Airport Spawns Water Wars

Two-Ton too late as Bentonville taps the boonies

A battle over water in Benton County has resulted in a deluge of lawsuits and a dispute over land around the Northwest Arkansas Regional Airport in Highfill.

Some Bentonville officials think the debate may jeopardize a multi-million dollar development planned for the area, but Michael Horn, the developer, says it won’t slow construction, which is expected to begin sometime this year.

“We’ll haul water in if we have to,” says Horn, who plans to build 10 restaurants, six hotels, eight office buildings, about 400 apartment units, two convenience stores, a bank, a day-care center and retail stores on 249 acres of land near the airport. The development will be called The Old Farm.

Horn says he’s not worried about the water. By the time he needs it, someone will provide it, he says.

The players

• On one side is the Benton County Rural Development Authority, a public facility board set up by the county. The RDA contracted with the Benton/Washington County Water Association (known as Two-Ton because of the “ton” in each county name) to furnish water to customers in rural sections of western Benton County, many of whom still rely on well water and have been trying to get “city water” for 30 years.

Under the RDA is the Benton County Rural Water Authority No. 2, which has yet to provide water to the area near the airport and probably won’t be able to do so until some time in 2001.

• On the other side is the city of Bentonville, which entered into an agreement with airport officials to provide water to the new airport since Two-Ton hadn’t been able to do that.

The airport paid $4 million for a seven-mile pipeline to Bentonville, and the city began providing water to the facility just days before the 1998 airport dedication ceremony featuring President Clinton.

Bentonville officials say, under state law, the city had to annex the land to provide water to the area. So Bentonville annexed strips of land along Arkansas Highway 12 in the vicinity of the airport.

Since then, Bentonville has purchased the pipeline from the airport. About 35 residents of the area asked to be annexed into Bentonville so they could tap into the existing water line, and the city has obliged. Two-Ton says Bentonville is stealing its customers and jeopardizing its opportunity to repay loans based on water service.

“We believe Bentonville has jumped the claim, so to speak,” says Bob Moore, assistant secretary for the Benton County RDA and a consultant to Two-Ton.

Britt Vance, Bentonville’s public works director, says Water Authority No. 2 stole customers first — about 800 of them — by taking Centerton away from Bentonville’s service area.

Vance says Water Authority No. 2 is a rural water provider and isn’t capable of providing water to a development like the one planned by Horn.

“The argument they’re making is laughable,” Moore says. “If the airport wasn’t out there, do you think Bentonville would want to serve John Doe and his wife out there [in the country]? Not on your life!”

Water agreement

In 1991, Two-Ton was formed as a government entity following federal and state guidelines.

Two-Ton officials took a census of all potential water users and solicited information from cities concerning how far west they would be willing to provide water service. As a result, 14 communities agreed to buy water from Two-Ton when the water is available, says Sherman Kinyon.

Kinyon is chairman of the Benton County RDA and vice chairman of Two-Ton. He served as mayor of Centerton for 12 years, losing an election last year to Mike Wakefield.

So far, about $40 million has been spent on the Two-Ton project. Two-Ton constructed an intake facility at Ventris Point on Beaver Lake and a treatment facility at Avoca that currently processes about 4.2 million gallons of water a day (7 million gallons a day during the summer).

Two-Ton is a wholesaler of water, running pipelines to cities, which must in turn construct their own pipelines to serve individual customers.

Under the RDA, the Benton County service areas have been split into two sections:

• Rural Water Authority No. 1, which cost about $3 million to construct, consists of a 24-mile-long, 36-inch pipeline that was constructed from the intake facility to a 5-million-gallon storage tank between Gentry and Decatur. A total of 100.7 miles of smaller PVC water pipes — ranging from 2 inches to 12 inches in diameter — branch off from the main line to serve smaller communities and individual customers (about 860 in all) in the area around Hiwasse as part of the Benton County Water Authority No.1.

All construction on Water Authority No. 1 will be complete by May, says Jerry Martin, president of Engineering Services Inc. of Springdale, engineer for both Benton County rural water projects.

• Rural Water Authority No. 2, a $2.7 million project, will serve about 600 customers in the area around the new airport when the pipeline is complete. Construction is expected to begin this summer and take about nine months to finish, Martin says.

In addition to the Benton County projects, Two-Ton also provides water to Lincoln and Prairie Grove though a pipeline to Hogeye and a 2-million-gallon storage tank north of Lincoln. That system, when complete, will take in Westville, Okla., as well.

“The airport was one of the prime objectives of the Two-Ton,” Kinyon says.

Joe Chappelle, an opponent of Two-Ton, says Two-Ton was established to be a “source” of water, not the only “water system” serving the area.

“They know it will boil down to pipe in the ground,” Chappelle says. “If I was [Horn], I wouldn’t be worried at all. Bentonville will end up providing him water.”

Since Water Authority No. 2 wasn’t completed, and the dedication ceremony was approaching, airport authorities entered into a deal with Bentonville for water service instead.

Airport agreement

The first meeting of the Northwest Arkansas Regional Airport Authority was in 1990. The group decided on the location of the new airport in 1995, and construction of the $108 million facility was completed in 1998.

