New state law gives XNA negotiating power

A new state law might have long-term benefits for Northwest Arkansas National Airport (XNA), particularly if it reaches an agreement on how the city of Highfill’s sales tax revenue is used.

State legislators recently approved Senate Bill 414 which became Act 769 after Gov. Sarah Sanders signed it into law. XNA general counsel Brian Burke said the law is expected to go into effect July 30.

The law allows XNA to detach from Highfill. Burke explained that will provide XNA with leverage when negotiating how the city’s sales tax revenue is allocated. He attributed about $600,000 of the annual revenue to transactions that take place at XNA.

“Act 769 puts XNA on a level playing field with Highfill so that we can discuss possible terms for an interlocal cooperation agreement,” Burke said. “That agreement could address a number of things, such as public safety, road maintenance, sales tax allocation, etc. We could have done that without the new law, but Highfill had nothing to lose and thus little motivation to negotiate about things that truly benefit XNA.”

However, the law requires the revenue that’s allocated to pay city bonds must continue to be used for this until the debt is paid or an equivalent amount is placed in escrow.

Because of this, “Highfill will have plenty of time to plan for the loss of that revenue which currently is almost equal to the annual debt service on their bond debt,” Burke said. “Likewise, we will have plenty of time to figure out the best way to capture that revenue. Act 769 is huge for XNA, but the real conversations are ahead of us. And we look forward to working with Highfill officials to explore all the options.”

If XNA and Highfill can’t reach an agreement, XNA could detach from the city. Burke said that would provide XNA with autonomy and reduce the sales tax by 2% for transactions that take place at the airport. XNA also would retain nearly $200,000 annually it spends on the sales tax for parking.