Can Garland County hand AWIN radios to a private property owners' association in Hot Springs Village for free, or pay to maintain its dispatch center?

Plain-English summary

Senator Bill Sample asked whether Garland County could spend tax dollars to (1) provide Arkansas Wireless Information Network (AWIN) radios "free of charge" to the Hot Springs Village Property Owners' Association for use by the Village's emergency personnel, and (2) take on responsibility for maintaining or upgrading the Village's dispatch center.

Hot Springs Village is a private gated community, half of which sits in Garland County. The Property Owners' Association is a private corporation, not a municipal entity. Attorney General Leslie Rutledge framed both questions through Article 12 § 5 of the Arkansas Constitution, which forbids any county from "obtain[ing] or appropriat[ing] money for, or loan[ing] its credit to, any corporation, association, institution or individual."

The Arkansas Supreme Court has consistently read this prohibition broadly. It bars direct gifts to private corporations, indirect financial aid like buying memberships in industrial development corporations, and, the AG previously opined, even small in-kind transfers like gift cards to volunteer emergency-services personnel. Because the Village POA is undisputedly private, the AG concluded that simply donating AWIN radios to it would amount to a "misapplication of public funds" subject to challenge in an illegal-exaction suit under Article 16 § 13.

But the analysis does not end there. Article 12 § 5 does not prohibit contracts between counties and private entities, as long as the contract serves a public purpose and is supported by adequate consideration. Emergency-services radios easily clear the public-purpose bar (Ark. Code Ann. § 14-14-802(b)(2)(D) explicitly authorizes counties to provide emergency services). The hard question is consideration. The AG noted that Garland County and Hot Springs Village already have overlapping arrangements (rights of way for emergency vehicles in the Village's covenants, a mutual aid agreement for fire services, and law enforcement assistance agreements), so a structured trade where the county provides radios "in lieu of" undertaking other emergency services for Village residents could supply the consideration needed.

On the dispatch center, the AG gave a parallel answer. Maintenance and upgrade of an emergency dispatch center are a public purpose. But because the Village's dispatch center belongs to a private POA, county dollars cannot simply flow to it. A contract for adequate consideration could work; a unilateral expenditure could not.

The AG could not opine definitively on either arrangement without more facts, and reminded the senator that quorum-court spending authority and the public-purpose doctrine remain layered on top of Article 12 § 5.

Currency note

This opinion was issued in 2017. 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.

Common questions

Q: Why is Hot Springs Village treated as a private entity?
A: Because it is. The Arkansas Court of Appeals confirmed in Coombs v. Hot Springs Village Property Owners Ass'n (2007) that the Village "is not a municipality." It is a planned community, governed by a private property owners' association, with no municipal incorporation. That status triggers Article 12 § 5's restrictions on county aid.

Q: Does Article 12 § 5 mean the county and the Village can never deal with each other?
A: No. The constitutional ban is on appropriations and loans of credit to private entities. Contracts with private entities supported by adequate consideration are not within the ban. Many county-private interactions (buying goods, leasing space, contracting for services) are routine and lawful.

Q: Why does "adequate consideration" matter so much?
A: Adequate consideration is what makes a transaction a contract rather than a gift. If the county pays the POA $100,000 and gets nothing of corresponding value in return, that is functionally a donation, which Article 12 § 5 forbids. If the county pays $100,000 and gets services or property of comparable value, the transaction is a contract.

Q: What kind of consideration could justify giving the radios?
A: The AG sketched a structure: the county provides AWIN radios to the Village POA "in lieu of" undertaking other emergency services that the county would otherwise have been obligated to perform. The Village's existing agreements (covenants providing rights of way, mutual aid for fire, law enforcement assistance) provide the framework for that swap. The trade has to be specifically articulated and the values roughly matched.

Q: Could residents of Hot Springs Village challenge this?
A: Article 16 § 13 of the Arkansas Constitution allows "[a]ny citizen of any county" to sue to stop "the enforcement of any illegal exactions." A gift of AWIN radios to a private POA, if challenged, would be evaluated under Article 12 § 5. If the radios were given without adequate consideration, the suit would likely succeed.

