Audit finds improper transactions by city of Texarkana

LITTLE ROCK — The city government of Texarkana failed to comply with several state and local laws in its efforts to secure and assist with two economic development projects, state auditors told a legislative panel Friday.

The report has been turned over to the prosecuting attorney’s office in Texarkana, auditors with the state Division of Legislative Audit told the Legislative Joint Auditing Committee.

The audit, requested by state Sen. Jimmy Hickey Jr., R-Texarkana, Rep. Prissy Hickerson, R-Texarkana, and the prosecutor’s office, focused on city’s involvement in the construction of a hotel-convention center complex and a water park, both by the same private investor, Hiren Patel.

Findings in the audit included:

— City payments totaling $4.14 million to Patel’s company for construction costs were not adequately documented.

— City Manager Harold Boldt waived building permit fees totaling $15,136, apparently without approval from the city’s board of directors.

— Boldt entered into a contract with Patel to waive water rates for the water park, in violation of state and local laws.

— Boldt directed that $584,500 be transferred from the city’s Water Department to Patel’s company without required approval from the board and in violation of a state law limiting how the funds can be used.

— Money from the city’s Advertising & Promotion Fund was transferred to the General Fund for debt service payments, in violation of state law.

— The city entered into an agreement to pay incentives to Patel in a manner that conflicted with state law.

— Boldt entered into a contract with the University of Arkansas Community College at Hope for reduced water rates, in violation of state and local laws.

Auditors also said there were several other “unusual” transactions by the city, including agreeing to pay significantly more per square foot for land for the projects than Patel paid for it and committing to make annual contributions and refund all A&P taxes for several years, although they noted that the board and A&P Commission did approve those actions.

Boldt assured the panel that steps are being taken to correct the problems in the audit.

Hickey and Hickerson questioned Boldt about his knowledge of state and local laws. Hickey said that waiving water rates must be done through the water utility via a special rate contract.

“Are you familiar with the correct way to do this?” he asked.

“Apparently not,” Boldt said.

Hickey asked Boldt if he was aware that a city manager can be removed from office for waiving rates without following proper procedures.

“I’m not aware of that,” Boldt said.

Texarkana Mayor Wayne Smith told the panel he sought help from the Legislature because he believed Boldt was not providing all of the information to the board of directors that it needed to make good decisions. He acknowledged that he and Boldt are not on speaking terms and that he voted against hiring Boldt.

Rep. John Walker, D-Little Rock, said the problems in Texarkana sounded like ones that could be solved at the local level without a need for legislative involvement. Hickey disagreed.

“It’s (violations of) state law we’re concerned with,” Hickey said.