City directors vote to sell off property
$210,273 bid from developers to buy acres once designated for sports complex
FORT SMITH — After a lengthy process, the city has narrowly given the go-ahead to sell property that was the site of a construction project that turned sour.
The Board of Directors voted 4-3 during its meeting Tuesday to approve a resolution accepting a $210,273 bid from XFED Commercial Properties for about 68.15 acres at Chaffee Crossing. About 62 acres of the parcel was formerly designated for the defunct River Valley Sports Complex project.
The Arkansas Democrat-Gazette previously reported that in 2014, then-state Sen. Jake Files and his business partner, Lee Webb, the developers of the River Valley Sports Complex, approached the city looking to build eight tournament-quality ball fields and amenities to draw in softball and baseball teams from around the region as an economic boost to the area.
The city budgeted $1.6 million for the project, stipulating that Files and Webb complete it by June 2015 with donations of materials and labor. However, Files and Webb went on to miss deadlines that city directors continued to extend until the end of 2016, at which point they expressed their desire to withdraw from the project.
The duo had spent $1.08 million of the city’s money before city directors voted in February 2017 to terminate the agreement with them. City directors also demanded that Files and Webb return the $26,945 in state General Improvement Fund grant money they received for infrastructure work.
Files pleaded guilty on Jan. 29, 2018, in U.S. District Court to wire fraud and money laundering over receipt of the grant money. He also pleaded guilty to bank fraud for pledging a forklift he did not own as collateral for a bank loan. He began serving an 18-month sentence in August 2018.
Files moved from a federal prison in El Reno, Okla., to a halfway house in Little Rock last year in preparation for a Nov. 11 scheduled release. Charlie Robbins, public information officer for the U.S. attorney’s office, confirmed on Nov. 26 that Files was released that day.
Deputy City Administrator Jeff Dingman wrote in a memo to City Administrator Carl Geffken that three parcels were appraised for $640,000 and offered for public sale.
The city received only one bid for the three parcels, $210,273 from XFED Commercial Properties, with the company providing the required deposit of $10,516.
It was recognized during the city directors’ study session Nov. 26, Dingman said, that the bid was well below the combined appraised value. A second appraisal requested by the board returned an estimated value of $852,000 for the property.
The board considered selling the property for the amount bid during its regular meeting Dec. 17, Dingman said. The board ultimately voted against the measure after a discussion that included possibly incorporating a “clawback” measure into the sale contract to provide the city with additional funds if XFED flipped the property for significant profit without improving it substantially. A sale contract including a clawback provision was drafted after further discussion with XFED, which agreed such a measure was acceptable to the company.
The contract’s “clawback” measure states that if XFED does not make significant improvements to the property and sells it within three years of the agreement closing for more than than $400,000, XFED agrees to pay the city half of the sale proceeds in excess of $400,000. In this case, improvements include, but are not limited to, clearing the property and demolishing concession stands there.