Airport Lease Ad Valorem Tax Exemption, Revisited
By Jeff Wagner, Shareholder
Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.
At the risk of redundancy, my column once again addresses the issue of the ad valorem tax exemption relating to leases of airport property provided by Miss. Code Ann. §61-3-21 (for authority operated airports) and Miss. Code Ann. §61-5-11 (for county, municipal and other airports). It appears there will be a concerted effort in the Mississippi Legislature during its next session starting in January to limit this valuable marketing and economic development tool for airports.
These provisions are virtually identical and provide:
All contracts, leases and other arrangements entered into pursuant to this section are deemed to serve a public and governmental purpose as a matter of public necessity; therefore, all such contracts, leases, and other arrangements and all structures, improvements and other facilities erected, installed, constructed or located in connection therewith on an airport or air navigation facility owned or controlled by an authority, or any portion of facility thereof or space therein, shall be free and exempt from all state, county and municipal ad valorem taxes on real property and personal property for so long as may otherwise be lawful, and the charges, rentals and fees received by an authority in connection with such contracts, leases and other arrangements shall be deemed to be in lieu of said taxes.
Some proponents of limiting the exemption claim that the Mississippi Supreme Court misinterpreted the Legislature’s intent in its decision in Rankin County Board of Supervisors v. Lakeland Income Properties, LLC, which upheld the exemption from ad valorem taxes for leases of airport authority-owned or controlled property (including all buildings and structures located on the property by the tenant), even if made for commercial, non-aeronautical purposes. Others have argued that, regardless of the intent of the existing law, the ad valorem tax exemption for leases of airport property should be optional with each individual county (or municipality) where an airport is located, either determined on a per-project basis or as applicable to all leases at that airport.
Without going into a long history of the statutes in question, the Legislature amended the statutes in 2004 to clarify that the definition of “airport” includes “any appurtenant areas which are used, or intended for use, for airport buildings or other airport facilities or rights-of-way, or for other appropriate purposes, including buffer areas and areas for airport compatible development.” Having been involved with the drafting of the 2004 amendments on behalf of the Mississippi Airports Association, I know that the intent of the Association, as communicated to legislative leadership in support of the amendments, was to confirm that the tax incentive to locate at an airport was intended to apply to both aeronautical and non-aeronautical businesses in order to provide an alternate source of funds to airports in the face of reduced federal assistance, especially for small and mid-sized airports.
If you agree that the ad valorem tax exemption for leases of airport property is a valuable marketing and economic development tool for airports and ought to be preserved, please share your thoughts with your legislators.
Jeff Wagner is a shareholder in the Jackson, Mississippi, office of Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., and may be reached at 601-973-3610 or by email at [email protected]