Little Rock board asks staff to prepare ordinance for up to $7.5 million loan to housing authority to avert Madison Heights foreclosure

The Little Rock Board of Directors on May 13 instructed city staff to prepare an ordinance that would authorize a loan of up to $7.5 million to the Metropolitan Housing Alliance (MHA) as one of two options to address debts tied to Madison Heights 1 and 2 and to avert a foreclosure expected this summer.

A city staff member told the board that the city’s options include a direct loan of up to $7.5 million or a short-term note for roughly $2.5 million to acquire MHA’s corporate office at 100 Bruce T. Moore Way. “We can loan up to 7 and a half million dollars to MHA. We can issue a short term note for up to 2,500,000 to acquire the property at 100 Bruce T. Moore Way,” the staff member said.

The matter drew extended discussion because the city has roughly 90 days from a recent foreclosure hearing to produce a formal financing plan. Mayor Frank Scott Jr. asked staff to prepare the ordinance and related materials for a board vote. “Mr. Sarpe, if you will prepare orders for the $7,500,000 and we'll add that as a modification,” Mayor Scott said.

Why it matters: city officials said Madison Heights 1 and 2 include both subsidized and market-rate units and that failing to act could displace residents who hold Section 8 vouchers. Staff described the choice as a public-policy decision for the board: a larger loan would aim to resolve MHA’s lender obligations and fund repairs to multiple vacant units; a smaller short-term note would be narrowly targeted to secure the corporate office and buy time.

Details and numbers discussed at the meeting included an appraisal of the MHA corporate office at about $2.11 million and a previously reported appraisal of Madison Heights at about $17 million. Staff said roughly 52 units were vacant in the Madison Heights property; other speakers provided differing unit counts (241 and 271 were both mentioned during the discussion). Staff also said about 25 tenants receive Section 8 vouchers at Madison Heights. The board heard that the city could issue a short-term note only if sufficient tangible personal property is identified as collateral.

City Attorney Tom Carpenter explained legal constraints and the structure under which the city may lend: state statute permits cities to create housing authorities and to loan them money, but such authorities are legally distinct entities. Carpenter also explained that MHA’s subsidiary Central Arkansas Housing Corporation (CAHC) would be involved in the loan structure and that any loan documentation would need provisions to preserve the city’s interests.

Several board members pressed for more financial details, audits and clarity about who holds ultimate fiduciary responsibility for MHA. One board member said they would not support lending city funds until they were satisfied who has legal and fiduciary responsibility; another said they would back the full $7.5 million proposal. Vice Mayor Warrick and other members raised concerns about deferred maintenance at Madison Heights and about collateral and cross-collateralization options.

No final vote was taken at the meeting. Instead the board directed staff and the city attorney to prepare an ordinance and the required short-term note documentation for a future vote; the mayor and staff repeatedly noted the need to meet the court timetable. Director Adcock told the board she would support the $7.5 million option when it comes back for a vote.

What remains: staff will return with a written ordinance and loan documents for board consideration and a short-term note procurement timeline. Officials said HUD and state actors had been contacted previously; staff reported HUD had no current contingent liability on the matter, and that some state funding requests had been denied. The board did not adopt any binding loan at the May 13 meeting; any loan remains subject to a future public vote and the specific loan terms and collateral that staff will present.

The board’s decision window is time-limited: staff told the board an agreed 90-day continuance from a foreclosure hearing requires action by August 2025 to avoid foreclosure proceedings moving forward. That deadline, the size of the loan, the proposed collateral and additional audit materials were all listed by multiple board members as information they expect to receive before voting.