Bob Malkas, former Manager of the Lansing Municipal Airport
Today few people in Lansing would be able to define a leasehold tax.
Residents would be more interested learning about it if they knew how it would indirectly affect them.
This began in 1985 when the airport learned that Cook County was preparing to assess for the first time a new tax on its more than 50 tenants.
If this were to happen, it would be easy to anticipate what type of effect it would have on the airport’s clients.
Anticipating a backlash, the airport tried to prepare itself by hiring an attorney to prepare a response to what the County was trying to do.
His report detailed the legalese, but also identified the revenue the County could expect annually was in the $10,000 range, and that would create a significant new burden on struggling FBOs and airplane enthusiasts wanting to house their aircraft.
It would also create another obstacle for the Village of Lansing to position itself to achieve financial self-sufficiency for the airport.
The ability to attract new paying clients and Fixed-Base Operator (FBO) businesses would be seriously impacted because they had the choice to locate on another airport that did not have the additional burden of dealing with a leasehold tax.
In 1999, while negotiating a solution to the problem, the airport was able to get an explanation from James M. Houlihan, the Cook County Assessor. This was done after a request was made to him by Lansing’s Cook County Commission.
Houlihan explained that the property composing the Lansing Municipal Airport is exempt from taxation—only leaseholds are assessable. He went on to say that if the word “license” were used instead of “lease,” a tax could be averted.
He then covered his position by saying that the agreement must not merely be called a license but must actually have the attributes that distinguish a license, including specific use.
The next step in the process was to ask Representative Bill Balthis for help to set up a meeting between Lansing and County officials to discuss the leasehold issue. The meeting was held at his office in Chicago, and Lansing was able to make its position known.
In early 1996 it appeared that the airport’s efforts were rewarded.
The Assessor relented on his decision and cancelled the bills already sent to Lansing’s 40 T-hangar tenants and 10 Port-a-Port owners. The Assessor also ended his attempt to get 8 years of back taxes.
The airport lost in its efforts to get our other FBOs included in that decision. This then sealed the fate of Aviation Management, Associated Air Activities, and Shannon’s Landing.
All were then paying rent to the airport for their occupied space and now would have to contend with a new burden to make their businesses successful.
You might want to ask how they were impacted.
In 2016 the Chicago Sun-Times published an article by Casey Toner of the Better Government Association: “Suburban airport a financial drain,” addressing the effect of the County’s work. I am borrowing 5 paragraphs of Toner’s work because it explains perfectly this chapter of the story:
“For more than three decades, airport operator Associated Air Activities occupied a 10,000-square-foot hangar on the airfield selling fuel, repairing planes and offering flight lessons. In 2014 Lansing sued to evict Associated Air, saying owner Wade Palmer’s business remained onsite for seven months after his lease expired without paying rent or fuel fees total $9,000. By last June, the debt had ballooned to $26,292.
“We weren’t making enough money to make payments. It was hard times at the airport,” said Palmer, who agreed that month to leave, turning over his two fuel trucks and surrendering a standalone building south of the hangar in exchange for the village dropping the suit and no longer trying to collect past rent.
“The village is in litigation with another tenant, Steve Leaven, the owner of Chicago Business Air Center, which stored airplanes, pumped fuel, did maintenance, and managed jet charter. Lansing sued to evict Leaven in June 2014 saying he owed $18,823 in unpaid rent for a year.
“A second lawsuit following in December 2015 accusing Leaven of owing Lansing $30-,000 in fuel pumping fees.
“In February 2010 the owner of Shannon’s Landing, a restaurant and bar at the airport sued after being evicted a year earlier for failing to pay $57,400 in rent. The owner said Lansing officials changed the locks and he was unable to redrive merchandize from his office.”
This article is only meant to establish facts. It is for others to make up their own minds.
The next step in this process would require the history of Lansing’s efforts to secure an exemption from the tax by appealing Illinois General Assembly. The Illinois Supreme Court would also be brought into the picture.
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