HIGHFILL, Ark. — The Northwest Arkansas Regional Airport Authority is now one step closer to filing for detachment from the City of Highfill after a Benton County judge denied a preliminary injunction on Sept. 18.
Highfill sued Northwest Arkansas Regional Airport, or XNA, in October 2023 after the airport announced plans to detach from the city.
The airport is currently located in the City of Highfill after being annexed in 1995.
The city, once characterized as rural and with minimal development, now says it's experiencing growth due to its proximity to XNA.
To support this growth, the city issued bonds for the development of a water and sewer system. Highfill claims that if the airport were to detach, it would affect its bond agreements.
XNA had been looking into detaching from Highfill since it was formed, and in 2022 the board voted to look at the pros and cons of moving forward with the plan.
An airport spokesperson said at the time that by de-annexing, XNA would become its own unincorporated community and sales tax revenue would go to the airport to fund improvement and projects.
With 2% of transactions at XNA going to Highfill as a city sales tax, the airport claimed it "receives no benefit from these tax dollars because it receives no municipal services from Highfill such as road maintenance, construction, utility infrastructure, police/fire, etc."
On Sept. 19, 2023, the board voted unanimously to detach from Highfill, claiming that the decision came after "multiple attempts to negotiate an interlocal agreement failed."
Less than a month after the vote, the City of Highfill filed a lawsuit against XNA, claiming that the 2% generates over $1 million a year, which funds the majority of the city's municipal operations.
A key point of the lawsuit is Act 769, which was passed by the Arkansas legislature in 2023 and allows regional airports to detach from municipalities.
Highfill said the act was unconstitutional and was seeking a preliminary injunction in the case with the hope of stopping XNA from filing to detach until the case had been resolved.
In a letter to all parties in the lawsuit from a Benton County judge filed on Sept. 18, the preliminary injunction requested by Highfill was denied.
"Act 769 and detachment would not impair the city's agreements and its contract with bondholders," the letter said. "Act 769 provides for avoidance of impairment of outstanding bonds or evidences of indebtedness. If no agreement is reached between the airport authority and the city, the revenues will be collected in the same manner as if there had been no detachment."
5NEWS reached out to Highfill Mayor Chris Holland and XNA's General Counsel and Director of Compliance Brian Burke regarding the letter.
Holland declined to comment, while Burke offered the following statement:
"We are pleased with the judge's decision. This is the right decision, and the one we expected would be made. We look forward to filing our petition to detach from Highfill as soon as the judge enters a formal order on this ruling."
"We hope that Highfill sees the sense in the judge’s ruling and discontinues this selfish litigation before wasting additional taxpayer money."
City officials have long said a de-annexation could spell disaster for Highfill.
“The problem with that is our sales tax revenue allows us to provide services after the bond payments are made,” Holland told content partner Arkansas Business in May this year. “So if we’re told that we have to escrow everything, then [the city’s] going to cut services,” such as the police and fire department.
The letter ended with a denial of the preliminary injunction, citing that the plaintiffs are "unlikely to succeed on the merits of their complaint."
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