Opinion ID: 2132360
Heading Depth: 1
Heading Rank: 1

Heading: harrisburg-raleigh airport authority

Text: In No. 66381, the appellant, the Illinois Department of Revenue, denied tax-exempt status to certain property owned by the appellee, the Harrisburg-Raleigh Airport Authority. The circuit court of Saline County reversed the denial, and the appellant appealed to the appellate court. In a unanimous decision, the appellate court affirmed (163 Ill. App.3d 253), holding that the property at issue was exempt from taxation. We granted the appellant's petition for leave to appeal (107 Ill.2d R. 315(a)). The property in question consists of 20 aircraft hangars which are available for rent to the public for storage of aircraft on a first come, first served basis. The airport averages a 75% occupancy rate, approaching full occupancy during the winter months. The hangars are rented on a monthly basis at the rate of $35 to $85 per month. Some tenants pay rent for a full year in advance, rather than on a monthly basis. The airport maintains the hangars and provides electricity. This case turns on a question of statutory interpretation, arising under section 19.20 of the Revenue Act of 1939 (Ill. Rev. Stat. 1985, ch. 120, par. 500.20). Section 19.20 provides tax-exempt status for [a]ll property of every kind belonging to any Airport Authority and used for Airport Authority purposes. The parties do not dispute that the appellee is an airport authority and that it owns the hangars. Thus, the critical question is whether the hangars are being used for Airport Authority purposes. The general principles governing our interpretation of the statute are clear. Where, as here, the facts are undisputed, a determination of whether property is exempt from taxation is a question of law. ( Weslin Properties, Inc. v. Department of Revenue (1987), 157 Ill. App.3d 580, 583.) While the Department's determination is entitled to some deference, courts of review are not bound to give the same measure of deference to an administrative agency's construction of a statute as is given to its findings of fact. ( Nestle Co. v. Johnson (1979), 68 Ill. App.3d 17, 20.) A decision based upon an erroneous, arbitrary, or unreasonable construction of a statute cannot be allowed to stand. ( Winnetkans Interested in Protecting the Environment v. Pollution Control Board (1977), 55 Ill. App.3d 475, 480.) On the other hand, statutes exempting property from taxation are to be strictly construed in favor of taxation ( Telco Leasing, Inc. v. Allphin (1976), 63 Ill.2d 305, 310; Follett's Illinois Book & Supply Store, Inc. v. Isaacs (1963), 27 Ill.2d 600, 606), and the taxpayer seeking the protection of the exemption bears the burden of proving that he is entitled to it ( Thermos v. Department of Revenue (1976), 37 Ill. App.3d 410, 414). The parties urge two differing interpretations of the phrase Airport Authority purposes. The appellant relies principally on section 7 of An Act in relation to airport authorities (Act) (Ill. Rev. Stat. 1985, ch. 15 1/2, par. 68.1 et seq. ), which states: The establishment and continued maintenance and operation of safe, adequate and necessary public airports and public airport facilities    and the creation of airport authorities having powers necessary or desirable for the establishment and continued maintenance and operation of such airports and facilities are declared and determined to be in the public interest, and such powers and the corporate purposes and functions of such authorities, as herein stated, are declared to be public and governmental in nature and essential to the public interest. (Ill. Rev. Stat. 1985, ch. 15 1/2, par. 68.7.) The appellant argues that these phrases control the meaning of the term Airport Authority purposes, and that such purposes are to be regarded as a particular subset of those public and governmental purposes which generally qualify property so classified for an exemption from taxation. The appellant goes on to argue, citing such cases as People ex rel. Lawless v. City of Quincy (1946), 395 Ill. 190, and Sanitary District v. Hanberg (1907), 226 Ill. 480, that property leased or rented to private individuals is not being used for public purposes and is therefore not exempt from taxation. Both City of Quincy and Hanberg were decided prior to the enactment of section 19.20, at a time when the Revenue Act did not provide a specific airport-authority exemption, but only provided an exemption for `public grounds owned by a municipal corporation and used exclusively for public purposes.' City of Quincy, 395 Ill. at 193, quoting Ill. Rev. Stat. 1945, ch. 120, par. 500. Thus under the appellant's interpretation, only a public use of airport-authority property is use for an Airport Authority purpose. The appellee urges a broader interpretation of the term Airport Authority purpose. The appellee points out that section 7 of the Act provides that public airport-authority powers and the corporate purposes and functions    as herein stated, are declared to be public and governmental in nature and essential to the public interest. (Ill. Rev. Stat. 1985, ch. 15 1/2, par. 68.7.) The appellee argues that the purposes and functions of airport authorities implicitly include the rental of hangar facilities for the use of private aircraft. The Act defines an Airport as any locality    used or designed for the landing and taking off of aircraft, or for the location of    hangars, buildings, structures,    and other facilities. (Ill. Rev. Stat. 1985, ch. 15 1/2, par. 68.1.) Public Airport means an airport owned by an airport authority which is used or is intended for use by public, commercial and private aircraft and by persons owning, managing, operating or desiring to use, inspect or repair any such aircraft or to use any such airport for aeronautical purposes. (Ill. Rev. Stat. 1985, ch. 15 1/2, par. 68.1.) The appellee constructs the following syllogism. Since: (1) airports include hangars; (2) public airports