Tech Park board approves $17.5 million finance package, extends offer to attorney for downtown property

The Little Rock Technology Park Authority approved two measures on Monday to move the city’s multimillion downtown tech park development closer to realization, but it still may face legal hurdles depending on what transpires in the days and weeks ahead.

At Monday’s hastily called conference call meeting, the tech park board first approved a measure by a vote of 5-to-1 to accept a letter of commitment from a local bank consortium to finance the first phase of the project through a $17.5 million loan over a 72-month term.

Although approved after only a few minutes of discussion, Board member C.J. Duvall did raise questions about whether the arrangement should be vetted by the City of Little Rock and other sponsors.

Officially, the Little Rock Technology Park Authority was created in 2007, under enabling legislation passed by the Arkansas General Assembly as Act 1045 of the 2007 Session. The Authority is sponsored by the University of Arkansas at Little Rock (UALR), University of Arkansas for Medical Sciences (UAMS), and the City of Little Rock, and governed by a seven-member Board of Directors appointed by the sponsors.

“Considering the fact that in a sense, we are partnering with the city and the citizens of Little Rock, would it not be important to pass this by the city manager, the mayor and the city’s lawyers?” Duvall asked.

But Tech Park chair Mary Good and Dickson Flake defended a motion to approve the financing package, saying that the authority was independent and already had City of Little Rock, UAMS and UALR representatives on the board. “The city is one of three sponsors, (and) I would say it wouldn’t be any more appropriate to pass it by the city than to pass it by the attorneys of the universities,” Flake said.

“That would be my comment as well,” Good added. “This is an independent agency, I don’t see that is necessary.”

Duvall countered by debating that the citizens of Little Rock were the biggest stakeholders in the downtown development, which has been on the table for more than five years. “The citizens tend to be vocal about what we do. If that question should arise that as a courtesy we shared it with the city manager, I’d feel pretty uncomfortable that we had not.”

In deference to Duvall’s concerns, however, the board then added an addendum to its motion to send a letter to the City of Little Rock, UAMS and UALR officials concerning the financing arrangement.

Under the terms of the proposed deal, the financial consortium would provide necessary funding to begin Phase 1 of the downtown project at a fixed 4.19% interest rate over a period of six years. The $17.5 million loan will consist of two promissory notes, one taxable in the amount of $7.9 million and the other tax-exempt at $9.6 million.

Despite Monday’s 5-to-1 vote to approve the measure, with Duvall voting against it, the Tech Park board still may face legal action if it goes forward with the financial arrangement. Led by Centennial Bank, the bank consortium group also includes Simmons Bank, Bear State Bank, Arvest Bank, First Security Bank, Eagle Bank and Trust Company, First Arkansas Bank & Trust, Malvern National Bank (MNB) and Relyance Bank.

But Arkansas Federal Credit Union (AFCU) was not listed as part of the consortium. During a board meeting last month, Little Rock attorney Richard Downing told the board that the consortium of six local banks led by Conway-based Centennial left out AFCU in a proposed bid to provide financing for the project.

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.”

Following Monday’s action, Downing would not comment specifically on the Tech Park board’s action, but offered the following statement to Talk Business & Politics on behalf of AFCU.

“Arkansas Federal Credit Union (AFCU) believes, with respect to the Tech Board’s bidding process, what occurred was a clear restraint trade by the Arkansas Bankers Association and others. In addition, in AFCU’s opinion, the Tech Board’s bidding process was fundamentally flawed and failed to follow applicable State of Arkansas procurement statutes — public funds are being expended without proper notice and in an improper procedure. AFCU, at this time, will keep their legal options open.”

Although the legal threat on the financing deal still looms, the board was able to stave off another legal battle for a day or two against Little Rock Attorney Richard Mays, who had not responded to the authority’s $845,000 offer to purchase his downtown law offices by Monday’s noon deadline. At a previous meeting in late October, the board voted to hire Mitchell Williams law firm to prepare an “eminent domain” condemnation lawsuit by Nov. 18 if Mays did not respond to the offer by the deadline.

But board member Jay Chesshir said he visited with Mays and representatives of his law firm over the weekend, and requested that the board extend the offer until noon Friday in order to give the Little Rock attorney more time to make a decision.

“I would request in the form of a motion that we move or extend the acceptance of our firm offer from today to Friday at noon to give him … an opportunity to take a look at all information in reviewing our offer,” Chesshir said.

The board immediately voted unanimously to approve Chesshir’s motion.

Once signed and delivered, the financing package will allow the publicly-financed authority to close a $11.6 million deal with real estate partnerships headed by Stephens Inc. CEO Warren Stephens for nearly 142,500 square feet of building space, or 3.25 acres, in the downtown area.