Harrisburg-Raleigh Airport Authority v. Department of Revenue

• Decision Date: 18 January 1989
• Docket Number: Nos. 66381,66544,HARRISBURG-RALEIGH,s. 66381
• Citation: 533 N.E.2d 1072,127 Ill.Dec. 944,126 Ill.2d 326
• Parties: , 127 Ill.Dec. 944 TheAIRPORT AUTHORITY, Appellee, v. The DEPARTMENT OF REVENUE, Appellant. The FOX VALLEY AIRPORT AUTHORITY, Appellee, v. The DEPARTMENT OF REVENUE, Appellant.
• Court: Illinois Supreme Court

Page 1072

533 N.E.2d 1072

126 Ill.2d 326, 127 Ill.Dec. 944

The HARRISBURG-RALEIGH AIRPORT AUTHORITY, Appellee, v. The DEPARTMENT OF REVENUE, Appellant.

The FOX VALLEY AIRPORT AUTHORITY, Appellee, v. The DEPARTMENT OF REVENUE, Appellant.

Nos. 66381, 66544.

Supreme Court of Illinois.

Jan. 18, 1989.

Neil F. Hartigan, Atty. Gen., of Springfield (Shawn W. Denney and Robert J. Ruiz, Solicitors Gen., and Rosalyn B. Kaplan, Asst. Atty. Gen., of Chicago, of counsel), for appellant in No. 66381.

Charles M. Ferguson, of Harrisburg, and Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago (Bruce L. Carmen, of counsel), and John H. Brechin, of Oak Brook, for appellee in No. 66381.

Neil F. Hartigan, Atty. Gen., of Springfield (Shawn W. Denney and Robert J. Ruiz, Solicitors Gen., and Rosalyn B. Kaplan and Ann Plunkett-Sheldon, Asst. Attys. Gen., of Chicago, of counsel), for appellant in No. 66544.

Hinshaw, Culbertson, Moelmann, Hoban & Fuller, of Chicago (James W. Keeling and Bruce L. Carmen, of counsel), John H. Brechin, of Oak Brook, and Charles M. Ferguson, of Harrisburg, for appellee in No. 66544.

Justice CLARK delivered the opinion of the court:

These consolidated cases raise the question of whether certain real estate leased to private individuals by an airport authority is exempt from taxation as property belonging to an airport authority and "used for Airport Authority purposes" (Ill.Rev.Stat.1985, ch. 120, par. 500.20). The property in question in No. 66381 consists of hangars rented by the Harrisburg-Raleigh Airport Authority to private individuals for storage of their private aircraft. The property in question in No. 66544, owned by the Fox Valley Airport Authority, consists not only of hangars but also various other facilities for the private storage or maintenance of aircraft, as well as two additional parcels of land, one leased to a private individual as a residence and the second leased as a farm, which are being held for future expansion of the airport. No. 66544 also raises the question of whether a notice of appeal from a judgment of the circuit court is timely filed if it is mailed within the 30-day period for filing a timely notice but is not received by the clerk of the circuit court until after the period has expired. For the purposes of convenience, we will treat each case separately.

HARRISBURG-RALEIGH AIRPORT AUTHORITY

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, 114 Ill.Dec. 812, 516 N.E.2d 967), 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, 109 Ill.Dec. 696, 510 N.E.2d 564.) 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, 24 Ill.Dec. 652, 385 N.E.2d 793.) 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, 13 Ill.Dec. 149, 370 N.E.2d 1176.) 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, 347 N.E.2d 729; Follett's Illinois Book & Supply Store, Inc. v. Isaacs (1963), 27 Ill.2d 600, 606, 190 N.E.2d 324), 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, 346 N.E.2d 47).

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, 69 N.E.2d 892; and Sanitary District v. Hanberg (1907), 226 Ill. 480, 80 N.E. 1012, 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, 69 N.E.2d 892, 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....