County exec hears airport tax argued

He’ll make LR vacant-building ruling

Barry Hyde, the county judge of Pulaski County, said Friday that he will rule within a week on whether the state's largest airport must pay more than $400,000 in property taxes regarding the Hawker Beechcraft complex and two other vacant buildings.

Officials at Bill and Hillary Clinton National Airport/Adams Field dispute a Pulaski 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 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.

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

"The question before the court is, 'Are these properties being used to further a public purpose?'" Adam Fogleman, the county attorney, told Hyde at the climax of a nearly four-hour hearing Friday. "Are they actively utilized to meet some public purpose? And the answer across the board is no."

Clinton National didn't build the buildings and only took control of them because tenants vacated the properties, argued Andy Taylor, an attorney retained for the case by the airport. It is actively trying to lease the properties, he said.

"What you'll find is those properties came into the possession of the airport through no fault of [its] own," Taylor said.

Exempting the airport from paying property taxes on them would be consistent with case law upholding exemptions from paying property taxes for improvement districts which come into possession of property and "they're just trying to get them off their hands," he said.

Thus, Hyde should similarly uphold the exemption for the airport, Taylor said. "They don't want this [property]. They received it, they're holding it and now they're trying to lease it out."

Clinton National is also hamstrung by the fact that it "cannot just go lease this to anyone they want" because of limitations by the Federal Aviation Administration. A security clearance is required to access the Hawker complex, he added.

"They can't go put a Walmart out there," Taylor said. "They're very restricted in what they can do."

The case dates back more than a year. At issue are the tax years 2014 and 2015, after Hawker Beechcraft filed for bankruptcy and vacated the property, which it used as a completion center to paint and customize its business jets manufactured elsewhere.

The other buildings include the former Southwest Airlines reservation center and a building that used to house an operation for Carrier, an international heating, air-conditioning and refrigeration company. Unlike the Hawker complex, both of those buildings aren't inside the airfield fence.

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.

Part of it has since been leased. The private tenants are required to pay property taxes as part of their lease with the airport.

Hyde is hearing the case in county court, a venue in which the county's chief executive officer presides. County court was established by the state Constitution 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.

The airport's requests for property tax exemptions on all three properties were denied. The airport started their case before Hyde in late 2016.

Friday's hearing was the third over the past several months that Hyde has convened to hear the case. The final hearing included testimony largely from top executives at the assessor's office, including Joe Thompson, the chief assessment administrator, and operations director Karla Burnett, as well as appearances from members of the city attorney's office, including City Attorney Tom Carpenter.

The assessor's office claims the vacant airport properties are no different than vacant lots of which the city of Little Rock has come into possession and for which it must pay property taxes because though publicly owned, they aren't be used for a public purpose. Trying to lease the property doesn't meet the "public use" test, according to Fogleman.

"Again, are they using the property?" he said. "Is it being utilized? And to now suggest that trying to lease a property meets that use test is creative, I'll acknowledge that. But it's not supported by law."

Similarly, saying, for instance, that the Southwest and Carrier buildings are available for storage, as Clinton National officials have said, doesn't meet the "public use" test, either, Fogleman said.

Taylor argued that the unused buildings are identical to other unused airport property that are exempted from property taxes: green spaces or a runway that is closed for maintenance or construction.

"The Hawker facility -- this is is about as clear a case of public use as I can imagine," Taylor said. "This is inside an airfield. The county has told us if a runway is out of use for a year, they don't go assess it. They talk about use as an object, as if some physical activity has to be going on."

The airport's 2,000 acres include "green space," he added. "There aren't planes parked out on the green space. There aren't people in the green space. It's not a park. It's not a venue for concerts. It isn't used for anything like that. It is unused property. If you stand and look at the property, it is not in use by their definition."

It also goes untaxed, he said.

Metro on 02/24/2018

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