Northwest Arkansas National Airport seeks to fly on its own as board votes to leave Highfill

HIGHFILL — Northwest Arkansas National Airport officials voted Tuesday to begin detaching themselves from Highfill.

Brian Burke, the airport’s in-house attorney, said Tuesday’s resolution is the first step in what will likely be a monthslong process.

“It’s totally necessary for the future of XNA, and it should have been done a long time ago,” said Jonathan Barnett, who represents Benton County on the board. “It’s been a real long path, and it’s overdue, but we’ve been working on this for a long time.”

Highfill Mayor Chris Holland said Tuesday he’s disappointed the airport has chosen to leave the city.

“They can do what they want to do. It’s a one-sided deal,” Holland said. “We told them many times that if they wanted to stay in the city, we’d help them any way we can.”

Airport officials said they met with Highfill officials three times since the Arkansas Legislature earlier this year passed a law allowing Northwest Arkansas National Airport to deannex by a two-thirds vote of the airport authority board.

The law permits regional airport authorities to detach from a city without also having to be annexed into another city. The airport has about 2,600 acres, and all but about 35 acres of that are within Highfill.

The vote Tuesday was unanimous among directors who attended the meeting. Two board members, Philip Taldo, who represents Springdale, and Phil Phillips, who also represents Benton County, weren’t at the meeting and didn’t cast votes.

The 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 loans because of uncertainty over the airport leaving the city. Discussion centered on a possible interlocal cooperative agreement to address paying off the city’s $7 million water and sewer bond issue.

Holland said the city still cannot issue bonds because of the situation.

Airport officials said the sides couldn’t come to terms.

Currently, transactions at the airport are subject to a Highfill city sales tax of 2%. Airport officials say the airport receives no benefit from the tax revenue because it receives no municipal services from Highfill and provides its own road maintenance, utility infrastructure, and police and fire departments.

“We went so far as to present a proposed agreement to them and had really no success in reaching an agreement,” Burke said. “Really, from where I sit, there is no realistic possibility of reaching an agreement with the city of Highfill as it pertains to allocation of sales tax revenues, as it pertains to the single contribution for infrastructure maintenance and things like that.”

Part of the issue is figuring out how to pay off the city’s $7 million in outstanding water and sewer bonds using, at least in part, sales tax money from transactions on airport property.

Under the new law, the airport can’t leave Highfill hanging with its bonds. Highfill’s outstanding bonds would be paid by the airport as part of any detachment from the city, whether through a lump sum or continuation of the sales tax until the bonds are paid in full in 2038, leaving the city no debt.

Burke said the whole purpose of the legislation was to level the playing field so airport officials could have discussions with the city.

Northwest Arkansas National Airport was hoping to get an agreement with Highfill. Proposals included a partial detachment of the airport’s property, a division of sales tax revenue, and assistance with road and infrastructure maintenance.

“Being able to put a situation in front of them where their sales tax revenue might be affected, where we could detach, we hoped would be sufficient motivation to maybe work out some kind of interlocal cooperative agreement with them, and they were always unwilling to do anything,” Burke said.

Board member Mike Johnson asked if Highfill officials offered any kind of counter to the airport’s offer. Burke said they didn’t.

Holland said some of the proposals from the airport, such as leaving the city’s water district and helping maintain airport roads, were nonstarters.

“We can’t spend taxpayer money on a private road,” Holland said.

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