How local chambers of commerce perform economic development tasks for cities could change depending on a Pulaski County court case.
Circuit Judge Mackie Pierce ruled on Jan. 5 that Little Rock and North Little Rock must immediately stop paying chambers for economic development, calling the arrangements "window dressing" to get around the constitutional provision that bars municipalities from giving money to private businesses without getting something in return.
Economic development
Northwest Arkansas cities contract with chambers of commerce for economic development services. Below are 2015 contract amounts and lengths.
City 2015 Length
Bella Vista $25,000 1 year
Bentonville $100,000 1 year
Fayetteville $165,000 2 years
Rogers $200,000 1 year
Springdale $150,000 2 years
Source: City documents
Pierce has yet to issue an order in the case. The ruling came in response to a lawsuit by two Pulaski County residents challenging the legality of how the cities pay their chambers for economic development services.
Northwest Arkansas' five largest cities all have contracts with their respective chambers for economic development services. Siloam Springs is planning on entering into such a contract with the chamber this year.
"Right now we are in a holding pattern as we wait for the order," said Wyman Morgan, Springdale's director of finance and administration.
Little Rock City Attorney Tom Carpenter said the order could come next week.
"I need to see the order before I decide what the next step I take is," he said. "There's no reason to anticipate anything, but you have to anticipate everything."
Springdale's economic development contract with the chamber is $150,000 annually, and is typically paid quarterly.
Perry Webb, Springdale chamber president and chief executive officer, said the economic development contract automatically renews each year, but he suggested the City Council wait to pay until after the judge issues his order.
"We don't know what is going to shake out," he said. "It is probably in everyone's best interests to have an open conversation about this and make sure we are in the best position possible."
Webb said the chamber will use funds from its Ignite Springdale! fundraising campaign for up to 90 days. He will re-evaluate the situation if the judge has still not issued his order.
Steve Clark, Fayetteville chamber president and CEO, said it is legal for cities to enter into contracts with chambers as long as deliverables are outlined. Clark is also a former Arkansas attorney general.
Fayetteville's economic development contract with the chamber is $165,000 and is paid quarterly starting in October. Clark said the chamber already has received the first two payments of the fiscal year.
Kit Williams, Fayetteville city attorney, said the city's contract is very detailed and should be OK no matter what the judge's ruling is.
"We tried to be very careful," he said.
There is no boiler plate way for cities and chambers to enter into economic development contracts, Webb said. About 30 cities in Arkansas have these types of contracts, he said.
"There are 30 different contracts with 30 different terms," he said. "There is no perfect way to do this."
Local contracts range from two pages in Bentonville to 14 pages in Fayetteville. The Fayetteville contract outlines very specific requirements such as hosting visits by business site selection professionals three times a year to attending trade shows each year.
The Rogers-Lowell Area Chamber of Commerce formed a separate organization, the Rogers-Lowell Economic Development Corp., to handle its contract with the city.
Raymond Burns, the chamber's president and CEO, said he feel's the Rogers-Lowell chamber is in good shape, but has not submitted a bill to be paid yet this year. The city typically funds the $200,000 contract with one payment at the beginning of the year.
Dana Davis, Bentonville/Bella Vista Chamber president and CEO, said he believes the chamber's contracts with each city is viable and has already received its $25,000 payment from Bella Vista.
The contact proposal in Bentonville is $100,000 and Davis said he expects the City Council to approve it soon. It is paid on a monthly basis.
Things are a bit different in Siloam Springs, said Wayne Mays, the chamber's president and CEO.
"The city approved entering into a contract with us, but that contract is still being worked out," he said. "The city attorney is watching the court case and we are taking it slow and easy."
Christie Swanson can be reached by email at [email protected] or on Twitter @NWAChristie.
NW News on 01/26/2015