A Saline County judge on Friday dismissed a lawsuit brought by a political action committee that claimed the city of Benton improperly used $400,000 in tax revenue for economic development.
The dismissal was made in Saline County Circuit Court by Judge Gary Arnold.
The complaint, filed Dec. 7 by Citizens Holding Officials Responsible Everyday, alleged that in November the city transferred $400,000 from its general fund to the financial stability fund for the development of a proposed shopping center.
The transfer was necessary "to reimburse the financial stability fund for $400,000 transferred to Benton Utilities for utility infrastructure," the complaint stated.
The $400,000 is part of Benton's up to $1.4 million in assistance to the city's utility department, Benton Utilities, for the cost, installation and construction of sewer, water and electrical lines for the Shoppes of Benton, according to court documents.
The complaint said the transfer violated the Arkansas Constitution. The suit also asked for a temporary injunction preventing the city from making future payments until the case was heard.
The complaint was dismissed after a hearing Friday morning at the Saline County Courthouse.
"I'm certainly pleased, and I believe the judge's decision was certainly appropriate in this case," Benton Mayor David Mattingly said. "I felt all along that we ... did this right from the first -- openly shared information about this at public meetings.
"There was never any intent on our part nor action on our part that was anything but transparent."
Shoppes of Benton is an approximately 160,000-square-foot shopping center being developed along the north side of Interstate 30 near the Alcoa Road exit. Construction is set to begin in March or April and is expected to take 10 to 12 months to complete.
Mattingly said the finished center will create more than 190 full-time jobs and about 220 part-time jobs.
According to a September memorandum of understanding among the city, the Benton Public Utility Commission and Benton Investment Partners, the center's developer, "the city has determined that the development of the site, so as to increase the city's tax base and tax revenues, is in the public interest."
Benton "promised to extend utility services to this tract of land in exchange for the promise of the developer to construct this retail shopping facility," City Attorney Brent Houston wrote in a trial brief.
To assist in financing the project, Benton's City Council agreed to use funds from its general fund to partially reimburse the city's utility department for the cost of the extensions, the brief said.
"All of the work and infrastructure will be within city owned utility easements," Houston wrote. "The city will own all of these improvements. The city will not be expending any funds on the private property of the developer."
According to Houston, the memorandum of understanding also states "all work performed by the city will be on its own property" and any work exceeding $1.4 million will be paid by the developer.
"Without the proposed utility extensions the area will not develop," the brief said. "This adversely affects the tax base, the area property owners and the public at large. There has not been any type of constitutional violation in the project the city is undertaking."
The political action committee's suit alleged the $400,000 so far pledged by the city came from a 1.5 percent citywide sales and use tax approved by city voters in May 2004.
The revenue generated by the tax is to be used for the city's general fund, street improvements and the operation and maintenance of the city's parks and recreation facilities, the lawsuit stated.
Proceeds from the tax could be used only for purposes designated on the ballot, according to the lawsuit. No vote was held allowing city voters to cast a decision on whether the tax could be used for economic development.
Citizens Holding Officials Responsible Everyday, based in Benton, registered with the secretary of state's office in November.
State Desk on 01/16/2016