are airports which are intended for use by, among others, private aircraft and persons desiring    to use such airport for aeronautical purposes; it follows that: (3) public airports are airports which include, among other things, hangars used to store private aircraft. Since the establishment and operation of a public airport is the cardinal purpose of an airport authority, it follows that the leasing of hangars to private parties for the storage of private aircraft is an Airport Authority purpose. This syllogism, while superficially plausible, is not perfect. While airports may certainly include hangars, and public airports may encompass hangars which can be used by private aircraft, it need not follow that these hangars can be rented to individual private aircraft owners for their exclusive use without infringing upon the public character of the airport. Be that as it may, other considerations persuade us that such a use of the airport is a tax-exempt use for an Airport Authority purpose within the meaning of section 19.20 of the Revenue Act. If it was true that airport-authority uses are synonymous with public uses in the strict sense, section 19.20 would be somewhat superfluous. Section 19.9 of the Revenue Act has long provided that public grounds owned by a municipal corporation and used exclusively for public purposes are exempt from taxation (Ill. Rev. Stat. 1985, ch. 120, par. 500.9), and this provision has previously been interpreted to include municipal airports ( People ex rel. Lawless v. City of Quincy (1946), 395 Ill. 190, 193-94). There is a strong presumption against finding statutory language to be mere surplusage. ( People ex rel. Hartigan v. Illinois Commerce Comm'n (1987), 117 Ill.2d 120, 139; Arnold v. Board of Trustees (1981), 84 Ill.2d 57.) Moreover, the lack of specific language in section 19.20 excluding from the exemption airport-authority property leased to private parties or used in part for private purposes militates against the appellant's position. A number of other statutory exemptions do, in fact, include such language. See, e.g., Ill. Rev. Stat. 1985, ch. 120, par. 500.10 (all property which may be used exclusively by societies for agricultural, horticultural, mechanical, or philosophical purposes, and not for pecuniary profit  (emphasis added)); Ill. Rev. Stat. 1985, ch. 120, par. 500.16 (parking areas  not leased or used for profit, when used as a part of a use for which an exemption if provided hereinbefore and owned by any school district, non-profit hospital or school, or religious or charitable institution which meets the qualifications for exemption (emphasis added)). The inclusion of a separate and broadly written exemption for airport-authority uses suggests that such uses, while they must be consistent with the maintenance of a public airport, need not be exclusively public in the sense that the appellant contends. The fact that these leases are short-term, in no case exceeding one year, and are available to all members of the flying public on a first come, first served basis strongly supports the conclusion that they serve a public airport's statutory function as a terminus for private, as well as public and commercial, aircraft. Without some provision for storage of private aircraft, private aircraft owners would be forced to construct their own storage facilities at a distance from the airport, or use public storage facilities which might not be available on short notice. The goal of assuring regular users of the airport that they will be able to store their craft in secure facilities bears a real and substantial relation to a public airport's function of serving as a terminus for private aircraft. Cases from other jurisdictions holding hangars or other airport property leased to private individuals nonexempt are distinguishable. In all of these cases, the legislatures did not provide a separate exemption for airport-authority property, and the courts were faced only with the question of whether such property was held for public use or used for public purposes. (See, e.g., Salina Airport Authority v. Board of Tax Appeals (1988), 13 Kan. App.2d 80, 761 P.2d 1261 (hangars leased to private corporations not held for public use); City of Cleveland v. Perk (1965), 2 Ohio St.2d 173, 207 N.E.2d 556 (airport concessions leased under long-term agreements not held for public use); Town of Harrison v. County of Westchester (1963), 13 N.Y.2d 258, 196 N.E.2d 240, 246 N.Y.S.2d 593 (hangars leased to private corporations on 10- to 15-year leases not held for public use); Chemung County v. Hartman (1965), 24 A.D.2d 1063, 265 N.Y.S.2d 458 (month-to-month rentals of hangars not held for public use); but see Hanover Township v. Town of Morristown (1949), 4 N.J. Super. 22, 66 A.2d 187 (public airport used for public purposes notwithstanding lease of hangar space to private persons).) Where the legislatures of other States have provided exemptions for specified uses of public property, these exemptions have often been more broadly construed. (See City of Newark v. Essex County Board of Taxation (1969), 54 N.J. 171, 254 A.2d 513 (exemption for publicly owned marine terminal facilities includes facilities leased to private individuals).) The General Assembly's inclusion of a separate exemption for airport-authority uses suggests that this exemption is to be construed at least broadly enough to encompass private uses of airport-authority property which bear a real and substantial relation to the authority's statutory purpose of maintaining a public airport. The case of Marshall County Airport Board v. Department of Revenue (1987), 163 Ill. App.3d 874, is distinguishable, simply because it involves a municipally owned airport, rather than an airport authority. The farmland and tie-down areas in that case were therefore nonexempt under section 19.9 of the Revenue Act, and section 19.20 did not apply. For these reasons, the judgment of the appellate court in No. 66381 is affirmed.