FCRA responds to merit pay complaint filed with state commission

The 2% merit pay received by Fort Chaffee Redevelopment Authority (FCRA) CEO Daniel Mann is legal because it’s for his work with a “political subdivision” in Arkansas, according to an FCRA response to the Arkansas Real Estate Commission (AREC).

Developer Steve Beam, who owns property in the Chaffee Crossing area, filed a complaint with the AREC in which he alleges that Mann and FCRA may have violated state real estate licensing law. The complaint contends that the merit pay of 2% of the sale price of all real property transactions in which FCRA is the seller of the property as long as he is the CEO is a legal violation.

Beam said even though the 2% commission is listed as a merit pay instead of a commission it is still in violation of the Arkansas Real Estate Law. Commission on the sale of property is only to go the buying agent or selling agent in a real estate transaction in Arkansas, and the law stipulates that only licensed real estate can act as either a buying or selling agent.

Dalton Person, an attorney representing the FCRA, said the merit pay does not violate real estate law because Mann is operating within the duties of a political subdivision.

“It’s just like a city or county does not have to engage a Realtor to sell property,” Person said in an interview with Talk Business & Politics.

In the response filed Oct. 3 with the AREC, Dalton noted that the merit pay “falls within the performance or conduct of the FCRA executive director’s official duties,” and those duties are conducted for a “political subdivision of the State of Arkansas.”

Person also explained that the merit pay does not come from the proceeds of a property closing.

“This means the merit compensation is paid as wages and subject to employment taxes. Again, the merit compensation is paid directly from the FCRA to Mr. Mann as part of the FCRA’s normal pay practices and does not transfer as part of any closing of property. This internal pay procedure between the FCRA is entirely independent of any real property transaction closing,” Person noted in the response. (Link here for a PDF copy of the response.)

Beam said he has read the response, and offered a blunt assessment.

“I think it’s all cover-your-ass if you ask me,” Beam said Tuesday. “You know, they don’t get together and discuss, ‘Hey, did he merit this pay?’ … They call it merit pay to try to get around the commission. But it’s merit pay that is based strictly on the sale of property. It’s not based on anything else.”

There is no time frame set for when the commission will rule on the complaint.