Tuesday, October 11, 2011

Another Walker-Mays state real estate deal

Posted By on Tue, Oct 11, 2011 at 4:02 PM

TOGETHER AGAIN: Richard Mays (left), Bill Walker.
  • TOGETHER AGAIN: Richard Mays (left), Bill Walker.
I wrote recently about a state agency head, Bill Walker of the Arkansas Department of Career Services, who'd picked a building for consolidation of the Arkansas Rehabilitation Services Division that happens to be owned by an LLC headed by his friend and fellow Mike Beebe supporter, Richard Mays, a Little Rock lawyer and former legislator.

Walker spent several hours last week explaining the rationale for the move and wondering why I'd see anything amiss. I was not alone, however. I learned bells had gone off in the negotiating process at the Arkansas Building Authority because Mays' future ownership wasn't disclosed when the lease negotiations first began. Rent there is going to increase to about $782,000 a year when the building is expanded for more of Walker's offices.

Walker said friendships are routine in state business deals (true, which doesn't mean appearances are unimportant.) He also said he and Mays believe they are being singled out because they are black. Walker even defended the deal on the ground of race. He said there were only a bare handful of black investors benefitting from state real estate business and he thought black ownership should be encouraged.

Turns out Walker had helped black ownership — Mays specifically — more than I then knew.

It's the same set of circumstances as with the 525 W. Capitol Avenue building, soon to be expanded for Walker's Rehab Division. In 2008, Walker's department negotiated a lease for a building that a Mays-related LLC bought after the state lease was completed.

Walker moved a Rehabilitation Services office from Sherwood to 1401 Main in North Little Rock in 2008. Anne Laidlaw, head of the Arkansas Building Authority, said she couldn't remember the circumstances except there was an urgency to the move. The Authority reported June 12, 2008 on three other proposals it had solicited for space that had to be ready for occupancy June 30. It passed up two cheaper offers and chose to lease 4,000 square feet at $15 per square foot, or $60,000 per year, from TIMA Investments.

TIMA is an LLC whose registered agent is May's law partner, Arkie Byrd. Its address is Mays' law office. Real estate documents list Mays, who signed them, as a "member" of the LLC. Mays himself signed the required disclosure form on whether anyone at the business was a state official. Mays' form said no one was, though in 2008 he'd been serving for two years by then on the Arkansas Claims Commission in a paid slot, appointed by Gov. Mike Huckabee.

County records show Mays acquired the former church building June 26, 2008 for $325,000 anda state lease, previously arranged, began four days later for $60,000 a year. He pledged the rents as collateral on his mortgage with Centennial Bank. The lease had been completed, working through Colliers International, which also handled the Capitol Avenue transaction, on June 19, 2008. To repeat myself: As with the Capitol Avenue building, Walker worked out a six-year lease deal on a building that his friend's LLC later bought, supported by the collateral of a guaranteed state lease. The lease on the North Little Rock building increases to $15.45 July 1, 2012.

Walker told me last week that he didn't understand why I would ask questions about the arrangement. I said, well, I'd like to buy a building knowing beforehand that I had a solid state lease in my pocket to guarantee cash flow.

Walker has not returned my calls so far. An assistant said he was out of the office. (He actually has two offices, one in a building on the Capitol mall, the other an expansive former executive suite with big screen TV in the former Arkansas Baptist Convention building on West Capitol. (He emphasized that the handsome furnishings in the office were supplied by him, not the state.) When I was with him last week, he told me Mays had said he would not call me because he believed I was singling them out on account of race. It's irrelevant, but this isn't the first public building deal I've written about and white men were involved in most of the rest. I sent Mays an e-mail about this deal as well, but he hasn't responded.

I hope to talk to Walker more and not just about real estate. Employees of his agency called and wrote me after my tour of his buildings last week. They wanted to dispute arguments he'd made for the Rehab consolidation, saying there was no benefit to two disparate operations (one oriented more to client services, the other more administrative) being housed at one location with increased rent. They also disputed his description of conditions in a building vacated in Riverdale and said the move of Rehabilitation Services offices from Corporate Hill would create parking difficulties for clients in the new Capitol Avenue quarters. The parking acquired there is a fenced lot for employees. Clients must park at metered spaces on the street.

Walker and Mays are right about several things. Many political insiders have profited from the state's enormous leasing business over the years. State investment in downtown real estate is of value to the community. Investors shouldn't be excluded on account of race, nor unfairly scrutinized for that reason. Nor should race, or any other factor, give anyone a free pass when friends do business with public money.

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