BENTONVILLE — The Bella Vista Property Owners Association could be fined as much as $276,595 by the Arkansas Contractors Licensing Board for failing to obtain a contractor’s license.
The licensing board began an investigation into the Property Owners Association’s contracts with the Bella Vista for street maintenance. Property Owners Association attorney Chastity Clark said she and other members of the association met Wednesday with Larry Loyd, an investigator with the licensing board.
“We provided them with the information they requested and are cooperating in every way with the investigation,” Clark said.
Mayor Frank Anderson said he was unaware of the investigation, noting the city and the Property Owners Association are separate entities. Anderson said he never thought to ask the Property Owners Association if it had the necessary licenses to maintain city streets.
Clark said she believes it’s a gray area whether the Property Owners Association needs a license to perform the city’s street maintenance.
The Contractors Licensing Board began reviewing the Property Owners Association’s contract with Bella Vista after resident Jim Parsons requested the board to do so. Parsons said he inquired whether the Property Owners Association had a contractor’s license as a part of his lawsuit against the city and several City Council members.
Parsons filed a lawsuit in December alleging the city violated state laws pertaining to the competitive bidding when it awarded contracts to the Property Owners Association for street maintenance. The association is responsible for maintaining the city’s streets and roads under the terms of the three contracts dating to November 2009.
Clark said it is best to let the courts decide whether the city violated bidding laws by awarding contracts to the association.
“There certainly wasn’t any intent to circumvent the bidding process,” Clark said. “Both parties feel they didn’t act outside the bounds of the law.”
According to the Contractors Licensing Board, is the association is not properly licensed to perform some of those duties outlined in the contracts, said Greg Crow, licensing board administrator.
“In reviewing the contract, it seems that there are some items in the scope of work that fall within the definition of construction set out by Arkansas Code Ann. § 17-25-101, and as such would require a contractor’s license if that work is $20,000 or more, including labor and materials,” said Vicki Pickering, an attorney for the licensing board.
Arkansas law defines a contractor as a person, firm, partnership, co-partnership, association, corporation or other organization that manages the construction, erection, alteration, demolition or repair of any buildings, apartments, condominiums, highways, sewers or utilities for $20,000 or more.
A contractor’s license is needed once a project’s cost exceeds $20,000. A contractor can be fined up to 3 percent of the entire project cost for not having a license and an additional 5 percent of the additional project cost for failing to pay a $10,000 surety bond to the state before beginning work, Pickering said.
The Property Owners Association’s 2009 contract for street maintenance was for $1,224,314. The 2010 contract was for $1,100,000 and the 2011 contract is for $1,133,134. An 8 percent fine levied on all three contracts is $276,595.
Duties that require a license are patching potholes and conducting street repairs, maintaining unpaved roads if the Property Owners Association grades them, grading and repairing roadway shoulders, street striping and resurfacing streets, Crow said.
Clark said she was unaware those duties were considered construction.
“We did not realize what we were doing would rise to the level of construction,” Clark said. “We didn’t think putting up street signs was construction.”
Clark said association officials never thought a license was needed because employees have performed the same types of work for years.
The association would not have needed the contractor’s license when it owned the streets before the city incorporated. That changed when the city took ownership of the roads and began contracting with the association for street maintenance, Pickering said.
“The owner does not need a license,” Pickering said, noting cities are able to work on their own streets without a license.
Since the association does not own Bella Vista’s streets, it needed a contractor’s license to perform the work, Pickering said.
Clark said the association’s failure to obtain the license was not intentional.
“Sometimes things just appear to be common sense, but they aren’t.”
Clark said theassociation’s board discussed getting a contractor’s license and is in the process of getting the required documentation to do so.
Bella Vista resident Dave Barfield said he hopes the investigation will spur the association to do what’s best for the city.
“Hopefully, it will make them hurry up and do the right thing,” Barfield said, noting he believes the association should begin transferring street maintenance equipment to the city to allow it to begin its own street department.
Barfield called the Contractors Licensing Board’s investigation “another piece of shrapnel in the bomb going off.”
Crow said the state’s investigation into the contracts will take about a month to complete.