Airport officials initially paid $4 million for the four-mile water and sewer pipelines to Bentonville (including $1 million for design work). In an agreement with the city, Bentonville paid $1 million to build a one-mile road from the airport north to Arkansas 12 and another $1.1 million to buy out front-foot fees along the pipeline — meaning the city now owns the pipeline and could charge customers to hook up and receive water along the line.

“As developers tap into the line, we could recover up to half of our investment, up to about $1.5 million over 20 years,” says Scott Van Laningham, airport director.

Bentonville also paid for upsizing the water line from 10 to 12 inches, Van Laningham says.

“They wanted that road to 12, and so did we,” Van Laningham says.

Bentonville side

Vance and Chappelle argue that the RDA never actually took out loans for the water projects in Benton County.

David Meador, chief of the water resources development division of the state Soil and Water Conservation Commission, says an $877,000 deferred loan and $1 million in bond money has been allocated for the Water Authority No. 2 project.

“They have loans approved but not closed,” Meador says.

The law isn’t clear on whether the water agreement is binding when loans are approved or when they are actually procured, Meador says. That’s to be decided by the courts, along with the question of whether state law required Bentonville to annex land to be able to provide water service.

In January, the Arkansas Department of Health, on the advice of the Soil and Water Commission, denied an application from Bentonville to provide water to a convenience store in Horn’s proposed development based on the 1996 water agreement with Two-Ton. Kinyon says the health department also said Bentonville could hook up no more customers to the water line to the airport, but Vance says that’s not true.

“The health department does not review all connections,” Vance says, “only large-scale developments that go through the planning commission. We’ll continue to [provide water service in that area] for anybody who wants water. [The RDA] has been claiming this territory for seven years now.”

But a lawyer familiar with the situation says Bentonville is breaking the law.

“Federal law says if a water distribution outfit is receiving federal funds, no municipality can serve that area,” says Samuel Reeves, who until January served as attorney for the Benton County RDA in the matter. Reeves has been replaced by Curtis Hogue of Fayetteville, who could not be reached for comment.

In January 1999, U.S. District Judge Jimm Hendren in Fayetteville dismissed a case filed by Two-Ton against Bentonville for annexing the land and providing water service in the area. Hendren said “the issue presented by Two-Ton is not ripe” because Two-Ton wasn’t providing water service to the area now served by Bentonville. But the judge left the door open for changes after Two-Ton is up and running.

“It may well be that Bentonville is setting water meters at its peril,” Hendren wrote, “and that Two-Ton becomes operational in the questioned area and a genuine and immediate controversy will be presented, but that time has not yet arrived.”

Two related suits are pending in federal court and another three have been filed in state court in Benton County.

Water plan

In May of 1996, J. Randy Young, executive director of the Soil and Water Commission, approved Two-Ton’s plan to provide water to area No. 2, referred to as “Area B” in his letter to Robert Moore of the Benton County RDA.

In Young’s final determination, he said Bentonville officials believe they can better serve the airport with water service in the future, but Two-Ton’s project can be completed “in a relatively short time.” That was four years ago.

“We got stymied,” Kinyon says. “We got stymied by the law, and we got stymied by Bentonville. … Every time we have a lawsuit, we’re slowed down. We’re 18 months behind where we should be.”

Kinyon also noted that Bentonville refused to allow Two-Ton to lay pipes through the northern part of the city. The rerouting of pipes cost Two-Ton about $700,000 and further delayed the project, he says.

Young also noted in the 1996 document that Bentonville could provide higher quality water service rated for fire protection in addition to wastewater service.

“The benefit to the area of having potable water in the near future is great and this project will not prohibit the development of a fire-rated system or wastewater collection system in the future,” Young wrote.

With loans in place, “it’s an absolute necessity that the customer base be protected,” Young said in a telephone interview.

“Those projects don’t happen overnight,” Young says. “They continue to make progress. I’m confident they’ll be constructed.”

Since Bentonville already has a pipeline in the area, city officials want to know why they can’t provide the upgraded service now instead of waiting for Two-Ton to come on line.

No delays

Although the Two-Ton won’t be completed and serving the area around the airport until October, Horn says that won’t affect his construction plans.

“We’re trucking right along,” Horn says. “It just made me go faster. There’s too many factors that have to come into play first.”

Horn says it will take six to eight months to put in the infrastructure for the development, and that’s after permits are secured. During construction, workers can bring their own water to drink. By the time the infrastructure is completed, Two-Ton will be providing water to the area according to the current plan.

The only thing that could hamper the project, Horn says, is if the issue drags out in court for years and neither Two-Ton nor Bentonville is allowed to provide water to the development in the meantime.

In December, Horn purchased 177 acres of land along Arkansas 12 in and around Bentonville, 3.4 miles north of the Highfill airport. The site will be developed over the next seven to 10 years as The Old Farm.

Horn, who is president of Risknet Corp., spent about $3.5 million for the first 177 acres and plans to buy another 72 acres nearby. The farmland previously belonged to Lee Harris. Horn says part of the land is in Bentonville and the rest of it is being annexed by Bentonville.

Horn says he began looking at the site last April because of its development potential. Horn has a similar project under way near Bush International Airport in Houston.

“The timing is extremely precipitous,” Horn says of the Benton County location. “It’s ready.”

Ninety-two acres of the site will be for commercial development. Another 85 acres will be used as a distribution warehouse.