Conway won’t be buying the 220,000-square-foot building formerly occupied by Spirit Homes as was announced in June, according to Mayor Tab Townsell.
Townsell said the city’s plan to borrow money from Conway Corp. to pay for the building isn’t permitted under the state Constitution. This was brought to the city’s attention by Gordon Wilbourn, a Little Rock attorney handling the transaction, Townsell said, and came as a surprise to himself and city attorney Michael Murphy.
The plan involved borrowing the $3.75 million needed for the purchase and delaying payment for five years as other parks projects are completed. At the end of the five-year delay period the city would begin repaying Conway Corp. the money, plus interest, through another five-year loan.
"Under amendment 78 of the state Constitution municipalities are allowed to go out up to five years without a vote of the people," assistant to the mayor Jack Bell said. "(The plan) would have amounted to 10-year financing, we’re now told. We were under the assumption that two different sources wouldn’t trigger the five-year thing, but Gordon (Wilbourne) said on any parcel of property you could only go out five years, period. We had a lot of people trying to figure out a way to make it work, and we just couldn’t figure out a way."
The city’s offer of $3.75 million was accepted by Cavalier Real Estate Company Inc. in June. Townsell had planned to turn the building into an expo center and recreation facility. The city did not put up any "earnest money" and will not have to pay any fees for backing out of the purchase agreement, Bell said.
If the city is again able to issue competitive bonds, which Townsell has said is impossible now due to usury laws rendering the state’s municipal bonds too low-yield to sell, it may be possible to buy the property, but as the bonds would likely be repaid over more than five years the bond issue would require a public vote.
In the meantime, the Spirit Homes property is back on the market.
(Staff writer Joe Lamb can be reached at 505-1238 or by E-mail at firstname.lastname@example.org. Send us your news at www.thecabin.net/submit.)