Can a city's Advertising and Promotion Commission use A&P tax money to build a youth-programming auditorium next to its existing convention center?

Plain-English summary

State Representative Mark D. McElroy, on behalf of the City of Dumas, asked the AG whether the city's Advertising and Tourist Promotion Commission could use A&P tax revenue to build an auditorium for the education, development, and recreational activities of city youth, either annexed to the existing Dumas Convention Center or as a separate building.

AG Leslie Rutledge said the answer was likely yes, with two analytical paths:

• If the auditorium is annexed to the convention center, it falls within Ark. Code Ann. § 26-75-606(a)(1)(A)(ii)'s authorization to use A&P funds for the "construction, reconstruction, extension, equipment, improvement, maintenance, repair, and operation of a convention center." The AG read "extension" using its dictionary meaning ("an addition") and concluded an annexed auditorium is an extension of the convention center.
• If the auditorium is separate, it can still be authorized under § 26-75-606(b)(2) as a "public recreation facility," because the AG read "recreation" broadly enough to include education, development, and recreational youth activities.

The opinion is careful to emphasize that the Commission has broad discretion under the statute, and that the actual call is fact-specific and belongs to the Commission with the input of local counsel.

Currency note

This opinion was issued in 2018. 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.

The Arkansas A&P tax framework in Ark. Code Ann. § 26-75-606 has been amended in various ways since 2018. A current Arkansas A&P Commission considering a similar project should pull the present version of the statute and look at later AG opinions, not this 2018 review alone.

Common questions

What is an Advertising and Promotion Tax in Arkansas?

A locally-imposed tax (often called the "hamburger tax" or "lodging tax" depending on what it covers) that Arkansas cities and counties can levy to fund tourism promotion. Ark. Code Ann. § 26-75-606 sets out what the proceeds can be spent on. The tax is administered by an Advertising and Promotion Commission appointed by the city or county.

Why is "extension of a convention center" the same as "annex"?

The AG used dictionary definitions: "extension" means an addition, "annex" is something attached to a building. So an annexed auditorium is an extension. The reading lets cities expand their convention infrastructure without the legislature having to update the statute every time the form of the addition is different from the original.

Is "youth recreation" really a public recreation facility?

The AG took the broad reading. "Recreation" was defined as a "pastime, diversion, exercise, or other resource affording relaxation and enjoyment." Youth education, development, and recreational programming fits within that. So the auditorium counts as a public recreation facility, even though it is also used for education.

What can A&P funds NOT be used for?

Ark. Code Ann. § 26-75-606(c) lists the exclusions, including "general capital improvements," "costs associated with the general operation of the city or county," "general subsidy of any civic group or the chamber of commerce," and "expenditures that are normally paid from general revenues of the city." The Commission has to make sure its proposed spending is on the affirmative list in subsections (a) and (b) and does not fall into any of the exclusions in subsection (c).

Why does the AG keep saying "this is for the Commission to decide"?

Because the Arkansas Supreme Court will defer to the Commission's interpretation of the statute as long as it is not clearly wrong (Brookshire v. Adcock, 2009 Ark. 207, 307 S.W.3d 22). The AG's role is advisory; the actual spending decision is the Commission's, applied to the specific facts of the proposed project.

Background and statutory framework

Ark. Code Ann. § 26-75-606 lays out the authorized uses of A&P tax revenue in Arkansas:

• Subsection (a): includes construction, reconstruction, extension, equipment, improvement, maintenance, repair, and operation of a convention center.
• Subsection (b)(2): includes construction of public recreation facilities.
• Subsection (c): lists prohibited uses.

The Commission has broad discretion within those limits, and the Arkansas Supreme Court reviews the Commission's spending decisions under a "clearly wrong" standard.

Citations

• Ark. Code Ann. § 26-75-606 (Repl. 2008)
• Brookshire v. Adcock, 2009 Ark. 207, 307 S.W.3d 22
• Op. Att'y Gen. 2011-005 (Commission's authority to spend A&P funds on a project)

