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It was a taxpayer handout that should have never happened.
A 2022 Arkansas Legislative Audit has found that the Baxter County Quorum Court’s $275,000 taxpayer handout to the Mountain Home Saddle Club to be in violation of Arkansas’s Constitution. In addition to that finding, the audit also concluded that the county violated the state constitution by purchasing $4,189 in Christmas gift cards for its employees in 2022.
Former Baxter County Judge Mickey Pendergrass was also determined to have violated AR Code § 14-22-101 by failing to properly solicit competitive bidding for two pieces of equipment in the amount of $263,700 for the Mountain Home Saddle Club.
“There was a lot of things that went on at that point in time that probably wasn’t the way it’s supposed to be happening,” said Baxter County Treasurer Jenay Mize while speaking to the Quorum Court Tuesday evening. “I think when we originally talked about it in the Budget Committee meeting, it was set at one amount. When we came here that night, it changed to a different amount. And then I think, the county judge at that time was trying to protect the county by trying to do it and pay the bills himself. Instead, we didn’t do it properly by bidding it out. So, I’ll just say, we don’t need to do any knee-jerk reactions in the future, because that’s what I felt that was.”
The push for a handout to the Mountain Home Saddle Club
The Quorum Court’s vote to hand out $275,000 in taxpayer money to the Mountain Home Saddle Club for its arena renovation marked one of the most contentious moments for the court in 2022.
Egos and tempers flared as members of the court argued amongst themselves over appropriating such a large amount of money for an organization that openly admitted to mismanaging the funds it raised throughout the year.
Public outcry against the handout was largely ignored.
In April of 2022, the court rejected the Saddle Club’s pitch for $375,000 in funding for renovations to its arena. At the time, the request was framed as an issue of non-compliance with COVID-19 social distancing guidelines regarding the club’s bathrooms and bleachers.
Those COVID pretenses were quickly dropped during the court’s May 3 meeting in 2022, with the Saddle Club pivoting to handicap access and noncompliance with the American Disabilities Act as the need for its upgrades.
During that meeting, Saddle Club President Tommy Rand, who has a long history of using taxpayer money to keep his businesses going, made a passioned pitch about the need for the renovations to the court and the public before ultimately admitting that the club had paid little attention to saving for upgrades to its facilities, instead claiming to opt to donate its money to other groups and organizations.
Sonia Rand, Tommy Rand’s wife and treasurer for the Saddle Club, also admitted to the club having “some money unaccounted for.”
Justice of the Peace Dirk Waldrop, who led the opposition against the handout, said that the club was financially irresponsible, drawing protests from Tommy Rand.
“It’s financially irresponsible when you have plenty of money coming in but are donating into other groups when you need to be taking care of your own house,” said Justice Waldrop.
Then former County Judge Mickey Pendergrass pushed for the court to make a motion to appropriate the funds for the Saddle Club, prompting Waldrop to call out his fellow members of the court.
“I’ve heard every one of y’all on this court at some point or another grumble about those politicians in Washington D.C.,” said Justice Waldrop. “If we want to change things going on at the federal government and the state level it starts right here in this room. The ‘we got to spend it because somebody else will’, that doesn’t make it right.”
As the vote for the appropriation was about to be called, Justice of the Peace Cameron Davis made a last-minute motion to appropriate $275,000 instead of the originally planned $100,000. Davis was a supporter of the Club’s request for money stating, “It needed to be more and considerably more for what they’re trying to get done down there.”
The move drew outrage from the three opposition members of the court, before finally passing 8-3. Waldrop made an attempt to pass a motion to revert the funding back to $100,000 but it failed 3-8.
Only former Justice of the Peace Wayne Roth, Waldrop and Justice of the Peace Tink Albright voted against the handout. Dennis Frank, Angela DeGroote, Maryanne Edge, Charles Osgood, Roger Steele, Cameron Davis, Ty Chapman and then Justice of the Peace Kevin Litty voted in favor of the handout.
It should be noted that the Mountain Home Saddle Club was not the only organization to receive taxpayer handouts during the COVID-19 pandemic.
In December 2020, the county appropriated $388,000 in coronavirus relief funds to three local non-profits.
The Food Bank of North Central Arkansas, one of the largest nonprofits in the area, received $200,000 in relief funding from the county through the CARES Act, while the Baxter County Fair Board received $94,740 in relief. The Baxter County Fire Chiefs Association also received $94,000.
According to ProPublica’s Paycheck Protection Program (PPP) tracker, both the Food Bank and the Baxter County Fair Association, received PPP loans, with the former receiving $60,800 and the latter receiving $3,600. Both organizations had their loans forgiven by the federal government.
Violating the Arkansas Constitution and state law
According to the management letter given to county representatives by the Legislative Joint Auditing Committee, former Baxter County Judge Mickey Pendergrass and Baxter County Clerk Canda Reese were found to have violated Ark. Const. art. 12, § 5 as in as interpreted in Op. Att’y Gen. nos. 1992-099 and 1991-410 when disbursing funds totaling $279,198.
Roughly $275,000 of those funds were for improvements to the Saddle Club’s arena, with the remaining $4,189 going towards Christmas gift cards for county employees.
Under the Arkansas Constitution, no county, city, town or other municipal corporation, shall become a stockholder in any company, association, or corporation; or obtain or appropriate money for, or loan its credit to, any corporation, association, institution or individual.
