Mediation Fails in Airport Property Tax Dispute

Home » City » Mediation Fails in Airport Property Tax Dispute

Thursday January 01, 1970

Property tax assessments for Burlington International Airport and adjacent properties have been at the center of litigation between the City of South Burlington, where the airport is located, and the City of Burlington, which owns the airport, since the fall of 2013. Court ordered mediation began in mid-fall 2014, in a final attempt to reach agreement on the value of the property. According to City Manager Kevin Dorn, mediation failed and the City of Burlington has filed papers to proceed to court.
During an interview with The Other Paper, Dorn noted that a hard working South Burlington team put forth many creative concepts to resolve this complex issue, but unfortunately, none were accepted. Representing The City of South Burlington at mediation meetings were City Manager Dorn, Deputy City Manager Tom Hubbard, City Attorney Jim Barlow, Attorney Bob Fletcher, and City Councilor Meaghan Emery. At the table for the City of Burlington were Burlington Airport Director of Aviation Gene Richards, City Attorney Bill Ellis, and Chief Administrative Officer Bob Rusten.

“Both sides came to the table ready to negotiate, but we couldn’t make it happen,” Dorn said.

The controversy over the airport’s property tax bill has been ongoing. The City of Burlington appealed the 2012, 2013, and 2014 property valuation of approximately $73 million dollars per year. The South Burlington Board of Civil Authority (BCA) re-evaluated, confirmed that their figures were accurate, and the appeal was denied. The City of Burlington appealed once again and the issue was moved to Vermont Superior Court.

According to Barlow, the crux of the tax issue is a dispute between the parties (City of Burlington and the City of South Burlington) regarding the interpretation of a Vermont statute, 32 V.S.A. 3659.

“Essentially, section 3659 sets out a formula for taxation of property owned by one municipality but located in another municipality. On its face, the statute might appear straightforward, but there are several different types of airport property owned by Burlington, such as the residential properties it has acquired through the FAA noise mitigation program, property and improvements used for airport purposes (e.g., the terminal, runways) and property Burlington leases to parties like the Vermont Air National Guard and Heritage Aviation,” Barlow said.

Burlington and South Burlington disagree on how, and even if, section 3659 applies to these different types of property. The complexity of the airport’s holdings, and the changing nature of the property add to this unique situation. Additionally, sales of airport land and comparable large properties (the typical basis for real estate appraisals is to use comparable sales) do not occur very often. An important issue in the case is whether the appraisers should be using smaller, local parcels as the basis to determine the value of the airport land or larger parcels of commercial land located around the county.

Both sides retained expert appraisers and those experts differed significantly in their opinions of the value of the airport property.

South Burlington values the property at approximately $73 million dollars while, in stark contrast, Burlington believes the value should be set at $16.9 million dollars.

Ultimately, the decision will now be made in court; a judge will decide how Section 3659 is interpreted, and determine the value of the property.

Although, there is disappointment that mediation failed, Dorn says it will not hamper ongoing efforts to collaborate around shared services and initiatives. The Chamberlin/BTV neighborhood planning project committee will begin work this spring with a focus on creating a shared vision for the neighborhood that has been drastically impacted by the airport buyout and removal of a vast number of homes.

Dorn said, “Relations between Burlington and South Burlington are good and we will continue to work together, we just disagree on this complicated issue.”

Dorn said the city has an obligation to defend its grand list, which is valued at approximately $28 billion dollars; the City of Burlington is the largest landowner in South Burlington. However, if the judge decides in Burlington’s favor, the tax discrepancy will have to be rectified. The city has allocated a $155,000 reserve fund in the FY 2016 budget, if repayment is required.

While the court date has yet to be set, the hope is that the city will have some clear answers on the matter by early summer 2015.

SOURCE: corey Burdick, Correspondent