The Arkansas Attorney General’s Office is entering the legal dispute between a half-dozen landowners and the Ozark Mountain Solid Waste District.
The Ozark Mountain Solid Waste District — which includes the counties of Baxter, Boone, Carroll, Marion, Newton and Searcy — is facing lawsuits in each county filed by Fayetteville attorneys Matt Bishop and Wendy Howerton on behalf of landowners over a yearly $18 service fee collected for the district.
On Oct. 3, Deputy Attorney General Olan W. Reeves filed an Entry of Appearance on behalf of the State of Arkansas in each of those cases. According to Reeves’ filing, he is joining the lawsuits “for the sole purpose of defending the constitutionality of acts alleged in the Plaintiffs’ complaint to be unconstitutional.”
Bishop and Howerton filed the six class-action lawsuits in the summer of 2018, arguing that the $18 solid waste fee is in fact a tax and amounts to an illegal exaction. Each of the suits name the solid waste district and that county’s tax collector as defendants. The lawsuits ask the courts to halt the assessments and for property owners who have already paid the assessment to be reimbursed.
The $18 fee, which was included on tax assessments for property owners in Carroll, Baxter, Boone, Marion, Newton and Searcy counties beginning in 2018, is intended to repay bondholders who purchased $12.4 million in bonds issued by the 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.
According to online court records, the next scheduled court date in the lawsuits is motion hearing on March 29, 2019, in Yellville for the lawsuits filed in Baxter, Marion and Newton counties. Those three cases all fall under the jurisdiction of the 14th Judicial District’s Division I court, and arguments in those cases are currently being held simultaneously by David Laser, a retired circuit court judge appointed to hear those lawsuits.
The yearly $18 service fee originated in Pulaski County Circuit Court after Bank of the Ozarks (now Bank OZK) sued the solid waste district after it closed the NABORS landfill and defaulted on its bonds in 2012.
ADEQ sued the district in 2013 in Baxter County Circuit Court and received an order of summary judgement to take possession of bank accounts and certificates of deposit held by the solid waste district. That order also said that ADEQ could pursue additional money related to the cleanup and closure of the landfill site.
The solid waste district filed for a voluntary petition for Chapter 9 bankruptcy in January 2014. Bank of the Ozarks, acting as the trustee for the bondholders, filed a motion asking the court to dismiss the bankruptcy. U.S. Bankruptcy Judge Ben Barry granted that motion in an order issued Aug. 4, 2014.
Bank of the Ozarks filed a complaint in Pulaski County Circuit in December 2014, asking that Little Rock attorney Geoffrey Treece be appointed as the receiver for the solid waste district. A receiver is a person appointed as the custodian of another entity’s property by a court or creditor of the owner, pending a lawsuit or bankruptcy.
Treece was appointed the solid waste district’s receiver in May 2015 and was instructed by the Pulaski County Circuit Court to evaluate the district’s operations and make recommendations for ways the district could generate additional revenue that could be used to repay the bonds. Treece filed his recommendations, which included levying the yearly $18 solid waste fee, with the court in November 2016.
Neither Bank of the Ozarks or ADEQ objected to Treece’s recommendations. The solid waste district’s board of directors — comprised of the mayors and county judges from the six counties within the district — discussed the receiver’s report in a board meeting on Dec. 1, 2016. While individual board members expressed unhappiness with or opposition to the $18 assessment, the board ultimately felt like it did not have the ability to fight the recommendation and reported to the court that it had “no opinion” on the proposed assessment.
Fox then issued his order establishing the $18 service fee on April 21, 2017.
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