TAXATION ‑- LEASEHOLD INTERESTS ‑- PERSONAL PROPERTY ‑- IN FEDERAL LANDS ‑- MILITARY RESERVATIONS ‑- UNITED STATES

AGO 1951 No. 476 - Mar 20 1951

Attorney General Smith Troy

TAXATION ‑- LEASEHOLD INTERESTS ‑- PERSONAL PROPERTY ‑- IN FEDERAL LANDS ‑- MILITARY RESERVATIONS ‑- UNITED STATES

1. Privately-owned leasehold interests and improvements upon Federal lands used as a military reservation may be subjected to property taxation only where the lands are under the concurrent jurisdiction of the United States and the state, but not where such lands are under the exclusive jurisdiction of the United States.

2. Spokane Air Force Base is situate upon lands under the concurrent jurisdiction of the United States and the state of Washington; personal property in private, taxable ownership and situate upon such lands may be subjected to property taxation.

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March 20, 1951

Honorable Hugh H. Evans
Prosecuting Attorney
Spokane County
Court House
Spokane 11, Washington Cite as: AGO 49-51 No. 476

Attention: Earl W. Foster, Deputy

Dear Sir:

You have requested our opinion on the following legal questions:

1. May the personal property tax be imposed upon privately-owned leasehold interests in lands owned by the United States and used as a Federal military reservation?

[[Orig. Op. Page 2]]

2. May the personal property tax be imposed upon privately-owned improvements on lands owned by the United States and used as a Federal military reservation?

Our conclusion may be summarized as follows:

1. Privately-owned leasehold interests and improvements upon Federal lands used as a military reservation may be subjected to property taxation where the lands are under the concurrent jurisdiction of the United States and the state, but not where such lands are under the exclusive jurisdiction of the United States.

ANALYSIS

You state that a portion of certain land owned by the United States and used as a military reservation, known as the Spokane Air Force Base, has been or may be leased to a private person who is to erect housing facilities thereon for renting to military personnel stationed at the base. The lease, for a term of 75 years, provides that the title to the buildings shall vest in the United Statesat the termination of the lease. There are numerous other provisions, but we do not deem them relevant to the decision. You further state that these lands were acquired by the Federal government from private individuals in 1941 by condemnation proceedings.

It is our opinion that both of the property interests existing in the private person ‑ the leasehold interest in the land and the ownership of the improvements ‑ are subject to taxation as personal property. These privately-owned interests are personal property, for the purpose of taxation, under the provisions of section 5, chapter 130, Laws of 1925, Extraordinary Session (Rem. Rev. Stat. 11109), which provides in part as follows:

"The term 'personal property' for the purposes of taxation, shall be held and construed to embrace and include, without especially defining and enumerating it, * * * all leases of real property and leasehold interests therein for a term less [[Orig. Op. Page 3]] than the life of the holder, all improvements upon lands the fee of which is still vested in the United States, or in the state of Washington; * * *"

Separate taxation of theleasehold interest is expressly provided for in the above statute. In re Barclay's Estate, 1 Wn. (2d) 82, 95 P. (2d) 393. The leasehold interest in the Federal lands is taxable if the land itself is within the taxing jurisdiction of the state.

Referring to the taxation of the improvements on the government-owned land, we find that they are privately owned, because they are constructed by the lessee with his capital and are owned by him until the termination of the lease. Although they are subject to subsequent ownership by the United States, the present ownership (and only useful ownership, for the life of the buildings should not exceed 75 years) is in the private, taxable person. Section 11109,supra, provides expressly that improvements upon lands the fee of which is vested in the United States may be subjected to taxation as personal property.

In the early case ofPercival v. Thurston County, 14 Wash. 586, 45 Pac. 159, the Supreme Court, construing a statutory provision which was the forerunner to that portion of Rem. Rev. Stat. 11109 quoted above, upheld the power of this state to tax privately-owned improvements upon lands the fee of which was vested in the state of Washington, saying:

"The improvement in question receives from this government the same protection that is afforded other property, and we are unable to perceive any sufficient reason why it should not bear its share of the public burden. But, however this may be it is enough to say that by the express language of the act this improvement is taxable and the propriety of the enactment is not a question for our consideration."

The same principles apply in the taxation of improvements upon lands owned by the United States, provided that the lands are within the territorial jurisdiction of this state.

