"Commuter Airline Fights Harrisburg, Pa., Airport over Real Estate Taxes"

Friday, August 22, 2003

Commuter Airline Fights Harrisburg, Pa., Airport over Real Estate Taxes
The Harrisburg (PA) Patriot-News


A court challenge by a commuter airline over whether it must pay real estate
taxes on a building it owns at Harrisburg International Airport could be
costly for Dauphin County and other tax recipients. 

Allegheny Airlines is fighting in Dauphin County Court to get tax-exempt
status for its one-story, 46,000-square-foot hangar, which is assessed by
the county at $2.9 million. 

In addition to more than $70,000 a year in property taxes that would be lost
by the county, Lower Swatara Twp. and Middletown School District, a victory
by the airline could pave the way for similar businesses at the airport to
file for tax exemptions. 

Officials with the airline, a subsidiary of US Airways Group Inc., declined
to comment. 

In its court filings, the airline argues that work done in the hangar is
critical to the airport's operation. Because the airport is publicly owned
and exempt from taxes, the hangar, which is helping support the airport,
also should be exempt, according to the company. 

County tax officials argue that the building is owned by the airline, a
for-profit company, and real estate taxes should be paid. 

Allegheny Airlines, which has used the hangar since 1993, owns only the
building. An agreement with the airport allowed the hangar to be built on
HIA-owned land under a long-term lease. 

Real estate taxes are only for the building and not the land, which is owned
by Susquehanna Area Regional Airport Authority, the owner and operator of
HIA. 

About 180 airline employees work in the hangar to maintain, service and
repair aircraft. Seven airplanes are serviced in the hangar every night,
according to the company's court filings. 

The hangar, north of the control tower, also is the control center for the
airline and maintains radio contact with about 400 flights a day that
operate in the Northeast and eastern corridor of the country, according to
the filing. 

In 2001, Allegheny Airlines operated more than 5,500 flights in and out of
HIA, serving more than 185,000 passengers, court documents state. 

Fred Testa, aviation director for the airport authority, said all companies
that either own or lease space at the airport pay real estate taxes. 

In some cases, Testa said, the authority collects the tax through the lease.
In other cases, the company, as in Allegheny's case, would pay the taxes
directly, he said. 

Some of the companies at HIA paying real estate taxes are the National and
Hertz car-rental agencies and Rite Aid Corp., Select Medical Corp. and
Hershey Foods Corp. for their corporate hangars, Testa said. 

The only buildings exempt from real estate tax are the airport and terminal
building, maintenance facilities and a garage directly used by the
authority, Testa said. A tax-exempt church on HIA property is leased by a
religious organization, he added. 

The Dauphin County Board of Assessment Appeals initially turned down
Allegheny's request. Carl Wass, attorney for the board, said the bottom line
is that the company is private and not public. 

Should the county lose the tax dispute, Wass said, other firms at the
airport would likely use the case as a precedent to challenge their real
estate tax status. 

"They claim they're operating public property. We don't agree," Wass said.
"Allegheny Airlines Inc. is a private company, they are not public at all;
they lease the land from the airport authority. 

"They built the building on it, and when the lease is terminated, they are
supposed to tear down the building and return the land to the airport," he
said. "So as far as I'm concerned, and the board is concerned, that is the
private property of a profit-making corporation."


 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dc/dcboard.php

*****************************************