The president of the Arkansas Arts Center's board of trustees said Wednesday that he will resign from the board to avoid the appearance of an ethics conflict when his firm applies for legal work related to a $37.5 million bond package to pay for the museum's overhaul.
J. Shepherd Russell, managing partner of the Little Rock firm Friday, Eldredge & Clark, said he does not believe laws preclude him from holding both roles because the agreement for bond counsel will be with the city of Little Rock. Little Rock's Board of Directors, which appoints the museum's trustees, has final say over the bond counsel contract.
"We do bond counsel work with the city on their bond issues," Russell told the board's executive committee. "The Arts Center, there will be a city bond issue to finance the project, and we will apply for that. It's probably best that I not be on the board even though the Arts Center and the board have nothing to do with the selection."
City Attorney Tom Carpenter said Russell would be required to disclose the relationship but would not be prohibited from serving in both capacities as long as he holds less than 10 percent interest in the law firm.
"It sounds like he's just going the extra mile," Carpenter said.
The Arts Center, with the help of the national architectural firm Studio Gang, is in the early stages of designing its makeover, estimated to cost $46 million without including nonconstruction costs such as the architects' and consultants' fees.
Money from the bond sale will be paired with private donations to pay for the project and expand the museum's endowment to a size appropriate to cover increased day-to-day costs, Executive Director Todd Herman has said. The museum's target is $50 million in private donations.
Little Rock voters in February 2016 authorized the city to sell the general obligation bonds to partially pay for the redo of the MacArthur Park museum. The Little Rock Board of Directors approved an increase to the city's sales tax on hotel stays and dedicated it to pay down the bond debt.
Herman said last month that the museum had asked the city to start drafting a request for qualifications for potential bond attorneys. The city has not yet advertised the job, according to its purchasing division.
Russell's announcement comes a little more than two weeks after Herman said the museum was accelerating plans to sell the bonds. A trustee since 2010, Russell said he would tender his resignation after the full board meets Monday.
Leadership grappled with the timing of the sale for months. A federal tax rule requires that public bodies must "reasonably expect" to spend 85 percent of bond proceeds within three years of the sale or face penalties. But Herman pointed to a shortened project timeline and an expectation that federal interest rates will rise, cutting into spendable money, as reasons to push forward.
If the city sells the bonds this year, as Herman said he expects, the three-year window would close in late 2020, or about a year into the project's expected 18-month construction phase and more than a year before the facility is expected to reopen. Herman said he's confident the Arts Center will meet the deadline.
Russell said he expects to be part of the Friday, Eldredge & Clark team to work as bond counsel on the project if the firm receives the contract. He noted that other firms will likely apply for the work. Bond attorneys' job is to help the client through the process of issuing bonds and to get the documents in order.
Starting in July, Russell would have served as the board's chairman, the top spot that sometimes doubles as the trustees' representative on the nonprofit Arkansas Arts Center Foundation. The foundation controls the museum's endowment and its artwork.
Merritt Dyke, the incoming board of trustees president, will serve as the Arts Center board's representative on the foundation's board, Herman said.
"I just am so glad you were at the helm," trustee Chucki Bradbury, who is departing the board because of term limits, told Russell. "You provided the leadership we needed not only for the board, but for all of the other balls in the air around the Arts Center. You're just a great leader."
Metro on 06/08/2017