Hangar Property Taxes by State: Who Taxes a Hangar on Leased Airport Land

Abstract

1. Introduction

A private party builds a hangar on ground it does not own, at an airport owned by a city, a county or an authority. The land underneath is exempt from property tax. Some owners in that position receive an annual tax bill and some do not, and the difference is rarely explained to either group.

The premise that produces the confusion is intuitive and wrong. Exemption of the land does not imply exemption of anything on it. In thirteen of the fifteen states surveyed here, something remains in private hands that an assessor can reach: the tenant's leasehold or possessory interest, the hangar improvement itself, or both. Two states provide clean relief. Minnesota exempts hangars from its lessee-user tax by name, subject to two carve-outs. Nevada excepts property located upon a public airport from its leasehold tax without regard to the character of the tenant's business. North Carolina is a partial third case: it stopped taxing the leasehold interest in 2019 but continues to tax a privately owned hangar building to the party that owns it.

Which object a given state reaches is not a technicality. It determines who receives the bill, what number appears on it, whether a lien can attach to the airport's land, and where an appeal is heard. It also determines whether the ground rent negotiated in the lease raises the tax, lowers it, or has no effect at all, and the four states that answer that question differently do so in mathematically opposite directions.

The survey has a second purpose. Practitioners frequently assume that because a hangar is federally regulated, it enjoys some federal protection from local taxation. Section 4 establishes that it does not, and identifies the one federal statute that addresses state taxation of aviation property in order to show how narrow its reach is.

Method and scope are stated plainly. Fifteen states were selected for general aviation activity, for diversity of legal architecture, and for the availability of primary sources. Each jurisdiction was worked from the statutory text, the controlling appellate decisions, and the assessment guidance issued by the state revenue authority or its equivalent. The survey classifies architectures. It does not adjudicate parcels, and Section 7 sets out what it does not establish.

2. Five Architectures by Which a State Reaches a Hangar

The fork that governs everything downstream is what remains taxable once the land is removed from the base. Because the land is publicly owned and exempt, the assessor must decide what, if anything, is left in private hands. Across these fifteen states the answer takes one of five forms, and the differences are not cosmetic. They set the tax base, the rate, the roll, the lien and the appeal path.

The lessee-user tax. Minnesota and Michigan tax the private lessee of exempt property as though the lessee owned it. The measure is the property, not the bargain. Michigan's formulation is unqualified: the lessee "is subject to taxation in the same amount and to the same extent as though the lessee or user owned the real property." Both states then publish a list of exceptions, and whether hangars appear on that list decides the outcome. In Minnesota they do. In Michigan they do not.

The possessory interest. California and Colorado assess the tenant's private right to possess public property as a distinct taxable object. Both build value from the lease, in opposite directions. California excludes the rent obligation from the base and requires that the present value of unpaid contract rent be added back to a sale price before that sale can be used as evidence of value. Colorado constructs the base out of the rent stream the tenant pays the government.

The improvement account. Texas, Colorado and North Carolina reach the physical hangar directly, as real property listed to whoever owns it, with the land carried separately and exempt. North Carolina applies it without qualification: the leasehold is statutorily invisible, the building is not.

Exemption denial. Ohio and Florida never create a separate taxable object. Their public-property exemptions turn on use, so a private lease strips the exemption from the leased portion, which is then split off and taxed. Nothing new is invented; something existing is withdrawn.

An excise instead of a tax. Washington removed leasehold interests in public property from the property tax and substituted a leasehold excise measured by rent. The burden follows the rent rather than the value, which makes Washington the one state in this survey where a below-market ground lease reduces the bill rather than raising it. The privately owned improvement is handled separately, and Section 5.6 sets out how.

Georgia belongs to none of these. It asks a prior question of property law: did the lease convey an estate at all, or only a right to use. If only the latter, there is nothing to tax and nothing to argue about.

Table 1. The five architectures and what each one taxes

Source: Author's classification, from the statutes and decisions cited in Section 5.

3. Comparative Results

Table 2 summarizes the treatment of a privately held hangar interest on government-owned airport land across the fifteen jurisdictions. "Reached" means the state taxes some privately held object. It does not mean the airport's land is taxed anywhere; in none of these states is it.

Table 2. Treatment of a privately held hangar interest on government-owned airport land, fifteen states

Source: Author's compilation from the statutes, regulations, administrative guidance and decisions cited in Section 5 and listed in the references.

Read across a row and the same physical asset, an enclosed structure sheltering an aircraft on government land, is reached by five different legal theories, placed on different rolls, and measured against different benchmarks. That is why no national rule of thumb for hangar assessed value exists, and why an appraisal that reports a dollars-per-square-foot figure without first naming the taxable object is unreliable.

4. Federal Law and the Absence of Preemption

4.1 What federal airport law governs

Owners frequently assume that because a hangar is federally regulated, it is federally protected from local taxation. It is not. Federal airport law governs use and revenue. State law governs tax. The two run on separate tracks, and a hangar can be in full federal compliance and still generate a five-figure annual tax bill.

The current authority is FAA Order 5190.6C, Airport Compliance Manual, effective February 2026, which cancels and replaces Order 5190.6B. Three chapters bear on hangar leases: Chapter 12, review of aeronautical lease agreements; Chapter 15, permitted and prohibited uses of airport revenue; and Chapter 18, airport rates and charges, which requires rates to be fair and reasonable and the airport to maintain a self-sustaining rate structure (Federal Aviation Administration 2026).

The self-sustaining requirement is where tax and federal policy touch. A sponsor that agrees to absorb a tenant's property tax, or that sets ground rent below market to compensate a tenant for a tax burden, is making a revenue decision the agency can review. That is a reason to negotiate the tax allocation clause explicitly rather than leaving it to be inferred.

The second federal document matters because of a single sentence about ownership. The FAA's Policy on the Non-Aeronautical Use of Airport Hangars, 81 Fed. Reg. 38906 (June 15, 2016), effective July 1, 2017, states that it applies to all users of aircraft hangars "regardless of whether a user is an owner or lessee of the hangar," and that "when land designated for aeronautical use is made available for construction of hangars, the hangars built on the land are subject to the sponsor's obligations to use aeronautical facilities for aeronautical use" (Federal Aviation Administration 2016).

Read that against the state law below and the asymmetry is apparent. Building the hangar at the tenant's own expense on a ground lease buys no relief from the federal use restrictions. In most of these states it also buys no relief from tax, and in several it is precisely what creates the tax, because a lessee-owned improvement is the object the assessor lists. The policy also settles what counts as aeronautical use: storage of active aircraft, final assembly of aircraft under construction, non-commercial construction of amateur-built or kit-built aircraft, maintenance and repair, and storage of aircraft handling equipment, with non-aeronautical items permitted so long as they do not interfere with the aeronautical use.

4.2 The one federal statute addressing state taxation, and its limits

One federal statute does speak to state and local taxation of aviation property, and it is frequently misread as a shield. The Anti-Head Tax Act, 49 U.S.C. 40116, prohibits a state or political subdivision from collecting a tax on individuals traveling in air commerce, on the transportation of individuals in air commerce, or on the gross receipts from that transportation. Subsection (d) adds a non-discrimination rule, barring assessment of air carrier transportation property at a ratio higher than, or taxation of it at a rate higher than, that applied to other commercial and industrial property in the same assessment jurisdiction.

Neither provision helps a hangar tenant. Subsection (e)(2) preserves the state's authority expressly, providing that the section does not limit a state's power to levy "taxes other than those enumerated," including property taxes. The non-discrimination rule in subsection (d) is confined by its own terms to air carrier transportation property, which does not describe a general aviation hangar or a fixed-base operator's leasehold. There is therefore no federal preemption of state property taxation of airport tenants, and none of the fifteen states surveyed here treats federal regulation as relevant to the question.

5. Jurisdiction Studies

5.1 Minnesota

Minnesota carries a hangar-specific statutory exemption that practitioners outside the state routinely overlook.

The baseline is a conventional lessee-user tax. Under Minn. Stat. § 272.01 subd. 2(a), when tax-exempt property is leased, loaned or otherwise made available and used by a private individual, association or corporation in connection with a business conducted for profit, a tax is imposed "in the same amount and to the same extent as though the lessee or user was the owner." Standing alone, that language would place every commercial hangar tenant in the state on the roll. The trigger is use in connection with a business conducted for profit, so a purely personal storage arrangement never reaches the baseline in the first place.