Q: What about general statutory authority for emergency services?
A: That authority exists and is broad. Quorum courts may establish "any service . . . not expressly prohibited by the Arkansas Constitution or by law," including emergency services such as fire prevention, ambulance services, and civil defense. The AWIN system itself is supported by a state Financing Fund (§ 19-5-1256). All of that supports the public-purpose element. But Article 12 § 5 is the constitutional gateway, and statutory authority cannot bypass it.

Q: What about the dispatch center?
A: Same analysis. Maintenance and improvement of an emergency dispatch center is a public purpose. But because the Village's center is owned by the private POA, county money flowing to it must be supported by a contract with adequate consideration.

Background and statutory framework

Article 12 § 5 of the Arkansas Constitution is a strict version of a "lending of credit" clause. The Arkansas Supreme Court has applied it broadly across decades, from Halbert v. Helena-West Helena Industrial Dev. Corp. (1956), striking down a county's purchase of memberships in an industrial development corporation, through City of Jacksonville v. Venhaus (1990), reversing distribution of illegal-exaction residuals to private nonprofits. The exception for contracts supported by adequate consideration was articulated in City of Ft. Smith v. Bates (1976), which allowed a city to build a driveway onto private property in exchange for fair consideration.

The public-purpose doctrine layers on top. Even when an arrangement is structured as a contract, the underlying activity must serve the welfare of the community. Courts give "great weight" to legislative determinations of what is a public purpose (Turner v. Woodruff, 1985), and the General Assembly has clearly designated emergency services and emergency communication as legitimate public purposes.

The Arkansas Wireless Information Network is the state's interoperable emergency communication backbone. Section 12-78-102 establishes the system and authorizes coordinated equipment review and procurement. Section 19-5-1256 funds maintenance, repair, and replacement. AWIN radios deployed in a private gated community would expand the network's reach but raise the structural problem this opinion addresses: the equipment passes from public to private hands.

The narrow path through Article 12 § 5 is to structure the arrangement as a contract: clear consideration on both sides (radios in exchange for services or covenants the county would otherwise have to provide), tied to existing intergovernmental and mutual-aid frameworks, and ratified by quorum-court ordinance.

Citations and references

Constitution and statutes:

• Ark. Const. art. 12, § 5 (lending of credit)
• Ark. Const. art. 16, § 13 (illegal-exaction suit)
• Ark. Code Ann. § 14-14-802 (quorum court authority and emergency services enumeration)
• Ark. Code Ann. § 20-13-301 (county emergency medical services)
• Ark. Code Ann. § 12-78-102 (AWIN coordination)
• Ark. Code Ann. § 19-5-1256 (AWIN Financing Fund)

Cases (Arkansas Supreme Court unless noted):

• Halbert v. Helena-West Helena Indus. Dev. Corp., 226 Ark. 620, 291 S.W.2d 802 (1956)
• City of Jacksonville v. Venhaus, 302 Ark. 204, 788 S.W.2d 478 (1990)
• City of Ft. Smith v. Bates, 260 Ark. 777, 544 S.W.2d 525 (1976)
• Chandler v. Board of Trustees, 236 Ark. 256, 365 S.W.2d 447 (1963)
• City of Harrison v. Boone County, 238 Ark. 113, 378 S.W.2d 665 (1964)
• McCutchen v. Huckabee, 328 Ark. 202, 943 S.W.2d 225 (1997)
• City of Paris v. Street Improvement Dist. No. 2, 206 Ark. 926, 175 S.W.2d 199 (1943)
• Barker v. Frank, 327 Ark. 589, 939 S.W.2d 837 (1997)
• Turner v. Woodruff, 286 Ark. 66, 689 S.W.2d 527 (1985)
• Arkansas State Highway Comm'n v. Alcott, 260 Ark. 225, 539 S.W.2d 432 (1976)
• Coombs v. Hot Springs Village Prop. Owners Ass'n, 98 Ark. App. 226, 254 S.W.3d 5 (2007) (Arkansas Court of Appeals)

Source

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

Original opinion text

Opinion No. 2017-035
April 25, 2017

The Honorable Bill Sample
State Senator
2340 North Highway 7

STATE OF ARKANSAS
ATTORNEY GENERAL
LESLIE RUTLEDGE

Hot Springs Village, AR 71909

Dear Senator Sample:

This is in response to your request for an opinion concerning emergency services in Hot Springs Village. You pose the following questions, which I have paraphrased slightly:

1) May Garland County spend tax dollars to provide radios to the Hot Springs Village Property Owners' Association, for use by Hot Springs Village emergency personnel on the Arkansas Wireless Information Network?

