Members of the Fort Smith Board of Directors on Tuesday (Oct. 9) discussed a possible appeal of a recent jury verdict against the city related to the abandoned River Valley Sports Complex (RVSC). City Director Kevin Settle, who reminded the group he opposed the complex, suggested the city consider criminal charges against those who pushed the project.
Discussions with Fort Smith businessman Lee Webb and former State Senator Jake Files to build the RVSC began in 2012 but the city did not enter into a partnership until 2014. Acting on the recommendation of Fort Smith City Administrator Carl Geffken, the board of directors nixed the plan effective Jan. 31, 2017, after more than two years of delays on the project, which was expected to cost the city just $1.6 million for the construction of eight tournament-quality softball fields, two concession stands and associated parking.
Files and Webb had planned to use private construction and in-kind donations to finish the project. They billed the city for completed work, utilizing $1.08 million of the $1.6 million commitment by the time the city ended the relationship. Files pleaded guilty to wire fraud, money laundering, and bank fraud and received an 18-month sentence in June.
On Sept. 12, 11 of 12 jurors ruled against the city of Fort Smith in a lawsuit involving the RVSC and adjudicated before Sebastian County Circuit Court Judge Stephen Tabor. Total jury awards were close to $200,000, to be paid to B&A Electric ($151,880), Megehee Fence Contracting ($14,926.08), Grimes Dozer Service ($12,977.50) and James Griffith ($20,337.50). On a fifth question, the jury ruled unanimously in favor of the RVSC, absolving Webb of financial obligations to the repayment of the four contractors. However, the jury did not find the city engaged in “unjust enrichment.”
The city has until Oct. 27 to file an appeal or make moves to abide by the ruling. Michael Jones, the attorney representing the city on the RVSC lawsuit, said it could cost the city another $20,000 or more to appeal. He told the directors and city staff there are “viable issues” for appeal, but that appellate courts don’t like to overturn jury verdicts.
Jones said he believes the jury followed Judge Tabor’s request to consider that the city gave Files and Webb an “implied authority” to reach contracts on behalf of the city. He also said he believes the jury was not happy with the city trying to avoid paying the contractors.
“I think they were mad. I’ll be frank with you,” Jones told the directors.
Settle, who wants to appeal the jury verdict, said he is frustrated the city is wrongfully being blamed for many of the reasons that resulted in the project’s failure. He reminded the board that he and a few other directors pushed for a performance bond with the project but were overruled.
“I think that was the biggest mistake we ever made,” Settle said.
He also said the city should consider a tougher legal stance toward Files and Webb.
“I’m struggling. I mean, why aren’t we going after them criminally?” he said.
Talk Business & Politics contacted Webb about Settle’s comments. Webb declined any response.
Director Keith Lau asked if the city would set a negative precedent by accepting the verdict and moving on. Jones said it would not set a precedent that would invite future lawsuits from subcontractors related to city projects.
“We are not putting ourselves in a position where we have bound our hands,” Jones responded.
In response to another question from Lau, Jones was uncertain if an appeal would delay moving forward on salvaging the complex project with a potential new investor who has expressed interest in the complex.
SPECIAL MEETING ACTION
In a special meeting prior to Tuesday’s study session, the board voted 5-0 to allow Geffken to participate in an Oct. 16 public auction of the former Arkansas Department of Transportation’s regional headquarters facility on Towson Avenue. The building and land is appraised at $300,000, but Geffken told Talk Business & Politics he is not sure he will bid that amount.
Geffken told the board an initial estimate is it would cost around $3.6 million to renovate the building for city purposes. If the property is acquired, the city’s street department would move into the building to make room for the expanded utilities department. Both departments work at a facility at 3900 Kelley Highway.