The Little Rock Technology Park Authority Board is eyeing the last piece of the park’s Phase 1 puzzle and is prepared to claim eminent domain to put it into place.
The board voted unanimously Wednesday afternoon to draft a condemnation lawsuit claiming eminent domain against Little Rock attorney Richard Mays, who owns the property at 415 Main St. that the board wants to use as the anchor for Phase 1 of the park.
If a settlement for the property can’t be reached by Nov. 1, the board will meet in special session the next day to decide whether to proceed with the lawsuit.
Board member Dickson Flake said Wednesday that he’s been engaged in casual negotiations with Mays for months, and he called those talks amicable. But Mays told Arkansas Business that while he doesn’t want to, he’s prepared to go to court if necessary.
Mays contends that the park does not qualify as a “public purpose,” a status that would allow the board to use eminent domain. The board and its attorney, Scott Schallhorn of Mitchell Williams Selig Gates & Woodward, believe it does. The statute that created the Tech Park Authority Board establishes it as a quasi-public entity, similar to an improvement district, Schallhorn said.
“The specific statute that authorized the tech park said it was for public use and authorized eminent domain powers,” he said.
More: View the legislation that created the park here (PDF).
But Mays told Arkansas Business on Thursday that public use has always been an issue for judicial determination.
Mays, who bought the property in 1984 for $100,000 and spent $400,000 on renovations, said his preferred resolution would be to lease his property to the board, for 99 years if necessary, at a cheap price.
“I have no problem with a tech park,” Mays said. “I’m just not sure you can take private property to do it. I want to work with them. I’m approaching this from the standpoint of being a good citizen, even though I think there’s a legitimate question about eminent domain.”
The board is updating an appraisal of the property it had made in the summer of 2014. The property, three stories but just 25 feet wide, was valued then at $470,000 to $530,000, Tech Park Director Brent Birch said. Mays said he is awaiting the results of an appraisal he ordered two weeks ago.
The board voted in July to pay $11.6 million for property owned by Warren Stephens at 417 and 421 Main St., which would make up the bulk of the project’s 3.25-acre and 39,000-SF first phase.
Despite his preferences, Mays said he’d consider selling for a price per square foot similar to that of the Stephens deal.
Board members on Wednesday indicated their desire to reach a settlement with Mays but were confident in their right to employ eminent domain. The property needs to be purchased outright, and quickly, in order to rehabilitate the space to its needs, said Board Chair Mary Good.
“The whole footprint of the park does not have good integrity without this property,” she said. “It’s really an essential piece to make the park work.”
Birch said the space will serve as the tech park’s front door and anchor the other properties that make up Phase 1 of the project, which the board hopes to begin to develop early next year.
Mays claims such an intended use doesn’t qualify as public use, though Good said it represented the most public aspect of the park.
“Using it to attract other private enterprises to generate economic activity is not public use,” Mays said. “That’s taking private property and giving it to private enterprise.”
Board member Darrin Williams, an attorney and CEO of Southern Bancorp, said litigation could stop the project in its tracks, but Schallhorn said the board could continue to negotiate a price even if a lawsuit is filed.
Jay Chesshir, president of the Little Rock Regional Chamber of Commerce and a member of the board, said it was better to get any eminent domain issues out of the way early before the project is developed further.
“We want to do what’s right for all involved, but we also have a time frame to get work done,” he said.
Credit Union and Financing
In addition to getting pulled into a potential eminent domain dispute, the board heard concerns about the bidding process used to select a consortium of local banks that would finance $17.5 million for development of the park’s first phase.
Arkansas Federal Credit Union was an original member of the group but was dropped when the Arkansas Bankers Association raised concerns over the inclusion of a credit union.
Richard Downing, lawyer for AFCU, asked the board to reopen the bidding process to allow the nonprofit to bid on the plan itself. He said AFCU was not given a chance to bid on the project once it was dropped from the original group.
Downing said the board’s request for financing proposals violated Arkansas law. Good said the dispute between AFCU and the banks should not involve the board.
“We didn’t leave ’em out or put ’em in,” she said. “I understand why they’re unhappy but it’s not this board’s problem to fix. They’re problem is with the consortium, which didn’t let them know they were out.”
Downing asked the board to reopen the bidding process for the financing plan.
“We submit that to rectify this, you need to cancel it and reopen the process,” he said. “If AFCU is not the lowest bidder, then fine.”
Schallhorn will review AFCU’s concerns for the board, which took no action on the matter Wednesday.
Downing told Arkansas Business that he didn’t know if AFCU would take legal action, but promised that if the bidding process was reopened and AFCU allowed to bid for the plan, it was prepared to beat the banks.
“Yes, they’re prepared to do it,” he said.