Thursday, June 25, 2015

Moline schools tell appellate judges Elliott Aviation tax break is unconstitutional

OTTAWA, Illinois -- A panel of Third District Illinois Appellate Court Justices will decide if a tax break granted by law to benefit Elliott Aviation is constitutional.

Attorneys for the Moline School District, Elliott Aviation and the state made oral arguments Wednesday before the panel in Ottawa. 

Justice Robert Carter said the court will take the matter under advisement and issue an opinion sometime in the future. The panel also included Justice Vicki Wright and Justice William Holdridge.

The case was filed by the school district in March 2012, about a month after former Gov. Pat Quinn signed a law exempting any fixed base operator (FBO) at the Quad City International Airport from paying property taxes.

Elliott Aviation -- the only FBO at the airport -- asked legislators to consider the exemption, saying the company could move an expansion it planned in Moline to its facility in Des Moines, where it would not have to pay property taxes.

The school district filed the lawsuit against the state, county and township officials. It contended the exemption violated provisions of the Illinois Constitution and would deprive it of $150,000 in annual in property taxes.

In May 2013, the Rock Island Circuit Court issued an injunction forbidding local and state taxing authorities from granting the tax break until the lawsuit was resolved.

In August, Elliott Aviation asked to intervene in the lawsuit. The company and the school district requested a summary judgment, and in December 2013, Circuit Court Judge Frank Fuhr ruled the tax break was constitutional and dissolved the injunction.

The school district asked the court to reconsider. In December 2014, Judge Fuhr ruled against reconsideration and the school district filed the appeal.

During the hearing Wednesday, school district attorney Floyd Perkins said the tax break violates the constitution because it is a special exemption, narrowly granted to FBOs at the Moline airport, instead of FBOs across the state.

He said there are plenty of FBOs in Illinois, as well as businesses in Moline and Rock Island County, that would like to pay less in property taxes and could say they would use that savings to expand their businesses and add jobs. However, the law signed by the former Gov. Quinn is too narrow and restrictive to allow any company to do that, he said.

State law also requires uniformity in taxation, and Mr. Perkins said the exemption is a blatant lack of uniformity. Tax code requires for-profit businesses to pay property taxes on any land they are leasing from a government body. Elliott Aviation is not required to pay property taxes, but all of the other businesses that are leasing land from the airport are required to do so.

Elliott Aviation attorney Jason O'Rourke said Judge Fuhr found the company is uniquely situated.

Mr. O'Rourke said the school district provided no evidence of another FBO in Illinois that was considering a large expansion and had a facility in a neighboring state where they could move the expansion and be exempt from paying property taxes. 

Justice Wright said it seemed a "little bullish" of Elliott Aviation to threaten to move its expansion, and the law includes no language requiring or obligating the company to follow through with its expansion.

Mr. O'Rourke said Elliott Aviation did not threaten, but rather there was a real threat facing the community that it could happen. Mr. O'Rourke said information about company's economic impact on the county was provided to the court. 

He said economic benefit meets the "rational basis" test on which special legislation can be created, and it was done to bring additional jobs to the county and state.  

Assistant Attorney General Evan Siegel said the school district did not meet the burden of proof for a constitutional challenge. The airport is a unit of government and Elliott Aviation should be viewed as an arm of that government, because the company is providing the same functions as the airport, but to general aviation customers instead of the public. 

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