Can a county economic development agency dissolve itself, or does the quorum court have to approve the dissolution by ordinance?

Plain-English summary

In 1990, Jackson County created the Jackson County Community and Economic Development Agency (JCCEDA) by Ordinance No. 1990-10 to operate a revolving loan fund seeded with a USDA Rural Development grant plus matching contributions from three local industrial development groups. By 2020, loan demand had dried up. JCCEDA's board adopted a resolution to dissolve and to refund the original investors plus pro-rata share of the surplus. The Jackson County Quorum Court declined to approve the dissolution and was considering an alternative ordinance that would refund the original investors but retain the surplus as a county industrial development fund.

Senator Ronald Caldwell asked the AG who has the final say. Attorney General Leslie Rutledge answered that JCCEDA cannot dissolve itself: the quorum court created it by ordinance under Ark. Code Ann. § 14-14-705(b)(2), and only the quorum court can dissolve it by ordinance. As for the revolving loan fund's surplus, the AG concluded that JCCEDA's board has authority to dispose of those funds in accordance with the terms of the Official Plan adopted at the agency's founding (which contemplated repayment of original contributions plus a board-vote disposition of any remaining funds for economic development purposes).

The opinion's structural takeaway: county administrative agencies live and die by quorum court ordinance, but the operational autonomy granted in their charter documents (here, the Official Plan) governs how their day-to-day funds are disposed of, even during wind-down.

Currency note

This opinion was issued in late 2021. The statutes cited (§§ 14-14-705 and 14-16-113) may have been amended. Verify current text before relying on this analysis to wind down a county agency.

What this means for you

If you serve on a county quorum court

Based on this opinion, you control the existence of administrative boards your court has created. Resolutions by those boards to dissolve themselves do not have legal effect without your ordinance. If you want to retain a board's residual funds for county purposes, build that into the dissolution ordinance, but be aware of the limits the board's own Official Plan or charter may impose.

If you sit on a county-created board considering dissolution

Per this opinion, your board cannot dissolve itself. Approach the quorum court with a coordinated dissolution plan: a board resolution recommending dissolution, plus the proposed quorum court ordinance to enact it. Disposition of funds usually follows the board's charter or operating plan. If the plan locks the funds into specific uses (returning to original investors, or only economic development), the quorum court generally cannot redirect them, but a friendly negotiation may produce an outcome both bodies accept.

If you contributed seed capital to a county development fund

This opinion suggests that if the original Official Plan promises return of contributed capital on dissolution, the agency's board has authority to honor that. The quorum court cannot use dissolution to reclaim the contributions for general county use unless the Plan permits it.

If you advise economic development entities

The split-authority point matters: existence of the entity is in the quorum court's hands, but disposition of fund balances on wind-down typically follows the entity's charter document. Audit the Official Plan or bylaws first; that text controls in cases like this.

Common questions

Q: How was JCCEDA created?
A: Per the opinion, by Jackson County Ordinance No. 1990-10, adopted in 1990 to receive a $70,000 USDA Rural Development grant plus a $50,000 local match from three industrial development entities, and to operate a revolving loan fund for start-up businesses.

Q: Why doesn't the agency's board have power to dissolve the agency itself?
A: Because the ordinance that created the agency did not give the board that power. Ark. Code Ann. § 14-14-705(b)(2) authorizes counties to create administrative boards by ordinance, and the agency's existence is a matter of county-government structure that only the quorum court can change.

Q: Can the quorum court override the Official Plan and reclaim the surplus?
A: The opinion did not categorically resolve that, but its analysis suggests the Official Plan governs disposition because it represents a quasi-agreement among the founding entities. The quorum court can dissolve the agency; the board has authority to follow the Official Plan in disbursing the surplus.

Q: What if the proceeds came from a sale of property the agency owned?
A: A footnote in the opinion flags Ark. Code Ann. § 14-16-113, which says proceeds from the "sale" of county property purchased with county road funds go into the county road fund. That statute by its face addresses sales, not leases, and the AG suggested consulting county legal counsel for application to specific facts.

