Are properties of regional intermodal authorities (port and freight facilities created under Arkansas law) exempt from local property taxes assessed by counties, cities, school districts, and improvement districts?
Subject
Whether properties owned by regional intermodal authorities created under the Regional Intermodal Facilities Act, A.C.A. §§ 14-143-101 to -129, are exempt from local property taxes assessed by counties, cities, school districts, improvement districts, and other political subdivisions.
Plain-English summary
Representative Andrew Collins asked the AG to interpret the tax-exemption provisions of the Regional Intermodal Facilities Act. The Act creates regional authorities that develop intermodal freight and transportation facilities (port-rail-truck connections). The Act provides two tax exemptions, and Collins specifically asked whether property taxes are within the local-and-municipal-tax exemption.
The AG identified three exemption sources, layered:
Exemption 1: § 14-143-121(b)(1): local and municipal taxes including property taxes. "The property of each authority shall be exempt from all local and municipal taxes." The AG's interpretive work focuses on what "all" and "local and municipal" mean. "All" means the whole of (referring to quantity, extent, or duration). "Local and municipal" means political subdivisions of the state, including school districts, fire districts, transportation authorities, and any other special-purpose district or authority.
The Arkansas Supreme Court's four-part test for what counts as a political subdivision (Dermott Special School District v. Johnson, 343 Ark. 90 (2000)): (1) covers a certain area and residents, (2) organized for the public interest, (3) chiefly designed to exercise governmental functions, (4) has electors residing within its area committed to the political subdivision exercising governmental power on behalf of the public.
The AG also pulled in two statutory definitions of political subdivision: A.C.A. § 12-9-102(4) ("any county, municipality, township, or other specific local unit of general government") and § 15-6-103(5) ("a county, municipality, and any other unit of local government, including a school district and an improvement district, authorized by law to perform governmental functions").
Putting these together: § 14-143-121(b)(1) exempts authority properties from all taxes by any political subdivision, including property taxes.
Exemption 2: § 14-143-121(a): broader exemption from taxes or fees. This subsection is "even broader." With certain exceptions, authorities are "exempt from the payment of any taxes or fees to the state, or any subdivision thereof, or to any office or employee of the state, or any subdivision thereof." This wraps in any local or municipal property tax along with any other state, county, or municipal tax or fee.
Exemption 3: Arkansas Constitution Article 16, § 5(b). Section 5(b) establishes a comprehensive list of property exempt from state taxation: public property used exclusively for public purposes; churches; cemeteries; school buildings and apparatus; libraries used exclusively for school purposes; and buildings and grounds and materials used exclusively for public charity. No other exemptions are allowed (Article 16, § 6).
The Arkansas Supreme Court's exemption test for public property has two prongs: ownership and use. Ownership: "real property owned by a for-profit company is ineligible for the tax exemption." Use: "the property must be used exclusively for public purposes, which excludes any profit making."
Authorities created under the Regional Intermodal Facilities Act are public corporations under § 14-143-104(a), which satisfies the ownership prong. The use prong is fact-specific and not within the AG's role; the local tax assessor decides whether a specific property is used exclusively for public purposes. (Pulaski County v. Jacuzzi Brothers, 317 Ark. 10 (1994), confirms the local tax assessor has the authority to decide property tax exemption questions on real property.)
The AG cautioned at the start that whether a tax exemption applies is a fact-specific issue. The opinion outlines the principles; the application is for the local assessor.
What this means for you
Regional intermodal authority officials
Three concrete points for budgeting and operations:
- Don't pay local property taxes on authority-owned property. Both § 14-143-121(b)(1) (specific local-and-municipal exemption) and § 14-143-121(a) (broader state-and-subdivision exemption) cover you. If a county or municipality has assessed property taxes, the proper response is a written exemption claim citing both subsections, not payment under protest.
- Use the constitutional exemption as a backup. Even if a court somehow read the statutory exemptions narrowly, Article 16, § 5(b) likely provides independent constitutional protection if the property is "used exclusively for public purposes." The fact-specific question (is this particular building or yard used exclusively for the authority's public purposes?) is decided by the local assessor and reviewable in court.
- Be careful with mixed-use leases. If the authority leases part of its property to a private for-profit user, the use prong of the constitutional exemption may not be satisfied as to that portion, even though the authority's ownership prong is satisfied. A lease to a private freight forwarder, for example, could create a partial taxable interest.
County tax assessors
Authority property is exempt from your assessment. The AG opinion is direct: § 14-143-121(b)(1) exempts authority property from all local and municipal taxes, including property taxes. Don't assess; if you have, refund.
