State Supreme Court: Suit on pacts is ‘moot’

The Arkansas Supreme Court, citing a new constitutional amendment, on Thursday ordered the end of a lawsuit challenging economic-development contracts by Little Rock and North Little Rock with local chambers of commerce.

A circuit court ordered in 2015 that the cities were “permanently ENJOINED from passing ordinances or resolutions in violation of” Arkansas Constitution Article 12, Section 5. However, in the November general election, voters amended the constitution to permit the sort of economic-development contracts the circuit court had ruled was illegal.

The case was appealed to the Supreme Court, which said Thursday that the legal question was moot because of Amendment 97. The justices sent the case back to circuit court with instructions to lift the injunction and dismiss the complaint.

“The circuit court’s enjoining of future appropriations to various entities for economic-development services essentially has been rendered moot by this subsequent amendment,” Justice Josephine Hart wrote in a unanimous opinion. “As a general rule, this court will not review issues that are moot.”

Little Rock Attorney Tom Carpenter, the appellant, had sought to keep the case alive. Still, he said he was pleased by the decision Thursday.

“It’s one thing to say you’re giving a donation or contribution to somebody. It’s another thing to say you’re in a contract. The judge’s ruling was that these were not real contracts because the chamber would do what the chamber does anyway,” Carpenter said. “The problem with that is that applies to a whole lot of things the city does.”

His concern was that the lower court ruling could be used to target city spending on programs — such as those at the Boys and Girls Club — that are aimed at keeping atrisk children out of trouble. Those concerns remained because the constitutional change addressed only economic development.

By vacating the judgment and remanding the case for dismissal, Carpenter said that means “there’s no order out there. Nobody can say, ‘Well, this is what’s been ruled upon in this case or that case.’ It’s totally out of the question.”

Carter Stein, an attorney with the McMath Woods law firm, which represented Jim Lynch, Tony Orr and Glen Miller, had written that the constitutional amendment had settled the case. He wrote that the appeal should be dismissed.

“Regardless of whether the Cities’ prior contributions to chambers of commerce and economic development corporations were unconstitutional, as the trial court ruled in June 2015, or constitutional, as argued by the Cities in their initial brief filed August 10, 2016, the amended version of Ark. Const. Art. 12, § 5 makes this case moot,” he wrote.

In an October interview with the Arkansas Democrat-Gazette about Issue 3, Lynch — the plaintiff — had objected to “corporate welfare.”

Before the 2015 ruling, Little Rock paid $350,000 annually to the Little Rock chamber and its subsidiary, the Metro Little Rock Alliance; North Little Rock paid more than $265,000 annually to its North Little Rock chamber and the development corporation.

“The chamber, you know it’s a free country, they can organize and collect dues from their members and, quote, promote economic development,” Lynch said in October. “That’s fine, except our $300,000, you can never tell what they used it for, and the judge found it was simply a cash payment from City Hall to a private organization to do what they were already doing.”

Amendment 97 allows local governments to pay outside entities, such as chambers of commerce, to support economic development; specifies what sort of economic development projects local governments could issue debt to support; and removes a cap on bonds for super projects approved by the Arkansas Legislature.

In April, the Little Rock Board of Directors approved a $300,000 one-year contract with the chamber for economic-development services.

Carpenter said Thursday that the contract has provisions to ensure city money is spent on economic development.

“The terms of the contract are always the oversight,” he said.