Northwest Arkansas National Airport (XNA) continues to seek to detach from Highfill amid claims the city is not correctly using sales tax revenue. The city recently missed the deadline for XNA’s settlement offer.
XNA gave Highfill until 5 p.m. Friday (March 14) to accept the offer. As of 5:15 p.m. Friday, an XNA spokeswoman said the city didn’t respond to XNA, “so they did not accept the offer.”
The XNA Board of Directors will meet at 9 a.m. Tuesday (March 18) to determine whether to sue the city and seek an order requiring the city to properly allocate sales tax revenue that XNA claims has not been allocated correctly.
XNA filed a petition in Benton County Court to detach from Highfill on Oct. 4. According to state law cited in a Dec. 6 order by County Judge Barry Moehring, the city is required to use sales tax revenue generated since the detachment filing to pay off its bonds. Sales tax revenue from XNA transactions will continue to go to Highfill until the city’s 2018 and 2021 bonds are paid off, which, according to XNA, is likely to be in four years.
“XNA believes that the city has improperly allocated over $800,000 in sales tax revenue since it filed its petition to detach on Oct. 4, 2024, and will take legal action against city officials to correct this,” according to documents provided by XNA.
Airport officials sought to reach a settlement with Highfill before seeking a writ of mandamus, which is a court order directing a public official to perform his or her public duty.
Brian Burke, general counsel and director of compliance for XNA, said this would “ensure that all of the sales tax revenue the city receives gets segregated and used only to pay or prepay the bonds and not for things like copy paper, paying employees, etc. Not a great look for the city, and not a great look for XNA.”
The settlement offer that Highfill did not accept by the 5 p.m. Friday deadline comprised XNA’s Nov. 21 proposal. Burke said “our proposal would have freed up $746,560 for them to spend however they want.”
Following are the other settlement points.
• Highfill will adopt by ordinance an airport overlay district with an influence area substantially similar to the one adopted by the city of Bentonville within 60 days following the entry of an order of detachment.
• Highfill will adopt XNA’s model height zoning ordinance within 60 days following the entry of an order of detachment.
• XNA’s status as a water customer of Highfill will be as a user within the city limits until Highfill is no longer entitled to receive sales tax revenue from transactions occurring at XNA.
Burke said XNA and Highfill officials met three times before XNA voted to detach from the city and try to reach an agreement. Officials met again in November, and XNA made a final offer from mediation and gave it to Highfill officials days later. XNA and Highfill officials met again on Monday.
“That’s six times we have tried to get this settled,” Burke said. “Each and every one of these efforts was initiated by XNA. I think this needs to be emphasized, because right now this thing is being portrayed as ‘my way or the highway,’ and it needs to be that we tried five times. And this is our sixth and final attempt to get this sorted out, motivated by a desire to avoid suing the mayor to do what the detachment law requires.”
The Arkansas Supreme Court recently denied Highfill’s appeal to block XNA’s filing to detach from the city.
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