Little Rock Arkansas Board Sets Rules for Housing Authority Bailout and Rejects Short-Term Debt Option

A few days ago, the City Board of Little Rock, Arkansas, took an important step to help the city’s housing authority deal with an imminent foreclosure, although it rejected a proposed plan to use short-term debt as part of the solution.

It all stems from a creditor planning to foreclose on more than 200 apartments at Madison Heights on August 1 unless a financial solution is found before that date.

The foreclosure results from two loans from the year 2019 totaling 5.5 million dollars, owed by two limited partnerships linked to the housing authority and which own Madison Heights I and II, two sections of the three-part complex.

On April 15, the Little Rock City Board agreed to join efforts to resolve the foreclosure threat. Two weeks later, an agreement between attorneys granted a grace period until August 1 for city officials to arrange financing. One option on the table is for the city to loan 7.5 million dollars to the housing authority, using Madison Heights I and II as collateral.

The resolution that establishes the bailout listed a series of requirements before the city would grant a loan or approve a short-term loan. One of those conditions is obtaining a legal opinion confirming that the city can legally lend money to the housing authority under state law.

In statements to local media, Mayor Frank Scott Jr. expressed his support for taking action to prevent foreclosure at Madison Heights I and II.

According to a prominent city attorney and expert, if the foreclosure goes through, the Department of Housing and Urban Development (HUD) would take control of the housing authority, opening the door to federal assistance.

In total, Madison Heights I and II contain 241 apartments: around 73% are affordable housing units with federal assistance, while the rest are market-rate rentals.

Without short-term loans, any loan from the city would have to come from general funds or reserves. However, board members have said they do not support dipping into the city’s savings. Loans would only be possible if the city receives some physical asset in return.

Available Foreclosures:

Little Rock, AR: 118 homes available

North Little Rock, AR: 46 homes available

Jacksonville, AR: 39 homes available

Benton, AR: 21 homes available

Sherwood, AR: 17 homes available

By Elías DaSilva | June 11, 2025