Little Rock airport due tax leeway, ruling says

County judge cites properties’ nonuse

Posted: March 3, 2018 at 4:30 a.m.

Bill and Hillary Clinton National Airport/Adams Field is entitled to the exemption it sought from paying more than $400,000 in property taxes on three vacant buildings, Pulaski County's County Judge Barry Hyde said in an order filed Friday.

"Based upon the testimony presented, the court finds that the petitioners have established an entitlement to an exemption on the property beyond a reasonable doubt," Hyde wrote in the four-page order.

The state's largest airport sought relief in Pulaski County Court over the denial of the property-tax exemption status on three airport properties by Pulaski County Assessor Janet Troutman Ward.

The denial 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, the former Southwest Airlines reservation center and the former Carrier building, also were denied, although the amount of money at issue was much smaller.

Hyde heard the case in county court, a venue in which the county's chief executive officer presides. County court was established in the Arkansas Constitution under Article 7, Section 28, which states that matters relating to county taxes, roads, bridges and some other issues are heard in county court before any other court.

He heard testimony during hearings dating to September and concluding Feb. 23.

The airport disagreed with the county assessor's office decision to require the airport to pay the property taxes for the buildings when they sit empty and have no tenants. The buildings are subject to property taxes when private tenants occupy them. The tenants are responsible for the payments.

The assessor's office said the unused buildings aren't exempt from taxation when they are vacant because while they are owned by a governmental agency, they have no public use, as defined by the state constitution.

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

Hyde's order cited Supreme Court cases used by airport attorneys as more relevant to the case before him.

"These cases establish that when a public entity is leasing public property to a private entity, the property should be subject to taxation," Hyde wrote. "When the public entity is not leasing the property, but is actively trying to lease the property, the property is not subject to taxation."

The county judge also noted that the airport had retained a commercial broker to market the buildings for new tenants. Some portions of the Hawker Beechcraft complex since have been leased.

"The unrebutted testimony in this case is that the property was not leased during the relevant time periods, and that the property was being actively marketed for lease through a commercial broker," Hyde wrote. "This is an exclusive public purpose and use."

The county judge said the issue boiled down to government taxing itself.

"It is counterintuitive to tax a public entity if the property is not generating revenue from the private sector," Hyde wrote. "The public would be taxing itself, and no one would [benefit] from this."

Ron Mathieu, the airport's executive director, welcomed the decision.

"We are grateful for Judge Hyde's decision and thank the county and its employees for their support of the airport as we work to make an increasing economic impact on Arkansas," he said in a statement.

Pulaski County Attorney John Fogleman, who represented the assessor's office in the case, didn't immediately respond to a request for comment, including whether Hyde's decision would be appealed to Pulaski County circuit court.

Metro on 03/03/2018