City disputes banks’ property value claim

Lawsuit says Elkins owes over $525,000

FAYETTEVILLE — Elkins says it should not have to pay damages to two banks because it did nothing to permanently hurt property values in a troubled subdivision.

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

First State Bank and Pinnacle Bank, now known as Central Bank, sued the city in federal court in April 2017 claiming that Elkins didn’t have the authority to implement a moratorium on sales in Stokenbury Farms Subdivision because Elkins 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 that 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 that they’re entitled to compensation under the Arkansas Private Property Protection Act.

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

In a motion to dismiss filed earlier this week, the city argues that 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 nonfunctioning 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 that the action did not 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 that 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 each for 105 residential lots during the moratorium, according to the banks.

Five months later, Rausch Coleman paid $18,000 each for 39 lots in the Oakleaf Manor subdivision, which is adjacent to Stokenbury. All lots should have had the same value, $18,000 each, according to the lawsuit.

The city contends that there is no proof that the lots were worth what the banks claim.