Rare Air Ltd. v. Prop

Citations

• 2019 COA 134

Syllabus

Centennial Airport (the airport) is owned by the Arapahoe County Airport Authority (Authority), a tax-exempt political subdivision of the State of Colorado. The Authority leased about 70 acres of the airport land in Douglas County to Denver jetCenter (DJC) pursuant to a Master Lease. The Master Lease requires DJC to construct or contract for the construction of various improvements, including an aircraft hangar. DJC entered into a sublease (Ground Lease) with Rare Air Limited, LLC to satisfy its obligation to construct the hangar facility. The hangar facility was constructed in 2012 and is located on tax-exempt land owned by the Authority. For tax year 2015, the Douglas County Assessor's Office issued a notice of valuation to Rare Air for the value of the hangar facility of $2,871,708. Rare Air sought and obtained an abatement from Douglas County for the tax assessment, claiming that the hangar facility should be assessed to DJC's leasehold interest under the Master Lease. Due to the size of the abatement, the Property Tax Administrator's review was required. The Tax Administrator overruled the abatement, stating that all property in the State of Colorado on the assessment date is taxable unless it is expressly exempted by the Constitution or state statutes. Rare Air appealed the Tax Administrator's decision to the Board of Assessment Appeals (BAA), which determined that Rare Air had been correctly assessed for its interest in the hangar and upheld the Tax Administrator's decision. On appeal, Rare Air contended that the BAA erred in upholding the tax assessment on the hanger facility because DJC, not Rare Air, holds a taxable interest in the hangar facility. Buildings and structures are improvements subject to taxation as real property unless exempted. Here, Rare Air holds title to the hangar facility, which it constructed at its own expense. It has exclusive use of the facility, has the right to all depreciation and tax advantages, retains all profits generated, an