Little Rock airport: Levee fees not on radar

It says exempt as drainage district duns landowners

Kenny Wilcox (right), who maintains pump stations that operate flood drainage equipment, works Wednesday in the levee district surrounding Bill and Hillary Clinton National Airport/Adams Field in Little Rock. Larry Alman (left), a district commissioner, said more revenue is needed to properly maintain the levee and equipment.
Kenny Wilcox (right), who maintains pump stations that operate flood drainage equipment, works Wednesday in the levee district surrounding Bill and Hillary Clinton National Airport/Adams Field in Little Rock. Larry Alman (left), a district commissioner, said more revenue is needed to properly maintain the levee and equipment.

An improvement district in Pulaski County that pays for a levee that protects Bill and Hillary Clinton National Airport/Adams Field and nearby property from flooding is at odds with the airport over a lack of fee payments.

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Kenny Wilcox maintains flood drainage equipment for the area around Bill and Hillary Clinton National Airport/Adams Field in Little Rock. The improvement district that pays for the levee and pumps that protect the area is in a dispute with the airport, which says it’s exempt from district fees and would need federal approval to make payments.

Pulaski Drainage No. 2 Improvement District levies a fee on landowners' property tax assessments, and that revenue pays for the operation and maintenance of a 7.2-mile levee and its pumps.

Of the 940 parcels of property in the improvement district, the airport is the single largest property owner with 95 parcels. But as a public entity, the airport doesn't pay property taxes, and its officials said federal aviation rules prevent it from voluntarily paying improvement district fees.

Improvement district commissioners said expenses are exceeding revenue, and they can't continue to maintain the levee and pumps for long under the current financial conditions. The district's staff recently sent out delinquency notices to business owners and homeowners within the district, but it didn't send a notice to the airport.

That upset several residents, who were notified of possible foreclosures and lawsuits if they didn't pay the fees.

After hearing the concerns of the residents, many of whom are low-income, airport officials now say they want to find a way to help the improvement district, but they first must get federal approval.

If the levee fails, the airport's runways are at risk of flooding, along with the homes in the area.

The drainage district was created in 1946, and its equipment is old and sometimes costly to repair, officials said.

"It came to a boiling point last year," said improvement district commissioner Larry Alman, who owns a business within the district. "We recognized if we continued on like we have, the district would go broke. The airport has bought so much land, it's just put a noose on our revenue."

When initially asked for comment on the matter, airport Deputy Executive Director Bryan Malinowski sent a statement in an email through a spokesman.

"The Airport is a public entity and the property that it owns is public property. Pursuant to Article 16, § 5(b), of the Arkansas Constitution, public property is exempt from taxation. For that reason, the Airport cannot be assessed the special improvement taxes," Malinowski said.

"Regarding a voluntary contribution to the Improvement District, the Airport is subject to federal laws and regulations that are enforced by the Federal Aviation Administration (FAA). Those laws and regulations include a prohibition against revenue diversion that prevents the Airport from making voluntary payments, such as the ones in question. These matters were addressed with the Improvement District several years ago, after which the parties all had an understanding of the Airport's position," Malinowski said.

The improvement district's attorney, David Menz of Williams and Anderson PLC, disagreed with the airport's interpretation of the law.

"The Arkansas Supreme Court makes it clear that special assessments are not a tax, so Article 16, Section 5 of the Arkansas Constitution does not apply," Menz said. "The law under which the district was formed provides that public lands can be assessed. In like manner, there is a specific Arkansas statute which provides that property in a central business improvement district can be assessed."

Joe Thompson Jr., chief administrator of the Pulaski County assessor's office, also said the improvement fee is not a property tax.

After being told by a reporter of the concerns from the improvement district and community members, airport officials reached out to the improvement district and met with officials Wednesday.

Airport spokesman Shane Carter said the agency is now exploring options that will meet FAA approval.

"Given the recent flooding, we are even more aware of the need to maintain a structurally sound levee system to maintain airport property and the land of other property owners," Carter said Thursday. "We are sensitive to what we heard from other landowners. ... Since this has been brought to our attention, we want to find a solution and be a good neighbor, but ultimately any plan that is developed will require FAA approval."