Subdivision 2(b) then lists exceptions, and clause (2) is written for hangars. The tax does not apply to property of an airport owned by a city, town, county or group thereof which is:

(i) leased to or used by any person or entity including a fixed base operator; and (ii) used as a hangar for the storage or repair of aircraft or to provide aviation goods, services, or facilities to the airport or general public

Minn. Stat. § 272.01 subd. 2(b)(2)

The clause is drawn broadly. It covers the fixed-base operator by name. It covers repair as well as storage. It covers aviation goods and services generally, not merely aircraft shelter. A hangar tenant at a Minnesota municipal or county airport is, by statute, outside the lessee-user tax.

5.1.1 The two carve-outs

The exception is then withdrawn in two situations, and both are easy to fall into.

The first is geographic. The exception does not apply to property located at an airport owned or operated by the Metropolitan Airports Commission, or by a city of over 50,000 population according to the most recent federal census, or by such a city's airport authority. This is a line drawn by sponsor, not by use. Identical hangars, identical leases, identical operations: one is exempt because the sponsor is a small county, the other taxable because the sponsor sits in the Metropolitan Airports Commission system or is a larger city. Population is measured by the most recent federal census, so a city can cross the threshold and change the tax status of every hangar on its field without anyone at the airport doing anything.

The second is by use. The exception does not reach hangars leased by a private individual, association or corporation in connection with a business conducted for profit other than an aviation-related business. Profit is not disqualifying; non-aviation profit is. A maintenance shop keeps the exemption. A contractor storing landscaping equipment in a hangar does not, and neither does the aviation tenant who sublets half the floor to one.

Two adjacent clauses round out the airport treatment. Subdivision 2(b)(3) excepts public pedestrian ramps and concourses at public airports, and subd. 2(b)(4) excepts passenger check-in areas, ticket counters, boarding areas and luggage claim areas, subject to the same large-airport carve-out. Minnesota built an aviation architecture into its lessee-user tax and then excluded its larger airports from it.

5.2 Nevada

Nevada taxes leasehold and possessory interests in exempt real estate, then excepts public airports from that tax. The result is broader relief than Minnesota's, because it does not depend on the size of the sponsor or the character of the tenant's business.

NRS § 361.157(1) provides that when exempt real estate is leased, loaned or otherwise made available to and used by a natural person, association, partnership or corporation in connection with a business conducted for profit or as a residence, "the leasehold interest, possessory interest, beneficial interest or beneficial use of the lessee or user of the property is subject to taxation," to the extent the portion of the property and the percentage of time it is used can be segregated and identified.

Subsection 2 then lists exceptions, lettered (a) through (n). The first is the airport exception:

Property located upon a public airport, park, market or fairground, or any property owned by a public airport, unless the property owned by the public airport is not located upon the public airport and the property is leased, loaned or otherwise made available for purposes other than for the purposes of a public airport, including, without limitation, residential, commercial or industrial purposes;

NRS § 361.157(2)(a)

The "unless" clause repays careful parsing, because it is frequently misread. The exception covers two categories: property located upon a public airport, and property owned by a public airport wherever it sits. The carve-back attaches only to the second category, and it requires two conditions together: the property is not located upon the airport, and it is made available for non-airport purposes.

An on-airport commercial leasehold, whether a hangar, a fixed-base operation, a maintenance facility or a terminal concession, therefore stays inside the exception and is not reached by § 361.157, without regard to how commercial it is. What falls out is the off-airport parcel that an airport authority owns as an investment and leases for a shopping center. That tenant is taxable; the hangar tenant on the field is not.

Two structural details are worth carrying into any Nevada engagement. Where the tax does apply, NRS § 361.157(3) provides that it does not become a lien against the property; it is a debt from the lessee or user to the county, recoverable in court. Taxability turns on NRS § 361.2275, which asks whether the possession or claim is independent, durable and exclusive of rights held by others, the same trio California uses, imported into a statute that then exempts airports anyway. Valuation, where it is reached, runs under NRS § 361.227(3), which values the interest as the property would be valued if the lessee owned it and it were not exempt, reduced by the percentage of the property not leased and the percentage of time it is not leased.

5.3 Texas

Texas starts from the proposition that a possessory interest in exempt property is listed and taxed. Tax Code § 25.07(a) provides that, except as provided by subsection (b), "a leasehold or other possessory interest in real property that is exempt from taxation to the owner of the estate or interest encumbered by the possessory interest shall be listed in the name of the owner of the possessory interest if the duration of the interest may be at least one year."

Subsection (b) then removes several categories from that rule. The aviation category is (b)(3), and it has two independent conditions that must both be satisfied. The property must be "part of a public transportation facility owned by a municipality or county," and it must be one of four listed facility types. The first two are:

(A) is an airport passenger terminal building or a building used primarily for maintenance of aircraft or other aircraft services, for aircraft equipment storage, or for air cargo;
(B) is an airport fueling system facility;

Tex. Tax Code § 25.07(b)(3)

Subparagraphs (C) and (D) round out the list with foreign-trade zone property at certain joint-airport-board and two-county airports. They are unlikely to reach a general aviation hangar, but they are part of the provision and should not be overlooked when the facility sits in a foreign-trade zone.

The leasehold rule is not the only route to a tax bill in Texas. Under § 25.04, when different persons own land and improvements in separate estates or interests, "each separately owned estate or interest shall be listed separately in the name of the owner of each if the estate or interest is described in a duly executed and recorded instrument of title." Section 25.08(b) is more direct still: "If a person who is not entitled to exemption owns an improvement on exempt land, the improvement shall be listed in the name of the owner of the improvement." A privately owned hangar on exempt airport land is therefore capable of appearing as its own improvement-only account regardless of how the leasehold question is resolved.

5.4 Florida

Florida decides the question by exemption denial, and the operative test is the character of the lessee's activity.

Fla. Stat. § 196.199(2)(a) provides that leasehold interests in property of the United States, the state, its political subdivisions, municipalities, agencies, authorities and other public bodies corporate "shall be exempt from ad valorem taxation and the intangible tax pursuant to paragraph (b) only when the lessee serves or performs a governmental, municipal, or public purpose or function, as defined in s. 196.012(6)." Where that test is met, the statute adds that "all other interests in the leased property shall also be exempt." The test is the statutory public-purpose test, not a general inquiry into whether the lessee is a for-profit entity, though in practice the two usually track each other.

A hangar-specific administrative authority applies that test directly. Florida Attorney General Opinion 2019-06, "Ad valorem taxation, municipal aircraft hangar leases," dated August 16, 2019, addressed city-owned hangars at Fernandina Beach Municipal Airport leased to private aircraft owners for storage. The conclusion:

The leasehold interests owned by Fernandina Beach and leased to private aircraft owners are exempt from ad valorem taxation under section 196.199(2)(a), Florida Statutes (2018), so long as the lessees are using the leaseholds for a noncommercial aviation or airport purpose or operation with no engagement in for-profit activity.

Fla. AGO 2019-06 (Aug. 16, 2019)

The reasoning is portable. The Attorney General treated the provision of hangar and tie-down space to individual aircraft owners as an activity that could properly be performed or served by an appropriate governmental unit, which is what § 196.012(6) requires. The hangars were used solely for noncommercial storage of private aircraft and supported noncommercial aeronautical users.

Two limits on the opinion's reach deserve emphasis. The exemption holds only where the lessee engages in no for-profit activity, so a fixed-base operator, a charter operator, a flight school and a maintenance business are all on the other side of the line. And the facts were city-owned hangar structures with space subleased, not privately owned hangars on city land, which is the situation this paper addresses. The opinion does not decide the privately owned hangar case.

5.4.1 The improvement is preserved expressly

Section 196.199(2)(b) closes with a sentence that governs the privately owned hangar directly: "Nothing in this paragraph shall be deemed to exempt personal property, buildings, or other real property improvements owned by the lessee from ad valorem taxation." A hangar built and owned by a tenant on municipal airport land is therefore subject to ad valorem tax on its own account, whatever the outcome of the leasehold analysis. The public-purpose exemption in (2)(a) reaches the leasehold interest and the interests in the leased property; it does not reach an improvement the lessee owns.

5.4.2 A structural feature with no analogue elsewhere

Where a leasehold is taxable, § 196.199(2)(b) changes the kind of property the interest is. A taxable leasehold is taxed only as intangible personal property under chapter 199, Florida Statutes 2005, if rental payments are due under the lease, and as real property if no rental payments are due. The classification turns on whether rent is payable, which is a drafting fact rather than an economic one. A nominal-rent hangar lease and a no-rent hangar lease land in two different regimes.

