Elkins’ freeze on new homes in subdivision draws lawsuit from banks that own lots

FAYETTEVILLE — A bank has sued Elkins, claiming that a moratorium on building homes in a subdivision has made the property worthless.

The city asserts that a moratorium was justified by unsafe and unsanitary conditions in the subdivision, and it wants the lawsuit dismissed.

First State Bank and Pinnacle Bank, now known as Central Bank, sued Elkins in Washington County Circuit Court in April over restrictions on 105 residential lots in Stokenbury Farms subdivision. The case was moved to federal court Monday.

The lawsuit claims that Elkins exceeded its authority under state law as a city of the second class to regulate the building of homes or to issue building permits for home construction. The lawsuit contends only cities of the first class have such authority.

The lawsuit also claims that the moratorium is essentially a taking of the property without just compensation, and it says the city should be required to buy the property for about $ 2 million, which the banks claim represents full market value at the time the moratorium was issued.

According to the lawsuit, Elkins issued a blanket moratorium on all home construction in the subdivision. The lawsuit says the city took the action “all because it claims

there is a risk that citizens may be exposed to mosquitoes and snakes that could be located in two storm water detention ponds adjacent to the subdivision.”

The banks do not own the property the ponds are on, according to the lawsuit.

“The moratorium was issued in November 2016, even though these ponds have not effectively drained for over 11 years,” according to the lawsuit. “The cause of the drainage issue rests with Elkins when it decided that the ponds should be constructed in a way that water would eventually have

to flow uphill.”

The lawsuit contends there is no rational basis for the moratorium and that it contradicts a previous city plan to remedy problems with the ponds after Stokenbury Farms was built out.

“Elkins is attempting to regulate the condition of two lots that are not owned by plaintiffs by barring residential construction on lots owned by the plaintiffs,” according to the lawsuit. “By issuing this moratorium, Elkins has effectively taken the 105 lots owned by plaintiffs and rendered them worthless.”

The ponds were designed around 2006, according to the lawsuit. But they were then altered at the request of the city

to change the direction of the water flow from the subdivision, the suit claims. The lawsuit contends that the ponds have not drained properly since the city demanded the changes. The city refused to approve the final plat for the subdivision until the changes were made, according to the lawsuit.

The banks acquired the 105 lots after the original developers defaulted on their loans, according to the lawsuit.

In a response generally denying allegations in the lawsuit, Elkins contends that any action taken in pursuit of the public health and welfare cannot constitute a taking of property or a violation of due process.