Arkansas's AG says a POA could become a water authority — the Village itself could not
Arkansas's AG says a POA could become a water authority — the Village itself could not
2026-09-09 · Arkansas · Regulation
Hot Springs Village cannot become a water authority, because as an unincorporated community it is not a legal entity at all. Its property owners association might — because it is a nonprofit corporation. Arkansas Attorney General Tim Griffin issued that opinion on December 4, 2025, at the request of State Representative Richard McGrew.1
The question was about a single gated community, but the reasoning states something that reaches every property owners association in Arkansas: the corporation is the legal person. The community is not.
The question
Act 736 of 2025 expanded eligibility for water development state programs, amended the Water Authority Act and changed the permitted uses of the Construction Assistance Revolving Loan Fund. Representative McGrew asked whether Hot Springs Village — a gated community spanning Garland and Saline Counties, governed by the HSV Property Owners' Association — “would qualify, be eligible to participate in, and receive loan funds” under it.
The stakes are not small. Under the Water Authority Act a water authority is a “public body politic and governmental entity.” It may exercise the power of eminent domain, issue interest-bearing bonds for water projects, and borrow tax-exempt funds. Its projects and project income are public property used for a public purpose and are exempt from ad valorem taxation.
Why the Village itself fails at the first step
A “qualified corporation” under Ark. Code Ann. § 4-35-103(7), as amended, is either a nonprofit corporation, or a governmental entity or investor-owned water or wastewater utility, that provides or proposes to provide water “to or for the benefit of members of the general public.”
Hot Springs Village is none of those things, for a reason that has nothing to do with water. It is an “unincorporated community,” and, in the opinion's words, “HSV has no legal status.” The authority is old and blunt: Bunch v. Launius (1953), holding that an unincorporated labour union cannot be sued in its society name, and District No. 21, United Mine Workers v. Bourland (1925), holding that “an unincorporated or voluntary association of persons has no legal entity.”
“Without legal status, HSV cannot be a nonprofit corporation, a government entity, or an investor-owned water or wastewater utility.”
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