5.5 California

California does not exempt the private occupant of public land. It assesses a taxable possessory interest, and hangars appear as an example in the Board of Equalization's own guidance. The Board's fact sheet defines the object as "a possession, a right to the possession, or a claim to a right of the possession of publicly owned real property that is independent, durable, and exclusive of rights held by others, and that provides a private benefit to the possessor," and lists among its examples "aircraft hangars and tie-downs at publicly owned airports" (California State Board of Equalization n.d.).

That much is well understood. What follows is not.

The first is scope. Section 107.9 creates "an additional taxable possessory interest conferred upon an operator of certificated aircraft at a publicly owned airport." The Assessors' Handbook glosses operators of certificated aircraft as commercial airlines. A general aviation owner is outside the section entirely.

The second is the treatment of hangars within the section, and it is frequently stated backwards. Section 107.9(a) defines the "excluded possessory interests" as those:

stated in a written agreement for terminal, cargo, hangar, automobile parking lot, storage and maintenance facilities and other buildings and the land thereunder leased in whole or in part by an airline

Cal. Rev. & Tax. Code § 107.9(a)

The exclusion is from the section's valuation formula, not from taxation. The same sentence opens by describing these interests as "taxable real property interests that an operator of certificated aircraft has at a publicly owned airport," and subdivision (b)(5) confirms that nothing in the formula subdivision applies to the determination of a term of possession for an excluded possessory interest. An airline's hangar interest remains taxable; it is valued conventionally rather than by the landing-fee method § 107.9(b) prescribes.

Two further points of precision, since the formula is widely paraphrased loosely. Section 107.9 is a safe harbor rather than a mandate. It confers a presumption of correctness "only if the assessor uses the following direct income approach," and the Assessors' Handbook explains that where the prescribed method is not followed, the assessment's usual presumption of correctness is lost. And the benchmark is one-half of the landing fee rate used to calculate the 1996-97 assessment, annually adjusted by the California Consumer Price Index and capped so that the adjusted rate never exceeds one-half of the airport's actual landing fee rate for the last full fiscal year. The twenty-year figure is the outer cap on the term under (b)(4); other sub-cases run ten to fifteen years and five to fifteen years. Section 107.9 was added by Stats. 1998, ch. 85, and has not been amended.

5.5.1 What actually governs a general aviation hangar

Ordinary possessory interest methodology. The Assessors' Handbook states that the valuation of taxable possessory interests is primarily addressed in Rule 21, and Rule 21 lists §§ 107 and 107.1 as its authority, not § 107.9 (California State Board of Equalization 2002). County assessor guidance matches, listing T-hangars and hangar buildings at airports as possessory interests under § 107 and Rule 20, without reference to § 107.9.

Two Rule 21 mechanics drive value. The term of possession for valuation purposes is the reasonably anticipated term, with the stated term presumed correct unless a different mutual understanding is shown by clear and convincing evidence. And the direct comparison method at Rule 21(e)(1)(A) requires three additions to the sale price of the subject or comparable possessory interest before the sale can indicate value: the present value on the sale date of any unpaid future contract rent for the term of possession; the fair market value of any debt assumed by the buyer; and the present value of any future costs the buyer is contractually obligated to pay for the right of possession, less the present value of any future benefits beyond possession that the buyer is entitled to receive. The unpaid future contract rent is itself reduced by any expense necessary to maintain the income from the interest.

The first of those add-backs is the reason enrolled possessory interest values in California systematically exceed observed leasehold hangar sale prices. An appraiser who compares an enrolled value to a leasehold transfer price without making it is comparing two different quantities.

5.6 Washington

Washington removed leasehold interests in public property from the property tax and replaced them with an excise. This is a different tax on a different base, and treating it as a property tax produces errors in both directions. A privately owned hangar on Washington public airport land is reached by both systems: leasehold excise on the ground interest, ordinary property tax on the building.

5.6.1 The excise and its rate

The leasehold excise tax under RCW ch. 82.29A is, in the Department of Revenue's words, a tax on the use of public property by a private party, imposed in lieu of the property tax. RCW 82.29A.030(1) levies the tax "at a rate of twelve percent of taxable rent," with a credit for any local tax collected under RCW 82.29A.040. Subsection (2) adds a surtax equal to the rate specified in RCW 82.02.030, which is seven percent, applied to the tax payable under subsection (1). The combined figure is therefore 12.84 percent, which is the rate the Department publishes but which appears nowhere in the statute as such.

The local tax is a credit, not an addition. RCW 82.29A.040 authorizes a county to levy up to six percent and a city up to four percent, with the city tax credited against the county's, and RCW 82.29A.030(1) then credits the local tax against the state tax. The Department's own reference manual states the division: of the 12.84 percent, 6.84 points go to the state and 6.00 points to counties and cities (Washington Department of Revenue 2023). The 12.84 percent is a ceiling on the combined burden, not a state rate with local rates stacked on top of it.

The base is a defined term. RCW 82.29A.020(2) defines "taxable rent," of which contract rent is one input. Where a lease was not entered through competitive bidding, or is at least ten years old without renegotiation, the Department may compute taxable rent by a different method under that subsection. Appraisal work that treats the base as contract rent without checking the definition can understate the liability.

The structure has a history. The Washington Supreme Court held in Pier 67 v. King County (1970) that a leasehold interest in publicly owned property could be taxed. The legislature responded in 1976 with the excise, initially at twelve percent, resolving longstanding complaints about unequal treatment of leasehold and fee interests in public property.

5.6.2 The breadth of the definition

WAC 458-29A-100 defines a leasehold interest as an interest granting the right to possession and use of publicly owned property "as a result of any form of agreement, written or oral, without regard to whether the agreement is labeled a lease, license, or permit." The rule adds that "both possession and use are required to create a leasehold interest, and the lessee must have some identifiable dominion and control over a defined area to satisfy the possession element."

For hangar practice this cuts two ways. Calling the document a permit rather than a lease does not avoid the tax. But a genuinely non-exclusive arrangement, shared ramp access with no defined area under the tenant's dominion and control, may fail the possession element. The line is dominion and control over a defined area, not the label on the paper.

5.6.3 The lessee-owned improvement

The improvement is handled outside the excise, and the authority for that is not in WAC 458-29A-100, which addresses definitions and is silent on the question. It is in four other places.

RCW 82.29A.020(2)(c) includes in contract rent expenditures for improvements to the property "to the extent that such improvements become the property of the lessor," which places improvements the lessee retains outside the base by definition. The Department's reference manual states the carve-out directly, listing improvements subject to personal property tax among the items contract rent does not include. RCW 84.36.451 exempts from property tax any right to occupy or use public property and any leasehold interest arising from it, exempting the interest rather than a privately owned improvement standing on it. And RCW 84.04.080 classifies as personal property all improvements upon lands the fee of which remains vested in the United States or the State of Washington; for a municipally owned airport the route is instead that a lessee-owned hangar is not property belonging exclusively to the municipality under RCW 84.36.010 and is therefore simply not exempt.

The Department's published guidance draws the conclusion the statutes support: a privately owned improvement on leased public land is subject to property taxation, while the leasehold interest in the underlying land is exempt from property tax and subject instead to the leasehold excise (Washington Department of Revenue n.d.). The guidance cites Washington Mutual Savings Bank v. Department of Revenue, 77 Wn. App. 669 (1995). No Department source addresses hangars or airports by name; the conclusion follows from the general rule.

5.6.4 Scale

The tax is not a rounding error. Department of Revenue distributions of local leasehold excise tax ran $35,098,348 in fiscal 2022, of which $15,700,092 went to counties and $19,398,256 to cities, with King County alone receiving $16,283,007, roughly 46 percent of the statewide total. By fiscal 2025 local distributions had reached $43,827,538 (Washington Department of Revenue 2026). These are distributions to local government, a different series from state collections, which the reference manual reports separately. The two are frequently conflated and should not be.

5.7 Arizona

Arizona is frequently misdescribed in national summaries, usually by assuming that the Government Property Lease Excise Tax reaches airport hangars. The statute says otherwise, in terms.

GPLET, A.R.S. §§ 42-6201 through 42-6210, imposes a per-square-foot excise on government property improvements leased to private parties. Section 42-6208 lists the property to which the tax does not apply, and clause (5) is written for aviation:

Property that is used for or in connection with aviation, including hangars, tie-downs, aircraft maintenance, sale of aviation related items, charter and rental activities, commercial aircraft terminal franchises, rental car operations, parking facilities and restaurants, stores and other services that are located in a terminal.

A.R.S. § 42-6208(5)

Hangars are named. Two structural provisions point the same way. Section 42-6201(2) limits "government property improvement" to a building for which the title of record is held by a government lessor, which a tenant-owned hangar is not. Section 42-6201(1) limits "government lessor" to a city, town, county or county stadium district, which places state-owned airport land outside the program altogether. A related provision, § 42-6206(C), carves airports out of the mandatory end-of-lease conveyance requirement where the parcel is controlled by an airport subject to federal regulation.

