Multiple sources say a potential settlement is being worked on in the North Little Rock School District's lawsuit against the city over the illegally drawn midnight tax increment finance district, approved in the waning minutes of 2008. Mayor Pat Hays and his accomplice, City Attorney, Jason Carter, gerrymandered a district along city streets to pull a completed $30 million apartment project, The Enclave, into the district to swell the amount of tax dollars the city could convert from school to city use.
My efforts to dislodge papers on the proposed deal fell short this afternoon, though I was promised something by tomorrow. I also couldn't shake loose comments from the school superintendent, school board members, the district's attorney or city officials. But I heard enough to be confident something is up.
The school district was joined in opposition to the TIF district by hotel owner Frank Fletcher, who resented Hays' designs to build a free parking deck for a hoped-for new hotel to compete with Fletcher's Wyndham, and Fletcher's attorney, Sam Hilburn.
The city earlier proposed an empty shell of a compromise — preservation of the district, city retention of the money, but a city review board for future TIFs. The new compromise is reportedly different. It might cut The Enclave out of the district and save that property's tax money for the schools, but allow the mayor to save face on creation of the downtown district.
Dissolution of this misbegotten district and distribution of escrowed money to the school district woul be the best solution. But the mayor has made implied threats against the school district for its resistance and, with a school tax election coming, it needs as many city friends as possible. The city is better able to compromise today given that in two years it expects a $14 million annual windfall from completion of bond payments on the hydro plant. Also, the city is voting today on a sales tax increase that could produce $15 million a year. Mayor Hays could be awash in money, TIF district or no TIF district.
The trial is scheduled for Wednesday and Thursday of next week. Greg Hopkins, attorneys for intervenors, said they have not been a party to any settlement talks, but could be open to a settlement. He said, however, that no settlement that included the city's capture of tax revenue on The Enclave apartments would be acceptable.