Airport officials weigh detachment
Revenue sharing between Highfill, XNA proposed in talks
HIGHFILL — Northwest Arkansas National Airport officials sat down Tuesday with Highfill’s mayor and city attorney for the first time in a formal attempt to figure out what subjects need to be ironed out between the sides, regardless of whether the airport board decides to deannex from the city.
The Arkansas Legislature approved a process earlier this year for the airport to leave Highfill if the board chooses to do so. The law takes effect July 31.
The major issues Tuesday appeared to be deannexation itself and whether some sort of agreement can be reached on revenue sharing from existing and future sales taxes.
Currently, transactions at the airport are subject to a Highfill city sales tax of 2%. Airport officials say the airport receives no benefit from those tax dollars because it receives no municipal services from Highfill and provides its own road maintenance, utility infrastructure, and police and fire departments.
A sticking point in any negotiation is a lack of information about how much is collected in sales taxes from businesses operating at the airport and where that money goes. Both city and airport officials said the Arkansas Department of Finance and Administration is limited in the amount of information it can release.
“My biggest question is numbers. A mind can be changed by numbers,” Highfill Mayor Chris Holland said. “That’s the elephant in the room to me. What are the numbers? We need to know the numbers, and unfortunately, I don’t think we’re going to get the numbers.”
The airport board voted in June to form a committee to negotiate with Highfill after city officials said they were turned down for both long- and short-term debt because of uncertainty over the airport leaving the city, according to Brian Burke, the airport’s attorney. Discussion has centered around a possible interlocal cooperative agreement to address paying off the city’s $7 million water and sewer bond issue.
Tuesday’s meeting was between Holland and a three-member ad hoc committee of the airport’s board of directors: Howard Kerr, Tom Lundstrum and Jonathan Barnett. Also attending were airport senior staff members and legal counsel for both entities.
Airport CEO Aaron Burkes, Chief Operating Officer Andrew Branch, Burke and Chief Financial Officer Tim O’Donnell joined committee members. Highfill City Attorney Jay Williams joined Holland.
Holland said his goal is to keep the airport from leaving the city.
“My intent is to try to keep you all from going out, to try to keep you in, 100%,” Holland said. “Ultimately, if you guys vote to deannex as a board, that’s the route that it’s going to go, and we’ll try everything we can to make it less detrimental to Highfill. But, my first goal is to try to keep you guys in.”
Burke said the sentiment of the airport board appears to be that they want to be an autonomous entity that ultimately receives the benefit of the financial transactions that take place at the airport.
Holland also said he would likely veto any revenue-sharing agreement involving the airport leaving the city, based on the advice of the city’s bond council. But he’d be open to revenue sharing of some kind should the airport stay in Highfill, he said.
Williams pointed out the detachment legislation doesn’t include a way for the airport to implement a tax. Should the airport detach, Highfill would continue to collect the current sales taxes until the bonds are paid off and the sales tax would cease to exist.
“I think that’s where the city stands from a revenue perspective,” Williams said. “The city does not believe we can share sales tax revenue with the airport once detachment occurs.”
Holland said there are things the city and the Northwest Arkansas National Airport Authority can work together on that could help with the airport’s goal of more income.
“Right now, you guys have no authority to tax, but we’re sitting here willing to help you guys,” Holland said. “There’s things we can do for you like the hotel/motel. We can pass a tax that the whole thing can go back to you guys for funding more employees, more equipment, whatever you need.”
Burkes suggested there could be a resolution if the airport detached only a portion of its property from Highfill, such as the terminal, parking lots and runways. A partial detachment would mean Highfill could continue to receive sales tax revenue on transactions occurring outside the airport’s core property.
Holland offered to take any proposal the airport makes to Highfill’s City Council.
Part of the issue, according to Holland, is the airport is basically the city’s identity in the region.
“Everybody’s got an identity, and the airport is Highfill’s identity,” Holland said. “We’re super proud of that. We like having the airport here. We like it being part of our community.”