Texarkana Crossroads Business Park Faces Scrutiny

by Luke Jones  on Monday, Jul. 22, 2013 12:00 am  

In 2007, Texarkana City Manager Harold Boldt believed it was his job to get some development started in the southwest Arkansas city.

Six years later, Crossroads Business Park adjacent to Interstate 30 is bristling with hotels, restaurants and a nearly completed convention center and water park. But Boldt is gone, and he’s left behind a trail of questions regarding the city’s handling of the development.

The questions began when Dennis Young, a lifelong resident of the city and a former member of the Texarkana Board of Directors, heard about a last-minute meeting of the city board in January.

At the meeting, Boldt was asking the city board for more money for the convention center and water park. “Due to several factors, the city does not have the cash available to fund our costs at this time,” Boldt told the board in a letter.

He asked the city to increase a $487,000 short-term note to $1.06 million and to pledge sales tax revenue and additional franchise fees to pay the additional debt. He also announced he would ask the city’s Advertising & Promotion Commission to contribute $500,000 to Texarkana Hotels LLC, the private company belonging to Hiren Patel, an investor Boldt brought in when he realized the city would never be able to pay for all that development itself.

All of this piqued Young’s interest. In his eyes, Boldt was holding the city hostage. He called up his friend Tom Cabaniss, a former CPA and 40-year resident of Texarkana, and the pair began procuring documents related to the development.

Findings

The documents that Young and Cabaniss requested revealed some eyebrow-raising details about the project. Here are a few:

• The city of Texarkana has very little ownership of the project. The convention center, water park and much of the land belong to Patel’s company. The city owns mostly unoccupied land, some of which will be used for parking lots.

• More than $6 million in A&P funds have been pledged for the project, but state law dictates that cities may provide A&P funding for the operation of such projects if the city owns an interest in the project.

• When the city issued a $9.7 million building permit to Texarkana Hotels LLC in February 2012, Boldt waived fees of $15,135 without approval from the city board. The city then paid the state’s $1,000 portion of the fees.

• Over the course of the project’s lifespan, Boldt had often approached the city board with last-minute requests for more money or changes to the project’s budget and usually claimed that the project would die if the changes weren’t made.

The pair began presenting their findings to the board and the mayor. In March, following a closed board meeting, Mayor Wayne Smith announced that the board and Boldt “mutually agreed to part ways.”

It was the third city government job from which Boldt was removed: In 1995, he lost his job as director of the finance department of Columbia, Mo., and in 1999 he was forced to resign from a similar position with the city of Little Rock.

Smith cited some of the issues raised by Young and Cabaniss as reasons for Boldt’s departure.

“During the entire incentive programs with Texarkana Hotels LLC and Holiday Springs Water Park, Harold Boldt has failed to keep the board of directors adequately informed,” Smith said in a document outlining his reasoning behind Boldt’s departure.

Smith said Boldt “significantly depleted” the city’s reserves: They fell from $3 million to $1 million.

Harold Boldt, however, says “there’s not one truth” in what the mayor, Young or Cabaniss has said about him. Young and Cabaniss, he said, were engaged in “pure political politics” and their claims were intended solely to make him look bad.

“There wasn’t any development until the board asked me in 2007 to aggressively pursue economic development,” he told Arkansas Business last week. “That’s exactly what I’ve been doing. There has been more development down there than in maybe 30, 40, 50 years, and I’m very proud of that accomplishment.”

In July the board voted 5-2 to give Boldt a $162,000 settlement, representing about a year’s pay plus accrued and unused paid leave. The settlement agreement also gives both Boldt and the city total immunity from any potential legal proceedings stemming from his employment.

Smith is currently searching for Boldt’s replacement.

“Personally, I do not believe he should have received any money,” Smith said. “However, I was not elected to look out for my personal opinion.”

He said the settlement was negotiated to prevent Boldt from taking legal action and forcing the city to absorb steep legal fees.

Continuing Battle

Young, a retired insurance agent, said the situation has become a bit more transparent since Boldt left, but he and Cabaniss are still keeping an eye on things.

“It seems like every meeting we go to, something else comes up,” Young said. For example, there’s still the issue of how much ownership the city has in return for its investment.

The A&P Commission continues to make $132,000 annual payments on a bond issue that provided for infrastructure and kitchen equipment at Crossroads Business Park. The state’s law on the use of A&P funds states that funds can be used for tourism or promotional activities — with convention centers being specifically mentioned — if the city owns the property.

