Wednesday, June 11, 2014

Airlines sue Sacramento County over property taxes

Major airlines have complained for years that the user fees they pay at Sacramento International Airport are too high. Now they’re arguing over property taxes, and have taken Sacramento County to court over the issue.

Southwest, United and Skywest airlines sued the county last week over the property taxes they’re assessed when they park their jets at Sacramento International, demanding refunds totaling $2 million.

California law allows counties to collect property tax on commercial aircraft for the time they spend in their airports. The taxes are separate from the landing fees and other payments the carriers are charged to do business at the airport.

The same three carriers, joined by American, AirTran and Envoy airlines, are also suing Los Angeles County over the property tax issue. In those cases, the airlines are demanding a combined $7 million in property tax refunds, according to a report by Bloomberg BNA.

All of the lawsuits, filed by a Los Angeles firm, are based on taxes paid in 2009. The requested refunds are a portion of what was paid.

Property tax on commercial planes is calculated through a complicated formula based on multiple factors, including the age and original price of the aircraft.

The individual counties don’t perform the calculations; instead, the assessors’ trade association designates a “lead county assessor” for each airline. For example, United jet valuations are calculated by the assessor of San Mateo County, home of San Francisco International Airport, a major United hub. As a result, the San Mateo assessor is named as a defendant, along with Sacramento County Assessor Kathleen Kelleher, in the United litigation.

In each lawsuit, the argument is essentially the same: The airlines say the assessors failed to take into account “economic obsolescence” when calculating the jets’ value. Economic obsolescence includes passenger demand, the amount of revenue generated by the jets and other factors.

Southwest, the largest carrier at Sacramento International, is seeking the largest refund: $1.6 million. United says it is owed $365,000 and Skywest wants $65,000.

Mary Conde, chief appraiser in the Sacramento County Assessor’s Office, said Monday the county would have no comment on the lawsuits. Attorneys for the airlines couldn’t be reached for comment.


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