The administrative record is consistent with the statute. The Department of Revenue's GPLET rate schedule under A.R.S. § 42-6203(B) contains no aviation, airport, hangar or aircraft category. The Department's lessor database lists cities, towns and two counties, and no airport, airport authority, aviation department or air-related entity appears on it. Neither absence is the finding on its own; § 42-6208(5) is.

5.7.1 The hangar use codes

What Arizona does have is unusual. It is the only state in this survey with purpose-built hangar categories in its property classification system. The Department of Revenue's Property Use Code Manual, revised January 1, 2000, carries:

• 22-6 Aircraft Hangar Condominium, a development in which individual units are parceled with fractional, undivided interests in the land
• 22-4 Improved Private Air Field, noted as possibly including aircraft hangars
• 22-5 Unimproved Private Air Field
• 15-8 Office Building with aircraft hangar
• 37-8 Office or Retail Warehouse with an aircraft hangar

The manual's fourth-digit option set includes the designation IPR, for Improvements Possessory Rights, available across use-code categories. That is the Department's own coding mechanism for privately owned improvements on government land carried as ordinary ad valorem property, and it is the administrative counterpart to the statutory GPLET exclusion.

A dedicated code for a hangar condominium also indicates how the assessor expects to encounter the asset: as a deeded or leasehold condominium parcel on the ordinary roll, valued and classified like other real property, not as an excise account. The manual does not map use codes to legal classes or assessment ratios, so the applicable class and ratio must be confirmed against the assessment statutes and the county assessor's records for the specific parcel.

5.8 Michigan

Michigan is Minnesota's mirror image. Same tax, same structure, same kind of exception list, and hangars are not on it.

The lessee-user tax, MCL § 211.181 (Act 189 of 1953), provides:

Except as provided in this section, if real property exempt for any reason from ad valorem property taxation is leased, loaned, or otherwise made available to and used by a private individual, association, or corporation in connection with a business conducted for profit, the lessee or user of the real property is subject to taxation in the same amount and to the same extent as though the lessee or user owned the real property.

MCL § 211.181(1)

"In the same amount and to the same extent as though the lessee or user owned the real property" is an unqualified formulation. There is no leasehold-advantage measure, no capitalization of a rent bargain, no discount for the finite term. The tenant is taxed on the property as an owner would be.

Subsection (2) lists six exceptions, lettered (a) through (f). They are: federal property for which payments in lieu of taxes are made, and property of a state-supported educational institution named in the state constitution; property used as a concession at a public airport, park, market or similar property and available for use by the general public; property used only in conjunction with a county, community, 4-H or state fair or a special event of not more than fourteen consecutive days; a horse racing provision limited to tax days before December 31, 1985; real property in a renaissance zone other than a casino; and a public bridge facility used by a concessionaire under a public-private agreement. The airport entry is the concession provision:

Property that is used as a concession at a public airport, park, market, or similar property and that is available for use by the general public.

MCL § 211.181(2)(b)

Concessions at public airports are excepted. Hangars appear nowhere in the section. And the Michigan Tax Tribunal has applied exactly that distinction to an aviation tenant. In Winstanley and KDUB Enterprises, LLC v. City of Grand Ledge, MTT Docket Nos. 15-006901 and 16-000026 (July 6, 2017), the petitioners had built a hangar facility on leased airport land. The Tribunal held on a bundle-of-rights analysis that the buildings were owned by the airport lessor, so the petitioners were exempt from ordinary ad valorem taxation, and then held them subject to the lessee-user tax anyway. It rejected the concession argument, finding that the aviation repair and service sublessee "does not qualify as a concessionaire under MCL 211.181(2)(b)," and that because no part of the hangar was restricted from the sublessee's use, the entire buildings failed the exception. The Tribunal also described the lease's removal-of-improvements clause as "a fiction; a result of clever drafting, without changing any meaningful measure of control."

An aviation business at a public airport had to argue its way into a concession exception because there was no aviation exception to argue. The practical consequence is that a Michigan hangar tenant operating any for-profit business should budget for an ad valorem bill computed as though it held fee title, and should read the ground lease's tax clause before assuming the sponsor absorbs it.

5.9 Alaska

Alaska taxes the private interest, but the threshold question is whether anyone is levying a tax at all.

Property taxation in Alaska is municipal. Article X, section 2 of the state constitution vests the power in boroughs and cities, and the unorganized areas of the state have no authority to levy. Of eighteen organized boroughs, fourteen levy a property tax, along with eleven cities outside boroughs. A hangar at a state-owned airport in the unorganized borough faces no property tax, not because of an exemption but because no taxing authority exists.

Where a borough or city does levy, the private interest is taxable. Article IX, section 5 of the state constitution provides that "[p]rivate leaseholds, contracts, or interests in land or property owned or held by the United States, the State, or its political subdivisions, shall be taxable to the extent of the interests." AS § 29.45.030(a)(1) exempts municipal property, property held by a public corporation of a municipality, state property and University of Alaska land, "except that (A) a private leasehold, contract, or other interest in the property is taxable to the extent of the interest."

State ownership does not change the answer. The statute sweeps municipal and state property into the same clause, and the private-interest carve-out applies to both. That matters in Alaska more than elsewhere, because the Department of Transportation and Public Facilities owns a large share of the state's airports.

The Division of Community and Regional Affairs states the rule and its consequence:

Article IX, Section 5 of the State Constitution and AS 29.45.030 state that these private uses are taxable, with certain exceptions, and "to the extent of that interest." An example of taxable property would be a lease on public land to an individual or entity. This leasehold interest would be taxable regardless of the amount of the lease payment.

Alaska Div. of Community & Regional Affairs, Property Tax Exemptions in Alaska

The closing clause carries more weight than it appears to. "Regardless of the amount of the lease payment" signals that Alaska does not follow the leasehold-advantage measure used in Tennessee and in pre-2019 North Carolina, where a market-rent lease produces little taxable value. A hangar tenant paying full market ground rent in a taxing Alaska borough should not expect the rent level to defeat the assessment.

Because administration is entirely local, the operative answer for a specific Alaska hangar comes from the borough or city assessor. Two hangars two hundred miles apart can face wholly different regimes, one inside an organized borough that levies and one in an area that does not.

5.10 Colorado

Colorado generates two taxable items from a hangar on leased public airport land, not one, and an analysis that identifies only one of them understates the annual cost by a wide margin.

The first is the improvement. C.R.S. § 39-1-102(6.3) defines improvements as "all structures, buildings, fixtures, fences, and water rights erected upon or affixed to land, whether or not title to such land has been acquired." The hangar is taxable real property in its own right, classified by use, without regard to who owns the ground. The Division of Property Taxation's Assessors' Reference Library uses hangars as its illustration, noting that where a privately owned building is erected on exempt land, such as airplane hangars at a public airport, the building is classified as real property and conveyed by deed.

The second is the possessory interest in the ground lease. C.R.S. § 39-1-103(17) governs, and Colorado's valuation rule inverts California's:

the actual value of the possessory interest shall be determined by the present value of the reasonably estimated future annual rents or fees required to be paid by the holder of the possessory interest to the owner of the underlying real or personal property through the stated initial term of the lease

C.R.S. § 39-1-103(17)(a)(II)(A)

Colorado capitalizes the rent obligation itself, what the tenant pays the government, not the bargain element and not the excess of market over contract rent. The statute directs use of actual contract rents unless they are shown not to be representative of market, in which case market rents are substituted. The Colorado Supreme Court applied the formula to Denver International Airport concessionaires in Cantina Grill, JV v. City & County of Denver Board of Equalization, 2015 CO 15, affirming use of a lease's minimum monthly guarantee as the reasonably estimated future rents. "Initial term" excludes options to renew until they are exercised. Rents attributable to non-exclusive rights, including roads, rights-of-way, easements and common areas, must be stripped out under (17)(a)(II)(B).

The Assessors' Reference Library assigns airport possessory interests their own abstract subclass, code 2020, covering possessory interests in government-owned, tax-exempt airport land and improvements, with lessee-owned improvements classified according to use and assigned to the corresponding subclass. The library is not advisory. C.R.S. § 39-2-109(1)(e) directs the property tax administrator to prepare the manuals and to require their use by assessors in valuing and assessing taxable property. Colorado is the only state in this survey that has built the airport hangar case directly into its assessment coding.

