Ruling backs state cutoff of agency’s rent payments
Arkansas regulators acted well within their authority when they cut off rent payments to a Pine Bluff social service organization that feeds hungry children and houses children in need of immediate shelter, a Pulaski County circuit judge ruled on Wednesday.
After a 30-minute hearing, Judge Chris Piazza rebuffed the lawsuit by the Community Empowerment Council that sought to force the state to resume the $2,500 monthly payments, plus reimburse the council for the rent it has been forced to pay on its own since the state stopped in October.
A grant from the federal Children and Adult Food Care Program of the U.S. Department of Agriculture paid for the council’s rent at 1711 S. Ohio St. when the charity began leasing the property in January 2017 in an effort to consolidate its service programs, which include three shelters and a summer feeding program for children. The grant is administered by the state Department of Human Services’ Child Care and Early Childhood Education Division.
But the nonprofit was allowed only six months of rent under a special one-time exemption granted by federal authorities. The Human Services Department stopped paying the rent after agency inspectors concluded the council’s lease agreement with the property owner ran afoul of federal conflict-of-interest regulations.
Property owner Charles Anderson Jr. helped found the nonprofit. He is the brother of Jermaine Anderson, the organization’s current executive director, and uncle to Tony Anderson, the organization’s previous director, who co-founded the charity in 2009.
Inspectors for the Human Services Department determined that relationship makes the organization eligible for only $417 per month under federal conflict-of-interest rules.
Tuesday, department attorney Michael Brechlin urged Piazza to side with the agency, arguing that regulators clearly applied the federal rules in the decision to cut off the Community Empowerment Council.
The decision to cut off the rent payments was upheld in an internal departmental appeal in December, but the state Administrative Procedure Act allowed the council to take the matter to circuit court for a judge to decide.
Attorney Bart Calhoun — representing the council, Jermaine Anderson and council president Albert King — called on the judge to force the state to resume rent payments, plus reimburse the nonprofit for the months it has been forced to shoulder the rent costs alone.
Calhoun argued that regulators overstepped their authority by focusing solely on the fact that the Andersons are brothers.
Blood ties like that are not enough to prohibit the council from having a business relationship with a company owned by Charles Anderson, Calhoun said.
Federal rules require a broader examination of the dealings between the men to determine whether Charles Anderson actually had any role in the operations of the council, the attorney argued. Charles Anderson is not involved in the charity’s operations, a fact that should allow the Community Action County to continue to lease the property, Calhoun said.
The lease clearly shows that the council was not renting directly from Anderson, but leased the property from one of his companies, Charles Anderson Homes Construction, an arrangement that is permissible under the federal regulations, Calhoun told the judge. Charles Anderson is a property manager and leasing his property, whether it be to the council or someone else, is how he makes a living,
“It’s something he does in his ordinary day of business,” he said.
Anderson purchased the 17,424-square-foot property, formerly the American Sheet Metal Works, in January 2011 for $52,000, according to the Jefferson County assessor’s office. The land, at the corner of South Ohio and East 17th streets, also houses a 6,100-square-foot building.
In March 2011, when Tony Anderson was executive director of the council, he and Charles Anderson sued the city of Pine Bluff on behalf of the council, accusing city leaders of racial bias when the city required the organization to install a sprinkler system in its proposed youth shelter at 2501 S. Cherry St., which now operates as a girls shelter called Hank House.
Similar shelters run by white people were not required to have sprinklers, according to the lawsuit by Little Rock attorney Austin Porter.
City leaders countered by arguing that state law required fire safety equipment be installed on the property. They also noted that neither of the white-run shelters described by the plaintiffs were in a similar situation. Neither housed solely children, as the council’s shelter proposed to do, and both also predated the fire safety laws that required installation of sprinklers.
U.S. District Judge D. Price Marshall Jr. threw out the Andersons’ lawsuit in July 2012, ruling that the pair failed to prove they were treated differently from anyone else or that they were discriminated against because of their race.
“There is no evidence, other than the Andersons’ subjective beliefs, that the Council was treated differently because of their race. Nothing in the decision itself or the decision-making process suggests that the City Defendants intentionally discriminated against the Council because of race,” Marshall wrote. “The Council and the Andersons have embarked on a worthy venture to help foster children. But the City’s sprinkler mandate did not violate the Constitution.”
According to the empowerment council’s most recently available financial disclosures, which are required by federal law, the organization had 60 employees in 2016, with just under $2 million in revenue, all of which came from contributions and grants. It reported expenses that year of $1.9 million, mostly due to food costs of $678,641 and personnel expenses of $531,798.