Background and statutory framework

Arkansas county government runs on a quorum court / county judge structure. The quorum court legislates by ordinance; the county judge executes. Counties commonly create administrative boards (planning, equalization, parks, economic development) to handle specialized functions. Ark. Code Ann. § 14-14-705(b)(2) gives the quorum court that creation authority, and dissolution typically uses the same mechanism.

JCCEDA's combination of public ordinance and Official Plan is unusual but not unique: when federal grant money flows through a county to a public-private development partnership, the federal grant terms and the local matching commitments often take the form of a written plan that operates alongside the ordinance. The AG treated the Plan as quasi-contractual: a "quasi-agreement amongst the four entities" that controlled how the loan fund would be wound down.

That treatment matters in dissolutions. If the Plan locks distributions to a specific waterfall (return of contributed capital, then pro rata share of surplus to the four founding entities), neither the agency's board nor the quorum court can casually override it. The board has authority to execute the Plan; the quorum court has authority to dissolve the agency. The two should align.

Citations and references

Statutes:

• Ark. Code Ann. § 14-14-705(b)(2) (county authority to create administrative boards by ordinance)
• Ark. Code Ann. § 14-14-801 (county appropriation power)
• Ark. Code Ann. § 14-16-113 (proceeds from sale of county property purchased with road funds)

Cases:

• Federal Express Corp. v. Skelton, 265 Ark. 187, 578 S.W.2d 1 (1979) (quorum court as legislative branch of county government)

Source

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

Original opinion text

Opinion No. 2021-016
December 16, 2021

The Honorable Ronald Caldwell
State Senator
120 CR 393
Wynne, AR 72396

Dear Senator Caldwell:

This is in response to your request for an opinion on behalf of the Jackson County Judge concerning dissolution of the Jackson County Community and Economic Development Agency ("JCCEDA" or "the Agency"). In this regard, you have provided the following background information:

In 1990 the United States Department of Agriculture/Rural Development (USDA/RD) awarded a grant of approximately $70,000 to fund the Jackson County Community and Economic Development Agency. The grant was conditioned upon some local match of $50,000 which was raised from three local independent industrial development groups.

JCCEDA was authorized by Jackson County Ordinance No. 1990-10. The organization came into being with a board appointed by the county judge and an executive director was employed. We believe the original grant had monies earmarked for payment of the salary of that director. The executive director stayed until salary played out and she quit.

At the outset, JCCEDA adopted a plan of operations captioned Official Plan. JCCEDA, as established pursuant to USDA/RD guidelines, was designed to make loans to start-up businesses, required potential borrowers to provide business plans, and various documentation. The loans were documented and secured with mortgages and security interests where applicable.

By the terms of the USDA/RD grant, the organization had to operate under the eye of USDA/RD for several years. At the end of that term, USDA/RD conducted an audit and released the organization from further oversight by USDA/RD.

A new director was employed at a modest salary and JCCEDA continued to operate into the 2000's. Ultimately interest in the loan program began to wane. As of early 2020, JCCEDA had not had a loan application in over four years. JCCEDA holds $77,552.18 remaining in its bank account.

In April, 2020 the board of JCCEDA met and adopted a resolution to dissolve in accordance with its original Official Plan. The resolution provides for repayment of the original investments to the initial local independent industrial development groups and to share the excess pro rata among those same organizations.

Initially, the JCCEDA resolution was presented to the quorum court with a similar resolution for the quorum court to approve. The quorum court declined to adopt the resolution approving the dissolution.

The quorum court is now considering an amendment to the original ordinance (1990-10) which would refund the original local independent industrial development groups but retain the excess as an industrial development fund for future use at the pleasure of the quorum court.

In light of the above background information, you have asked the following questions:

1) Can JCCEDA in following its official plan elect to dissolve without the concurrence of the quorum court, thereby dissolving and repaying the original investors and sharing the excess pro rata? Is the resolution adopted by JCCEDA sufficient without any further action by the quorum court?

