2018ís top local news story: $18 assessment angers residents, spurs lawsuit
By Scott Loftis
The biggest local news story of 2018 has the potential to have an impact for decades on property owners in Carroll County and across north Arkansas.
Those property owners got a surprise on their 2018 tax assessments, which included an $18 assessment connected to a defunct landfill in Baxter County. The assessment was billed to property owners in Carroll, Baxter, Boone, Marion, Newton and Searcy counties on the order of Pulaski County Circuit Judge Tim Fox.
The $18 assessment is intended to repay bondholders who purchased $12,340,000 in bonds issued by the Ozark Mountain Solid Waste District in October 2005 to finance the purchase of the North Arkansas Board of Regional Sanitation (NABORS) Landfill in Baxter County. The assessment, which could continue for 30 years or more, also is intended to repay the Arkansas Department of Environmental Quality (ADEQ) for up to $16.5 million in costs related to closing and cleaning up the landfill.
The solid waste district, which was controlled by a 14-person board that included county judges and mayors from each of the counties and cities included in the district, defaulted on its bond payments in 2012 and closed the landfill that same year. ADEQ sued the solid waste district in 2013 in Baxter County Circuit Court and was granted an order of summary judgment to take possession of bank accounts and certificates of deposit held by the solid waste district. The order also said that ADEQ was entitled to pursue additional money related to the cleanup and closure of the landfill.
In January 2014, the solid waste district filed a voluntary petition for Chapter 9 bankruptcy. Bank of the Ozarks (now Bank OZK), acting as a trustee for the bondholders, filed a motion asking the court to dismiss the bankruptcy petition and U.S. Bankruptcy Judge Ben Barry granted the motion in an order issued Aug. 4, 2014. Bank of the Ozarks filed a complaint in Pulaski County Circuit Court in December 2014, seeking the appointment of Little Rock attorney Geoffrey Treece as a receiver for the solid waste district.
The court entered a consent order appointing Treece as the receiver in May 2015. Among his court-ordered duties were to evaluate the solid waste districtís operations and make recommendations to the court regarding alternatives for the solid waste district to generate additional income and revenue that could then be used to repay the bonds. Treece recommended the imposition of the $18 assessment, and Fox agreed.
Property owners in the six counties affected by Foxís order were outraged, leading to a series of public meetings. More than 300 people attended one meeting in Berryville in March 2018, and a state legislative committee met here in May to discuss the issue. Frustrated residents called on the Carroll County Quorum Court to adopt a resolution expressing its disapproval of the $18 assessment but the measure was table at the courtís April meeting.
In May, Fayetteville attorneys Matt Bishop and Wendy Howerton filed a class-action lawsuit in Carroll County Circuit Court on behalf of Paul Summers of Berryville, contending that the $18 assessment is in fact a tax and amounts to an illegal exaction. Bishop and Howerton later filed similar lawsuits in the other five counties affected by Foxís order. The lawsuits seek to have the $18 assessments halted and for property owners who have already paid the assessment to be reimbursed.
Defendants in the Carroll County suit ó the solid waste district and county tax collector Kay Phillips ó both sought to have the suit dismissed, and defense attorneys also argued that Carroll County is not the proper venue for the lawsuit since Foxís order was issued in Pulaski County Circuit Court. Attorneys for both sides argued those issues in a hearing before Carroll County Circuit Judge Scott Jackson in August.
In early December, Jackson issued an order refusing to dismiss the lawsuit and declaring that Carroll County is the proper venue. No date has been scheduled for the next hearing in the case.