Two administrative points. Under C.R.S. § 39-1-107(4) the possessory interest tax "shall not become a lien against the property"; it is a debt due from the holder to the board of county commissioners. And the nonresidential assessment rate is on a statutory schedule rather than a fixed figure: C.R.S. § 39-1-104(1.9) sets 27 percent for tax year 2025, then 26 percent for 2026 with 25 percent for improved commercial subclass codes and agricultural property, then 25 percent for 2027 and after. A hangar ordinarily falls within improved commercial. Confirm the rate for the applicable year rather than carrying a figure forward.

5.11 Georgia

Georgia asks a question no other state in this survey asks, and the answer can dispose of the tax entirely. The question is not how to value the tenant's interest. It is whether the lease conveyed an interest in real property at all.

Georgia law distinguishes a usufruct, a mere right to possess and enjoy the use of real estate, from an estate for years, which is an interest in real property. O.C.G.A. § 44-7-1(a) provides that where the landlord grants only the right to possess and enjoy the use, "no estate passes out of the landlord and the tenant has only a usufruct," and subsection (b) makes leases of less than five years presumptively usufructs. O.C.G.A. § 48-5-3 makes "[a]ll real property including, but not limited to, leaseholds, interests less than fee, and all personal property" liable to taxation, and Georgia courts read the two together so that a usufruct falls outside the base.

The Supreme Court of Georgia stated the consequence in Clayton County Board of Tax Assessors v. Aldeasa Atlanta Joint Venture, 304 Ga. 15, 815 S.E.2d 870 (2018), a Hartsfield-Jackson case:

Because a usufruct is not considered an estate in real property under Georgia law, it is not subject to ad valorem property tax.

Aldeasa, 304 Ga. at 16

And in a holding that matters for hangars, the Court extended it to the improvements:

The improvements that Clayton County attempts to tax are fixtures to realty. The trial court properly concluded, however, that Aldeasa held only a usufruct and not an estate in real property. It follows that Aldeasa could not be assessed for leasehold improvements that were not personal property but instead were attached to and passed with the real property it did not own.

Aldeasa, 304 Ga. 15 (2018)

If the ground lease conveys a usufruct, then neither the tenant's interest nor the hangar it built is taxable to the tenant. For a Georgia hangar owner this is the holding that decides the case.

5.11.1 Which one did the lease convey

Term length creates only a rebuttable presumption. The Court of Appeals in City of College Park v. Paradies-Atlanta, LLC, 346 Ga. App. 63, 815 S.E.2d 246 (2018), held that where a lease term exceeds five years a rebuttable presumption of an estate for years arises, and then set out the factors that rebut it: the terms used to describe the grantee's rights; provisions addressing liability for ad valorem taxes; the grantor's retention of dominion or control over the leased property; which party maintains the premises; and whether the grantee may assign or allow others to use the premises without consent. The seven-year concession agreements there were held to be usufructs.

Long terms routinely still produce usufructs. Georgia courts have found usufructs in thirty-year airline leases, a thirty-five year lease, and fifty-year leases, where the sponsor retained pervasive control. The label in the document does not decide it. Aldeasa held that in a tax dispute "the provisions of the agreement must be objectively scrutinized to determine the legal effect of the agreement, despite its terms stating it creates a usufruct." An airport ground lease with sponsor rights to terminate, relocate or control operations is a strong usufruct candidate however it is captioned.

Georgia has one aviation-specific taxing provision, and it is narrow. O.C.G.A. § 6-3-21 addresses municipal airport land lying outside the sponsoring political subdivision's territorial limits and declares that private interests there are not used for public, governmental or municipal purposes. Before 2014 the section reached such interests "regardless of the extent of such interest, whether possessory or an estate in land." Ga. L. 2014, p. 824, § 1 narrowed it to interests that create an estate in land, which means it no longer converts a usufruct into a taxable interest. Separately, O.C.G.A. § 48-5-15.1 is a situs rule allocating the taxing county at airports divided by county lines, expressly inapplicable to airports certificated under 14 C.F.R. Part 139, and O.C.G.A. § 48-5-41 withholds the public property exemption where property is "rented, leased, or otherwise used for the primary purpose of securing an income."

One practical note on where the doctrine lives. Georgia's Appraisal Procedures Manual, DOR Rule 560-11-10, does not use the words usufruct or estate for years and contains no guidance on improvements on exempt land. The analysis is in Title 44 and in the appellate decisions, not in the assessment manual.

5.12 Illinois

Illinois taxes the private interest in public airport property, but the route depends on whether the sponsor is an airport authority or a municipality, and the two routes are governed by different sections. Practitioners conflate them.

The general rule is 35 ILCS 200/9-195:

Except as provided in Sections 15-35, 15-55, 15-60, 15-100, 15-103, 15-160, and 15-185, when property which is exempt from taxation is leased to another whose property is not exempt, and the leasing of which does not make the property taxable, the leasehold estate and the appurtenances shall be listed as the property of the lessee thereof, or his or her assignee. The lessee shall be liable for those taxes. However, no tax lien shall attach to the exempt real estate.

35 ILCS 200/9-195(a)

Section 15-160, the airport authority exemption, is on that exception list. Where an airport authority owns the property, 9-195 therefore does not supply the answer; 15-160 does, and it operates as a condition on the exemption rather than as a leasehold tax.

Section 15-160(a) exempts "[a]ll property belonging to any Airport Authority and used for Airport Authority purposes or leased to another entity, which property use would be exempt from taxation under this Code if it were owned by the lessee entity." The conditional clause does the work. The lease preserves the exemption only where the lessee's own use would independently qualify. A for-profit hangar tenant or fixed-base operator does not qualify, so the property is not exempt in the first place and is assessed as taxable property. Two limits on the subsection are worth noting: it does not apply to airport authority property in counties of more than three million inhabitants, which removes the Chicago airports from its operation, and subsection (b) separately exempts property of another state or a political subdivision of another state.

Where the sponsor is a municipality rather than an authority, 35 ILCS 200/15-60(c) supplies a different mechanism. Municipal property within the corporate limits is exempt, and "[a]ny such property leased by a municipality shall remain exempt, and the leasehold interest of the lessee shall be assessed under Section 9-195." There the leasehold estate is the taxable object, listed to the lessee, with no lien against the municipality's land.

The opinion also records the baseline: "Illinois has assessed property taxes on airport property leased to FBOs, and Elliott Aviation has been required to pay property tax on the FBO it operates at the Quad City airport in Moline."

Valuation follows leasehold logic. In United Airlines, Inc. v. Pappas, 348 Ill. App. 3d 563, 809 N.E.2d 735 (1st Dist. 2004), an O'Hare terminal leasehold case covering the 1994 through 1996 assessments, the appellate court described the fair cash value of a leasehold as the rental value in the market, the amount a willing lessee will pay a willing lessor in a voluntary transaction for the right to use and occupy the premises. The taxpayer failed to carry its burden by clear and convincing evidence because its appraiser derived market rent through a cost approach while ignoring available comparables, and "the existence of other leases at O'Hare Airport for the lease of terminal space demonstrates the existence of a market."

5.12.1 The relief that does exist

Not an exemption but a valuation preference. In counties of 200,000 or more inhabitants, 35 ILCS 200/10-90 allows property used for airport purposes for the three preceding years to be valued "on the basis of 33 1/3% of its fair cash value, based upon the price it would bring at a fair, voluntary sale for use by the buyer for airport purposes." It requires an annual application to the chief county assessment officer by January 1 under section 10-95, and it carries a recapture: when the land ceases to be used for airport purposes, the difference in taxes for each of the three preceding years becomes payable with 5 percent interest under section 10-100. The statute keys the benefit to the person liable for the taxes, which under 9-195 is the lessee, though no primary authority expressly confirming that a leasehold interest may claim it was located.

Exemption claims in Illinois are decided by the Department of Revenue rather than finally by the board of review, and under 86 Ill. Adm. Code 110.115 an application for exemption of a leasehold estate taxable under section 9-195 must be filed by the lessee, and is available where the lessee and the use of the leasehold both qualify.

5.13 North Carolina

North Carolina made a statutory change in 2018 that practitioners still miss, and it produces a clean split: the leasehold is invisible, the building is not.

The mechanism is classification, not exemption. N.C.G.S. § 105-273(8) defines intangible personal property to include leasehold interests in exempted real property. N.C.G.S. § 105-275(31) then excludes intangible personal property from the tax base. A leasehold interest in exempt airport land is therefore excluded from taxation, with no application required.

