https://www.avweb.com/aviation-news/faa-santa-monica-airport-violated-grant-assurances/
FAA: Santa Monica Airport Violated Grant Assurances
Marc Cook November 26, 20190

Image: AOPA
The ongoing saga of Santa Monica Airport now includes a rebuke from
the FAA for the city’s handling of federal grants. In ruling against
the city in a complaint filed in 2016, the FAA seeks to correct how
federal funds have been handled within the city and for the airport.
You may remember that in 2017, the FAA came to an agreement with the
city on the continuing operation of SMO through Dec. 31, 2028, that
included allowing shortening of the single runway. Santa Monica
Airport has been attacked by city residents as noisy and dangerous.

In the 2016 filing, the “complainants,” which included NBAA and AOPA,
said that “airport revenue has been and continues to be diverted
through insufficiently documented alleged loans from the City to the
Airport and that the City charges excessive interest thereon; the
landing fee structure at the Airport is flawed, resulting in excessive
and unjustified fees; a non-aeronautical user, Santa Monica College
(SMC), has paid below-market rent for non-aeronautical property; and
the City has refused to extend the leases of aeronautical tenants
beyond month-to-month holdover terms and adopted short-term leasing
policies.”

In the lengthy response, the FAA determined that the “alleged loans to
the Airport are insufficiently and improperly documented as such and
fail to satisfy the requirements of loans under the Revenue Use
Policy.” In response, the city of Santa Monica says it will “implement
a corrective action plan to recalculate the accumulated interest on
its loans.”

The FAA also found that the Santa Monica College was paying below
fair-market value for a facility on the field and that the “leasing
agreement between the City and the College was not consistent with the
City’s federal obligations, but that the City took proactive steps to
correct the situation by submitting the corrective action plan, which,
upon review, is generally consistent with correcting the situation.
However, within 60 days, the City still must provide details,
acceptable to the FAA, on (1) how it will ensure future compliance,
(2) how reimbursements to the Airport for any differential between the
rent paid by the College in FY2017 and beyond will occur, and (3) the
City’s actions concerning future leases with the College.”

The complaint also accused the city of setting “excessive and
unreasonable landing fees,” to which the FAA responded that the city’s “justification for its landing fee methodology and rates does not
reflect current and actual costs and use of the Airport, and some of
the methodology is unclear … Therefore, within 60 days, the City must
update its methodology and fees to reflect current and actual costs in
the use of the Airport and in accordance with FAA guidance.”

The final issue had to do with property leases on the airport, which
the FAA found to be “generally consistent with the 2017 Settlement
Agreement, any leases to aeronautical service providers must be ‘no
less than (3) years’ in duration.” Airport businesses objected to the
shortness of the leases and said that the city had “denied new leases
and imposed month-to-month lease terms,” but the FAA found the city to
be generally in compliance with the agreement.

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