Vanguard Car Rental USA, Inc. v. San Mateo, 104 Cal. App. 4th 1316 (Cal. Ct. App.2010)

Vanguard Car Rental USA, Inc. v. San Mateo, 104 Cal. App. 4th 1316 (Cal. Ct. App.2010)

Summary: A rental car company bror"rght an action against the county for a refund of ad valorem properly taxes on ceftain possessory interests at an airport rental facility. Judgment for county affirmed.

Facts: Vanguard Car Rental USA, Inc., ("Vanguard") operates a car rental business within the rental car facility (RCF) at San Francisco International Airport ("SFO"). SFO is located in San Mateo County, but owned by the City of San Francisco. Vanguard leased properly at the RCF for its exclusive use; it also leased property at the RCF which was subject to limited common use (LCU) and to common use (CU). as those terms were defined in the lease.

Under California law, propertv owned by' a city is not subject to property tax, Cal. Rev. & Tax Code 104,107, 201 (2007), but private uses of such property,' may be taxed if the use constitutes a "possessory interest." Vanguard challenged the County's taxation on its possessory interest in LCU and CU property that Vanguard shared with several other rental companies. Vanguard claimed that its interest in those cornrnon spaces was neither "independent" nor "exclusive."

Issue: Did Vanguard hold a taxable possessory interest in LCU and CU property at the RCF, or did it hold a non-taxable intangible business interest?

Holding: Under California law, a private possessory interest in public lands is taxable to the holder if the interest is independent, durable and exclusive of rights held by others. Vangr-rard held a possessory interest in the RCF common areas because it had rights in such property that were not granted to the general public. Vanguard also retained sufficient authority and control over the LCU and CLI areas to qualify as an independer-rt use. Because Vanguard had beneficial rights in LCU and CU areas that members of the general public did not share, Vanguard's rights were sufficiently exclusive and its interest was a taxable possessory interest.

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