A flight support service company is asking a state court to declare its leased facilities at Westchester County Airport exempt from property taxes, raising alarm and a united legal defense from school district, local government and county officials who collectively stand to lose millions of dollars in tax refunds and future revenue.
Some officials worry that other airport tenants could follow with similar court petitions seeking tax-exempt status for their operations on county-owned property.
A fixed-base operator at the county airport since 2006, Signature Flight Support Corp. last year filed its petition in state Supreme Court in White Plains for tax-exempt status. Headquartered in Orlando, Fla., and owned by London-based BBA Aviation plc, Signature is the world”™s largest fixed-base network for business aviation services.
The company offers 120,000 square feet of hangar space at the county airport, according to its website. Its land, hangars and flight support services facilities in the town of Rye in 2011 had an assessed total value of approximately $17.3 million.
The company in its court filing claimed its leased property in Westchester should be exempt from taxes under state law because it is county-owned and is available for use by the general public.
Opponents, though, have claimed Signature”™s space and services are used strictly by private aircraft.
Town of Rye Assessor Mitchell Markowitz said Signature is seeking full refunds for property taxes paid from 2009 through 2012. Those total $3.4 million, including approximately $850,000 due this year, he said.
Markowitz said another fixed-base operator at the county airport, Houston-based Landmark Aviation, also has served notice that it will seek tax-exempt status through the state court. Landmark”™s 2012 tax bill totals approximately $143,000, he said.
“The impact is certainly measurable on some of the (taxing) jurisdictions affected,” said Markowitz. “I don”™t know where it”™s going to end up, frankly. There”™s real money involved any way you cut it.”
The Westchester County Board of Legislators at its September meeting unanimously agreed to join legal forces with the town of Rye in opposing the Signature exemption. The county will be represented in the legal action, at no cost to the county, by attorney Mark S. Tulis and the White Plains firm of Oxman Tulis Kirkpatrick Whyatt & Geiger L.L.P. Tulis and his firm already represent the town of Rye in the case.
Prior to their vote, county legislators heard from village and school district officials on the potentially dire financial impact of Signature”™s flight from property taxes.
Rye Brook Mayor Joan Feinstein said the village, which operates on a $16 million budget, would lose $275,000 to $300,000 in annual revenue from Signature. Blind Brook-Rye Union Free School District Superintendent William J. Stark said the school district, which operates on a $34 million budget, stands to lose an estimated $2.3 million in cumulative refunds if both Signature and Landmark are granted exemptions. That would trigger a nearly 7 percent increase in school taxes for other taxpayers in the district, he said.
With the school district already operating under the state”™s property tax cap, “This is unconscionable,” Stark told legislators.
Tulis and county officials claim a provision in Signature Flight Support”™s 2006 lease contract with the county expressly prevents the company from seeking a tax exemption in court. While the agreement allows the fixed-base operator to seek lower property assessments that would reduce its taxes, it adds this restriction: “Lessee hereby waives any right otherwise available to it to seek a judicial determination with respect to the non-exempt taxable status of the leased premises.”
“Our position is, your lease is your lease,” said County Legislator David Gelfarb, a practicing attorney whose legislative district includes the Blind Brook district and municipalities affected by Signature”™s action. “Your deal is your deal.” Gelfarb said the county”™s share of tax refunds would amount to more than $404,000.
Each airport operator negotiates its own deal with the county, Tulis and county officials noted, and some leases grant tax-exempt status while setting higher rents for those operators. Changing terms of an existing lease through a judicial decision could give a competitive advantage to Signature, he noted.
“I think some of their competitors who pay higher rents might be awfully (upset) if these guys get a low rent and are exempt from taxes,” Tulis said.
“The issue, when you get past the exemption issue, is whether or not it”™s open to the public,” he said. “We have to have a judge decide this issue.”
A 2009 state Supreme Court decision involving another fixed-base operator at the county airport might have prompted Signature and Landmark to seek tax exemptions.
Panorama Flight Service Inc., which for many years operated in Westchester with a tax exemption, went to court in 2008 after Harrison officials revoked the company”™s tax-exempt status. Harrison officials argued that Panorama served almost exclusively privately licensed customers rather than the general public and so should pay taxes on the premises. The judge, though, ruled that Panorama did serve the public and the town had no reason to revoke its exemption.
Rochester attorney John B. Hood, who represents Signature Flight Support in the Westchester case, did not return a call for comment at press time.
Feinstein, the Rye Brook mayor, said a court-granted exemption for Signature “could set a terrible precedent with other private operators at the county airport and would be devastating” to local municipalities.
“This may be the start of operators trying to go that way,” said Deputy County Executive Kevin Plunkett
