Lawsuit filed challenging HISID levy

A late December press release from a group of property owners in Holiday Island states that the residents have filed a protest lawsuit challenging the Holiday Island Suburban Improvement District (HISID) levy that is charged to pay for services including maintenance of roads, fire protection, water and sewer services, and amenities such as the golf courses and swimming pool. The press release states that the move is aimed at safeguarding the rights and interests of the property owners.

A lawsuit filed in the Carroll County Circuit Court was brought by plaintiffs Rickey L. Chambers, Tracey A. George, David J. Bischoff, John P. Brown, Delbert L. Phillips, Michael Sampson, Kenneth L. Eggert and Bradley D. Handley. The filing asserts a series of counts highlighting alleged discrepancies in the assessment and imposition of the annual levy by HISID. The plaintiffs seek a declaration of the HISID levy as unlawful and unjust, an injunction against future levies until a lawful reassessment is conducted, and relief deemed just and proper by the court.

The lawsuit presents only plaintiffs arguments. Response from HISID was not possible at press time due to the New Year’s Day holiday.

“The plaintiffs express reluctance in having been forced to commence this legal course of action,” the email from the plaintiffs states. “However, they assert that the failure of the Board of Commissioners to adhere to Arkansas state laws necessitated someone to step forward and attempt to uphold HISID property owners’ rights and file a protest. This group believes their actions are imperative to protect said rights of HISID property owners, while safeguarding the integrity of the assessment and levy process within HISID.”

During HISID’s November board meeting at which the annual levy was discussed, the commissioners expressed a desire for a $50 per year annual increase. Holiday Island resident Linda Graves, who was in the audience, pointed out that the process required a unilateral percentage increase, not a fixed amount. Plaintiffs said the board was undeterred by that argument, and reverse engineered its way to the approximate $50 annual increase they sought.

“This unconventional approach raised eyebrows as it diverges from the established Arkansas state laws governing levying procedures and processes,” the plaintiffs wrote in an email. “The plaintiffs emphasize that the annual levy-setting process is bound by specific State of Arkansas laws and guidelines so as to ensure fairness and equity for all property owners. We contend that the HISID Board of Commissioners must under Arkansas Law adhere to all legal parameters, rather than arbitrary calculations.”

The plaintiff said several costly developments further fueled their protest:

• The Yacht Club Building, integral to the Assessment of Benefits (AOB), was demolished without adjusting the assessment.
• The Cell Tower next to the fire station was leased out for $625,000 on a perpetual lease, thus removing it from further benefit to HISID property owners.
• The closure of the Driving Range at the 18H Golf Course, and the demolition of the Recreational Center Building were similarly unaccompanied by any adjustments to the AOB as is mandated under Arkansas State law.
• The sale of significant equipment assets, and the dedication of 6 percent of the total to HISID roads, occurred without the issuance of corresponding amendments to property owners’ assessment liability balances,” the plaintiffs said. “Moreover, the plaintiff’s realize that even with the approximate $50 increase in the yearly levy (which amounts to about $156,500 dollars in additional revenue), HISID is left with a budget shortfall of about $1.7 million, and this doesn’t take into account the estimated minimum of $750,000 they are spending on the new recreational center, and a loan being solicited for more than $300,000 dollars for additional new golf course equipment which, when added to the budget shortfall, makes HISID more than $3 million dollars in the red.”

The key grounds for protest, according to the press release, are the following:

COUNT I: Failure to perform required reassessment. The plaintiffs argue that HISID has failed to perform mandated reassessments, specifically in the transfer of roads to the City of Holiday Island. The lawsuit contends that HISID’s charging of fees for road maintenance constitutes a violation of established obligations.

COUNT II: Minimal fee for fire service. The lawsuit questions the propriety of HISID charging a nominal fee for fire service to the City of Holiday Island while separately assessing homeowners for the same service, raising concerns about the transparency and fairness of such practices.

COUNT III: Failure to equalize the assessment. The plaintiffs allege that HISID has perpetuated an unjust distribution of financial burdens among property owners by failing to equalize the assessment.

COUNT IV: Failure to reduce assessment balances. The lawsuit contends that HISID has neglected to apply income from leasing assets to the reduction of Assessment of Benefits (AOB) balances, along with the destruction of homeowners’ structures without adjusting AOB balances.

COUNT V: HISID is accused of failing to reduce AOB for required ambulance service as mandated through legal settlements with the continuation of an allegedly illegal extraction on water bills for said service.

COUNT VI: Failure to follow state statutes and incorrect formula. The lawsuit argues that HISID has disregarded state statutes by using an incorrect formula for levies, specifically concerning the interest of sewer bonds and principal loan amounts, while also neglecting to levy vacant lots in violation of statutory requirements.

Plaintiffs request the court to:

• Declare the annual levy imposed by the HISID as unlawful and unjust and to order a new assessment or reassessment of benefit before it authorizes or enforces any future AOB.
• Grant an injunction and direct the defendant that they may not authorize or enforce an annual levy until the defendant conducts a lawful full assessment or reassessment of benefits prior to establishing the levy.
• Grant an injunction to direct the defendant that HISID may not collect the 2023, 2024 and any future levies until such order levying such tax becomes final after all timely challenges filed within 30 days of publication of such tax have been litigated.