delivered the opinion of the court:
Aftеr an unsuccessful appeal to the Board of Appeals of Cook County, Trans World Airlines, Inc. (TWA), paid under protest the 1966 property taxes levied upon its leasehold interest in a hangar and hangar site at Chicago-O’Harе International Airport. Its obj ections to the county collector’s application for judgment fixing the correct amount of taxes paid under protest were dismissed by the circuit court of Cook County upon the authority of People ex rel. Korzen v. American Airlines,
To the extent that they are alleged in TWA’s amended objection, the facts are substantially identical to those in Amеrican Airlines. The hangar and the adjacent land covered by the lease are owned by the city of Chicagо, and by statute are exempt from taxation. (Ill. Rev. Stat. 1965, ch. 120, pars. 500.9, 500.19, 500.20.) The hangar and the hangar site have been leased to TWA for a term of 40 years. The lease provides for a ground rental of $5,654 per month and an additional rentаl of $36,588 per month. The obligation to pay the additional rental ceases if revenue bonds issued to construct thе airport are retired before the term of the lease expires.
The hangar was constructed by the city of Chicago in 1959 at a cost of $5,000,000. In this case, as in American Airlines, the county assessor determined that the term of the lease would exceed the useful life of the hangar building. As in American Airlines, the objector does not challenge this factual determination. The assessor valued the hangar building at $1,686,104. He then applied a final “condition” factor оf 72% which reflected allowances for depreciation, lessor’s reversionary interest and lease restrictions. The resulting amount, $1,213,992, was returned as the assessed value of TWA’s leasehold interest.
With respect to the taxation of leasehold estates in tax-exempt property, section 20(2) of the Revenue Act provides : “Each tаxable leasehold estate shall be valued at its fair cash value, estimated at the price it would bring at a fair, voluntary sale.” (Ill. Rev. Stat. 1965, ch. 120, par. 501(2).) Nowhere in its objections or in its briefs in this court does TWA suggest that its leasehold has beеn valued in excess of the price it would bring at a fair, voluntary sale.
Neither in this case nor in American Airlines was therе any attempt to assess the fee. The principal difference between this case and American Airlines is thаt the objections disposed of in that case are in this one sought to be cast in constitutional terms. The basic position of the objector, repeated in many forms throughout its argument, is thus stated in its amended objection: “A leasеhold has a salable value to the tenant only when the market or economic rental which can be obtained for the demised premises is in excess of the rental liability of the tenant under the lease.” (Italics supplied.) Thеrefore, the obj ector says, its “leasehold interest has no value and any assessment thereof is null, void and cоnstructively fraudulent.” The difficulty with this position is that what is being taxed is the value of the leasehold, in the sense of the price for which it can be sold, not the value of the leasehold to the tenant, in the sense of the profit that the tenant can make upon a sale of the lease. Contrary to the objector’s suggestion, the fact that the lessee’s net worth was not increased by entering into the lease does not affect the market value of the leasehold estate. The objector’s reliance upon Pollock v. Farmers’ Loan & Trust Co. (1895),
The objector contеnds that “[t]o value a contract by its benefits, without offsetting the liabilities and burdens can only radically distort the value of the contract.” More than a hundred years ago, in People v. Rhodes (1853),
Section 20(2) requires that “each taxable leasehold estate shall be valued at its fair cash value, estimаted at the price it would bring at a fair, voluntary sale.” Although the section establishes a mandatory standard, it providеs no formula for the determination of the sale price of a leasehold that is not in fact for sale. The аssessor must therefore determine what valuation technique he will use.
To determine the fair sale value of TWA’s pоssessory interest, the assessor first determined the full value of the hangar building, and then discounted that value to reflect thе reversionary value of the building at the end of the lease, restrictions contained in the lease upon the use of the building, and depreciation. He assigned no value to the land included in the lease. This technique presumes thаt all, or at least a substantial portion, of the useful life of the building will have expired after 40 years. TWA does not questiоn this assumption, nor does TWA dispute that a competitor would be willing to pay at least $1,213,992 for the possession and use of the hangar site for the remaining term of the lease. In the American Airlines case there was testimony by an exрert for the airline which made it possible to check the accuracy of the assessor’s valuation by using a different method of determining value. In this case there is no such testimony, and no similar check is possible. But the objector has failed to show that the method used resulted in an excessive valuation.
The judgment of the circuit court of Cook County is affirmed.
Judgment affirmed.