Does Clark County need a contract for economic development services?

By JOEL PHELPS | arkadelphian.com

The Clark County Quorum Court gave its nod to an ordinance that excludes retail businesses from receiving public funding. In a matter related to economic development, one resident raised a question about whether the county has its ducks in a row to legally allow a third party to spend county funds.

“Does Clark County have a physical contract with the EDCCC?” Bruce Bell, president of the local NAACP chapter, asked of justices of the peace. Bell’s question drew silence from the court; “I think so,” county Judge Troy Tucker replied. Tucker did note that he was unsure what document Bell was showing members of the court. Bell was showing them an economic development agreement between Boone County and the Harrison Regional Chamber of Commerce.

State law, Bell argued, requires a service contract between the county and the economic development entity tasked with creating jobs, and for the county’s legislative body to approve the contract by way of ordinance or resolution. 

Clark County collects a voter-approved 1/2-cent sales tax that is earmarked to incentivize companies to create jobs in the county. Hostess Brands, for instance, was the recipient of a $2 million incentives package to renovate the former Danfoss facility into a bakery and create 150 local jobs. A board of 15 county judge-appointed members make up the Economic Development Corp. of Clark County, the entity that manages how the sales tax is spent. The EDCCC makes its decisions based on recommendations of the private Arkadelphia Regional Economic Development Alliance, which negotiates between prospective industries and the EDCCC.

Bell argues that the county — not the EDCCC — should control the tax, since the county collects it.

“You can’t just say, ‘Here’s a million dollars — go handle business’ without a contract,” Bell would later tell arkadelphian.com. “You’ve got to have an application, a bidding process and a vote, just like with any other contract with the county.”

No contract necessary

Bell is correct, to an extent. To be legal, a public entity needs a contract with a private organization providing a service, and to go through the advertising, bidding and voting process.

Because the EDCCC is a public corporation established by the quorum court, there is no need for a contract between the two, Alliance CEO Shelley Short later explained. Instead, there’s an ordinance establishing that relationship:

So what’s the difference between Clark and Boone counties?

Boone County, located in Northwest Arkansas, does not have a public entity responsible for job creation. Like many municipalities or counties, Boone County has a service contract with its chamber of commerce to negotiate between the public entity and private businesses that are interested in opening up shop there. It’s because Arkadelphia’s Harrison counterparts have only the private Chamber to do its marketing that Boone County needs a contract.

Clark County’s quorum court, on the other hand, formed the EDCCC — a political subdivision of the county — in 2007 to oversee the spending of the 1/2-cent sales tax, which voters had recently approved. Like quorum court meetings, EDCCC meetings are open to the public. But rather than negotiating private (dare we say top-secret?) business discussions in a public setting, the EDCCC contracts a private organization, the Arkadelphia Alliance, to do the legwork.

Yes, the public EDCCC is required to have a contract to do business with a private organization. As such, one exists and establishes a contractual agreement between the EDCCC and the Alliance:

The Clark County Quorum Court, however, relies instead on the aforementioned ordinance to establish the EDCCC’s responsibilities relating to economic development efforts.

Back to the retail incentives

In recent months Bell has been an outspoken citizen on the EDCCC’s control of the tax funds, particularly speaking out against the recent decision to halt incentivizing retail businesses with public funding, which jobs officials — relying on the advice of “multiple” attorneys — say is unconstitutional in Arkansas.

Bell’s inquiry about a contract preceded the court’s vote to adopt an ordinance governing the tax incentives, finalizing the exclusion of retail businesses’ qualifications for the incentives.

Before voting, District 4 Justice Albert Neal said he was against shutting out retailers and wanted to table the matter. “I’ve heard both sides of this argument, and personally I think that the small businesses should be able to participate in this tax,” Neal said, “because we are the ones who are paying it. I think this ordinance closes the door on small businesses on being able to [receive incentives].”

Neal added: “I know that [leaders in Clark County] usually find a way to do the things [they] want to do. I also know there are times that Clark County has done things that probably was kinda shaky.” Tucker would later ask Neal if he was referring to any county elected officials; Neal said he wasn’t but didn’t say who he was referring to. But he remained adamant about tabling the ordinance.

“I think we should leave this ordinance until we can get some further clarity to try to come to some conclusion whereas the people in Clark County, the small businesses, can also be a part of this tax,” Neal said.

District 7 Justice Jenna Scott, who sponsored the ordinance being considered, argued that the legislation doesn’t prevent small businesses from participating, but rather allows the quorum court to “make a statement” — at the recommendation of “multiple attorneys” — that the county will be compliant with state laws. Scott added the ordinance does give the quorum court more authority over the EDCCC’s guidelines.

“I agree,” Tucker said, prompting discussion toward a vote. At Scott’s motion to adopt the ordinance, it passed in a 10-1 decision, with Neal casting the only dissenting vote.

In other business, the court:

• Adopted the 2024 budget with no discussion. District 2 Justice Michael Ankton abstained.

• Adopted an ordinance to finance a front-load sanitation truck at $369,000. The truck is replaced every four years.