By: Tammy Curtis, Managing Editor
After nearly four years of deliberations and massive issues at the Ozark Acres Suburban Improvement District (OASID), one resident who has attempted to help with the situation has filed a lawsuit against the organization for illegal exaction for charging residents assessment after they were paid in full.
Financial issues are nothing new to the OASID, for the last three to four years have faced issue after issue including having a dam constructed with little more than a hand written agreement, the resignation of the majority of the commissioners, various blatant attempts to circumvent the Freedom of Information Act by commissioners in charge of the official social media page and attempting to raise taxes as commissioners.
The lawsuit was filed on Sept 7 in Sharp County Circuit Court by Debra Lumley, a resident of Ozark Acres. Ozark Acres Road and Street, Recreational, Fire and Ambulance Service, combined are known as Improvement District One, is the defendant in the case.
HOW THE CASE CAME ABOUT
After being established in Nov. 1979, the commissioners accepted as gifts improvements or facilities within the SID on behalf of the district’s property owners. They then appointed Tom Johnson to appraise the benefits these gifted improvements added to the property owner’s value. This created an assessed benefit amount for each parcel within the SID at that time. The amount is the value of the improvements alone. The amount could change with future improvements or additions to the district. These improvements included roads and streets, fire department, an ambulance service, the lake and clubhouse.
In 1980, the Assessment of Benefits was set and accepted by the SID. In 1981, the SID began collecting these amounts from property owners each year along with their personal property taxes. The amount was set at 10 percent of the Assessment of Benefits each year with no more than six percent interest being charged annually. This amount would reduce each property owners Assessed Benefit by at least four percent per year.
The assessment was a mandatory fee that had to be paid or a lien would be placed upon the property. Each annual payment from property owners decreased the balance owed on the Assessment of Benefits to the SID. After the installments were exhausted, residents of the SID are considered to have paid in the full the Assessment of Benefits and are no longer responsible for paying that fee. The basis of the lawsuit is that the Ozark Acres SID has continued to collect the assessment when the Assessed Benefits had actually paid in full since 2006.
There have been no improvements to the Ozark Acres SID since 1980 to increase the amount. The lawsuit cites Ozark Acres SID is in violation of the “Takings Clause” in Amendment V and XIV of the US Constitution for any amount they have taken since depleting the Assessment of Benefits.
“All moneys collected on any levy charged after the Assessment of Benefit was depleted should be declared void and contrary to Arkansas law; and all moneys collected after the Assessment of Benefit for that parcel of property was depleted should be returned to the person who was forced to pay this illegal levy at the risk of losing their property through a delinquent tax foreclosure action. Further, any future levy against the Assessment of Benefit should be declared null and void and the Defendant should be enjoined from any future levy for said individual parcel, “ the suit states.
The filer, Debra Lumley, who moved to the area in 2018 with her husband, began taking an active role in her community almost immediately. Happy to move to the rural area and have a lake home with lower taxes than big cities, she said she became aware of the lawsuit filed against the Cherokee Village SID. As she closely followed its progression, she realized the issues contained within that suit were very similar in nature to those of OASID.
Lumley attempted to work with the previous board of commissioners to no avail and became frustrated with the condition of the area she was living in regard to roads, streets, and other things. The lack of funds to upkeep even the most basic amenities caused her to fear a decreasing value in her property. She explained that despite the issues, she is glad she moved to the area because she has met some very nice people.
The people on the board have changed many times, with resignations, reappointments of those who had left and one resigning after receiving felony criminal charges. Lumley said at least a few on the new board listened to her when she voiced her concerns and explained that back assessments were being paid on properties in which it wasn’t owed by the land owners in the SID.
“I don’t think it is right. I don’t think people should pay anything that isn’t due. I don’t think the solution is the county. There has to be an end to this. My goal is that I believe the assessments aren’t totally used up on every lot, overall, they have been paid and maybe some way in excess. I want the SID dissolved in 5 years, “ she explained. Lumley said this timeframe gives the residents time to come together and develop a plan for the area they all love. They can then speak with nearby cities like Williford and Hardy to see if they would like to annex them into their cities. The other option for Ozark Acres, she explained, is for the SID to become a municipality like Cherokee Village. If this were to happen, they would also become eligible for grants they cannot receive while operating solely as an SID.
After speaking with her attorney, Timothy Hutchinson, she explained SIDs were initially established as tax breaks for the developers and were never intended to last indefinitely. She said Hutchinson stated he felt they should have grandfathered a clause into the contracts that wold have made the SID’s become towns or cities in ten years. Hutchinson who also represented Mark Kronkosky in the lawsuit that was decided in January against Cherokee Village SID, American Land Company and the City of Cherokee Village.
If Ozark Acres opted to become a town, it would enable Ozark Acres to receive around $209,000 annually in turn back funds based on a population of approximately 550, the number of residents counted in the 2020 census. This amount is much more than they are receiving from the assessment fees.
The states legislated SIDs into existence, enabling them to charge and the county to collect the assessment fees with personal property taxes, yet the state won’t step in to help these SIDS because they are not municipalities. This leaves the tax payers of the districts across the state with no other option but to file class action suits personally to force judges to legislate change based on state laws that are already in effect.
In the past, members living in the OASID would hold potlucks and get togethers and after the previous board took over, many residents said the commissioners were very contentious and stopped attending meetings because their opinions weren’t heard for one reason or another. After Tom Parsons and Eric Bagwell left the board, Lumley said some of the newer board members have listened to her suggestions but she said it was time to file the suit. She first visited with the attorney in 2020 about the possibility of filing the suit.
“It is a negotiation process. I really did a lot of thinking before I filed this. I think a lot of long term thinking is needed. It is not something short term. We have to decide what is best. None of the options are great, but some are better than others,” Lumley explained.
She hopes more people within the district who aren’t attending meetings because they may have been mistreated in the past will also start coming and providing input to the new commissioners.
Lumley, like many other similarly situated taxpayers in the OASID, worries about decreasing property values with little or no money coming into the SID. She said she and her husband worked many years of their lives to be able to pay cash for their home and retire to the area.
WHAT THE SUIT SEEKS
• An order declaring the Defendants’ annual installment against the Assessment of Benefits completely exhausted for properties that are not delinquent and prohibiting the District from any further extension and/or collection of a levy against the Assessment of Benefits for parcels that have paid each year’s Annual Installment.
• An order finding that the Plaintiff and all similarly situated taxpayers are further entitled to a declaratory judgment declaring which parcels have paid off the Assessment of Benefit and the amount remaining for all other parcels.
• A refund of all moneys collected on any levy charged after the Assessment of Benefit for any particular parcel was already exhausted;
• The Plaintiff and all similarly situated taxpayers are further entitled to an award of reasonable attorney fees and costs of collection as allowed for under Arkansas law.
It is unclear where the money to pay the taxpayers money back would come from with the OASID having very little money to even complete day to day functions.
This news agency will continue to provide updates of the actions of the suit as it progresses through the court system.