2) Can Garland County legally assume responsibility, by spending tax dollars or otherwise, for maintaining or upgrading the Hot Springs Village emergency dispatch center?

You explain that Garland County is preparing to upgrade its 911 system and its county dispatch center. And you state that Hot Springs Village is a private gated community, half of which is located within Garland County.

RESPONSE

Your questions concern limitations that the Arkansas Constitution imposes on a county's ability to appropriate money for a private entity. Specifically, Article 12, section 5 of the Constitution states that "[n]o county . . . shall . . . obtain or appropriate money for, or loan its credit to, any corporation, association, institution or individual." Inasmuch as the Hot Springs Village Property Owners' Association ("Village POA") is a private corporation, I believe Garland County would be prohibited from simply donating the radios referred to in your first question.

But Article 12, section 5 does not prevent contracts between counties and private entities, so long as the arrangement serves a public purpose and is supported by adequate consideration. In your request, you state that the radios would be "free of charge," implying that the Village POA would accept the radios as a gift. Nevertheless, adequate consideration might exist if Garland County provided the radios in lieu of undertaking other emergency services for the residents of Hot Springs Village. I cannot definitively opine on the legality of such an arrangement, however, because of the factual questions it raises. And I am unable to answer your second question beyond advising that generally, maintenance and improvement of an emergency dispatch center are public purposes to which a county may properly devote its tax dollars. Still, an expenditure of county funds must be consistent with Article 12, section 5. The fact that the Village POA is a private entity could curtail Garland County's ability to maintain the dispatch center in Hot Springs Village.

DISCUSSION

Question 1: May Garland County spend tax dollars to provide radios to the Hot Springs Village Property Owners' Association, for use by Hot Springs Village emergency personnel on the Arkansas Wireless Information Network?

In my opinion, Garland County could provide radios to the Village POA for use on the Arkansas Wireless Information Network, but only if the exchange were supported by adequate consideration. Given that Hot Springs Village "is not a municipality" but a private entity, whether Garland County can purchase radios for the Village POA is governed by Article 12, section 5 of the Arkansas Constitution. This constitutional provision states in relevant part that "[n]o 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." The Arkansas Supreme Court has made clear that Article 12, section 5 prohibits the direct donation of "county . . . funds . . . to any corporation," but the ban applies more generally to any "financial aid" flowing from a public entity to a corporation. For example, the Court held that "to 'purchase membership' in a local industrial development corporation . . . would be doing indirectly what the Constitution forbids to be done directly." And this office has opined that art. 12, § 5 applied to the purchase of gift cards for individuals who volunteered for a city as emergency-services personnel.

Thus, the threshold issue is not the nature of the expenditure, but the identity of the recipient: if the beneficiary is a private individual or corporation, then it is likely unconstitutional for a county to "obtain or appropriate money" for that entity. Because the Village POA is undoubtedly a private corporation, art. 12, § 5 should prevent Garland County from dedicating tax dollars to the purchase of radios for Hot Springs Village. Such a transaction would, I believe, amount to a "misapplication of public funds" that could be challenged in an illegal-exaction suit.

Determining that the recipient is a private entity does not end the inquiry, however. While a county cannot simply donate emergency-services radios to a private corporation, it may be constitutional for the county and the corporation to enter into a contract for the same equipment. As the Supreme Court stated when considering whether a city had authority to build a driveway onto private property, art. 12, § 5 "was not meant to apply as a limitation on the ability of the municipal corporation to acquire private property . . . in exchange for fair and equitable consideration." That is, it remained the case that "[b]oth the city and the county have the power to enter into contracts." But in light of the prohibition on county expenditures flowing to a private entity, the presence of adequate consideration is crucial to remove the contractual transaction from the scope of art. 12, § 5.

