Arkansas Industrial Development Authorities

Second in a series on Privatizing Economic Development through Public Private Partnerships

In the first article in this series (link) we discussed Public Benefit Corporations (PBCs) as the growing tool of choice to privatize government functions. PBCs are the private side of Public Private Partnerships (PPPs) and are being sold as a more efficient and effective way to achieve public purposes. Efficient and effective? Possibly, but what are they efficiently and effectively delivering? We will cover that more in a future post, for know how does privatization work and what are the concerns?

How It Works

An example of a state law enabling and encouraging the privatization of economic development is Arkansas Code, Title 14, Chapter 189 – Industrial Development Authorities Expansion Act passed in 2025. Note: I am not picking on Arkansas, it is far from alone in privatizing state functions, other states will be addressed in future posts. This one is just fresh in our minds.

This statute authorizes the establishment of Industrial Development Authorities (IDAs) by state, county, or municipal government. That may sound innocuous but there are several areas in this law that may encourage corruption and cronyism at the expense of property owners and taxpayers.

First, the statute clearly states that IDAs are PBCs. (FYI, I apologize for all the acronyms/initialisms, FWIW). Being considered a PBC means that these IDAs are private corporations with shareholders who benefit from the corporation’s activities. As a citizen you will not know who the shareholders are or how they benefit.

If you look at Arkansas corporate law (Title 4, Chapter 36) you will see that PBCs are generally treated as ‘regular’ corporations, the primary difference is that the traditional duty to provide shareholder value is paired with the duty to provide public benefits in governance decisions. Annual disclosure requirements are limited and the privacy afforded by corporate law means the citizens of Arkansas will not know the management decisions and internal actions made by the PBC.

One or more local governments can establish and organize and IDA. The law states that the local government(s) establishing the IDA are to appoint the Board of Directors. This may sound like accountability, but who do you think is going to be appointed? We will share examples from other states in a future post.

The appointed Directors then hire the officers of the corporation and handle the issuance of shares. Each of these decisions is outside the public eye. The effort at public oversight and transparency falls short.

The law also states that an IDA is considered a political subdivision of the state.

Purposes and Authority

The purposes and authority of an IDA are broad, example:

14-189-107. General purposes of industrial development authority.

(a) An industrial development authority may accomplish the following

general purposes:

(1) To establish, acquire, develop, improve, or maintain:

(A) Commerce and industrial parks;

(B) Research, technology, and development proving grounds

and facilities;

(C) Job training facilities, air cargo operations, depots

for military use, rail lines, rail transload operations, and short-line

railroads; and

(D) All other qualifying economic development projects

under § 14-174-105;

(2) To acquire, purchase, install, lease, own, hold, use,

control, construct, equip, maintain, develop, and improve lands and

facilities…

This section also states the IDA can “accept and use funds from any sources and to use them in such a manner as is within the purposes of the industrial development authority”. (emphasis added)

And, the law gives IDAs “the power to create and operate such agencies, departments, and instrumentalities as an industrial development authority may deem necessary, desirable, or useful for the accomplishment and furtherance of any of the purposes of this chapter.”

Broad and sweeping.

Eminent Domain

Eminent Domain has been a hot issue across the country because of its impact on property rights. Here, the Arkansas law gives IDAs authority in “acquiring of property, including rights-of-way, necessary or desirable for the carrying out of the powers of an industrial development authority and for the accomplishment of the purposes of this chapter, an industrial development authority may acquire property by gift, by purchase, by negotiation, or by condemnation”. (emphasis added)

Desirable? That’s a little creepy. And catch the wording, it doesn’t say necessary and desirable it says necessary or desirable. We know that corporations are considered persons under the law, this is primarily to allow corporations to enter into contracts, open bank accounts, etc. But when we start adding the ability of a corporation to desire a peace of property it reminds me of Porky Pig’s vision of Daffy Duck roasting Porky on a spit. Your property could be Porky on a spit in that analogy. Puts eminent domain in a new light. Granting these private corporations this level of power and authority is very dangerous and threatens private property rights.

Agent of the U.S. Government?

The purposes of an IDA are broad and sweeping as provided above and Code Section 14-189-107 also includes this authority:

“To act as agent for the United States Government or any agency, department, corporation, or instrumentality of the United States Government and for the State of Arkansas and any agency, department, instrumentality, or political subdivision of the State of Arkansas in any matter pertaining to the accomplishment of the purposes of the industrial development authority”.

To recap, we have a private corporation recognized as a political subdivision of the state, able to accept funding from any source, and authorized to act as agent for the U.S. Government. These types of laws deserve much more scrutiny in my opinion.

Public Money

As shown above, the IDA is allowed to accept funds ‘from any source’ but just so we are clear, the law also states explicitly that public money can be given to an IDA as well. Excerpt:

(1) In addition, local governments may use and make available to an industrial development authority, by way of donation, loan, or otherwise, any available revenues for the purpose of financially assisting the industrial development authority to accomplish the purposes of this chapter. (emphasis added)

(2) Revenues made available under subdivision (b)(1) of this section may be used by the industrial development authority either alone or together with any other available funds and revenues for the accomplishment of the authorized purposes of this chapter.

Potential for Corruption

Little to no transparency or accountability raises serious concerns. The combination of the powers granted by the state, public funds provided to the IDA, the ability to accept money from any source, and the privacy afforded to private companies make PBCs a significant target for corruption.

Arkansas law recognizes IDAs “for the purpose of securing and developing industry and fostering economic development and that is invested with all the powers that may be necessary to enable it to accomplish those purposes”. Heady stuff indeed.

Crony capitalism, corporatism, fraud, whatever you call it - the privatization of government functions through PPPs can reward bad private actors at the expense of taxpayers and property owners. Whether intended or not these laws fit well into Agenda 2030 and The Great Reset. Citizens must be vigilant.