Tech Park Faces Eminent Domain Troubles Again, Financing Package for Downtown Project Also Questioned

Editor’s note: Clarifications were made to paragraphs seven and nine of this story that deal with process and ownership.

The Little Rock Tech Park Authority temporarily tabled two controversial items dealing with the first phase of the $30 million downtown development after the board learned that talks on a year-long property dispute and a consortium-backed financial package for the project could land the publicly-financed agency in court.

The contentious issues played out on Wednesday (Oct. 14) in a sparsely attended meeting at the Little Rock Venture Center, where audience members and media struggled to hear board members speak against the constant din of the center’s humming air conditioning system.

But even with the center’s acoustics problem, the board spent nearly an hour debating whether or not to move forward with eminent domain proceedings to take over the downtown property of Little Rock attorney Richard Mays, whose law offices at 415 Main St. are situated right in the middle of the multi-million dollar project.

Board member Dickson Flake, a prominent local real estate developer, told the board members that he has been in friendly negotiations concerning the possible sale of the Little Rock attorney’s downtown property. However, he recommended that the board move forward with taking over the property through eminent domain proceedings if his talks with Mays did not prove successful.

“We have been in discussion over the past year, but we’ve only got serious over the last four or five weeks,” Flake told the other board members. “But, this has to be settled before everything else moves forward or it will affect our schedule.”

That schedule referred to by Flake is the development of nearly 142,500 square feet of building space, or 3.25 acres, in the downtown area’s “Creative Corridor” that will serve as the city’s proposed tech park.

So far, the board is in talks with East Harding Inc. as the construction manager for the first phase of the $30 million project. Brent Birch, the tech park’s executive director, said at Wednesday’s meeting that Wittenberg Delony & Davidson Architects officials are close to completing design and architectural plans for the development, and will unveil those at the next meeting. East Harding officials will take those plans and see if it fits the tech park’s budget, officials said.

“Right now we have a lot of good ideas but don’t want to show them right now just in case they don’t fit our budget,” Birch told the board. In July, Little Rock’s board of directors voted unanimously to appropriate nearly $6.8 million in advance funds for a $17.5 million financing proposal to funding the initial phase of the project.

Flake had earlier told board members that the financing package will allow the publicly-financed authority to close a deal with two limited liability entities headed by Stephens Inc. CEO Warren Stephens, whose partnerships own most of the downtown land tied to the development except for the Mays property.

“No one could have been more cooperative than Richard Mays,” Flake told the board after asking for eminent domain authority. “That (property) has been his home for 30 years of law practice and he hates to move.”

Following Flake’s recommendation, the fractious board went back and forth for nearly an hour debating if the “public use” statute of the State Constitution allowed the publicly-financed authority to take Mays property in this case.

Although most board members seemed ready to move forward with Flake’s request immediately, Southern Bancorp CEO and former Arkansas lawmaker Darrin Williams took a strong stance that he would not vote to use the constitutional power to force Mays from the property without additional information on the “public use” statute of state law.

The former Democratic lawmaker, who served as chief deputy attorney general under Mark Pryor, told board members that he believes the Arkansas Constitution only allows for “narrow exceptions” to deploy eminent domain authority for publicly-financed projects.

“I would like to know a whole lot more facts because I don’t know where we are in these negotiations,” Williams said. “The ‘public use’ determination could hold us up a whole lot more than the issue of money.”

Before the debate was over, Tech Park Chair Mary Good several times implored the board to move forward immediately and take over the Mays property so the multi-million downtown project won’t stall.

“We’ve got to do something to move this forward because the schedule will be destroyed if we don’t,” Good said, citing the development’s tight deadlines and a clause in an agreement with Stephens that a deal to purchase the downtown property has to be closed by early 2016.

ANOTHER LEGAL CHALLENGE
After several amended motions and asides, the board voted unanimously to table the issue until a specially called Nov. 1 board meeting to get legal clarity on the “public use” question. Several board members also expressed hope that talks with Mays could be expedited with a better financial offer based on pending property appraisals from both parties.

And even if the eminent domain issue does not derail the downtown project, an attorney representing the Arkansas Federal Credit Union (AFCU) threatened the board with legal action if it did not cancel a proposed deal for the authority to negotiate with a consortium of local banks for a proposed $17.5 million financing.

Representing the AFCU, Little Rock attorney Richard Downing told the board that the consortium of six local banks led by Conway-based Centennial Bank left out AFCU in a proposed bid to provide financing for the project.

In a three-page letter provided to the board, Downing explained that the AFCU was excluded from the original $17.5 million proposal by the consortium to finance the tech park development because of a complaint from the Arkansas Bankers Association.

“We were advised that the Arkansas Bankers Association and other banks didn’t like a credit union being a part of the consortium and were removed from the proposal,” Downing told board members.

After several terse exchanges with board members, Downing said that the tech park authority’s 67-page request for proposals (RFP) was not conducted in compliance with state law because the bid was not sealed, did not follow the state’s “public notice” rules, and failed to treat all bidders “fair and equal.”

“You allowed one participant to amend his proposal and not another. I humbly submit, you can’t do that,” Downing argued. “I think you engaged in a fundamentally flawed process.”

Despite Downing’s argument, several board members bristled at the suggestion that the board’s RFP process was unfair or illegal. Tech board vice chair Kevin Zaffaroni told Downing he believed the board had gotten caught in the middle of ongoing disputes between banks and credit unions.

“Is the heart of your issue some (disagreement) between the credit unions and the banks?” asked Downing. “In other words, are you attempting to do all of this to get us in the middle of your dirty laundry with the banks?”

After several more exchanges with Good and other board members over whether or not the tech board failed to comply with state laws in keeping the bid offers sealed, Downing told the board they needed to start the RFP process for the financing proposal over again to give the local credit union a chance to make a bid.

“What you need to do to rectify this process is cancel it,” Downing said. “Re-notice it and let the bids come in again, and if Arkansas Federal Credit Union is now the lowest bidder – then fine.”

Afterwards, Good told Downing the board would consider his advice, but did not plan to address the complaint or rebid the contract at this time.

When asked what was AFCU’s next step if the board moved forward with negotiations with the bank-led consortium, Downing replied: “Go to court, I’m not saying we will, but that is an option.”