Elkins says moratorium didn’t devalue lots

FAYETTEVILLE — Elkins says it shouldn’t have to pay damages to two banks because it did nothing to permanently hurt property value in a troubled subdivision.

Two banks claim in a lawsuit Elkins owes them more than $525,000 for improperly prohibiting them from selling lots. That figure doesn’t include interest, costs or attorney fees.

First State Bank and Pinnacle Bank, now known as Central Bank, sued the city in federal court in April 2017 claiming the city didn’t have authority to implement a moratorium on sales from Stokenbury Farms Subdivision because it was a city of the second class at the time. It became a city of the first class in November 2017.

The banks are asking a judge to find they are entitled to just compensation because they say the moratorium constituted an unlawful taking of their property and a violation of due process. The banks contend they’re entitled to compensation under the Arkansas Private Property Protection Act.

The subdivision had drainage issues when the moratorium was ordered, but they have since been rectified.

In a motion to dismiss filed earlier this week, the city argues it was legally using police powers by issuing a temporary moratorium to protect people and property in the city from flooding, stagnant water, and mosquito and snake infestations related to non-functioning retention ponds in the subdivision.

“Because the city’s actions were taken in order to avoid danger and injury to people and property, plaintiffs’ claims should be dismissed,” the motion says.

The city further argues the action didn’t permanently harm the value of lots in the subdivision because the moratorium was lifted as soon as the ponds were repaired and functioning again.

The banks contend the moratorium was illegal and cost them at least 20 percent of the value of the lots in the subdivision, according to the suit.

Rausch Coleman Homes paid $13,000 for each of 105 residential lots during the moratorium, according to the banks.

Five months later, Rausch Coleman paid $18,000 for each of 39 lots in the Oakleaf Manor Subdivision, which is adjacent to Stokenbury. Both sets of lots should have had the same value, $18,000 per lot, according to the lawsuit.

The city contends there’s no proof the lots were worth what the banks claim.