This is recent. Before Session Law 2018-98, § 105-275(31) carved leaseholds in exempt real property out of the intangibles exclusion, making them taxable to the lessee. The 2018 act, titled in part "to conform treatment of leasehold interests in exempt property to that of other types of intangible personal property," removed the carve-out effective for taxes imposed for taxable years beginning on or after July 1, 2019. Any analysis, memorandum or assessor training material predating that change states the opposite rule and should not be relied on.

Where the ground lease vests title to improvements in the airport authority, on completion or on reversion, the hangar becomes government-owned and the ownership-based exemption of § 105-278.1(b) applies. North Carolina's exemption turns purely on ownership, without a use requirement: "Real and personal property belonging to the State, counties, and municipalities is exempt from taxation." In North Carolina, therefore, the title-to-improvements clause in the ground lease is the tax clause, whether or not it says so.

The ownership rule is judicial as well as statutory, and the leading case is an airport case. In In re Appeal of the University of North Carolina, 300 N.C. 563, 268 S.E.2d 472 (1980), the disputed parcels included the portion of an airport leased to a private airplane maintenance and repair firm together with storage space rented to individual airplane owners. The Supreme Court held that "State owned property is exempt from ad valorem taxation solely by reason of State ownership, regardless of the property's use," striking the then-existing public-purpose requirement as unconstitutional. Practitioners who expect an exclusive-use test, as Ohio applies, will misread the North Carolina result; here the entire analysis turns on the separately listed private improvement.

One further provision reaches a very small number of owners. N.C.G.S. § 105-275(50), added by Session Law 2023-134, § 42.23(a), excludes fifty percent of the appraised value of real and personal property located at a "qualifying airport" and used for aviation or airport-related commercial activities. Four criteria apply cumulatively: designation as a legacy airport by the Department of Transportation under G.S. § 63-59; general aviation airport status as defined in 49 U.S.C. § 47102; location within the corporate limits of a municipality; and economic output of $850,000,000 or more as published in the Division of Aviation biennial economic impact study dated January 2023. Smith Reynolds Airport in Winston-Salem is the only general aviation airport in the state that clears the output threshold, at $894,000,000 in that study, and it satisfies the remaining criteria. The exclusion is owner-agnostic, so it reaches privately owned hangars where it applies. Criteria drawn that tightly invite the special-legislation question Moline raised in Illinois, though no North Carolina challenge has been located.

5.14 Ohio

Ohio's public property exemption is a use exemption, and that design choice decides the hangar question.

Real or personal property belonging to the state or United States used exclusively for a public purpose, and public property used exclusively for a public purpose, shall be exempt from taxation.

Ohio R.C. § 5709.08(A)(1)

Government ownership is necessary but not sufficient. Lease a portion of a public airport to a private party and that portion stops being public property used exclusively for a public purpose. The Supreme Court of Ohio described the rule and its aviation origin in O'Keeffe v. McClain, 166 Ohio St.3d 25, 2021-Ohio-2186:

Under R.C. 5709.08, if a portion of a public airport is leased to private persons, that portion "loses its identity as public property used exclusively for a public purpose and is not exempt from taxation." Carney v. Cleveland. In Carney, this court refused exemption to hangars leased to private companies under long-term leases.

O'Keeffe, 2021-Ohio-2186, ¶ 46

Ohio then reaches the hangar without inventing a leasehold tax. The hangar is real property, since R.C. § 5701.02 defines a building to include a shelter for tangible personal property with structural integrity independent of what it shelters, and R.C. § 5713.04 requires split listing where part of a parcel would be exempt and part would not: the exempt part is listed exempt, and "the balance thereof used for a purpose not exempt shall, with the approaches thereto, be listed at its taxable value and taxed accordingly."

Ohio's one statute that deems leased public land to be the lessee's own property, R.C. § 5709.06, reaches lands held "under a lease for a term of years renewable forever and not subject to revaluation," and prescribes a specific measure: the reserved annual rent is capitalized at six percent and deducted from true value. An ordinary twenty or thirty year hangar ground lease is not perpetually renewable and falls outside the rule, but the section is worth knowing because it is the state's own model of a possessory-interest computation.

5.14.1 Two features specific to Ohio

Several Ohio commercial airports are operated by port authorities. R.C. §§ 4582.20 and 4582.46 exempt port authority property used exclusively for an authorized purpose, then switch the exemption off: "This exemption shall not apply to any property occupied and used during a tax year by a person who is a lessee of the property as of the tax lien date for that tax year under a written lease with a remaining term longer than one year." Two qualifications attach. The threshold is a remaining term longer than one year, so short-term arrangements keep the exemption. And the switch-off itself does not apply to property that would be exempt under Chapter 5709 if it belonged to the lessee, which preserves the exemption for a lessee whose own use independently qualifies.

O'Keeffe should not be over-read. The taxpayer won there, but on a ground unavailable to airports with any other kind of sponsor. The Ohio State University Airport was exempted under R.C. § 3345.17, the state-university property statute, which the Court noted contains no exclusive-use limitation. A municipality, a regional airport authority and a port authority have no equivalent. Under R.C. § 5709.08 the Carney rule governs and the leased hangar portion is taxable.

A related distinction is worth preserving. Hiring a for-profit manager to run day-to-day operations is not the same as leasing. In RiverSouth Authority v. Harris, Slip Opinion No. 2026-Ohio-2396 (June 26, 2026), the Supreme Court held that a political subdivision retains direction and control for exemption purposes when it hires a management company to run day-to-day operations, provided the contract shows the subdivision's oversight of operations, rates, budgets, finances and maintenance standards. A fixed-base operator management agreement and a hangar lease are not interchangeable for exemption purposes.

Procedurally, R.C. § 5715.27 permits a lessee for an initial term of not less than thirty years to file the exemption application in its own name. The Tax Commissioner or county auditor determines taxability, appeal runs to the Board of Tax Appeals within sixty days, and from there to the Supreme Court or the court of appeals within thirty days.

5.15 Tennessee

Tennessee has an express statutory provision on lessees of exempt property, and a valuation rule that makes the ground rent number the controlling fact in the file.

T.C.A. § 67-5-502(d) makes the lessee's interest separately assessable where the fee owner is exempt and the lessee is not. The Comptroller's Division of Property Assessments states the three conditions in its Appeals Handbook: the fee owner is exempt; the lessee is not exempt; and contract rent, including imputed rent, is less than market rent. "Typically," the handbook adds, "a leasehold assessment is basically made by calculating the present worth of the lessee's savings for the remaining term of the lease."

That improvements ride along with the interest is confirmed on the face of the enacted law. Public Chapter 265 of 2019, signed April 30, 2019, amended § 67-5-502(d) with language expressly reaching "the lessee's or a sublessee's interest in any such real property, including any improvements erected upon the land." The same amendment added an exception that matters in airport practice: where the interest is the subject of a lawful payment-in-lieu-of-taxes agreement with the state or a local government entered into or amended on or after April 30, 2019, the property is assessed solely to the governmental entity and takes all applicable exemptions. An airport authority payment-in-lieu agreement therefore defeats leasehold assessment entirely.

Valuation runs under T.C.A. § 67-5-605, which directs that leasehold interests assessable under § 67-5-502 "shall be valued by discounting to present value the excess, if any, of fair market rent over actual and imputed rent for the leased premises, for the projected term of the lease, including renewal options," with purchase options deemed to have no value. Two Tennessee Supreme Court decisions supply the measure the Comptroller directs assessors to. State v. Grosvenor, 149 Tenn. 158, 258 S.W. 140 (1924), held that the value of a leasehold is based on the difference between the rent paid and the value of the use of the property, and that where property is rented for its full value the leasehold has no separate taxable value. Metropolitan Government of Nashville v. Schatten Cypress Co., 530 S.W.2d 277 (Tenn. 1975), held that valuation of a leasehold for tax purposes is normally accomplished by determining whether there is an excess in fair rental value over the rent reserved in the lease, and that the government's reversionary interest remains exempt and need not be assessed.

The government property exemption, T.C.A. § 67-5-203, exempts property of the United States, the state, any county and any incorporated town, city or taxing district used exclusively for public, county or municipal purposes. It contains a deemed-ownership rule: where a political subdivision leases to a private entity for fifty years or more, or where the lease permits purchase for a nominal sum, the property is assessed as though the lessee were owner. Subsection (f) then removes airport sponsors from that rule, providing that "political subdivision of the state" does not include any airport authority or public entity created by or subject to title 42. A long-term lease from an airport authority therefore does not trigger the deemed-ownership provision, and the leasehold assessment of § 67-5-502(d) remains the operative mechanism.

