The Minnesota Supreme Court has ruled the properties of Avis Budget Car Rental LLC and Enterprise Leasing Co. of Minnesota at the Minneapolis-St. Paul airport were overvalued for tax purposes, reported Bloomberg Law.
Avis and Enterprise lease space for their rental car operations from the Metropolitan Airports Commission. The companies also pay a concession fee totaling 10% of the revenue earned at the property in exchange for use of the facilities and access to airport patrons.
Hennepin County was including the concession fee as rental income attributable to the property when assessing its value, thus valuing Avis properties at $20.4 million and the Enterprise properties at $34.9 million.
The central issue was over whether the concession fee could be considered rental income under the income capitalization approach to valuing the property. The rental car companies asserted that by including these fees in property valuations, the assessed market value exceeded the actual market value.
The court ruled adding in the concession fee resulted in an estimated market value that was unreasonably high. When companies pay rent and additional fees (in this case a concession fee) to the airport, the fees paid should not be included as rental income, according to the court.
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