Opinion No. ( 2007 )

The Honorable Barbara Horn State Senator Post Office Box 64 Foreman, AR 71836-0064

Dear Senator Horn:

I am writing in response to your request for my opinion on the following two question:

With the near $300 million dollar expansion of Ash Grove Cement Company and the anticipated need for expanding the city's water and sewer lines, may the City of Foreman use its economical development funds for expanding water and sewer lines associated with this project?

A new company that has come into and purchased grain elevators and adjacent lots are [sic] to build a 40 x 80 building for a feed plant and will be employing approximately fifteen employees, then later have a trucking line. The site will have to have some electrical lines moved/revamped, the cost can be sizeable. Can the City use the economical development funds to assist with the infrastructure for the new plant's site?

You have submitted this request as a follow-up to my immediate predecessor's opinion in Ark. Op. Att'y Gen. No. 2006-199, in which you posed the more general question of whether sales and use tax revenues generated by City of Foreman Ordinance No. 241 might be expended to finance infrastructure expansion "specifically construction and maintenance of water lines, sewer lines, etc. for an expansion of the city limits of Foreman."

RESPONSE

Particularly in light of the ambiguities in the levying ordinance discussed in Opinion No. 2006-199, I am unable to address the factual question of whether tax revenues might be used to finance the particular projects you have described.

As my predecessor noted in Opinion No. 2006-199:

[I]n the present case, the levying ordinance sets forth a "priority list" to which "tax collections are expected to be expended," whereas the ballot contains no such recitation. Under these circumstances, I am unable to opine whether the proposed project would be permissible under the terms of the ordinance. . . . [I]n declaring that "tax collections are expected to be expended" (emphasis added) on a particular range of projects, the ordinance at issue in your request at least leaves open the possibility that the voters intended that the revenues might be otherwise expended. This question is one of fact that I am neither situated nor authorized to address. Moreover, only a finder of fact could determine whether using the sales tax revenues for the proposed project referenced in your request would be consistent with any or all of the specified uses authorized by the voters. Without parsing the list of "expected" uses in an effort to divine their scope, I will only characterize as factual the question of whether any of these uses might include what you characterize as the proposed use of the tax revenues to fund "construction and maintenance of water lines, sewer lines, etc. for an expansion of the city limits of Foreman."

I will note that subsection 3(a) of levying Ordinance No. 241 does authorize devoting one-half of tax proceeds to "equipping of water, sewer and other utilities for industrial sites" — uses a finder of fact might conclude are in accord with the projects you have described in your request. However, only local counsel fully acquainted with all of the facts, including the details of the proposed uses of tax revenues, would be situated to advise whether the tax revenues might be used as you have proposed. Under the circumstances, I can do no more than echo my predecessor's conclusion that the operative factual inquiry must be whether tax revenues used for the proposed purposes would be diverted from the purposes approved by the voters, thus running afoul of Ark. Const. art. 16, § 11.

Assistant Attorney General Jack Druff prepared the foregoing opinion, which I hereby approve.

Sincerely,

DUSTIN McDANIEL Attorney General