Commercial and industrial real property is assessed at 40 percent of value under article II, section 28 of the Tennessee Constitution and T.C.A. § 67-5-801. Appeals run from the county board of equalization to the State Board of Equalization, through an administrative judge, then the Assessment Appeals Commission, then discretionary review by the full Board, and then to chancery court, where review is de novo with no presumption of correctness attaching to the decisions below. A lessee legally obligated to pay the ad valorem taxes has standing to appeal in its own right under T.C.A. § 67-5-1412(f); a lessee obligated for only part may appeal only with the owner's written consent.

There is no aviation exception reaching hangars. The one airport provision in the exemption title, T.C.A. § 67-5-219, exempts "so much of the real property of private public use airports as is shown to be used for airport runways and aprons," which is a different situation entirely: it runs to privately owned public-use airports and reaches only runways and aprons. Yet Tennessee's leasehold doctrine was substantially built on airport disputes. Three of the five leading leasehold-assessment authorities the Comptroller directs assessors to are aviation matters, involving a Memphis airport hotel, a Nashville flying service, and a package carrier at Memphis.

6. Implications for Practice

The recurring failure in hangar transactions is not misvaluing the asset. It is failing to identify which object the assessor will reach, and therefore mispricing a recurring annual cost across a twenty or thirty year term. Six checks follow, in order.

1. Name the taxable object before valuing anything. Improvement, possessory interest, leasehold estate, excise base, or nothing. A dollars-per-square-foot conclusion that does not first answer this question is unreliable, because leasehold and fee comparables trade on different bases and cannot be compared without adjustment.
2. Read the title-to-improvements and reversion clauses first. In North Carolina they decide taxability outright. In Colorado they decide whether the tenant owns a taxable improvement in addition to a possessory interest. In Georgia they feed the usufruct analysis. In Florida the statute preserves tax on a lessee-owned building whatever the leasehold analysis produces. This is usually one paragraph, and it is usually the paragraph that decides the annual bill.
3. Confirm the sponsor's legal form, not its name. Texas's exception runs to municipalities and counties. Minnesota's turns on the Metropolitan Airports Commission and on city population. Ohio treats port authority airports differently from other public sponsors. Illinois routes airport authority property through § 15-160 and municipal property through § 15-60 and § 9-195. Arizona's excise reaches only city, town, county and county stadium district lessors, which leaves state-owned airport land outside it. "Public airport" is not a tax category in any of these states.
4. Model the ground rent as a tax input, not only as a cost. The four treatments in Table 3 are mathematically opposed, and the same lease negotiation produces opposite tax outcomes depending on which state the field sits in.
5. Check the use restrictions on both tracks. Non-aviation commercial activity can independently violate the sponsor's federal obligations under 81 Fed. Reg. 38906 and destroy a state exemption under Minnesota's non-aviation-business carve-out or Florida's no-for-profit-activity condition. The tests are different and are enforced by different bodies on different timelines.
6. Verify the account with the assessor in writing, for the specific parcel. Ask which roll it sits on, what the taxable object is, whether a lien can attach, and what the appeal deadline is. In several of these states the tax is a personal debt with no lien against the airport's land, which changes both the credit analysis and the remedy.

Table 3. Four opposed treatments of the same ground rent obligation

Source: Author's compilation from the statutes and rules cited.

7. Limitations

Four limits bear on how this survey should be used.

Scope. Fifteen states are covered, selected for general aviation activity, diversity of architecture and availability of primary sources. The five architectures identified in Section 2 are unlikely to be exhaustive across all fifty states, and a state not covered here may resolve the question by a mechanism not described.

Open interpretive questions. Three questions could not be resolved against controlling authority and are stated as open rather than answered. Whether a private storage hangar sheltering one owner's aircraft qualifies as a building used primarily for "aircraft equipment storage" under Tex. Tax Code § 25.07(b)(3)(A) is a facts-and-circumstances question on which no controlling authority was located. What the chapter 199 branch of Fla. Stat. § 196.199(2)(b) produces as an actual liability under current law, given that chapter 199 is referenced as it stood in 2005, is not established here and no figure is asserted for it. And whether the holder of a leasehold interest may claim the airport valuation preference of 35 ILCS 200/10-90, which keys the benefit to the person liable for the taxes, is not confirmed by any authority located.

Figures that move. Rates and assessment ratios change on statutory schedules and by annual administrative action. Colorado's nonresidential rate steps down through 2027, Arizona's excise rates are adjusted annually, and Washington's collections and distributions are reported on a fiscal-year lag and in two distinct series that are frequently conflated. Confirm any figure for the applicable year before relying on it in a report or an appeal. The North Carolina qualifying-airport threshold is keyed to a biennial economic impact study, so the set of qualifying airports can change with a later study cycle.

Classification, not adjudication. This survey classifies architectures. It does not determine the treatment of any particular hangar, lease or parcel. Where a specific hangar's treatment is material to a transaction, an appeal or an opinion of value, the answer comes from reading the actual ground lease and making a direct written inquiry to the assessor or property appraiser of record. The framework here identifies which questions to ask and which answers should prompt further inquiry.

8. Conclusion

The exemption of publicly owned airport land tells a hangar owner nothing about its own tax position. Thirteen of the fifteen states surveyed reach something in private hands, through five architectures that differ in the object taxed, the measure applied, the roll used, the availability of a lien, and the forum for appeal. The same physical hangar, on the same kind of ground lease, generates an ad valorem bill computed as though the tenant held fee title in Michigan, an excise on the rent plus a separate property tax on the building in Washington, two assessments in Colorado, one assessment on the building alone in North Carolina, and nothing at all in Nevada.

Three conclusions follow for valuation practice. First, the taxable object must be identified before any per-unit conclusion is reported, because leasehold and fee interests are not comparable quantities and the adjustment between them differs by state. Second, the ground rent is a tax variable, not only an operating cost, and in four of these states it enters the tax computation in mathematically opposed ways, so a lease negotiated without regard to the tax architecture can produce an outcome opposite to the one intended. Third, federal airport regulation provides no protection from state property tax and creates a second, independent use test that can be failed by the same commercial activity that forfeits a state exemption.

The broader observation is that no national rule of thumb for hangar assessed value can exist, because the states are not measuring the same thing. An analyst who carries a dollars-per-square-foot assessment ratio across a state line is carrying a number derived from one legal object and applying it to another.

Questions This Paper Answers

If a hangar sits on leased land at a public airport, is property tax owed on it?

In thirteen of the fifteen states surveyed, yes, though rarely on the land. The airport's fee interest is exempt, but the state reaches something left in private hands: the leasehold or possessory interest, the hangar improvement itself, or both. Minnesota and Nevada are the exceptions, each exempting on-airport hangar interests by statute. North Carolina excludes the leasehold from the base but still taxes a privately owned hangar building to its owner.

Who is the tax assessed to when the airport owns the land?

The private lessee or the owner of the improvement, not the airport sponsor. Several states, including Colorado, Illinois and Nevada, provide by statute that the resulting tax is a personal debt of the lessee and that no lien attaches to the public land. That distinction matters to a lender, because the remedy on default differs from an ordinary tax lien foreclosure.

Does California Revenue and Taxation Code section 107.9 apply to a general aviation hangar?

No, and the reason is frequently stated incorrectly. Section 107.9 applies only to operators of certificated aircraft, which the Assessors' Handbook glosses as commercial airlines, so a general aviation owner is outside it. Hangar interests are named in the section as excluded possessory interests, but the exclusion is from the section's landing-fee valuation formula, not from taxation; the statute calls those same interests taxable real property interests. A general aviation hangar possessory interest is taxable under section 107 and valued under Property Tax Rule 21.

Does federal airport law protect a hangar tenant from local property tax?

No. Federal airport law governs use and revenue; state law governs tax. The one federal statute that addresses state taxation of aviation property, 49 U.S.C. 40116, preserves state property taxes expressly at subsection (e)(2), and its non-discrimination rule at subsection (d) reaches only air carrier transportation property, which does not describe a general aviation hangar or a fixed-base operator's leasehold.

Does building the hangar at the tenant's own expense change the answer?

In several states it is what creates the tax. A lessee-owned improvement is the object the assessor lists in Texas, North Carolina, Colorado and Washington, and Florida preserves ad valorem taxation of lessee-owned buildings expressly at section 196.199(2)(b). Ownership of the improvement also provides no relief from the federal aeronautical-use restrictions, which apply to a hangar's user "regardless of whether a user is an owner or lessee of the hangar."

References

Statutes and constitutional provisions

Alaska Const. art. IX, § 5; art. X, § 2.

Alaska Stat. § 29.45.030(a)(1).

