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 the Attorney General whether a city could trade municipal real estate worth more than $20,000 with a state agency, such as the University of Arkansas, without going through competitive bidding. Attorney General Leslie Rutledge concluded that Act 470 of 2017 had changed the answer. The Act amended Ark. Code Ann. § 14-54-302 to add the words "real estate" to the list of municipal property that could not be disposed of without competitive bidding when valued at $20,000 or more. On the plain text of the amended statute, an exchange (which is a kind of disposal) of city-owned real estate above that threshold could not happen without bidding. The opinion treated that as a legislative drafting question: if the General Assembly wanted to allow a city to swap real property with a state agency without bidding, it would have to say so by further legislation. The second question, about adding cash to balance unequal values, was deferred for the same reason: if Question 1 forecloses the deal, the cash component does not save it.

Currency note

This opinion was issued in 2019. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Section 14-54-302 of the Arkansas Code governs how a city may "purchase, lease, sell, or exchange" municipal property. Before Act 470 of 2017, the statute required competitive bidding only for disposal of municipal personal property over the $20,000 threshold; another section in a different chapter, Ark. Code Ann. § 14-58-306, separately covered some aspects of municipal property disposal. Act 470 was titled "An Act to Clarify the Law Regarding the Sale, Lease, Purchasing, and Disposal of Real and Personal Property of Municipalities." It repealed § 14-58-306 outright, folded that section's substance into § 14-54-302 as new subsections (c) and (d), and inserted "real estate" alongside "personal property" in the bidding requirement.

After the 2017 amendments, subsection (d) of § 14-54-302 read, in relevant part: "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)…" The opinion read the term "exchange" as a form of disposal covered by that bar. The AG applied the standard rule of statutory construction: when the statute is plain, no resort to legislative history or external aids is needed.

Why the AG declined to "fix" the problem

The opinion noted that the question really sought permission to do a deal that the amended statute appeared to prohibit. The AG framed that as a legislative-clarification problem, not an interpretive problem. Once the General Assembly had inserted "real estate" into the bidding requirement, the executive branch had no authority to read it back out for sympathetic situations, even an exchange with a state university. Question 2, which asked whether the city could add a monetary component to make the values match, was treated as a follow-on to Question 1: because the underlying disposal could not proceed without bidding, the cash component did not change the analysis.

Common questions

Did Act 470 of 2017 require competitive bidding for municipal real estate disposals?

Yes. The Act inserted "real estate" into Ark. Code Ann. § 14-54-302's competitive-bidding requirement for disposals valued at $20,000 or more. Before the Act, the bidding requirement covered personal property in that section.

Does an exchange count as a "disposal" under § 14-54-302?

The opinion treated it that way. The amended subsection (c) explicitly authorized the mayor to "sell or exchange" municipal real estate or personal property valued at $20,000 or less, which strongly implied that exchanges over the threshold were governed by subsection (d)'s bidding requirement.

Could the city add cash to the swap to make the values equal?

The opinion declined to opine separately on this, treating it as a follow-on to Question 1. If the underlying transaction could not proceed without bidding, adding cash would not cure the bidding problem.

Does this rule apply to swaps between cities and state agencies?

The statute does not carve out state-agency counterparties. The opinion read the statute as written, which makes no distinction between private and public counterparties.

Citations

The opinion cited Act 470 of 2017 and the amended Ark. Code Ann. § 14-54-302, along with general statutory construction precedent including MacSteel Div. of Quanex v. Arkansas Okla. Gas Corp., Turnbough v. Mammoth Spring Sch. Dist. No. 2, and Edwards v. State.

Source

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

Original opinion text

Opinion No. 2018-003
January 31, 2019
STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE
The Honorable David Whitaker
State Representative
717 North Lewis Avenue
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 470 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 470 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 470, I refer you to my previous response.

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 470 of 2017?

Your question is one of statutory interpretation. Act 470 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 law," Act 470 repealed one statute found in another chapter of the Code exclusively concerning a municipality's disposal of personal property. 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. 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 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. When the language of the statute is plain 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