However, a county, city, town, or other municipal corporation may obtain or appropriate money for a corporation, association, institution, or individual that finances economic development projects or provides economic development services.
“Economic development projects” means the land, buildings, furnishings, equipment, facilities, infrastructure, and improvements that are required or suitable for the development, retention, or expansion of:
(A) Manufacturing, production, and industrial facilities;
(B) Research, technology, and development facilities;
(C) Recycling facilities;
(D) Distribution centers;
(E) Call centers;
(F) Warehouse facilities;
(G) Job training facilities; and
(H) Regional or national corporate headquarters facilities;
“Economic development services” means:
(A) Planning, marketing, and strategic advice and counsel regarding job recruitment, job development, job retention, and job expansion;
(B) Supervision and operation of industrial parks or other such properties; and
(C) Negotiation of contracts for the sale or lease of industrial parks or other such properties; and
(A) Land acquisition;
(B) Site preparation;
(C) Road and highway improvements;
(D) Rail spur, railroad, and railport construction;
(E) Water service;
(F) Wastewater treatment;
(G) Employee training which may include equipment for such purpose; and
(H) Environmental mitigation or reclamation.
In its current state, the Mountain Home Saddle Club does not appear to meet any of these definitions.
According to Arkansas Attorney General Opinion No. 1992-099, no grants or donations may be made to private nonprofit organizations by local municipalities with taxpayer money. Governments may also not use taxpayer funds to become members of organizations such as a local Chamber of Commerce.
In addition to violating the State’s Constitution, Judge Pendergrass was found to have violated Ark. Code Ann.§§ 14-22-101 – 14-22-115, which requires local governments to post formal biddings in local, legal newspapers no less than 10 days nor more than 30 days prior to the date fixed for opening bids. If no legal newspaper is available, then the government is to post the bids in three public locations as approved via ordinance.
The bid must also be posted inside the county courthouse.
During Tuesday night’s meeting, Baxter County Judge Kevin Litty defended Pendergrass by stating that he was defending the county.
“So, he paid the bills as they came in instead of just handing the Saddle Club a check for $275,000,” Litty said. “So, there was items in that $275,000 that should have been bid because they were over the threshold of $35,000. We were paying the bills that came in instead of handing the check to them. He was protecting the county, but he did it wrong.”
While the state audit claims that Pendergrass was out of compliance with the law, emails between the former judge and the Observer reveal that Pendergrass may have been in partial compliance with state law’s surrounding bidding when answering FOIA requests from the Observer.
In an email to the Observer on June 1, Pendergrass sent over an attachment for a legal notice that was to be published in the May 11, 2022, edition of the Baxter Bulletin. A look at the Bulletin’s May 11 edition does reveal that the former judge put a bid notice as legally required in the paper.
A legal notice was presented in the county courthouse on May 5, 2022.
In addition to the document Pendergrass provided, the judge told the Observer that bidding would officially open at 3 p.m. on June 1 and that the county was “in consultation with the bidders and are waiting on that discussion before accepting.”
On June 2, Pendergrass wrote to the Observer again stating that the June 1 bids were “under study and negotiation as to the availability date for materials and best bid for what is needed.”
He provided the Observer with the names of two companies, Jennings Pie & Fence and Stadium Pros Inc., which he claimed to have bid on the project in the amounts of $273,080 and $263,700 respectively.
The State Legislative Audit shows that the county appears to have gone with Stadium Pros Inc. and their offer of $263,700 leaving an undocumented $11,300 that possibly went through two other unidentified vendors that did not go through the competitive bidding process.
The audit claims that none of the vendors had a services contract with the county.
Judge Pendergrass may have also been out of compliance with Ark. Code Ann.§ 14-22-115 as noted in the audit if he attempted to handle the contracts between the chosen vendors himself, as suggested by Judge Litty during Tuesday’s meeting.
Ark. Code Ann.§ 14-22-115 requires government officials to “call upon the prosecuting attorney of the district in which the county lies, or employ counsel for advice and aid in the preparation of necessary contracts and all other legal matters in connection with those purchases.”
Following Baxter County Treasurer Jenay Mize’s presentation on the 2022 State Legislative Audit, several members of the court reacted to the news that they had violated the state constitution.
Justice of the Peace Dennis Frank was the first to react by asking what would have needed to have been done to make the process legal, before Judge Litty defended former Judge Pendergrass infront of the public.
Baxter County Clerk Canda Reese also gave a speech, asking the court to remember that their decisions affect other county officials.
“For all of the years that I’ve served as clerk, it has been frustrating to me, that because my office handles the payment of claims on the county’s accounts, that in a situation like this, I’m attached to the write-up to that finding,” Reese said. “I take my job very seriously and I take it personally. My fellow elected officials have heard from me on numerous occasions, just imploring that they understand that the decisions they make impact me.”
Following Reese’s comments, Baxter County Prosecutor David Ethredge chimed in to iterate that county officials had made a procedural mistake that did not rise to the level of a crime.
“I will tell you that Baxter County has done a great job since I’ve been prosecutor,” Ethredge said. “We don’t have the issues I see in other places and every place has problems, but they are real issues. This is a mistake, not a crime. And we need to keep that in mind when talking about this. It was a procedural issue. An audit’s job is to go in and look and see if we’re complying with Arkansas law about finances under the given definition of what those should be. So, I just want to say to everyone, this was an error, there was not ever any missing money. So, that means I’m not prosecuting anybody, which is important to say.”