Ariz. Rev. Stat. §§ 42-6201 to 42-6210, esp. §§ 42-6201(1), 42-6201(2), 42-6203(B), 42-6206(C), 42-6208(5). https://www.azleg.gov/ars/42/06208.htm

Cal. Rev. & Tax. Code §§ 107, 107.1, 107.9 (added by Stats. 1998, ch. 85).

Cal. Code Regs. tit. 18, §§ 20, 21 (Property Tax Rules 20 and 21), esp. Rule 21(e)(1)(A). https://www.boe.ca.gov/proptaxes/pdf/rules/Rule21.pdf

Colo. Rev. Stat. §§ 39-1-102(6.3), 39-1-103(17), 39-1-104(1.9), 39-1-107(4), 39-2-109(1)(e), 39-3-105, 41-3-107(1)(c) (as amended by H.B. 23-1156).

Fla. Stat. §§ 196.012(6), 196.199. https://www.flsenate.gov/Laws/Statutes/2026/196.199

Ga. L. 2014, p. 824, § 1 (amending O.C.G.A. § 6-3-21).

Mich. Comp. Laws §§ 211.181, 211.27m (Act 189 of 1953). https://law.justia.com/codes/michigan/chapter-211/act-189-of-1953/section-211-181/

Minn. Stat. § 272.01 subd. 2. https://www.revisor.mn.gov/statutes/cite/272.01

N.C. Gen. Stat. §§ 63-59, 105-273, 105-275(31), 105-275(50), 105-276, 105-278.1, 105-282.1, 105-290, 105-302(c)(11), 105-309, 105-345. https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_105/GS_105-275.html

N.C. Sess. Laws 2018-98; N.C. Sess. Laws 2023-134, § 42.23(a).

Nev. Rev. Stat. §§ 361.157, 361.227(3), 361.2275. https://www.leg.state.nv.us/nrs/nrs-361.html

O.C.G.A. §§ 6-3-21, 44-6-103, 44-7-1, 48-5-3, 48-5-15.1, 48-5-41.

Ohio Rev. Code §§ 3345.17, 4582.20, 4582.46, 5701.02, 5709.06, 5709.08, 5713.04, 5715.27, 5717.02, 5717.04. https://codes.ohio.gov/ohio-revised-code/section-5709.08

35 ILCS 200/9-195, 10-90, 10-95, 10-100, 15-55, 15-60, 15-160; 86 Ill. Adm. Code 110.115. https://law.onecle.com/illinois/35ilcs200/9-195.html

Tenn. Code Ann. §§ 67-5-203, 67-5-219, 67-5-502(d), 67-5-605, 67-5-801, 67-5-1412(f); Tenn. Pub. Ch. 265 (2019). https://publications.tnsosfiles.com/acts/111/pub/pc0265.pdf

Tenn. Const. art. II, § 28.

Tex. Tax Code §§ 25.04, 25.07, 25.08. https://texas.public.law/statutes/tex._tax_code_section_25.07

49 U.S.C. § 40116.

Wash. Rev. Code ch. 82.29A, esp. §§ 82.29A.020(2), 82.29A.030, 82.29A.040; §§ 82.02.030, 84.04.080, 84.36.010, 84.36.451; Wash. Admin. Code 458-29A-100. https://app.leg.wa.gov/WAC/default.aspx?cite=458-29A-100

Administrative and departmental guidance

Alaska Division of Community and Regional Affairs. Property Tax Exemptions in Alaska. https://www.commerce.alaska.gov/web/dcra/LocalGovernmentResourceDesk/TaxationAssessment/PropertyTaxExemptionsinAlaska.aspx

Arizona Department of Revenue. Government Property Lease Excise Tax: Rate Information and Lessor Database. https://azdor.gov/business/government-property-lease-excise-tax-gplet

Arizona Department of Revenue. Property Use Code Manual (rev. Jan. 1, 2000). https://azdor.gov/sites/default/files/2023-03/PROPERTY_useCodeManual.pdf

California State Board of Equalization. 2002. Assessors' Handbook Section 510: Assessment of Taxable Possessory Interests (Dec. 2002, reprinted Jan. 2015). https://www.boe.ca.gov/proptaxes/pdf/ah510.pdf

California State Board of Equalization. n.d. Taxable Possessory Interests (fact sheet). https://www.boe.ca.gov/assessors/pdf/tpi-general.pdf

Colorado Division of Property Taxation. Assessors' Reference Library, vols. 2 and 3. https://arl.colorado.gov/

Florida Attorney General. 2019. Opinion 2019-06, Ad valorem taxation, municipal aircraft hangar leases (Aug. 16, 2019). https://www.myfloridalegal.com/ag-opinions/ad-valorem-taxation-municipal-aircraft-hangar-leases

Georgia Department of Revenue. Rule 560-11-10, Appraisal Procedures Manual. https://rules.sos.ga.gov/GAC/560-11-10

Illinois Department of Revenue. PTAX-1004, The Illinois Property Tax System.

Tennessee Comptroller of the Treasury, Division of Property Assessments. 2023. Appeals Handbook for Assessors of Property (Oct. 2023). https://comptroller.tn.gov/content/dam/cot/pa/documents/manualsandreports/appeals-handbook/2023.10 - Appeals Handbook - final version.pdf

Tennessee State Board of Equalization. 2023. Property Tax Exemption Manual (approved Oct. 2023). https://comptroller.tn.gov/content/dam/cot/sboe/documents/rules-&-manuals/2023.10.SBOEpropertyTaxExemptionManual.SBOEApproved.pdf

Washington Department of Revenue. 2023. Tax Reference Manual, ch. 17, Leasehold Excise Tax. https://dor.wa.gov/sites/default/files/2023-08/TRM_17_LeaseholdExciseTax.pdf

Washington Department of Revenue. 2026. Tax Statistics 2025, table 20, Local Leasehold Excise Tax Distributions, Fiscal Years 2023-2025. https://dor.wa.gov/sites/default/files/2026-03/Tax_Statistics_2025.pdf

Washington Department of Revenue. n.d. Valuation of privately-owned improvements on public land. https://propertytax.dor.wa.gov/programs/personal-property-tax/personal-property-tax-articles/valuation-privately-owned-improvements-public-land

Cases and tribunal decisions

Cantina Grill, JV v. City & County of Denver Board of Equalization, 2015 CO 15 (Colo. 2015).

Carney v. Cleveland, 173 Ohio St. 56, 180 N.E.2d 14 (1962).

City of College Park v. Paradies-Atlanta, LLC, 346 Ga. App. 63, 815 S.E.2d 246 (2018).

Clayton County Board of Tax Assessors v. Aldeasa Atlanta Joint Venture, 304 Ga. 15, 815 S.E.2d 870 (2018).

In re Appeal of the University of North Carolina, 300 N.C. 563, 268 S.E.2d 472 (1980).

Metropolitan Government of Nashville & Davidson County v. Schatten Cypress Co., 530 S.W.2d 277 (Tenn. 1975).

Moline School District No. 40 Board of Education v. Quinn, 2016 IL 119704 (Ill. 2016).

O'Keeffe v. McClain, 166 Ohio St.3d 25, 2021-Ohio-2186.

Pier 67, Inc. v. King County, 78 Wn.2d 48, 469 P.2d 902 (1970).

RiverSouth Authority v. Harris, Slip Opinion No. 2026-Ohio-2396 (Ohio June 26, 2026). https://www.supremecourt.ohio.gov/rod/docs/pdf/0/2026/2026-Ohio-2396.pdf

State v. Grosvenor, 149 Tenn. 158, 258 S.W. 140 (1924).

United Airlines, Inc. v. Pappas, 348 Ill. App. 3d 563, 809 N.E.2d 735 (1st Dist. 2004).

Washington Mutual Savings Bank v. Department of Revenue, 77 Wn. App. 669 (1995).

Winstanley and KDUB Enterprises, LLC v. City of Grand Ledge, Mich. Tax Tribunal Docket Nos. 15-006901 and 16-000026 (July 6, 2017). https://www.michigan.gov/taxtrib/-/media/Project/Websites/taxtrib/Folder14/15-006901_FOJ.pdf

Federal authorities

Federal Aviation Administration. 2016. Policy on the Non-Aeronautical Use of Airport Hangars. 81 Fed. Reg. 38906 (June 15, 2016), eff. July 1, 2017. https://www.federalregister.gov/documents/2016/06/15/2016-14133/policy-on-the-non-aeronautical-use-of-airport-hangars

Federal Aviation Administration. 2026. Airport Compliance Manual. Order 5190.6C (Feb. 2026), chs. 12, 15, 18. https://www.faa.gov/airports/resources/publications/orders/compliance_5190_6