HomeMy WebLinkAbout1974-06-24 MinutesMINUTES OF A SPECIAL MEETING OF THE CITY BOARD OF DIRECTORS
June 24, 1974
The Board of Directors of the City of Fayetteville, Arkansas met in a
special session on Monday, June 24, 1974 in the Director's Room of the
CityiAdministration Building at 11:30 A. M.
Present: City Manager Donald L. Grimes; Administrative Assistant David
McWethy;rCity Attorney Jim McCord; Darlene Westbrook, City Clerk;
and Directors Orton, Purdy, Noland, Utley, Murray, Carlson, and
Stanton.
Directors Absent: None
Others Present: Mr. Bill Putman, representing the City of Fayetteville;
Mr. Lewis Jones, representing T. C. Carlson, et al.; members of
the audience and representatives of the news media.
Mayor Russell Purdy called the special meeting to order and explained
the purpose of the meeting was to consider a proposal for settlement in the
case of T. C. Carlson, et al. versus the City of Fayetteville as presented
by the plaintiff's attorneys. The Mayor then asked Mr. Putman, legal
representative for the City, to explain the proposal to the Board.
Mr. Putman said the proposal for settlement, as presented by the
plaintiffs, would attempt to settle two aspects of the case -- the question
of the five -mill voluntary tax issue and the inside water and sewer project
issue. The settlement would stipulate that the City would be enjoined and
restrained from levying or collecting the five -mill Voluntary Tax in the manner
that it had been collected in the past. The City's liability, if the
proposal were accepted, would involve the payment of $10,000 plaintiff's
attorney's fees and the payment of court costs.
In regard to inside water and sewer projects, it would be stipulated
that the projects were a constitutional exercise of the City's municipal power.
Mr. Putman said] all other issues would be open for decision by the Judge on
stipulation of facts and submission of legal briefs and indicated very few
facts would be in dispute.
Director Orton asked Mr. Putman if there was a stipulation that in the
future the City would have to notify people of the Voluntary Tax. Mr.
Putman replied that the settlement stipulates the City would be restrained
and enjoined from levying or collecting the tax under the procedure used in
the past; however, he said the City might be able to establish a procedure
to notify people as to the nature of the tax and collect the tax on a
voluntary basis. The language of the decree, Mr. Putman added, could
considerably affect the collection of taxes levied for the year 1973 and
collectable in 1974.
Director Murray then made a motion for the Board to reject the proposal.
Director Orton seconded the motion after which Mayor Purdy called for dis-
cussion from the Board
Director Noland felt an issue of such importance should be decided by
the court as he felt the citizens of Fayetteville were entitled to a court
decision instead of a decision arrived at by the Board.
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Director Carlson asked Director Noland if he had been advised by the
City's attorneys what the City's liability would be if the tax issue were
taken to trial and Director Noland said he was aware that the liability could
be $670,000.
Mr. Putman clarified Mr. Noland's statement by adding that if the
court ordered a refund, the refund could only include taxes paid in the last
three years because of the Statute of Limitations and that the City's
potential liability would be approximately $600,000.
Director Carlson was of the opinion the Statute of Limitations would
not apply in this case because there was a possibility of constructive fraud
to which there is no limitation.
Mr. Putman was in disagreement with Carlson and was of the opinion that
fraud was not an issue in the case.
Director Noland asked if other citizens would be entitled to file similar
suits against the City on the tax issue if a court decision were not obtained.
Mr. Putman said even if the case could be classi€iled asa true class action, and
he was not convinced it was, individual citizens would not be prevented
from coming before the courts and asking for the same type of relief on an
individual basis.
Director Stanton asked if citizens would have to apply for a refund if
the City were found liable for refunds for taxes collected in the past.
Mr. Putman answered that he could not be certain how the court would
stipulate the refunds to be made but that he did not believe the order
would be a blanket order requiring a refund to be made to everyone who had
paid the tax. Those people who knew the tax was voluntary and paid the
tax would not be entitled to a refund.
(The following statement,made by Director Carlson,was transcribed
verbatim from the tape recording of the Special Meeting upon her request.)
Then Director Carlson said, "Well, I hate to always be taking a legal
posture here, but I believe the Board should be apprised of the fact before
they make their decision that, in this instance, as a class action under
certain provisions of the Constitution providing that a citizen brings a
subject and it is the decision of that issue, so broad, is applicable to
all citizens in like position; so that indeed, an order entered in this
nature,precluding the rebate of taxes,would indeed hold a preclusion of
the rebate for all the citizens."
Mr. Putman said as far as the rebate question was concerned, the
potential would exist even if the proposed order were signed and entered by
the Judge. The constitutionality of any Ordinance or Act of the Legislature,
Mr. Putman stressed, could not be resolved by stipulation of the parties.
He believed there would be nothing preventing the citizens from taking
action to collect the tax refund as he did not believe the proposed order
would prohibit such action.
Director Utley's greatest concern was the fact that over a period of
months the Board had, through competent legal advice, taken a firm stand
on every facet of the litigation and he believed, without legal advice to
the contrary, that the Board was obligated to maintain the course of action
taken over the past year.
Mayor Purdy then called for discussion from the audience at which time
Mr. Lewis Jones, legal representative for the plaintiffs, reminded the Board
that the proposal brought before the Board was not the sole product of the
petitioners in the case but was the result of negotiations initiated by
the City's attorneys.
Mr. Putman said it was true that many of the aspects of the proposal
were arrived at through Lengthy negotiations but there were aspects of the
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proposed decree that were not suggested by the attorneys for the City.
There being no further discussion, Mayor Purdy called for the Board's
vote on the motion to reject the proposed settlement.
The recorded vote was: Orton, "Aye"; Purdy, "Aye"; Noland, "Aye";
Utley, "Aye"; Murray, "Aye"; Carlson, "Abstain", and Stanton, "Aye".
Mayor Purdy declared the motion passed and the proposal denied.
There being no further business, Director Murray made a motion that
the meeting be adjourned. The motion was seconded by Director Noland
and was approved by the Board. Mayor Purdy declared the meeting adjourned.
ATTEST:
Scala
TY CLERK
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APPROVED:
MAYOR
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