Can an Arkansas city swap real estate worth more than $20,000 with a state agency without competitive bidding?

Plain-English summary

Representative David Whitaker asked whether an Arkansas city could exchange real estate valued above $20,000 with a state agency, such as the University of Arkansas, without competitive bidding. He also asked whether the exchange could include cash to offset a difference in property values.

The Attorney General said Act 470 of 2017 appeared to prohibit a city from selling or exchanging real property above that threshold without competitive bidding. Act 470 inserted “real estate” into the bidding provision of Ark. Code Ann. § 14-54-302. In her view, legislative clarification or correction would be necessary to allow the proposed transaction.

She gave no separate answer on the cash component. She referred Whitaker to her first answer and said she lacked enough information about the transaction's details. The opinion does not say that adding cash would cure a bidding requirement or that it could never matter.

Currency note

This January 2019 opinion reads § 14-54-302 as amended by Act 470 of 2017. Check the current statute and the details of the proposed transaction before acting on a land exchange now.

Background and statutory framework

Act 470 repealed a separate municipal personal-property disposal statute and incorporated its provisions into § 14-54-302 as subsections (c) and (d). It also added real estate to the property addressed by the competitive-bidding requirement. The AG quoted subsection (c), which allowed a mayor to sell or exchange property worth $20,000 or less unless a city ordinance set a lower amount, and subsection (d), which required bidding for property disposed of as one unit above the threshold, subject to its stated exception.

The AG applied the amended language to Whitaker's first question and read it to include an exchange of city real estate. Her answer did not create an exception for a state-agency counterparty. She then declined to resolve the second question on the limited facts provided.

Common questions

Could a city swap land worth more than $20,000 with a state agency without bidding?

The AG said the amended statute appeared to prohibit that sale or exchange without competitive bidding. She thought legislative clarification would be necessary to permit the transaction in Whitaker's question.

Did the AG decide whether a cash payment could balance the exchange?

No. She referred to her first answer and expressly said the transaction details were insufficient to answer the cash question.

Why did Act 470 matter?

It added “real estate” to the bidding provision in § 14-54-302 after moving language from a repealed personal-property statute. The AG read that change according to the statute's ordinary words.

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

STAT E O F ARKANSAS
ATTO RNEY GEN ERAL
LE SLIE RUT LEDG E

Opinion No. 2018-003

January 31, 2019

The Honorable David Whitaker
State Representative
717 North Lewis A venue
Fayetteville, AR 72701-1611

Dear Representative Whitaker:

This is in response to your request for an opinion concerning the authority of a city to enter into a land exchange, which includes some monetary consideration, with a state agency. In this regard, you have asked the following questions:

1) Can a city agree to a land exchange valued in excess of $20,000 with a state agency such as the University of Arkansas without the competitive bidding referred to in Ark. Code Ann. § 14-54- 302( d) and Act 4 70 of 2017?

2) Can such land exchange include a monetary component to offset the greater value of the city's proposed land to be [the] conveyance's value to the city?

RESPONSE

In response to your first question, the statutory changes made to Ark. Code Ann. § 14-54-302 by Act 4 70 of 2017 appear to prohibit a city wishing to dispose of real property valued at $20,000 or more from selling or exchanging it without "competitive bidding." In my opinion, legislative clarification would be necessary to permit the transaction contemplated by your question. With respect to your second question and to the extent that it is posed in light of Act 4 70, I refer you to my previous response.

323 CENTER STREET. SU ITE 200 · LI TTL E ROCK. ARKAN SAS 72201 TE LEPH ONE (50 1) 682-200 7 · FAX (50 1) 682-8084 ARKAN SAS AG .GOV

The Honorable David Whitaker
State Representative
Opinion No. 2018-003
Page 2

DISCUSSION

Question 1: Can a city agree to a land exchange valued in excess of $20,000 with a state agency such as the University of Arkansas without the competitive bidding referred to in Ark. Code Ann.§ 14-54-302(d) and Act 470of2017?

Your question is one of statutory interpretation. Act 4 70 of 2017 made substantive changes to Ark. Code Ann. § 14-54-302, which concerns the purchasing, leasing, or selling a municipality's real and personal property. In an attempt to "clarify the 1 law," Act 470 repealed one statute found in another chapter of the Code exclusively concerning a municipality's disposal of personal property. 2 Act 470 then embedded-by adding new subsections (c) and (d)-that repealed statute's language into section 14-54-302. And of particular importance to your question, Act 470 added the words "real estate" to section 14-54-302's requirement that bids be taken prior to disposal if the value exceeds $20,000. 3 Section 14-54-302 now states in relevant part:

( c) The mayor or his or her authorized representative may sell or exchange any municipal real estate or personal property with a value of twenty thousand dollars ($20,000) or less, unless the governing body of the municipality shall by ordinance establish a lesser amount.

(d) Municipal real estate or personal property to be disposed of as one (1) unit shall not be sold without competitive bidding if the amount exceeds twenty thousand dollars ($20,000) or the maximum provided by resolution, unless the mayor certifies in writing to the governing body of the municipality that in his or her opinion the fair market value of the item or lot is less than the amount established by ordinance.

The first rule in considering the meaning and effect of these subsections is to construe them just as they read, giving the words their ordinary and accepted

1
See 2017 Ark. Acts No. 470, entitled "An Act to Clarify the Law Regarding the Sale, Lease, Purchasing, and Disposal of Real and Personal Property of Municipalities" (emphasis added). 2 Ark. Code Ann.§ 14-58-306 (repealed 2017).
3
See Ark. Code Ann.§ 14-54-302(c), (d) (Supp. 2017).

The Honorable David Whitaker
State Representative
Opinion No. 2018-003
Page 3

4 meaning in common language. The courts will construe the statute so that no word is left void, superfluous, or insignificant; and meaning and effect are given to every word in the statute if possible. 5 When the language of the statute is plain 6 and unambiguous, there is no need to resort to rules of statutory construction.

In this case, the statute at issue as amended, prohibits a city's sale or exchange of real property valued at $20,000 or more without "competitive bidding." I believe legislative clarification or correction would be necessary to permit the transaction contemplated by your question.

Question 2: Can such land exchange include a monetary component to offset the greater value of the city's proposed land to be /the/ conveyance's value to the city?

I take it from this question that you are asking whether the transaction described could be used to get around section 14-54-302 as amended. I must refer you to my response to Question 1, as I lack sufficient information about the details of the proposed transaction.

Sincerely,

~~~~
LESLIE RUTLEDGE
Attorney General

4
See, e.g., MacSteel Div. of Quanex v. Arkansas Okla. Gas Corp., 363 Ark. 22, 210 S. W .3d 878
(2005); Turnbough v. Mammoth Spring Sch. Dist. No. 2, 349 Ark . 341, 78 S.W.3d 89 (2002);
Edwards v. State, 347 Ark. 364, 64 S.W.3d 706 (2002).
5
MacSteel Div. a/Quanex, 363 Ark . at 30, 210 S.W.3d at 882-83.

6 Id.