januaryfebruary2021 - 26

LEGAL MATTERS
AUTHOR Alison Squiccimarro

IS YOUR

Airport Leasehold Taxable?
THE ANSWER differs from state to state depending
on whether that state has a statute that allows for
taxation of leaseholds and/or taxation of property
used for the operation of an airport.
This article will discuss the many
considerations that go into determining
whether your airport leasehold is taxable,
what happens if you agree to pay
taxes and find out the property is not
taxable, and what happens if the local
municipality suddenly decides that the
property is taxable and begins levying
taxes against the tenant.

DETERMINING WHETHER TAXES
CAN BE LEVIED AGAINST AN
AIRPORT TENANT
Whether a leasehold interest on airport
property is taxable is generally a question
of state law that involves several layers
of inquiry including (1) whether airport
property is exempt; (2) whether a tenant
leasing the property for a commercial
purpose can avail itself of the exemption;
and (3) whether leasehold interests are
taxable. Generally, a municipality only
has the taxing authority allowed to it
by the state's legislature. If the state
legislature does not provide for the

ABOUT THE AUTHOR

ALISON L. SQUICCIMARRO
Alison L. Squiccimarro is an attorney with
the Law Offices of Paul A. Lange, LLC with
offices in New York and Connecticut.
Alison's nationwide practice focuses on
aviation related commercial litigation with
an emphasis on FAA and DOT Regulatory
Issues, Airports, Insurance Coverage and
Employment matters. Additionally, Alison
co-chair's the American Bar Association,
Forum on Air & Space Law's Airports
Committee.

taxation of a particular property, it is
likely not taxable.
The first question is whether the
airport property is tax exempt under
state law. Many states have statutes that
exempt airport property either entirely
or in certain circumstances. For example,
Kansas exempts all property owned and
operated as an airport by a political
subdivision. See Kansas Statutes §79201q. Some states, like Connecticut,
only exempt airport property that
is owned by one municipality but
located in another municipality. See
Connecticut General Statutes §12-74.
In some states, like Pennsylvania, the
legislature has exempted property that
is used for a " public purpose " which
include operating an airport. See e.g. PA
Const. Art. 8 §2.
Assuming there is an exemption
that precludes the airport from being
taxed, can a tenant of the airport avail
itself of the exemption? In order to
determine this, one must first look to
the language of the statute that provides
the exemption. In order to avail itself
of the exemption, the tenant must fit
squarely within the statute. Many of
the state statutes which make airport
property tax exempt require that it be
used for a " public purpose. " Is a tenant
who leases airport property in order to
provide aviation services to the general
aviation community using the leased
airport property for a public purpose?
It depends on the jurisdiction, facts
and circumstances. An analysis of what

26 \ AIRPORTBUSINESS / JANUARY/FEBRUARY 2021

constitutes a " public purpose " requires
a review of the legislative history and
case law interpreting same.
Once you deter m ine what
constitutes a " public purpose " you need
to evaluate the facts and circumstances
of the particular situation to determine
whether the property is being used for a
public purpose. Factors to be considered
include the following: (1) Does the
tenant intend to provide services to the
general public; (2) Are the services the
tenant provides essential operations of
an airport? (3) Will the rents charged
advance the airport's interest in
becoming as self-sustaining as possible?
A credible argument can be made that a
tenant who intends to provide fueling or
maintenance to the aviation community
is using the premises for a public purpose
because the services are essential to the
operation of an airport and the airport is
collecting rent for the premises which is



januaryfebruary2021

Table of Contents for the Digital Edition of januaryfebruary2021

Inside the Fence: Genesis by Necessity
Industry Update
How General Aviation is Helping Support Commercial Aviation and Prop Up Tourism in Specific Markets, Amid COVID-19 Resurgences
Pioneering PCAs in Salt Lake City
FBOs in a Post-Pandemic World
Clearing the Air on HVAC
Totally Boggus: Catch the Plane!
Legal Matters: Is Your Airport Leasehold Taxable?
A Clean and Clear Future
Passenger Experience in the Time of COVID-19
Don't Leave Hygiene Up in the Air
Airport Guru: Airport Development 101: Will an Investment be Profitable?
Product Profile: Stress Test
januaryfebruary2021 - 1
januaryfebruary2021 - 2
januaryfebruary2021 - 3
januaryfebruary2021 - 4
januaryfebruary2021 - Inside the Fence: Genesis by Necessity
januaryfebruary2021 - Industry Update
januaryfebruary2021 - 7
januaryfebruary2021 - 8
januaryfebruary2021 - 9
januaryfebruary2021 - How General Aviation is Helping Support Commercial Aviation and Prop Up Tourism in Specific Markets, Amid COVID-19 Resurgences
januaryfebruary2021 - 11
januaryfebruary2021 - 12
januaryfebruary2021 - 13
januaryfebruary2021 - Pioneering PCAs in Salt Lake City
januaryfebruary2021 - 15
januaryfebruary2021 - 16
januaryfebruary2021 - 17
januaryfebruary2021 - FBOs in a Post-Pandemic World
januaryfebruary2021 - 19
januaryfebruary2021 - Clearing the Air on HVAC
januaryfebruary2021 - 21
januaryfebruary2021 - 22
januaryfebruary2021 - 23
januaryfebruary2021 - 24
januaryfebruary2021 - Totally Boggus: Catch the Plane!
januaryfebruary2021 - Legal Matters: Is Your Airport Leasehold Taxable?
januaryfebruary2021 - 27
januaryfebruary2021 - A Clean and Clear Future
januaryfebruary2021 - 29
januaryfebruary2021 - 30
januaryfebruary2021 - 31
januaryfebruary2021 - 32
januaryfebruary2021 - 33
januaryfebruary2021 - Passenger Experience in the Time of COVID-19
januaryfebruary2021 - 35
januaryfebruary2021 - Don't Leave Hygiene Up in the Air
januaryfebruary2021 - 37
januaryfebruary2021 - Airport Guru: Airport Development 101: Will an Investment be Profitable?
januaryfebruary2021 - 39
januaryfebruary2021 - Product Profile: Stress Test
januaryfebruary2021 - 41
januaryfebruary2021 - 42
januaryfebruary2021 - 43
januaryfebruary2021 - 44
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