Airport Sponsors are Supposed to Nurture their Airports

Apparently, Santa Monica never received the memo – The attached letter from NBAA to the Santa Monica City Council should be read just for the valuable information. It takes the city council to task on several issues including that “as early as 1981 the City was indeed aware that the FAA took the position that “if the city ever in perpetuity ever tries to convert any of this property to any other use, then the federal government gets it back, or can operate to get it back at that time.”

There is more too, as non-aeronautical tenants must pay fair market rent – as well as inconsistent with the report’s overall recommendation that KSMO revenues be maintained.

 

NBAA Letter to Santa Monica City Council

March 24, 2014
The Honorable Pam O’Connor
Mayor, City of Santa Monica
1685 Main Street, Room 209
Santa Monica, CA 90401
pam.oconnor@smgov.net

RE: Report on the Future of Santa Monica Municipal Airport

Dear Mayor O’Connor:

I am writing on behalf of the National Business Aviation Association (NBAA). NBAA represents the interests of more than 10,000 member companies in promoting the interests of business aviation across the United States, and has numerous members based at and/or otherwise
using the Santa Monica Municipal Airport (KSMO).

We understand that at its March 25, 2014 meeting, one of the Council’s agenda items (#8-A) will be a report from the City Attorney and Director of Public Works regarding “The Future of Santa Monica Airport”. As a general proposition, NBAA believes that the Airport is an important asset to the City and region, and should indefinitely continue to be operated in its present form – and that the City has grant- and deed-based obligations to the federal government which require that the Airport continue to be operated in its present form.

NBAA understands the report primarily recommends that further studies be authorized by the Council – but at the same time recommends that effective July 1, 2015, five-year leases be made available to non-aeronautical tenants at the Airport (potentially renewable for an additional five years) and one-year leases be made available to aeronautical tenants at the Airport (potentially renewable for an additional two years). These short terms are unjustified, and do not appear to comply with the Airport’s federal obligations. Generally, airport tenants are entitled to long-term leases at an airport – and in the case of KSMO, Airport Improvement Program grant assurances require it to be operated as an airport through 2023, and the terms of the 1948
Instrument of Transfer further require it to be operated as an airport in perpetuity. Moreover, there is no basis for making more favorable lease terms available to non-aeronautical tenants than to aeronautical tenants, as has been proposed by the report, given that KSMO is required by its federal obligations to prioritize aeronautical activities at the airport, and thus aeronautical tenants also should be offered the same “5/5” leases as non-aeronautical tenants. 1

1 Additionally, the report asserts that Santa Monica College has a “very long term lease” with Santa Monica for the space that it occupies at KSMO – but based on information previously provided by the City, the lease for its arts campus at 2800 Airport Avenue in fact expired in 2008, and the College has been a month-to-month tenant, paying rent that is substantially below the fair market value of the space that it occupies. This is a potential compliance issue from an FAA perspective, because non-aeronautical tenants must pay fair market rent – as well as inconsistent with the report’s overall recommendation that KSMO revenues be maintained. The Council should require clarification from the City Attorney.

Moreover, the report suggests that the Council consider imposing restrictions on the categories of aeronautical activities allowed to conduct business at KSMO – i.e., discussing the possibility of prohibiting flight schools and in passing also mentioning the possibility of restricting fuel sales at KSMO.

Restrictions such as these also would not comply with the Airport’s federal obligations. Both the Airport Improvement Program grant assurances and the 1948 Instrument of Transfer prohibit economic discrimination, as well as exclusive rights. This principle is well-established, most notably by the FAA and federal courts’ invalidation of the City’s effort to restrict the classes of aircraft that may operate at KSMO, as cited in the report (City of Santa Monica v. FAA, 631 F.3d 550 (D.C.Cir. 2011)).

For the same reasons, the City cannot prohibit other aeronautical activities – including but not limited to aircraft training operations and essential support services such as fueling – either in the short term or for so long as KSMO continues to be operated as an airport.
Additionally, to the extent that the City may intend to rely upon the factual and legal background provided by the report, it should be aware that certain statements therein are disputed ad/or inaccurate. NBAA appreciates the City Attorney’s efforts to alert the Council to limitations on its options going forward – but regrettably the report does not accurately capture all of the law and facts. Notably, the report insists that the City was not aware until 2008 that the FAA took the position that the Instrument of Transfer required KSMO to be operated as an airport in perpetuity – an issue that the City has sought to litigate.

But in his ruling last month, Judge John F. Walter of the U.S. District Court for the Central District of California held that the record “unquestionably demonstrates that the City knew, or should have known” about the requirement since 1948, and the report itself cites, among other authorities, a 1962 City Attorney opinion which acknowledged the FAA’s position. 2

In whatever process that is established by the Council to evaluate the options for the Airport’s future, it is critical that the City rely upon hard facts, and not political spin.

Finally, even though Santa Monica previously has indicated that it does not intend to accept any further Airport Improvement Program grants from the federal government, the Council should be aware that there are numerous means by which the City – and, ultimately, its residents and taxpayers – could be at risk if Santa Monica pursued a course of action that is contrary to the grant assurances and Instrument of Transfer.

In addition to the reversion of KSMO to the federal government, the FAA can issue a cease and desist order that directly prohibits the City from engaging in non-compliant conduct.

We urge you and the Council – as responsible representatives of the City’s residents – not to take any steps that would be in conflict with federal grant requirements, undercut KSMO’s

2 NBAA notes that, in addition to the evidence that was in the record considered by Judge Walter, in 2001 a former Assistant City Attorney for Santa Monica confirmed under oath that as early as 1981 the City was indeed aware that the FAA took the position that “if the city ever in perpetuity ever tries to convert any of this property to any other use, then the federal government gets it back, or can operate to get it back at that time.” This testimony was not disclosed to the Court by the City. The Council should require clarification from the Court by the City. The Council should require clarification from the City Attorney.

Read the offical letter here

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