For the constitutional exemption analysis, your role kicks in: you decide whether the property is "used exclusively for public purposes." Pulaski County v. Jacuzzi Brothers settled that this is your call. The factors are well-developed in Arkansas case law (the property's actual use, whether any private profit-making use occurs on the property, whether any portion is leased to private parties).
Municipal finance officers
If your city has been collecting property tax from a regional intermodal authority, the collections were unlawful. Refund procedures vary; you may need to coordinate with the county assessor and the authority's counsel.
School district business managers
The same answer applies to your district's millage. Authority property is exempt from school district property taxes. The AG includes school districts and improvement districts within "political subdivisions" for purposes of § 14-143-121.
Improvement district boards
Same answer. § 15-6-103(5) explicitly lists improvement districts as units of local government, and § 14-143-121(b)(1) exempts authority property from improvement district levies.
Port and freight industry attorneys
This opinion is a useful reference for the layered statutory and constitutional analysis. If your client is using authority-owned property under a lease, look carefully at the use prong: whether your client's commercial use of the property defeats the "exclusively for public purposes" element of the constitutional exemption, even if the authority retains ownership. A lease structure that provides for-profit use can convert a portion of the authority's property into a taxable interest.
Common questions
Q: Does the exemption cover only the buildings and land, or also vehicles, equipment, and other personal property?
The AG opinion focuses on real property. Section 14-143-121(b)(1) refers to "the property of each authority," which is broader than just real estate. Section 14-143-121(a)'s broader exemption from "any taxes or fees" likely reaches personal property taxes as well. For specific personal property tax questions, consult both subsections.
Q: What if part of the authority's property is leased to a private freight company?
The statutory exemptions still apply to the authority's interest. The constitutional exemption (Article 16, § 5(b)) requires the property be "used exclusively for public purposes," which a private commercial tenancy may not satisfy. The result is sometimes a partial taxable interest in the lessee's possessory interest, even though the authority's underlying ownership is exempt. Specific facts matter; talk to local counsel.
Q: The opinion mentions "public corporation." What does that mean for taxation?
A.C.A. § 14-143-104(a) declares that "[e]ach authority shall constitute a public corporation." Under the Arkansas Supreme Court's two-prong test for the public-property constitutional exemption, ownership by a public corporation satisfies the ownership prong. Whether the property is "used exclusively for public purposes" is a separate factual question.
Q: Are sales taxes covered by the exemption?
Section 14-143-121(a) exempts authorities from "any taxes or fees" with certain exceptions, which is broad enough to reach sales taxes paid by the authority. The exact contours depend on the specific exception language and on whether the tax is imposed on the authority or on its vendor. Op. 2024-072 addresses sales-tax exemptions in similar contexts.
Q: Can the General Assembly add a new exemption beyond Article 16, § 5(b)?
No. Article 16, § 6 says "No other exemptions" beyond those listed in § 5(b). But the legislature can decline to impose taxes on certain property, which has the same practical effect as an exemption. The Regional Intermodal Facilities Act exemptions are statutory tax-immunity provisions rather than constitutional exemptions.
Q: Who decides whether a particular property is "used exclusively for public purposes"?
The local tax assessor in the first instance, per Pulaski County v. Jacuzzi Brothers, 317 Ark. 10 (1994). The assessor's decision is reviewable through the property tax assessment process and ultimately in court.
Background and statutory framework
The Regional Intermodal Facilities Act, A.C.A. §§ 14-143-101 to -129, authorizes counties and cities to create regional intermodal authorities. These authorities develop and operate facilities that connect freight modes (port to rail to truck), supporting Arkansas's role in regional and interstate commerce. Section 14-143-104(a) declares each authority a "public corporation."
The two statutory exemptions in § 14-143-121:
- Subsection (a) (the broader exemption): "[E]ach authority is exempt, with certain exceptions, from the payment of any taxes or fees to the state, or any subdivision thereof, or to any office or employee of the state, or any subdivision thereof."
- Subsection (b)(1) (the specific local exemption): "The property of each authority shall be exempt from all local and municipal taxes."
The interpretive rule for "all" and "local and municipal" comes from Wickham v. State, 2009 Ark. 357, 324 S.W.3d 344, which says statutes should be construed "just as [they] read[], giving the words their ordinary and usually accepted meaning in common language." Black's Law Dictionary 12th ed. (2024) defines "local government" and "municipal government" as the government of a particular locality, such as a city, county, or parish.
The political-subdivision four-part test is from Dermott Special School District v. Johnson, 343 Ark. 90, 32 S.W.3d 477 (2000): covers a defined area and residents, organized for public interest, chiefly designed for governmental functions, with electors committed to the political subdivision exercising power.
