2023 Attorneys of the Year: Timothy A. Rye

Representing two car rental companies doing business at Minneapolis-St. Paul International Airport, Timothy Rye of Minneapolis-based Larkin Hoffman Daly & Lindgren won a major Minnesota Supreme Court decision affirming a lower court’s ruling that tax assessors should not include airport concession fees in calculating rent-based, property tax valuations.

For Rye, the important case started with a question from a colleague who was assisting Enterprise car rental. The client thought it was being taxed unfairly, which Rye confirmed when he began looking into Hennepin County’s method for levying property on the airport car rental vendors.

“I found out that the county was using concession revenue” — the fees rental companies paid for to use the airport facility — “as the primary input in their analysis,” he said. “We needed to figure out the best way to value these properties,” which also applied to another client of the firm, Avis.

“The airport is its own universe, isolated from the commercial real estate market,” Rye said. “The Metropolitan Airport Commission (MAC) doesn’t buy and sell that property, so valuing it becomes very challenging.”

Avis and Enterprise contested their 2019 property taxes, and the case went before the state Tax Court, which ruled in their favor. It affirmed Rye’s argument that agencies like MAC “have to be careful to make sure the income [used to calculate tax] is specifically related to real estate,” Rye said.

The court found that concession fees are not considered rent for the purpose of valuating property. In 2022, Hennepin County filed an appeal with the Minnesota Supreme Court and the decision in the plaintiffs’ favor was issued in 2023.

Rye said the “well thought-out” decision indicates that “we can take pride in the fact that the Minnesota courts are striving to really understand complicated issues like this. It gives our clients hope that when we bring a complicated case before the courts, we have a good chance of it being really well understood.”

The ruling has already had an impact in several other states and Canada, where vendors have challenged tax assessors’ practice of including airport concession fees in property valuations, Rye said.

Read more about Minnesota Lawyer’s superb class of Attorneys of the Year for 2023 here.