How would you like to have a government “appointed” board take your house under eminent domain and give it to Walmart?
Most Arkansans paying attention to this November’s elections know about Issue 3. Framed as a way to give local communities “tools” for growth, Issue 3 would amend the state constitution to let the legislature create economic development districts, in which an “appointed” board would: 1) set tax rates, 2) issue bonds, 3) divert tax revenue, and 4) provide loans and grants to private businesses and developers – all under broad “public purpose” language.
What many don’t realize is that the legislature already handed itself (and local governments) a powerful similar toolkit last year with Act 576[i], the Industrial Development Authorities Expansion Act. This law created Industrial Development Authorities (IDAs) with corporate powers, bonding authority, rail powers – and most controversial, eminent domain. While voters debate Issue 3 leading up to November, Act 576 is already on the books, expanding government’s ability to take property and redirect resources toward favored private entities.
Why People Are Up in Arms About Act 576
Act 576 is the first major expansion in Arkansas of “economic development” since Act 9 of 1960. It allows cities, counties, or combinations of them to create board-governed public benefit corporations (IDAs) that can:
- Acquire, develop, own, lease, or sell land for industrial parks*, research facilities, rail lines, air cargo operations, and more.
- Issue their own revenue bonds (without input from the local governments within their jurisdictions).
- Negotiate “payments in lieu of taxes” (PILOTs). The authority can negotiate an agreement with a business where the company does not pay full normal property taxes to the county, schools, or other taxing entities, and instead pays a negotiated lower fee directly to the IDA.
- Exercise eminent domain to condemn private property (including farmland or homes) for these projects – anywhere within their (multi-district) jurisdiction.
Crucially, the bonds are structured as obligations of the IDA only – “not backed by the full faith and credit” of the state or local taxpayers. This phrasing helped the bill avoid constitutional problems (more on that below) and means investors have less assurance of repayment. This effectively means that the government gained new authority to borrow and lend money but distanced itself from direct liability.
*An industrial park is a planned, zoned area of land developed specifically for industrial and manufacturing uses. It typically includes large lots with infrastructure (roads, utilities, rail spurs, sometimes water/wastewater treatment) pre-built or ready for heavy industry, warehouses, distribution centers, or tech/manufacturing facilities.
Public reaction, especially in Northwest Arkansas, has been strongly negative, particularly to the expanded powers of eminent domain. Residents opposed regional IDAs, citing the loss of local control, the threat of eminent domain against family farms, and unelected boards operating with broad independence. (Madison County[ii]; Washington County[iii])
Why Did They Bother Asking Voters for Issue 3[iv]?
If the legislature could already expand these powers through Act 576, why put Issue 3 on the ballot?
Because the Arkansas Constitution itself stands in the way of the broader “vision.”
Arkansas’s Constitution contains real protections against government becoming a partner or subsidizer of private enterprise. Article 12, Section 5[v], for example, historically barred counties, cities, and towns from becoming stockholders in private companies, lending credit to them, or appropriating money for private benefit. Other provisions limit debt and protect uniform property taxation.
Act 576 worked around some of these limits through “carefully crafted language” – creating “independent” authorities and revenue bonds that don’t technically pledge taxpayer backing. But for a wider system of Economic Development Districts (EDDs) with tax increment financing, property tax freezes or exemptions inside districts, and even more flexible incentives, legislators need to amend the Constitution. Issue 3 does exactly that. It overrides key restrictions “notwithstanding any other provision” of the Constitution and gives the legislature a blank check to implement the details later.
In short: Act 576 grabbed what economic control could be gained through statute. Issue 3 seeks voter permission to weaken the constitutional guardrails for the rest.
How Act 576 and Issue 3 Would Work Together
If Issue 3 passes, the two measures would complement and reinforce each other powerfully. An IDA (industrial-focused, with eminent domain) and an EDD (broader tax and incentive tools) could easily overlap in the same geographic area. The same appointed individuals could serve on both boards, creating a coordinated development authority with few practical checks.
This combination would allow “appointed” boards to:
- Use IDA eminent domain to assemble large sites.
- Apply EDD tax abatements, increments, and financing to subsidize projects.
- Issue bonds backed by future revenues (with the constitutional blessing of Issue 3 redefining broad economic development as a “public purpose”).
The most frightening result would be the implied redefinition of “public use” for the purposes of eminent domain. Arkansas has historically employed a narrower scope for the use of eminent domain, as illustrated by the Arkansas Supreme Court in City of Little Rock v. Raines.[vi] The US Supreme Court may have expanded the federal definition of “public use” in Kelo vs. City of New London[vii], in 2005, but Arkansas’s constitution has continued to protect private property in this state.
However, the adoption of Issue 3 could greatly expand the definition of “public purpose” in the constitution itself, and by extension expand the purposes for which eminent domain could be used. Here is the relevant language from Issue 3:
“…the making of loans and grants of public money for the public purposes of: (1) Development and diversification of the economy… (2) The elimination and prevention of unemployment or underemployment… (3) The development or expansion of transportation or commerce… or (4) The development or improvement of real estate… that contributes to economic development…”
This very broad language clearly defines almost any economic project as falling within the scope of “public purpose.”
Once created, these IDA and EDD entities will operate with substantial independence. Boards can act without repeated local approvals for bonds or projects. Oversight is limited, without mechanisms for direct voter removal of board members or easy dissolution. They can take property (with compensation), redirect tax streams via PILOTs and TIFs, borrow against future revenues (aka tax increases), and shape development according to their priorities.
In effect, Issue 3 gives government the ability to plan and construct large-scale developments – potentially even new “cities” – from the top down, with minimal ongoing input from existing property owners or the broader public.
Your private property rights are up for grab, and their use, taxation, and future are determined by unelected boards pursuing “their own vision” of economic progress.
The Only Real Protection Is to Say “No” to Issue 3 and Tell Your Friends
Act 576 and Issue 3 together represent a significant shift toward top-down governance in Arkansas. Supporters call it competition and modernization. Critics see a dangerous erosion of property rights and taxpayer protections in favor of government actors playing freely with taxpayer dollars and private property – the same approach that has fueled subsidy wars across the country without delivering sustainable prosperity. This is not government picking winners and losers. This is government picking us all to lose.
Voters in Arkansas still hold one powerful check: refusing to create these districts and authorities in the first place.
Once established, they become difficult to restrain. The choice in November (and in future local decisions about Act 576) is between protecting property rights or handing government actors the power to violate those rights wholesale.
[i] https://www.arkleg.state.ar.us/Bills/Detail?id=SB361&ddBienniumSession=2025%2F2025R&utm_source=substack&utm_medium=email
[ii] https://www.nwaonline.com/news/2026/mar/02/proposed-industrial-development-authority-not/
[iii] https://www.5newsonline.com/article/news/local/washington-county-industrial-development-authority/527-834cf96c-6ae2-4a8a-9100-d061c90c6ce9
[iv] https://ballotpedia.org/Arkansas_Authorize_Legislature_to_Create_Programs_for_Economic_Development_Including_Economic_Development_Districts_Amendment_(2026)
[v] https://ballotpedia.org/Article_12,_Arkansas_Constitution
[vi] https://law.justia.com/cases/arkansas/supreme-court/1967/5-4177-0.html
[vii] https://en.wikipedia.org/wiki/Kelo_v._City_of_New_London#Subsequent_developments
