Wednesday, December 21, 2016

County judge to hear Little Rock airport's tax exemption case

he state's largest airport and its largest county are at odds over a large tax bill.

Bill and Hillary Clinton National Airport/Adams Field is going to Pulaski County Court over the denial of the property tax exemption status of three airport properties by Pulaski County Assessor Janet Troutman Ward.

The denial has left the airport on the hook for $406,445.30 in overdue property taxes for the old Hawker Beechcraft complex for 2014 and 2015, when most or all of it sat unused after the aircraft manufacturer filed for bankruptcy in 2013 and vacated the property. The site had been used to finish business jets after they were manufactured elsewhere.

The airport's requests for property tax exemptions on two other properties also were denied, though the amount of money at issue was a much smaller figure and unavailable on Monday.

County Judge Barry Hyde of Pulaski County will hear the case in county court, which is a venue in which the county's chief executive officer presides.

County court was established by the Arkansas Constitution of 1874 in Article 7, Section 28, which states that matters relating to county taxes, roads, bridges and some other matters must go before the county judge before anyone else for approval.

Airport officials and their attorneys contend the properties at issue should be exempt from real estate property taxes because they have transitioned back to the airport, a public agency, and the property, when in the airport's control, is used for "public purpose and use."

Article 16 of the state Constitution states that "public property used exclusively for public purposes" is exempt from taxation.

"While there is no reason for the denial by the Pulaski County assessor, there is no dispute that the three parcels are 'public property,'" attorneys for the airport said in legal documents. "The question for the Court is whether the parcels are being 'used exclusively for public purposes.'"

The airport contends that the properties are for public use when they revert to the airport, Steve Bingham, one of the airport's attorneys, said in an interview. When there is a tenant leasing the property from the airport, the properties are considered private use and subject to property taxes, which are the responsibility of the tenants, he said.

Bingham said he is unaware of the airport paying property taxes on its properties except in limited circumstances. For example, he said, the airport has purchased property surrounding the airport in which the airport paid the property taxes owed for the property before it was purchased "on a catch-up basis."

Of the three properties at issue, the Hawker Beechcraft facility is the largest. Behind the airport's security fence, it encompasses more than 400,000 square feet of enclosed space that includes specialized hangars, and office, production and storage areas. The property also includes 11.5 acres of paved apron space.

After the aircraft manufacturer vacated the facility, Clinton National actively maintained it not only because it hoped to land new tenants for the facility, but the Federal Aviation Administration and the Transportation Security Administration mandated that the property "for security purposes ... be constantly observed, inspected and protected," according to legal documents.

"Until this property could be leased to an appropriate third-party, the airport has been holding the property exclusively for public uses and purposes."

Last year, a part of the property was leased to a general aviation service center, Fly Arkansas LLC. And in August, another portion was leased to Envoy Air Inc., an American Airlines subsidiary that will use its portion as a maintenance facility.

"Each private tenant has or will asses their appropriate portion of the property," the legal documents said.

The airport also contends that the property was subject to a tax exemption because Hawker Beechcraft financed the construction of the complex using tax exempt bonds.

"The airport was never advised that the bond exemption had been removed," the legal documents said.

The other properties, when in airport control, are considered "public use" properties also because of federal mandates, airport attorneys say.

A building the airport owns outside of the security fence was built by Southwest Airlines as a call center before the airline closed it. Arkansas Blue Cross & Blue Shield, the insurance center, eventually took over the building until May 2015. For that year, the airport paid the share of the property tax owed after May while the insurance company paid the share it owed while it leased the building, Bingham said.

The building, however, serves as a public use, according to the legal documents, in that it allows the airport to conform with federal regulations requiring it to "control existing and planned land uses in the vicinity of the airport." Other federal regulations allow the airport to "generate revenue" from the property "if it is put to acceptable compatible use."

The other property was leased to Carrier Inc., which manufactures heating, air-conditioning and refrigeration equipment. It is on the east side of the airport.

The airport twice this year has applied for tax exemptions for the properties. Both times, the airport received an exemption status sheet with a check mark by "denying your request for exemption status."

Joe Thompson, the chief assessment administrator for the county assessor's office, said he couldn't comment on a pending legal matter.

If the airport paid the amount the assessor's office said it owed, the money would go primarily to the county's public schools, the amount varying by school district. Lesser amounts of property taxes also help fund the county jail, police and fire pensions, roads and bridges, libraries and Arkansas Children's Hospital, according to the treasurer's office.

The Little Rock Municipal Airport Commission on Tuesday approved a staff request to use other attorneys, the Little Rock law firm of Taylor & Taylor, after the assessor's office objected to the airport's regular attorneys, Cross, Gunter, Witherspoon & Galchus, participating in the case.

The office cited the firm's work on an employee handbook for the county.

Original article can be found here:

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