Mayor-backed Hyatt/convention project is partly owned by campaign manager

Over $1.46 million is still owed to contractors

JONESBORO, Ark. – Mayor Harold Perrin supported a convention center project attached to his campaign manager and a campaign donor at the time public emails showed he pulled his support from Arkansas State University’s project.

These connections were never revealed to the public but instead surfaced after depositions in recent legal battles over unpaid debts to contractors.

Excerpts filed in June from depositions taken last December revealed the new information, as first reported in the June 28 edition of The Jonesboro Sun. Northern Arkansas Hotel & Convention Center L.L.C. is the company behind the Jonesboro Convention Center and Hyatt Place Hotel, 2112 Brown’s Lane Access Road. 85-percent of the L.L.C. is owned by the Keller-owned Oak Tree Management Services of Effingham, Illinois. Five percent is owned by David Mastio and the remaining 10-percent is owned by Centerline L.L.C.

Centerline is a partnership between Carroll Caldwell, Jerry Halsey, Roddy Thrasher, and Gary Harpole, the Sun reported. Harpole was Perrin’s former campaign manager and later the operations director for the City of Jonesboro. He is presently a managing partner at Halsey Thrasher Harpole Real Estate. Caldwell is a campaign donor to Perrin’s 2016 reelection campaign, contributing $1,000, a report from Region 8 News documented. Caldwell presently works as a realtor for Coldwell Banker Village Communities.

NEA Report reached out to Harpole for comment on Monday but had still not received a response as of this publication. We reached out to Caldwell and left a message on his voicemail which was not returned. We also reached out to Jonesboro Mayor Harold Perrin through his spokesperson, Bill Campbell, who said the connections would not have played a role in Perrin’s judgment.

“Actually, ASU was first to endorse the Keller project. They later decided they needed (wanted) one on campus,” Campbell wrote in an email reply Thursday. He said it was a “Tim Hudson thing.”

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The Beginning of the Debacle

A report by Hunter Field at the Sun details A-State’s efforts and support of the Keller project, initially. In 2013, Keller approached Perrin to build on land owned by the city but he couldn’t meet the deadline to secure funding. He also failed to secure funding on the A-State project, leading the university to move forward with O’Reilly’s project, instead.

Campbell did not make mention of Perrin pledging support for A-State’s project at an August 3, 2015 meeting in Little Rock at the system office. Three weeks after the meeting, a press release from the city surprised many by announcing the Keller group had secured funding for their project.  Perrin wrote in an email to then-chancellor Hudson that the city would only be supporting the Keller project – known today as the project partially owned by his campaign manager and a campaign donor.

Hudson was shocked and responded.

“Are you saying that you will not follow through with providing assistance to Arkansas State regarding our plans to locate a hotel and conference center on campus as you have indicated in our various meetings, most recently in the ASU system office in Little Rock with Tim O’Reilly, Mark Young and others?” Hudson asked in an email obtained by The Sun, seen here. “I am sure I have misunderstood your meaning as we have been accommodating your timing and tasked our staff at your request in order to provide you information so that we could finalize the potential investments and our ‘approvals.'”

But Perrin told The Sun on October 8, 2015 he was not trying to play favorites. He said he only decided to support the Keller deal because they had financing secured from First Community Bank while ASU was working on their project’s funding. University officials and O’Reilly himself were incensed, statements and emails show.

Mayor Perrin gives Chuck Keller a key to the city for making the convention center a reality @Region8News pic.twitter.com/AnKsIIyafm

— Meredith Miller (@MeredithKAIT) August 16, 2016

In retrospect, the Keller project’s financing has been anything but secure, just as A-State feared. Contractors are owed $1.46 million and are suing. Many are local businesses who have suffered the consequence of a poorly-executed plan by the Keller family and their partners.

However, what was financed by First Community Bank, per the June 28 Sun report, was Centerline’s land transaction with the Kellers. The 10-percent ownership stake was acquired with a check for $1 million and a donation of additional acreage along the frontage road valued at $250,000, Harpole told The Sun.

