A hearing has been scheduled for later this month in the first of several lawsuits filed against the Ozark Mountain Solid Waste District regarding an $18 fee being collected on property taxes as a result of the NABORS landfill bond default.
The Harrison Daily Times reports the first of almost identical lawsuits filed in each of the six counties in the solid waste district Baxter, Boone, Carroll, Marion, Newton and Searcy was filed on behalf of Paul Summers in Carroll County on May 16th.
Those suits, filed by Fayetteville lawyers Matthew Bishop and Wendy Howerton, name the solid waste district and each respective countys tax collector as defendants.
The solid waste district sold bonds to finance purchase of what was then RLH Landfill in 2005. There were environmental problems with the landfill at the time of purchase, and a portion of the bond money was supposed to go toward remedying those problems.
However, the solid waste district contends, the Arkansas Department of Environmental Quality rejected some proposals to fix problems, so the work was never completed.
After various financial woes, the district defaulted on bond payments in 2012. The landfill and hauling company associated with it were both closed.
Bank of the Ozarks (now known as Bank OZK) as trustee for the bondholders sued the district in Pulaski County Circuit Court to force taxpayers in all six counties to reimburse the bondholders for their investment. Judge Tim Fox ruled in favor of the bondholders, and Little Rock lawyer Geoffrey Treece was appointed as receiver to collect the debt.
Treece submitted a report to the court installing the $18 fee on every business and residential property in the district. The court accepted the report, and the fee was assessed on property tax bills.
In Summers suit, the $18 fee is alleged to be an illegal tax, because a fee is only imposed in the governments exercise of police purposes.
The suit maintains the $18.00 charge herein is not for the defendants exercise of its police powers. Rather, it goes almost entirely to creditors. Paying creditors is not a function of the defendants exercise of police powers, for as the receiver noted, the defendant Ozark is not operational. Moreover, paying creditors is never an exercise of police powers.
Further, the $18.00 confers no benefit on those taxpayers bearing it, because the entity charging it provides no services to said taxpayers; rather, it is a fee designed solely to benefit ADEQ, which already has the funds it needs to clean up, and the investors in the bonds who chose to take the risk of investing.
The suit asks the court to bar defendants from collecting the fee and to refund any fees already paid.
Treece filed a motion to dismiss the suit, claiming it had been filed in the wrong venue. It should have been filed in Pulaski County where the original decision was handed down.
But the plaintiff filed a motion to strike the receiver from representing the district.
According to that motion, the receiver must be loyal to all interested parties in the action, which includes Bank of the Ozarks as trustee, the district and ADEQ. In addition, other interested parties are the taxpayers in all six counties and the as yet unnamed bondholders, which could include some people who are also property owners in the district being assessed the $18 fee.
The plaintiff also states Bank of the Ozarks owns property in both Baxter and Boone counties and has been assessed the $18 fee in both counties. All constitutes a conflict for the receiver representing the district in the lawsuit.
But the receiver argued no conflict exists because it is the receivers duty to see the fee is collected per the courts order.
In a separate matter, Carroll County Prosecuting Attorney Robert T. Rogers has filed a motion to dismiss Carroll County Collector Kay Phillips from the suit.
Rogers argued Phillips wasnt properly served with notice of the suit because County Judge Sam Barr received notification, but the plaintiff argued Phillips would be served separately.
Rogers also alleges the suits should be filed in Pulaski County Circuit Court where the original action was filed by bond holders.
In addition, Rogers argues that ADEQ, the receiver and the trustee for the bondholders should all be named as defendants in the lawsuits because new court action could harm them in the long run.
In a response to Rogers motion, the plaintiff argues the law doesnt support enjoining the ADEQ, receiver or bondholder trustee. The plaintiff maintains Carroll County is the proper venue to keep Carroll County tax payers from having to foot the bill for Rogers and Phillips to travel to Little Rock for court proceedings and so tax payers can observe court proceedings if they wish.
A recent notice filed in the suit by Carroll County Circuit Judge Scott Jacksons office indicates a hearing on motions filed is set for 9:00 a.m. August 28th in the Carroll County Courthouse in Berryville.
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