Little Rock chamber boss lobbies for support of ballot issue expanding economic development support

Little Rock Regional Chamber of Commerce President and CEO Jay Chesshir told members of the Fort Smith Regional Chamber of Commerce that Arkansas is not where it needs to be to compete in economic development for large so-called “super projects.”

Chesshir, who spoke Friday (Sept. 9) at the Fort Smith chamber’s First Friday Breakfast  held at the University of Arkansas at Fort Smith, said approval of Issue 3 on the November general election ballot will help the state and cities and counties better compete for jobs.

“We are at a competitive disadvantage,” Chesshir said, adding Ballot Issue No. 3 — also known as “Jobs for Arkansas” — will ask for a number of changes to the Arkansas Constitution including a removal on existing caps on the principal amount of general obligation bonds local entities may use under Amendment 82 to attract large development projects. “All of the checks and balances will still be there. The governor will still have to approve. The legislature will have to approve. But with that cap, we’re not competitive for those super projects, and both the governor and the legislature have agreed.”

The Senate and House voted to support the ballot measure in April 2015 with 80% and 76% yes votes, respectively. The current cap on bonds to finance economic development projects is set at $250 million. If Issue 3 is approved, it would allow bond issues for private development to exceed $250 million. It would also allow municipal governments to devote funds to firms or individuals seeking to undertake economic development. But as Chesshir pointed out, it would still need the Legislature to approve bond issue amounts.

CONSTITUTIONAL PROBLEMS
One of the existing problems, Chesshir said, is the Constitution as it now stands is a “patchwork” of different language limiting local entities’ abilities to pool resources or even implement voter-approved tax increases specified for economic development.

“So let’s say the city of Fort Smith or Sebastian County decides to, by a vote of its own citizens, tax itself for economic development projects. Well, right now, because of the state’s Constitution, your hands are tied regarding what you can actually spend that money on, and the specifications are very, very narrow,” Chesshir said. “So what has happened is that cities and counties from across the state have done this — including Little Rock — and found that once everything was approved, and the people of those communities voted to do what they could to attract new jobs, they couldn’t use the money as they said they were going to.”

What Ballot Issue No.3 does, Chesshir continued, is give states and local entities more resources and freedom to go after large projects being pursued by other states “as well as India, China, and Europe.”

“It gives you the clear authority to spend the dollars you said you wanted to, the way you wanted to spend them,” he said, adding this enabling is due to its provision of a clear definition for what economic development projects are, including the industries where dollars may be spent and “all of those things this money is intended to do to attract and/or maintain capital investment.”

Chesshir believes it’s the way economic development in a public-private partnership agreement has been done for decades, and, “in my opinion, it’s the only way we’ve found success (for larger projects) in Arkansas and across the country.”

“We can’t succeed without a local government, without a local water department or local sanitation department. We can’t succeed without our utility partners. We can’t succeed if we’re not all at the same table, on the same team, working on the same thing. So this is about being competitive,” Chesshir said.

ONGOING LEGAL ISSUE
To illustrate more of the “patchwork” associated with existing Constitutional language, Chesshir said Little Rock and North Little Rock recently lost a lawsuit over contract services in the Pulaski County Circuit Court he believes they shouldn’t have lost.

“I know this is a sore subject in Little Rock and North Little Rock because we are, at the moment, the only two communities that have this issue,” Chesshir said. “The lawsuit claimed that economic development contracts for services — in other words, the cities hiring a local economic development organization like the chamber of Commerce to do economic development work — was effectively illegal and unconstitutional, and the Judge agreed. So for the last two years, we in Little Rock and North Little Rock have not been able to use our public partners in the economic development process, and the dollars they have funded for contract services, marketing, infrastructure, all those things that we do from an economic development perspective as a contractual agreement with the local city and county, we have not been able to do.”

Chesshir said the appeal will come before the Arkansas Supreme Court “sometime in the next year.”

“We believe it is strictly constitutional because it is the same concept for hiring services for IT, for real estate, for insurance, for banking services. We believe it is not an unconstitutional issue, but we have had the opportunity to add language to this amendment that strictly allows those contracts to be created between local entities, public entities, and economic development organizations.”

Link here for a PDF of SJR16 and the Jobs for Arkansas proposal.