Source

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

Original opinion text

Opinion No. 2018-004
April 23, 2018
STATE OF ARKANSAS
ATTORNEY GENERAL
LES LI E RUTLEDGE
The Honorable Mark D. McElroy
State Representative
2645 Highway 138 East
Tillar, AR 71670-9372
Dear Representative McElroy:
You have requested my opinion on the following question concerning the
expenditure of advertising and promotion tax revenues by an Advertising and
Tourist Promotion Commission pursuant to Ark. Code Ann.§ 26-75-606:
[Is it] legally permissible for a city's Advertising and Tourist
Promotion Commission to use revenue from its funds to construct an
auditorium, either annexed to or separate from an existing
Convention Center, which will be used for the education,
development, and recreational activities of persons under the age of
18 in Dumas, Arkansas.
RESPONSE
In my opinion, the answer to your question is likely "yes," under the limited facts
before me. I must emphasize, however, that the use of advertising and promotion
("A&P") funds ultimately presents a factual question to be decided by the
Advertising and Promotion Commission ("Commission") based on all the relevant
circumstances, ideally with the input and advice of its local counsel.
DISCUSSION
A&P tax revenues may be used for the purposes set forth in Ark. Code Ann. § 26-
75-606( a) and (b), provided a proposed use is not prohibited by section 26-75-
323 CENTER STRE ET. SU ITE 200 · LITTLE ROCK. ARKJ\NSJ\S 7220 I
TELEPHONE (501) 682-2007 ·FAX (501) 682-8084
ARKANSASAG.GOV The Honorable Mark D. McElroy
State Representative
Opinion No. 2018-004
Page 2
606(c).1 The Commission "determines the use of the city advertising and
promotion fund,"2 and has broad discretion to determine whether a use is
appropriate under section 26-75-606.3 And a court will defer to its decision
regarding the use of funds so long as it is not clearly wrong under the statute.4
You first ask whether the Commission can "construct an auditorium ... annexed to
... an existing Convention Center."5 I believe the answer to this question turns on
whether an annexed auditorium is an "extension . . . of a convention center" for
purposes of section 26-75-606(a)(l)(A)(ii).6 The term "extension" is defined
generally as "that by which something is extended; an addition .... "7 And an
"annex" is "[s]omething that is attached to something else, such as ... an addition
to a building."8 It reasonably follows that an auditorium "annexed to ... an
existing convention center" is an addition to and thus an "extension ... of [the]
convention center."9 Based on section 26-75-606(a)(l)(A)(ii)'s plain language,
1 Ark. Code Ann. § 26-75-606 (Rep!. 2008).
2 Id. at § 26-75-606(2)(A).
3 Section 26-75-606(c) places certain limits on the Commission's use of A&P funds. See id. at§§
26-75-606(c)(2) (funds shall not be used for "general capital improvements," "costs associated
with the general operation of the city or county," or the "general subsidy of any civic group or the
chamber of commerce") and 26-75-606(c)(4) (providing that A&P funds shall not be "utilized for
expenditures that are normally paid from general revenues of the city.").
4 See, e.g., Brookshire v. Adcock, 2009 Ark. 207, 307 S.W.3d 22 (internal citations omitted)
("The construction of a state statute by an administrative agency is not overturned unless it is
clearly wrong."). Accord Op. Att'y Gen. 2011-005 (opining that a Commission "can [use its
funds on a project] if it has reasonably determined that such activity will serve the purposes set
forth in A.C.A. § 26-75-606(a) and (b), and that this activity will not violate any of the limitations
stated in A.C.A. § 27-75-606(c).").
5 I gather that the "existing Convention Center" is located in Dumas, Arkansas, and therefore you
are asking whether the City of Dumas's Commission can use its funds to construct this
auditorium.
6 Ark. Code Ann. § 26-75-606(a)(l)(A)(ii) (specifically authorizing the use of A&P funds for the
"[ c ]onstruction, reconstruction, extension, equipment, improvement, maintenance, repair, and
operation of a convention center[.]" (Emphasis added).
7 RANDOM HOUSE WEBSTER'S UNABRIDGED DICTIONARY 684 (2d ed. 1999).
8 BLACK'S LAW DICTIONARY 108 (10th ed. 2014).
9 Ark. Code Ann.§ 26-75-606(a)(l)(A)(ii). The Honorable Mark D. McElroy
State Representative
Opinion No. 2018-004
Page 3
therefore, the use of A&P funds to construct an auditorium annexed to a
convention center would be permissible. However, this is ultimately a question of
fact for the Commission to decide in light of all the relevant circumstances, and
ideally with the advice of local counsel.
The second part of your question shifts to whether the construction of an
auditorium "separate from an existing convention center" is a permissible use of
A&P funds. The provision of section 26-75-606 that I deem most likely to be
interpreted as authorizing this use under the limited facts before me is section 26-
75-606(b )(2), which permits A&P tax proceeds to be used for the "construction ...
of public recreation facilities."10
The relevant inquiry, under your stated facts, is whether an auditorium constructed
for education, development, and recreational activities is a "public recreation
facilit[y ]" under section 26-75-606(b )(2). Section 26-75-606 does not expressly
address whether an auditorium constitutes a "public recreation facilit[y]." But in
light of the statute's plain language that permits the use of A&P funds on "public
recreation facilities," it may reasonably be concluded that an auditorium
constructed for, among other uses, "recreational activities" qualifies as a "public
recreation facilit[y]." 11 And therefore, the use of A&P funds to construct this
auditorium is likely a permissible expenditure. But again, the question you present
is ultimately a factual one to be decided by the Commission based on all the
surrounding circumstances.
Sincerely,
~~ LESLIE RUTLEDGE -
Attorney General
10 Id. at§ 26-75-606(b)(2) (emphasis added).
11 "Recreation" is defined as "a pastime, diversion, exercise, or other resource affording
relaxation and enjoyment." RANDOM HOUSE WEBSTER'S UNABRIDGED DICTIONARY 1613 (2d
ed. 1999). "Recreational activities" at an auditorium likely fall within this definition, and thus fit
within the plain meaning of section 26-75-606(b )(2)'s reference to "recreation facilities."