“There’s still over $6 million pledged from A&P funds, and there’s already been $2.2 million spent from A&P funds, and we certainly feel that there is a very strong possibility that the spending and pledging of those funds is illegal according to the law,” Young said.

“I think things were done illegally and things will continue to be done illegally,” Cabaniss said. “They’ve got 23 more years on [A&P payments]. Are they going to continue making illegal payments?

“We admit they’re in a bind. Deals were made, and it puts the city in a bad light if they renege on a deal. So do we renege on a deal and lose face, or continue to do what’s illegal?”

But Smith, who was elected in 2010, said he doesn’t think the payments are being made illegally.

“We do own areas of the convention center and the land,” he said. “Whether you agree or disagree with us having ownership in it, we do have ownership of parking lots and other properties surrounding it.”

Still, he said his staff is looking into the issue. He said that Ned Stewart, the previous city attorney, had indicated the payments were legal.

“We have also asked our current attorney to review those to assure that we are on adequate grounds,” Smith said. “Once he advises us, we’ll make a presentation to the A&P commission.”

There’s also the fact that quite a lot of taxpayer money has been given to, essentially, a private developer: The A&P Commission sends Patel’s company $150,000 annually for 15 years to maintain the convention center and $250,000 annually for 20 years to operate the water park. In addition, the city’s 3 percent A&P tax on hotels and 2 percent A&P tax on prepared foods will be refunded to Patel’s businesses for those same years.

“This is what so many citizens misunderstand completely,” Young said. “So many people think these are loans from the city and will be repaid by Patel, whether he owns it or not, they think they will be repaid. When you tell them ‘No, they’re not loans,’ folks are a little incredulous about that. They can’t believe it.”

Part of the question is how reliable Patel will continue to be in backing the project.

“Patel can turn around any time he wants to and sell,” Young said. “The city gets absolutely nothing.”

“The only protection the city really has is these annual A&P payments, which he forfeits if he sells,” Cabaniss said. “We don’t know that for sure, but it appears this way. It appears that’s his incentive for not trying to sell.”

Smith said he’s not worried about this happening.

“We have not invested in Patel; we have invested in a convention center and water park,” he said. “To say that he would walk away with taxpayer money, I would disagree with that. There’s no indication that that’s his intent.”

He said the risks of losing the incentive money are the same as they would be for any other business lured to town with incentives.

“We have Cooper Tire out here,” he said. “We’ve got quite a bit of tax incentives and tax breaks for them. If they closed up, well, that’s lost. Is there a potential to lose the incentives? There’s always a potential, yes.”

As for Patel’s perspective: “There is not any truth to that story,” he said in an email.

Ultimate Fate

Currently, the convention center itself is close to opening. Three of Holiday Springs Water Park’s five planned features are open, and last week dozens of visitors were present at the park.

But will the project be able to stay alive once it’s open and competing with the traditionally more business-heavy Texas side of the state line? And can it co-exist with the already completed Hilton Garden Inn and convention center just a few miles away?

Young and Cabaniss want it to succeed.

“Time will tell,” Young said.

Cabaniss said he’s seen some studies showing that the two convention centers couldn’t co-exist.

“But Texarkana is a unique area,” he said. “I think there’s a possibility that they can. But almost everyone we know, mostly businessmen, are skeptical about the water park, especially about how long it can stay open.”

Mayor Smith presented a more optimistic view.

“I think the convention center and water park is going to be a significant impact for the city of Texarkana, Arkansas,” he said.

He cited the opening of the nearby Copeland’s restaurant, Comfort Suites and the Hampton Inn as signs of growth, and the impending opening of the convention center and Amigo Juan Mexican Cafe near Copeland’s. Other businesses have opened nearby as well, he said.

“Was it worthwhile for the incentive package? I think it was,” he said. “Even though the incentive package originated before I got to the mayoral position, I think it was wise before when the board did that, and I have followed through with the commitment. I think the citizens of Texarkana will see the return of that investment.”

And despite the fact that he no longer works for the city of Texarkana — and, in fact, maintained a residence in Little Rock even when he was Texarkana’s city manager — Boldt still wants to be involved. In fact, last week the Texarkana Gazette reported that Boldt was one of 37 applicants for the city manager position.

“Even though I’m not an inside player, I can help these [developers] feel a bit more comfortable,” he said. “That’s my only objective. I want to see Texarkana grow. Without the resources, Texarkana will just wither away.”

 

 

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