Two state lawmakers from Texarkana said they’re frustrated that the city’s officials haven’t yet fixed problems identified by auditors after a probe of financial incentives from the city to a developer of a new hotel-convention center and water park.
The Legislative Audit Division reviewed selected transactions from Oct. 30, 2009-Sept. 23, 2013, in which the city’s portion of the development’s expenses totaled $8.4 million.
The division’s auditors said they found inadequately documented construction expenses totaling $4.1 million. They also accused the city of failing to comply with various state laws and city codes, ordinances, policies and agreements.
Several unusual transactions authorized by City Manager Harold Boldt included the city paying significantly more per square foot for property for the development than its investor, Texarkana doctor Hiram Patel;waiving building-permit fees; and reducing water rates for the water park, the division said. But the audit division said there was no indication that Boldt benefited personally from these transactions.
Sen. Jimmy Hickey, R-Texarkana; Rep. Prissy Hickerson, R-Texarkana; and Prosecuting Attorney Carlton Jones had requested the audit of the projects, which have now been built.
The Legislative Joint Auditing Committee on Friday approved Hickey’s motion to delay final action on the audit to allow auditors “to examine any possible contradictions or misrepresentation that we heard today and refer to the appropriate authorities, if the investigation warrants that.”
Boldt, who had been city manager since 2007, left the job after a March 2013 board meeting, a move city officials described as neither a resignation nor termination. But in October, the Board of Directors voted 4-3 to rehire him.
He was Little Rock’s finance director from 1996-2000.
Hickerson said Texarkana officials have acted like the auditors’ findings “are minor and they don’t need to be taken care of” since they met in December.
“I understand there is a lot of controversy among the board members, but … it would have been nice for the members [of the audit committee] to hear some of this has been corrected on these six violations,” she said during the committee’s meeting.
Afterward, Hickey said he’s disappointed that city officials aren’t fixing the problems.
Boldt said city officials submitted more than 1,000 pages of documents to state auditors and “we thought we had responded appropriately.
“We have every intent to fix these things … and I think within two or three months we can have it done,” he said.
Mayor Wayne Smith said he sought the audit because city officials were divided about whether the city followed the laws and procedures for these developments. He said he voted against rehiring Boldt and Boldt doesn’t talk to him.
The audit division said the city purchased about 4.2 acres from Texarkana developer Aven Williamson for about $1.4 million, or $7.59 per square foot, in November 2009 and the board authorized the purchase, yet Patel’s company, Texarkana Hotels LLC, purchased 4.5 acres of adjoining land from Williamson for $100,000, or 51 cents per square foot.
Hickey said it appears, on the basis of the tax rolls, that the property deals closed on the same day.
Boldt said the transactions “were independent because we didn’t know what was going on with Dr. Patel’s negotiations and we certainly didn’t let Dr. Patel know what we were paying for the land.”
The audit division said Patel’s company purchased about 8.9 acres from a business for $584,545, or $1.50 per square foot, in May of 2012 for the development, while Boldt and Patel signed an agreement in which the city agreed to purchase some of the land from Patel’s company for $2.95 per square foot in the same month. In September 2012, the city purchased 3.5 acres of this land from Patel’s company for $535,744, or $3.50 per square foot, in a purchase authorized by the city board.
Boldt said he advised Smith that “if we want a water park, we are probably going to have to pay” $3.50 per square foot for the land, and the city board approved the transaction.
Boldt signed an agreement with Patel in March 2012 for reduced water rates at the water park in violation of state law and city code, the audit division said.
Hickey said a city official or employee who is convicted of violating this state law is required to be fined between $10 and $250 and removed from his position.
Boldt said he “never knew anything” about that state law.
Texarkana could provide reduced water rates through special rate contracts negotiated through the water utilities under state law, according to state officials and lawmakers.
The audit division said auditors couldn’t locate documents supporting an appropriation or board approval for expenses totaling $584,500, after Patel submitted two invoices for the city for that much.
The division said one of the invoices for $439,500 was for furniture, fixtures and equipment owned by Patel’s company and isn’t considered a capital expenditure by the city. Boldt said that was “mislabeled.”
The audit division said Boldt waived building-permit fees totaling $15,136 when construction of the hotel and convention center started and auditors were unable to locate documents authorizing Boldt to waive the fees.
Boldt said he didn’t obtain the city board’s approval for the waiver, adding it was common in cities where he had worked in the past for a city manager to be able to waive these fees.
Smith said the board has instructed the city attorney to either start the process to collect the building fees from Patel or Boldt.
Front Section, Pages 1 on 04/12/2014