigned, but it was a move that had been planned for some time, Engfer said. Jim Whitaker and Bob Shefchik resigned from the board, which leaves Steve Thompson and Jimmy Parrish as the board’s only members. Board member Jim Dodson, who is executive director at the Fairbanks Economic Development Corporation, resigned from Festival Fairbanks’ board of directors last week.

“When the merger was put together, the idea was Steve and Jimmy would go with the merger,” Engfer said. “The board had already made the decision they would resign when the boards merged. Jimmy and Steve showed some reluctance and wanted to be safe.”

Whitaker and Shefchik voted for the merger while Thompson and Parrish voted against. Between gaming license concerns and Festival Fairbanks shrinking number of board members, Festival Fairbanks held off on the merger. “Our goal is to get the board up to full capacity before making a final decision about the merger,” Engfer said.

The stall was an unexpected announcement for leadership within the Downtown Association of Fairbanks, whose members approved the merger at the association’s Tuesday night general membership meeting. Because the Downtown Association is a multi-member agency, a majority vote was required by members to proceed with the merger with Festival Fairbanks. When the majority vote passed, the Downtown Association thought the merger was a go-ahead.

“We’re up in the air. Our schedule for merger was Jan. 1,” said Ken Henry, president of the Downtown Association board of directors. “We, our voting membership, voted to merge with Festival Fairbanks with instructions to sign documents to come under the same umbrella with the assumption that Festival Fairbanks would approve it.”

Now, Henry said, the plan is to stand by and visit with both boards’ members and see what can be done to spur the merger, Henry said.

“We feel an opportunity has been missed,” Henry said. “We’re going to continue what we’ve been successful at doing, and that’s promoting downtown.”

David van den Berg, president of the Downtown Association, echoed Henry’s comments, also calling it a missed opportunity to further downtown businesses and growth.

“We think it’s a missed opportunity to serve downtown better,” he said.

Both organizations are nonprofit groups that share similar roles, primarily promoting business, downtown revitalization and economic development in the heart of Fairbanks. The terms of the stalled agreement would have allowed each group to retain their identities while sharing their resources.

Contact Features Editor Gary Black at 459-7504 or on Twitter at @FDNMfeatures.

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