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Russellville Alderwoman Freddie Harris Questions Development Funds

5 min read

Since fall, Russellville Alderwoman Freddie Harris has been raising questions about how tax money is being spent at the Arkansas Valley Alliance for Economic Development Inc.

Harris’ questions are the latest assault on economic development programs funded with taxpayers’ money.

In January, Pulaski County Circuit Court Judge Mackie Pierce ruled from the bench that the cities of Little Rock and North Little Rock can’t provide money to their chambers of commerce and their related economic development programs. Even though the cities had contracts in place, Pierce ruled that the chambers were going to provide those economic development services anyway — with or without the cities’ money. The ruling is expected to be appealed.

Russellville’s $90,000 contract with the alliance expired on Dec. 31 and a new contract is being worked out. Harris wants it to be revised.

“In my opinion, it doesn’t need to be a blanket number anymore, without some oversight from the city,” Harris said. “We’ve never asked any questions about how our money was spent.”

Harris said she believes some of the city’s money is going to the Russellville Chamber of Commerce because the chamber and the alliance are headed by the same person: Jeff Pipkin.

Exactly how much Pipkin is paid for the jobs isn’t clear. He said the chamber pays his salary, but the amount paid isn’t reported on the chamber’s Form 990s on file with the Internal Revenue Service.

The chamber, a nonprofit, bills the alliance, also a nonprofit, for administrative salaries and other expenses. Pipkin said the alliance’s only employees are he and an assistant, and its Form 990 showed that a total of $124,036 in salaries was paid in 2013.

Pipkin told Arkansas Business that none of the city’s money goes for activities for the chamber.

Still, Harris said that she recently met with Little Rock attorney Bruce McMath, who represented the plaintiffs in their lawsuit against Little Rock and North Little Rock over payments to their respective chambers of commerce.

Harris said she is willing to file a lawsuit to settle the question of how the economic development funds should be spent.

The criticism raised by Harris resulted in alliance chairman Bryce Mobley holding a news conference on Dec. 8 in an attempt to clear up some misconceptions.

At the news conference, Mobley offered his support for Pipkin, who has been with the alliance since 1997. “Mr. Pipkin came to the alliance with excellent credentials and recommendations and very pertinent professional experience,” Mobley said, according to his prepared statement provided to Arkansas Business. “He has conducted himself in a professional manner with the highest integrity. … Prospects, peers and economic development agencies have found him to be effective, trustworthy and able to do business in a confidential manner.”

Questions Raised

Harris’ first year on the city council was in 2007. She said even at that time there were questions in the community about how the alliance spent its money.

But it wasn’t until the fall that she started asking questions about tax money spent on country club dues for Pipkin and his trips to the Southeastern Conference’s championship football games in Atlanta.

She also said that Russellville provides public money to the alliance, which then uses contract services from the Russellville Chamber.

Pipkin denied her accusation that the alliance money goes to the chamber.

“The Chamber of Commerce isn’t involved in this at all,” he said. “The chamber does not receive any public money. It’s strictly the alliance.”

He said the money the alliance receives comes from a dedicated sales tax — 1/16 of 1 percent — that voters in the city of Russellville adopted. Pipkin said that the alliance had a $90,000 contract with the city of Russellville to provide economic development services.

“Any additional monies will still come from the sales tax, but they would be a reimbursement for certain expenses, travel, whatever the case may be,” he said.

In 2014, the city of Russellville paid the alliance $100,477, a decrease of 1.2 percent from the previous year, according to Jerrold McKaughan, Russellville’s finance director.

In October, Harris used the state Freedom of Information Act to request details about the finances of the alliance and the chamber. Pipkin said that was the first FOI request he had ever received.

The request was turned over to Little Rock attorney Khayyam Eddings, who told Harris in an Oct. 17 letter that “the Chamber does not carry on ‘public business’ or engage in activities that are ‘otherwise intertwined with’ the activities of government. Therefore, the Chamber is not subject to the FOIA.” Harris provided Arkansas Business with Eddings’ letter and other documents.

Pipkin said the alliance provided Harris with about 800 pages of documents and charged her about $30 for making the copies.

Some of the documents provided to Harris included redacted items. Pipkin said the redacted items included chamber expenses that weren’t public.

Auto Allowance

Harris said other items in the documents caught her eye. The alliance paid $1,166 a month for Pipkin’s auto allowance, which she said she thought was excessive. In addition, if Pipkin drives for an alliance event he’ll bill the city for mileage, which in some cases was as high as 58.5 cents a mile, according to the documents Harris shared with Arkansas Business.

Pipkin said in an email response to questions from Arkansas Business that the auto allowance didn’t seem excessive. He said the auto allowance was set by the alliance board of directors, which includes 12 elected officials.

And as for the reimbursement of mileage, Pipkin said the money doesn’t go to him personally.

“It is a reimbursement by the City to the Alliance from the City’s economic development fund,” Pipkin said in the email. “The auto allowance covers all of the miles I travel within our service area.”

He said that when he travels for an official business trip related to economic development, the alliance wants to be reimbursed for that mileage.

Country Club

Harris also said that she didn’t realize until she reviewed the documents that the alliance was paying for Pipkin’s membership in the Russellville Country Club. The alliance paid $546.56 to the country club in July, according to Harris’ documents. The country club’s website said its monthly dues were $214.

Pipkin said that the alliance’s board wanted him to have that membership.

“We sometimes need a place to take prospective industry executives to have a nice, private meal where the guests can have an adult beverage and can speak freely without distractions that come with dining in public,” Pipkin said in the email.

And he’s been able to take potential clients to play golf there.

In addition, “it is a benefit of my employment,” Pipkin said. “These dues are paid from the Alliance general funds.”

The alliance also receives money from other cities and counties, including the cities of Atkins and Dardanelle and Yell County.

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