Group files suit over Benton funds transfer for retail development project

A political action committee composed of three Benton residents has filed suit in Saline County Circuit Court against the city of Benton for what they say is an illegal use of taxpayer funds for economic development.

Citizens Holding Officials Responsible Everyday, or C.H.O.R.E., says the city on Nov. 23 transferred $400,000 from its general fund to its financial stability fund to reimburse that fund for money that had been transferred to Benton Utilities. That transfer was for utility infrastructure improvements earmarked for the Shoppes of Benton private development shopping center.

That earmark is the result of a memorandum of understanding between the city, the Benton Public Utility Commission and the Shoppes of Benton’s Georgia-based developer, Benton Investment Partners, the suit says. Under that MOU, the defendant has committed to reimbursing the utility for the Shoppes of Benton project and to waive permits and connection fees. Benton has agreed to absorb up to $1.4 million of the project’s costs.

The suit says this use of city funds for economic development is inconsistent with the purposes of a 1.5-cent sales tax passed by voters in 2004. That revenue is to be divided into three parts: two-thirds going to the city’s general fund for general operations, one-sixth for street improvements, and one-sixth for parks and recreation facilities. The tax went into effect Jan. 1 and will remain so until Dec. 31, 2016.

Greg White, C.H.O.R.E.’s acting president and an alderman until 2010, said Wednesday that the public utilities budget is separate from the general fund. The suit says voters should have been asked if tax money could go to economic development. Because they weren’t, Benton should be enjoined from making further payments to Benton Utilities and should reimburse the general fund for $400,000.

White said he believes that under the law, what’s happening is an illegal exaction, but C.H.O.R.E. did not file the lawsuit that way because it didn’t want to stop the tax. White said Mattingly exercises too much control over the city administration and said city council meetings aren’t always open and transparent. He criticized the process that led to Mattingly acting as the city’s finance director.

CHORE registered as a political action committee with the secretary of state on Nov. 13 and has three members: White, Laura Butler and Ray Freeman. Freeman also is a former aldermen. Ethan Nobles of Bryant is the group’s attorney.

Brent Houston, attorney for the city, said the city has not violated the law.

“The city stands behind its decision to spend general fund money to help bring about economic development in our community. The use of the funds for this purpose is lawful. The city intends to fully defend its actions in this case,” Houston noted in a brief statement to Talk Business & Politics.

In addition to the lawsuit, C.H.O.R.E. will seek a referendum to elect a city treasurer, as was done earlier in Benton’s history, rather than having the finance director be an appointed position that is now held by the mayor. He said the group also will be looking for candidates for office who support transparent government. The group plans to start a website, chorenews.com.