American Airlines, Inc. v. County of Los Angeles

In two actions, consolidated for trial, 10 airline companies sought refund of property taxes paid on their respective leasehold interests at Los Angeles International Airport (LAX). The principal point of contention, and the only matter considered by the trial court, is whether the Los Angeles County Assessor could properly assess the possessory interests of the airlines upon the “reasonably anticipated term of possession” of the leased property as provided in State Board of Equalization rule 23 (Cal. Admin. Code, tit. 18, rule 23), instead of on the basis of the remaining terms of their leases.

Each airline leases at LAX various parcels of real property generally described as passenger terminal facilities. The leases, far from uniform in content, were entered into separately by each airline, as lessee, and the City of Los Angeles, a tax-exempt entity (Rev. & Tax. Code, § 202), as lessor. Many of the leases were entered into in 1962 and 1963 for 28-year terms, the period required to enable the department of airports to recover its capital investment for the remodeling of the airport facilities completed about that time. None of the leases contains any option to renew,…