Oceaside Airport – FAA Wants Lease Language Tweaked

Airport operator not cleared for takeover
By Lola Sherman Union-Tribune Staff Writer
April 2009

OCEANSIDE — Six weeks after a private firm was due to take over operation of Oceanside Municipal Airport, the deal still does not have the approval of the Federal Aviation Administration.

City officials and the proposed private operator say progress is being made. An FAA spokesman said, “The issues we have with the proposed agreement are major.

“But eliminating the problems might be as simple as changing the language in the agreement,” FAA spokesman Ian Gregor said after City Attorney John Mullen and representatives of the private firm held a teleconference with federal officials Tuesday.

“The city is going to work on revisions that would make it acceptable to the FAA,” Gregor said.

Mullen said the revisions in the contract the city has signed with Airport Property Ventures of Los Angeles would amount to “tweaking” some language so the company could take over management of the municipal airport.

Neither Mullen nor Lydia Kennard, an Airport Property Ventures partner, said they thought the outstanding issues are major.

The FAA expressed concerns about whether revenue from the airport would go into the city’s general fund, rather than being set aside in an account solely for the airport, Mullen said.

Aside from paying some past and current bills, Mullen said, the FAA did not want airport revenue diverted to the general fund, which pays for citywide services.

Under the terms of the 50-year lease the Oceanside City Council approved in November, Airport Property Ventures is expected to pay a base rent plus 40 percent of all net annual income to the city.

The base rent for the first year is $9,000 a month.

The company also must make certain improvements and pay off the city’s $744,000 debt to the California Department of Transportation’s Division of Aeronautics.

Over the first half of the lease period, the city expects $11.3 million in income from the airport.

Mullen said the FAA wants the lease agreement to clearly indicate that airport assets such as property and facility improvements funded by federal grants would be maintained.

The 50-acre airport in the San Luis Rey Valley, two miles east of Interstate 5, was built in 1963 and has been continuously owned by the city. Its 3,000-foot runway accommodates propeller craft.

Gregor said the FAA had concerns that the proposed lease might constitute privatization of the airport. While that would not be forbidden, the agency has approved only one such change, at Chicago Midway Airport, in a lengthy and complicated process, Gregor said.

There are no private airports used by the public in Southern California, Gregor said, although many have private operators. American Airports Corp. of Santa Monica, a private company that bid unsuccessfully for the Oceanside lease, operates five municipal airports in Los Angeles County.

The council’s choice, Airport Property Ventures, is a new company, but its principals have years of management experience with major Los Angeles airports.

“From our viewpoint,” Kennard said Tuesday, “APV does not feel anything (in the FAA’s concerns) is a fatal flaw. . . . This is a complicated deal,” she said, adding that she didn’t expect instant FAA approval.

None of the parties involved would estimate when the FAA will sign off on the deal and Kennard’s company can begin managing the airfield.

Mullen said he would get the reworked lease document back to the FAA in the next couple of weeks. He noted, however, that it has taken the agency from the city’s original November submission of the proposed contract until April to complete a teleconference on its concerns.

Kennard said that no matter the time frame, her company is onboard for the long haul.

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