The Arkansas Constitution exemption framework:
- Article 16, § 5(b) lists the exempt categories: public property used exclusively for public purposes, churches used as such, cemeteries used exclusively as such, school buildings and apparatus, libraries and grounds used exclusively for school purposes, and buildings and grounds and materials used exclusively for public charity.
- Article 16, § 6 prohibits other exemptions.
- The Arkansas Supreme Court has read the public-property exemption to require both ownership and exclusive public use. (See AG Op. 2023-044 collecting cases.)
- The local tax assessor decides exemption questions on real property (Pulaski County v. Jacuzzi Brothers Division of Jacuzzi, 317 Ark. 10, 875 S.W.2d 496 (1994)).
Citations
- A.C.A. §§ 14-143-101 to -129 (Regional Intermodal Facilities Act)
- A.C.A. § 14-143-104(a) (authorities are public corporations)
- A.C.A. § 14-143-121(a) (broader exemption)
- A.C.A. § 14-143-121(b)(1) (local and municipal tax exemption)
- A.C.A. § 12-9-102(4) (definition of political subdivision)
- A.C.A. § 15-6-103(5) (definition of political subdivision)
- Ark. Const. art. 16, § 5(b) (public property tax exemption)
- Ark. Const. art. 16, § 6 (no other exemptions allowed)
- Wickham v. State, 2009 Ark. 357, 324 S.W.3d 344
- Dermott Special School District v. Johnson, 343 Ark. 90, 32 S.W.3d 477 (2000)
- Pulaski County v. Jacuzzi Brothers Division of Jacuzzi, 317 Ark. 10, 875 S.W.2d 496 (1994)
- Black's Law Dictionary 835 (12th ed. 2024) (definition of local government)
- Random House Webster's Unabridged Dictionary 54 (2d ed. 1998) (definition of "all")
- Prior AG opinions cited: Ops. 2024-088, 2024-072, 2023-106, 2023-095, 2023-044, 2014-067, 2013-040, 2009-054, 91-371, 79-58
Source
Original opinion text
Opinion No. 2024-094
May 2, 2025
The Honorable Andrew Collins
State Representative
Post Office Box 21473
Little Rock, Arkansas 72221
Dear Representative Collins:
You have requested my opinion regarding A.C.A. § 14-143-121(b)(1) of the Regional Intermodal
Facilities Act.1 Under that provision, “[t]he property of each authority [created under the Act] shall
be exempt from all local and municipal taxes.” You ask: “What types of ‘local and municipal
taxes’ are included within this exemption,” specifically “[a]re property taxes included?”
RESPONSE
Per A.C.A. § 14-143-121(b)(1), an authority’s properties are “exempt from all local and municipal
taxes[,]” including property taxes. And A.C.A. § 14-143-121(a) contains an even broader tax
exemption. Under that provision, an authority is, with certain exceptions, “exempt from the
payment of any taxes or fees” to the State or its political subdivisions. Finally, an authority’s
property may also be exempt from property taxes under Article 16, § 5(b) of the Arkansas
Constitution.
DISCUSSION
Although I can opine on the interpretation of tax exemptions—and this Office has often done so2—
I caution that whether a tax exemption applies is a fact-specific issue upon which I cannot
definitively opine.3 I can, however, outline the principles that apply in making that decision.
1 A.C.A. §§ 14-143-101 to -129.
2 E.g., Ark. Att’y Gen. Ops. 2024-072 (interpreting sale-tax exemption), 2014-067 (regarding the tax exemption under
the Regional Intermodal Facilities Act), 2009-054 (regarding the “disabled veteran” tax exemption), 91-371
(interpreting Act 9 revenue bonds tax-exempt statutes), 79-58 (interpreting whether a paper plant qualifies for tax
exemption).
3 Ark. Att’y Gen. Ops. 2024-088, 2023-106, 2013-040. The Honorable Andrew Collins
State Representative
Opinion No. 2024-094
Page 2
Essentially, authorities created under the Regional Intermodal Facilities Act are exempt from all
state and local taxes under A.C.A. § 14-143-121. Subdivision (b)(1) states that authorities’
properties are “exempt from all local and municipal taxes.” And subsection (a) exempts authorities
“from the payment of any taxes or fees to the state, or any subdivision thereof, or to any office or
employee of the state, or any subdivision thereof[.]”