Other public agencies in Pulaski County pay improvement district fees.

The Little Rock Port Authority Railroad, for example, will pay $6,010.98 in drainage improvement district fees this year. The Port Authority is in a different improvement district from the airport.

Port Authority Executive Director Bryan Day said his agency voluntarily pays the fees.

"We understand how important the district is and what the impact would be if it was not able to maintain the drainage and levee," he said.

The difference, Carter said, is that the port isn't at risk of losing federal funding as the airport could be if it violated FAA regulations on how it spends money.

Little Rock Mayor Mark Stodola, who used to serve as legal counsel for the airport, said he doesn't think there would be an issue with the airport voluntarily paying the fees and that it "ought to pay them."

He has previously opined for the airport that it doesn't have to pay the fees, but he said federal regulations wouldn't stop it from doing so.

"There's a distinction between the question of legally are you required to do it or can you voluntarily do it. Is it a public purpose to be able to protect the levee? I think that argument can be made. A flood would drown the airport, so it sounds to me like there's a relevant -- there's a nexus of a relationship there," Stodola said.

"Usually the issue is you can't spend airport revenue on unrelated items. For example, you can't help fund the general fund of the city. But this is not the same. This is something related directly to the airport," he said.

Meanwhile, other property owners within the improvement district received delinquency notices informing them that liens would be placed on their property over the failure to pay fees, and that they faced being foreclosed on and possibly a lawsuit.

Homeowner Darlene Simmons got a notice March 27, telling her she owed $151.25 and would need to pay it to avoid a lawsuit.

"We felt like it wasn't fair we should have to pay for something the airport should have been paying for," Simmons said. "They said they wasn't going to pay it. So, that means it falls on the homeowners up here that the airport hasn't bought out."

Alman -- one of the improvement district commissioners -- met with community members about a month after the letters went out. He told residents that they could work out payment plans and that their homes would not be foreclosed on and they would not be sued, despite what the letter said.

Alan King, special assessor of the improvement district, said he never sent a delinquency notice to the airport and that he isn't sure how much the airport might owe in improvement district fees. He's working on figuring that out, he said.

The improvement district's fee was increased in December for the first time in several years to 2.3 mills assessed on property tax bills.

Property is taxed on 20 percent of its value. The assessed value of a $100,000 home is $20,000. A mill is one-tenth of a cent. So 2.3 mills levied on a $100,000 property would be $46 annually. Most homes in the area are valued much lower.

Of the 940 parcels in the district, 361 are owned by businesses and would owe a total of $98,002 in fees under the new millage rate. The airport owns 95 of those businesses, and the city of Little Rock owns seven.

Another 568 parcels are owned by homeowners, who would owe a total of $6,200 in fees under the new millage. The remaining 11 parcels in the district have no assessed value.

After county fees and nonpayments, the improvement district netted $55,245 last year under the old millage rate. Total expenses for 2016 were $188,581.

"The district cashed in a [certificate of deposit] to fund the difference," King said.

There were $9,796 in delinquent fees last year, but total delinquencies amount to $21,754 uncollected to date. That doesn't include whatever the airport would have paid over the years.

The city also hasn't paid the fees on the seven parcels it owns in the district, but the district also has not sent it delinquency notice, King said.

A 2005 article in the Arkansas Democrat-Gazette, mentions the airport failing to pay $16,900 in various improvement district fees on about 175 parcels of property. The airport said at the time that it had been granted exemptions from the respective districts.

Neither the Pulaski Drainage No. 2 district nor the airport mentioned any exemptions in conversations about its lack of payment this year.

Other airports in the nation that are near bodies of water pay for their own levee protection.

LaGuardia Airport in New York, for example, is managed by the Port Authority of New York and New Jersey, which builds, operates and maintains its own flood mitigation facilities.

It received millions of dollars in federal grants after flooding caused by Hurricane Sandy in 2012 and has since constructed flood walls and other infrastructure to protect the airport.

A Section on 05/28/2017

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