The mayor’s spokesman said this never played a role in the mayor’s decisions.

“As far as Harpole, I am sure [the mayor] knew the players in both projects,” Campbell said. “I’m equally sure [the mayor] didn’t give a damn. He doesn’t get involved in that stuff now, as much as people want to believe he does.”

CEO Tim O’Reilly issued a pointed statement in 2016 when their project was given the backseat treatment to the Keller project.

“It is unfortunate both that there appears to be a political competition of sorts regarding our project and another convention center project that has been attempted for many years, and that there is definitely not a market or opportunity to succeed for two convention centers in Jonesboro. However, we have great faith in our partnership with A-State which when combined with the outpouring of support from many facets of the Jonesboro business and medical communities, the powerful Hilton/Embassy booking and global marketing and sales engine, and our team’s experience and past success with this type of project, and we will press forward without hesitation and we will persevere and succeed in this market.”

Despite the constant setbacks of the Hyatt deal, even with city backing, the O’Reilly project has persevered into being the city’s only viable choice for the moment. The 7-story, 203-room Embassy Suites hotel is under construction along with the Red Wolf Regional Convention Center on the Arkansas State University campus. With work having begun in mid-February 2018, the project is expected to be finished in time to open in 2019 and they announced their first hire this week. It is a joint venture between A-State and O’Reilly Hospitality Management of Springfield, Mo.

The O’Reilly backed project was initially seeking promotional funding in from the Jonesboro Advertising and Promotion Commission but was denied moments before the Keller/Hyatt deal was approved for the same type of request in March, 2016. The Keller/Hyatt project received support from Perrin to the dismay of many. Within a short time of the decision, the Jonesboro Regional Chamber of Commerce ended its relationship with the A & P Commission.

Campbell claimed on Thursday the O’Reilly group had asked for an astonishing sum of $1 million a year for 20 years, while Keller only asked for $200,000. While Campbell admitted he was not with the city during much of this process, his numbers were incorrect. In this May 18, 2016 report from TalkBusiness.net, Michael Wilkey reported O’Reilly had requested a series of six, three-year contracts for their project, starting in late 2017 or early 2018. The amounts range from $157,302 the first year, $177,274 the second year and $200,000 in year three. Keller Management asked for $300,000 over three years and a $200,000 cap per year on hotel tax abatement. With the mayor supporting the Keller project and pulling support from O’Reilly, the Keller request was approved by a vote of 3-2 while the O’Reilly request was voted down by a vote of 3-2. An audible gasp in the room could be heard at the vote.

However, the city was forced to change course when it became apparent the financial concerns expressed by A-State about the viability of the Keller project were valid. In November, 2017, the A & P Commission agreed to fund the O’Reilly group’s request for rebates. The rebate is for ten-years on the city’s normal 3-percent hotel tax. The rebate must not exceed $2.5 million. At the same time, the commission pulled its support from the Keller project.

O’Reilly thanked the city, the mayor, and the commissioners for their support, despite the “twists and turns.” It was a change in tune from one year before.

Meanwhile, $1.46 million is still owed by the Keller group to their convention center project’s contractors. Many of those contractors are local businesses, like KEG Construction of Paragould and Midsouth Steel Inc. of Jonesboro. A hearing on all the motions in the case is scheduled for July 27.

Addendum/Clarification: Harpole contacted NEA Report following our publication of the report, and initial request for comment on Monday. He said late Thursday he had been part of the Keller project since the beginning and always had the goal of attaining ownership in the project, but did not finalize that acquisition until January, 2018. We have asked Harpole for documentation. He said he will forward it to us when he is back in the office (the exchange was after midnight Friday morning). In good faith, we’ve clarified the first sentence from “partly owned” at the time to “attached” at the time, to present the most accurate version of events we can. Harpole also said his ownership was only 1/3 of one-percent the project’s equity, but he did not deny his deep involvement with the project since its inception.

We will present a second report with more detailed responses from Harpole later Friday on NEA Report and Stan Morris Reporting at 3 PM on Facebook.