City and MAD officials to meet over contracts/property deeds
Officials from the city of El Dorado and the Murphy Arts District plan to meet next week with the El Dorado Works Board to sort through issues regarding contracts and property deeds pertaining to the MAD entertainment complex and the city’s financial support.
Mayor Frank Hash urged city council members to attend the EWB meeting so they can fully grasp the matter, ask questions and address concerns.
Hash explained that MAD has not turned over deeds to properties that were acquired and developed with money from the city’s one-cent, economic development tax, also known as the El Dorado Works tax.
State legislative auditors are asking for an accounting of city funds that were used to implement the MAD project as part of a purchase-lease agreement between the city and MAD.
At the core of the matter are a pair of purchase agreements the city and MAD signed in June 2017 for the amphitheater/north parking lot and playscape, all of which are facilities in the MAD arts and entertainment complex.
To acquire the property and construct the facilities, the city committed $9.47 million of the EWB tax to the MAD project.
The amount was the largest piece of a total $13.4 million in city economic development funds that have been allocated to the development of MAD.
City officials pledged $9.02 million toward the project in 2013 and in 2016, MAD returned to the EWB and El Dorado City Council with a request for an additional $3.2 million, which was combined with $6.47 million that remained from the 2013 funding request.
The money was used to cover several components in phase one of the $100 million-plus MAD development project.
The first phase included sidewalk improvements ($2.75 million), a conversion/renovation of Oil Heritage Park ($416,879.02) and property purchases and construction of the Griffin Music Hall/Restaurant, the amphitheater and playscape ($9.47 million).
The arrangement calls for MAD to use city funds to purchase and develop the properties, deed the properties to the city, operate and maintain the facilities and enter into a longterm lease agreement with the city at a nominal fee. ($10 per year for
99 years).
After two years of construction, the phase-one projects have been completed, with the grand opening of MAD taking place in the fall of 2017 and the playscape opening in May.
‘Additional monies’
“The deeds and other documents have not been forthcoming,” Hash told city council members Thursday.
“So, Mayor, what you’re saying is we’ve done what we’re supposed to do, but MAD hasn’t done what they’re supposed to do,” Council Member Willie McGhee said.
“MAD has had some cost overruns, and they will attend the EWB meeting (next week) to request additional monies,” the mayor said. “I don’t know how we jump that shark, but we’ve got to figure it out. The auditors are aware, and we’ve got to account for $9-plus million.”
Austin Barrow, MAD president and chief operating officer explained that for the past five to six months, MAD has been sifting through invoices for the playscape and amphitheater/parking lot projects.
Per the purchase agreements with the city, the purchase price and remodel/construction estimates were $6.4 million for the amphitheater/parking lot and $2.7 million for the playscape.
Barrow said the amounts were not “bids” but “loose estimates” for the construction phase when the purchase contracts were signed with the city.
He said MAD has covered the cost overages and will be asking the city to amend the contracts to reflect hard costs and to reimburse MAD for the additional construction expenses at a rate of just under 20 percent of the $9.02 million.
MAD officials sought legal advice from the Arkansas Municipal League about the matter, Barrow said.
“Those contracts are the legal vehicle to allow the city to pay MAD,” he said. “Had MAD handed over those deeds prior to that conversation with the city, the city would have no legal means to extend those (additional) funds to MAD,” Barrow continued. “Once those funds for the additional expenses are paid, the deeds will be handed over to the city. It will be clean.”
The city has encountered similar issues with other tax-funded projects, including the El Dorado Conference Center, which was completed in 2011 and paid for by the former El Dorado Forward economic development tax.
The tax expired in 2015 after eight years, and the El Dorado Works tax went into effect in October 2015.
A percentage of the revenue from both taxes has been dedicated to the development of MAD.
The city maintains a similar O&M agreement with South Arkansas Community College for the conference center, which houses a bistro, meeting rooms, and college bookstore and administrative offices.
With the conference center, the city covers half of annual O&M overages that exceed $300,000 and takes care of major repairs and equipment purchases.
In the city’s agreement with MAD, MAD is responsible for all O&M costs.
Hash provided council members with copies of the MAD purchase agreements and a letter regarding the contracts that was written in April 2017 by the Friday, Eldredge and Clark law firm in Little Rock.
He advised the council to read through the materials prior to attending the meeting with MAD and the EWB.
“It’s a tough decision. It entails public monies and you can’t willy-nilly public monies,” Hash said.
The EWB’s regular monthly meeting is scheduled for 5:15 p.m. Tuesday, but Hash said he will ask EWB members to reschedule the meeting due to a conflict with a local candidate forum that is set for 6 p.m. Tuesday in the El Dorado Municipal Auditorium.