First, under A.C.A. § 14-143-121(b)(1), authorities’ properties are “exempt from all local and
municipal taxes.” Because the terms “all” and “local and municipal” are not defined in the Act, I
must “giv[e] the words their ordinary and usually accepted meaning in common language.”4 To
that end, “all” means “the whole of (used referring to quantity, extent, or duration).”5
And “local and municipal” commonly refers to a political subdivision, like a city or county,
“includ[ing] a school district, fire district, transportation authority, and any other special-purpose
district or authority.”6 The Arkansas Supreme Court has held that a political subdivision (1) covers
a certain area and residents, (2) is organized for the public interest, (3) is chiefly designed to
exercise governmental functions, and (4) has electors residing within its area that are committed,
to some extent, to the political subdivision exercising governmental power on behalf of the public.7
Similarly, numerous statutes define local government units as political subdivisions.8 Under
A.C.A. § 12-9-102(4), “any county, municipality, township, or other specific local unit of general
government” is a political subdivision. Likewise, A.C.A. § 15-6-103(5) defines a political
subdivision as “a county, municipality, and any other unit of local government, including a school
district and an improvement district, authorized by law to perform governmental functions.”
Based on the common understanding of “all” and “local and municipal,” A.C.A.
§ 14-143-121(b)(1) exempts authorities’ properties from all taxes by any political subdivision of
the State, such as cities, counties, school districts, or improvement districts that are authorized to
levy a tax. This includes property taxes assessed by those political subdivisions.
Second, and in addition to subdivision (b)(1), A.C.A. § 14-143-121(a) exempts authorities, with
some exceptions, “from the payment of any taxes or fees to the state, or any subdivision thereof,
or to any office or employee of the state, or any subdivision thereof.” The first part of the listing—
4 Wickham v. State, 2009 Ark. 357, at 5–6, 324 S.W.3d 344, 347 (“[W]e are mindful that the first rule in considering
the meaning and effect of a statute is to construe it just as it reads, giving the words their ordinary and usually accepted
meaning in common language.”).
5 All, Random House Webster’s Unabridged Dictionary 54 (2d ed. 1998).
6 See Local government, Black’s Law Dictionary 835 (12th ed. 2024) (using “local government” and “municipal
government” as interchangeable terms and defining them as “[t]he government of a particular locality, such as a city,
county, or parish; a governing body at a lower level than the state government”).
7 Dermott Special Sch. Dist. v. Johnson, 343 Ark. 90, 95, 32 S.W.3d 477, 480 (2000).
8 Ark. Att’y Gen. Op. 2023-095 (listing statutes defining local government units as political subdivisions). The Honorable Andrew Collins
State Representative
Opinion No. 2024-094
Page 3
“the state, or any subdivision thereof”9—exempts authorities from local and municipal property
taxes. As noted above, a subdivision of the State—such as a city or county—is a political
subdivision.10 Thus, authorities created under the Act are exempt from paying taxes to political
subdivisions.
Finally, though not presented in your request, Article 16, § 5(b) of the Arkansas Constitution
exempts authorities’ property from property taxes. Section 5(b) establishes a comprehensive list
of real property that is exempt from taxation: “public property used exclusively for public
purposes; churches used as such; cemeteries used exclusively as such; school buildings and
apparatus; libraries and grounds used exclusively for school purposes; and buildings and grounds
and materials used exclusively for public charity.” No other exemptions are allowed.11 When
interpreting the exemption for public property used exclusively for public purposes, the Arkansas
Supreme Court has focused on “(1) ownership—real property owned by a for-profit company is
ineligible for the tax exemption, and (2) use—the property must be used exclusively for public
purposes, which excludes any profit making.”12
As to ownership, A.C.A. § 14-143-104(a) states that “[e]ach authority [created under the Act] shall
constitute a public corporation.” But the second half of the test requires factfinding, which is
outside the scope of this opinion. Instead, the local tax assessor will determine if a specific property
is used exclusively for public purposes.13
Assistant Attorney General Jodie Keener prepared this opinion, which I hereby approve.
Sincerely,
TIM GRIFFIN
Attorney General
9 Emphasis added.
10 See Johnson, 343 Ark. at 95, 32 S.W.3d at 480 (“Counties are a political division of the State government, organized
as part and parcel of its machinery, like townships, school districts, and kindred subdivisions.”).
11 Ark. Const. art. 16, § 6.
12 Ark. Att’y Gen. Op. 2023-044 (emphasis in original) (citations omitted).
13 Pulaski Cty. v. Jacuzzi Bros. Div. of Jacuzzi, 317 Ark. 10, 16, 875 S.W.2d 496, 499 (1994) (noting that the local tax
assessor “is charged with the authority to decide questions of exemptions on real property”).