This brings up the question of whether the state has jurisdiction to levy a property tax upon privately-held interests existing within a Federal reservation. We should here state that we do not have a question of the power to [[Orig. Op. Page 4]] tax property of the United States, but whether we may tax property in private ownership situate upon lands owned by the United States. See 2 Cooley, Taxation (4th Ed.) § 583. No authority need be cited for the proposition that the property tax imposed by the state and its taxing districts may be imposed if the land is under theconcurrent jurisdiction of this state and the United States, but that it cannot be imposed if such land be under theexclusive jurisdiction of the United States. Concessions Company v. Morris, 109 Wash. 46, 186 Pac. 655. Our question is, then, whether Spokane Air Force Base is situated upon lands over which the United States has concurrent or exclusive jurisdiction. It is our conclusion that this land is subject to concurrent jurisdiction by the United States and this state.

The Constitution of the United States, at Article I, section 8, clause 17, provides:

"The congress shall have power,‑-* * *

"To exercise exclusive jurisdiction * * * over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dock-yards, and other needful buildings; * * * "

There is no question that the lands here in issue are put to a use within the above provision. Consent to the exercise of exclusive jurisdiction by Congress over all lands then owned by the United States and used for such purposes was given by this state at the time of its admission to the Union. Article XXV, Washington Constitution. By substantially identical statutes enacted in 1890 and 1891 (p. 459, Laws of 1890; sec. 1, ch. 18, Laws of 1891) codified as Rem. Rev. Stat. 8108, exclusive jurisdiction over lands thereafter acquired "by purchase or by condemnation" was granted to the United States. SeeMurray v. Joe Gerrick & Co., 291 U.S. 315;Mason Co. v. Tax Commission, 30 U.S. 186; Ryan v. State, 188 Wash. 115, 61 P. (2d) 1276 (reviewed in the Mason Co. decision, supra); and Concessions Company v. Morris,supra.

However, section 8108,supra, was repealed by section 4, chapter 126, Laws of 1939 (Rem. Rev. Stat. Supp. 8108-4), and replaced by sections 1, 2, and 3 of that act (Rem. Rev. Stat. Supp. 8108-1 to 8108-3). These sections, applicable to lands acquired after June 7, 1939 (the effective date thereof), must be read as a whole. The Spokane Air Force Base lands were acquired in 1941. Although in section 8108-1 consent is given to the acquisition of land by the United States "by purchase, lease, condemnation, or otherwise" for the uses [[Orig. Op. Page 5]] set forth in the Constitution "or for any other purpose whatsoever," the consent is restricted in the next two sections to a grant of "concurrent jurisdiction with this state over any land so acquired by the United States," and further reserves to the state "such jurisdiction and authority * * * as is not inconsistent with the jurisdiction ceded to the United States."

A state may refuse to give such consent to acquisition of lands by the United States for the purposes mentioned in the constitutional provision, and if consent is not given and the land is acquired by the United States for one of the purposes within that clause,

"* * * then Federal jurisdiction is exclusive only to the extent of the purposes for which the land is held; * * *." Ryan v. State,supra, at page 126.

Furthermore, the consent of the state, even where given, may be with qualifications and reservations, and may grant only concurrent jurisdiction. Mason Co. v. Tax Commission, supra, at pages 203-204;Wilson v. Cook, 327 U.S. 474.

The situation in Washington at the present time is that the United States may not acquire exclusive jurisdiction over lands acquired by it after June 7, 1939, but may accept concurrent jurisdiction, complying with sections 8108-1 et seq.supra, and 40 U.S.C. 255. Of course, by a failure to accept any jurisdiction, the state's jurisdiction remains exclusive subject to use by the United States for the purposes for which the land is held. We are informed by the Governor's office that the United States Government has, by letter, accepted concurrent jurisdiction over the lands now comprising the air base.

Spokane Air Force Base is under the concurrent jurisdiction of this state and the United States. The jurisdiction over these lands is not such that property in private, taxable ownership and situate thereon can be said to be without the territorial limits of this state. Cf.Concessions Co. v. Morris,supra.

Your attention is directed to our opinion of June 9, 1944, to the Prosecuting Attorney of Benton County (1943-1944 AGO, p. 248) on a similar question.

Very truly yours,

SMITH TROY
Attorney General

C. JOHN NEWLANDS
Assistant Attorney General