Based on the background information provided, I am unable to opine as to whether a given contract for the provision of emergency-services radios to the Village POA would violate art. 12, § 5. I can, however, describe the public-purpose doctrine that all such municipal/private contracts must satisfy. This common-law doctrine limits the expenditure of public funds to those activities that further the "welfare of the community and its inhabitants." And though the judiciary may ultimately be the arbiter of whether an expenditure serves a public purpose, "great weight must be given legislative determinations of public purposes."

In my opinion, there is abundant legislative support for the proposition that a county acts in furtherance of a public purpose by providing Arkansas Wireless Information Network radios to a private community within its borders. County quorum courts may establish by ordinance "any service . . . not expressly prohibited by the Arkansas Constitution or by law," and those courts are specifically authorized to provide "Emergency services, including . . . Ambulance services . . . Civil defense services [and] Fire prevention and protection services." Likewise, the legislature has enabled "quorum court[s] in any county to provide emergency medical services for residents of the county or any designated area of the county, and to . . . provide funds for the purchase of equipment, the maintenance and operation of equipment, and the payment for personal services necessary to provide the services." Finally, in light of the potential for an "emergency-related disaster . . . requiring rapid and effective communications and warning to coordinate city, county, state, federal, and private sector emergency response personnel," the legislature established a "system to review and recommend the procurement of equipment and systems to local offices of emergency services."

This statutory authority, for county-level emergency services in general, and emergency communication coordinated over the Arkansas Wireless Information Network, specifically, should suffice to meet the public-purpose element of tax expenditure. But as I mentioned above, in order to provide the Village POA with emergency-response radios given the limitations of art. 12, § 5, the radios must be exchanged for adequate consideration. Such consideration might take the form of a modification to the emergency-service agreements that appear already to be in place between Garland County and Hot Springs Village. The Village's Covenants and Restrictions, for example, state that "[a]ll private ways of access for vehicles shall also be subject to a right-of-way for the agents, employees and officers of Garland County . . . having jurisdiction in Hot Springs Village to permit the performance of their duties, including but not limited to . . . emergency vehicles and law enforcement vehicles." Likewise, the Village's website refers to a "mutual aid agreement" between the Hot Springs Village Fire Department and volunteer departments in neighboring areas, along with "multiple Law Enforcement Assistance Agreements" between the Hot Springs Village Police Department and law enforcement in Garland and Saline Counties.

If the radios for use on the Arkansas Wireless Information Network could be purchased for the Village POA in lieu of Garland County officials providing the emergency services they would otherwise have been obligated to perform, adequate consideration might be present. Any such arrangement would be subject to the statutes constraining the spending authority of a county quorum court, however. And I emphasize that the legality of a particular contract is outside the scope of an opinion request, given that contractual relationships (and the consideration they involve) are highly fact-dependent. Nevertheless, the possibility of a valid contract leads me to believe that art. 12, § 5 is not an absolute bar to Garland County providing the Village POA with the Arkansas Wireless Information Network radios.

Question 2: Can Garland County legally assume responsibility, by spending tax dollars or otherwise, for maintaining or upgrading the Hot Springs Village emergency dispatch center?

As with your first question, art. 12, § 5 of the Arkansas Constitution governs whether a county can undertake maintenance or repair of a private entity's emergency-dispatch facilities. There exists the same risk of the county "obtain[ing] or appropriat[ing] money for . . . any corporation, association, institution or individual." At the same time, the nature of the endeavor, upkeep of emergency-response facilities and equipment, seems to meet the public-purpose test for municipal expenditures. Thus, if Garland County could arrive at a contract with the Village POA supported by adequate consideration, then an expenditure of tax dollars for purposes of maintaining emergency-response facilities in Hot Springs Village might withstand scrutiny under art. 12, § 5. However, I cannot offer a more definitive opinion without specific information about the nature of the "responsibility" that Garland County would assume with respect to Hot Springs Village's emergency-dispatch center.

Sincerely,

LESLIE RUTLEDGE
Attorney General