2) Does the quorum court have standing to reject the JCCEDA board's plan of dissolution and make its own plan for dissolution?

3) Is it necessary for the quorum court to approve or reject the decision of the JCCEDA board?

4) Assuming the JCCEDA board and the quorum court are at odds, what is the method for determining the proper method for dissolving the revolving loan fund of JCCEDA?

RESPONSE

I read your first question as inquiring whether the JCCEDA may dissolve itself. It may not. The Agency's dissolution, like its creation, would have to be accomplished by county ordinance. Consequently, the answer to your second question is "yes." The answer to your third question is "yes" with respect to the dissolution of the agency, but "no" as to the disposal of the revolving loan fund's excess money. In response to your fourth question, the JCCEDA has the authority to dispose of the surplus in accordance with the terms of its Official Plan.

DISCUSSION

Question 1: Can JCCEDA in following its official plan elect to dissolve without the concurrence of the quorum court, thereby dissolving and repaying the original investors and sharing the excess pro rata? Is the resolution adopted by JCCEDA sufficient without any further action by the quorum court?

At its root, your first question is asking whether the JCCEDA may dissolve itself without the Jackson County Quorum Court's approval. The answer is no.

From the information you provided, it appears that the JCCEDA is a county administrative board that the quorum court created in 1990 consistent with state law. This is evinced by Ordinance 1990-10 attached to your correspondence ("the Ordinance"). The Ordinance, in line with state statute, establishes the powers and duties of the Agency and its board of directors. It does not grant the Agency or its board the power to abolish itself. Thus, the Agency and board may only be dissolved or abolished by ordinance. Nothing in the "Official Plan" alters that analysis.

Question 2: Does the quorum court have standing to reject the JCCEDA board's plan of dissolution and make its own plan for dissolution?

Yes. See my response above.

Question 3: Is it necessary for the quorum court to approve or reject the decision of the JCCEDA board?

Yes, as explained above, the power to abolish the Agency rests with the quorum court. But to the extent you mean to ask about the continuation and balance of the revolving loan fund, that question is addressed below.

Question 4: Assuming the JCCEDA board and the quorum court are at odds, what is the method for determining the proper method for dissolving the revolving loan fund of JCCEDA?

Based on the limited facts before me, it appears likely that the Agency's board of directors has the authority to dissolve the revolving loan fund. Furthermore, it would appear to be the board's duty to disburse the remaining proceeds to the economic development entities listed in the Official Plan.

Your correspondence states that in 1990, the U.S. Department of Agriculture/Rural Development "awarded a grant of approximately $70,000 to fund" the JCCEDA. It is unclear from your correspondence or the attached documents to what entity the USDA/RD made the grant, Jackson County, which would have to appropriate those funds to the JCCEDA, or directly to the JCCEDA itself. However, this may be a moot question, as the fund ultimately came under the authority of the JCCEDA, pursuant to the 1990 county ordinance. And it appears, based on your correspondence, that the USDA/RD grant was seed money for the JCCEDA's revolving loan fund. Moreover, the 1990 ordinance apparently authorized the JCCEDA to apply for (and presumably accept) grants or other sources of financing (presumably for the revolving loan fund, although the ordinance does not expressly state that). Thus, those funds are under the Agency's purview.

One significant factor that must be considered is that the JCCEDA's revolving loan fund also involves three local industrial development agencies that contributed the required local matching funds. The loan fund's Official Plan was promulgated by the JCCEDA "in cooperation with" these other three agencies and might be read as a quasi-agreement amongst the four entities with respect to the dispensation of the fund.

In furtherance of that end, the Official Plan contemplates that the loan fund may be terminated by a simple majority vote of the JCCEDA's board of directors. In such a case, the Official Plan provides that the three local entities be repaid their initial contributions (exclusive of any interest). Furthermore, if there are additional funds in the loan fund, the Official Plan authorizes the board of directors, again by a majority vote, to dispose of the remaining funds with the proviso that the money be used for economic development purposes.

Sincerely,

LESLIE RUTLEDGE
Attorney General