[continued from previous message]
proceeding, the corrective action required by the Director’s
Determination should have included
actions to address the prior and continuing effects of the surplus,
including, as requested in the
Complainants’ associated motion, the suspension of landing fee
collections until such time as a
corrective action plan has been approved by the FAA – and, as
discussed below, the refund to
Airport users of the excessive – and thus unlawful – fees that have
been collected.
The Substantive Compliance Issues for Landing Fees Should Have Been
Addressed
The FAA has repeatedly established that excessive fees for
aeronautical users of airports –
along with any interconnected surpluses – are also among the agency’s significant compliance
concerns. The FAA’s Airport Compliance Manual elaborates upon this
issue, but the guidance is
not new, having appeared in substantially similar form in § 4-20(c) of
Order 5190.6A (1989) and
§ 70(d) of Order 5190.6 (1973). The central mandate is that: “In
establishing new fees … sponsors
should not seek to create revenue surpluses that exceed the amounts to
be used for airport system
purposes and for other purposes for which airport revenue may be
spent. … Additionally, the
progressive accumulation of substantial amounts of surplus
aeronautical revenue could warrant an
10
FAA inquiry into whether the aeronautical fees are consistent with the sponsor’s obligation to
make the airport available on fair and reasonable terms.” See Order
5190.6B, § 17.9.
The FAA recently explicated the meaning of this requirement in United
Airlines v. Port
Authority of New York and New Jersey, no. 16-14-13, Director’s
Determination (November 19,
2018). Although the FAA acknowledged that an airport has some
discretion in making
expenditures that can be incorporated into the rate base for its
aeronautical fees, the FAA also
criticized the lack of transparency in and a lack of supporting
documentation for the Port
Authority’s methodology, and accordingly required corrective action.
See id., at 17-18. Moreover,
in a prior proceeding involving Santa Monica, the FAA specifically
held that a fee may be
unreasonable independent of whether it results in a surplus; that
costs not specifically attributable
to a specific cost center must be allocated by methodology that is
transparent, reasonable, not
unjustly discriminatory, and applied consistently; and that critical
technical shortcomings in
methodology are a basis for the FAA to reject a landing fee schedule.
See Bombardier Aerospace
Corp. v. City of Santa Monica, no. 16-03-11, Director’s Determination
(January 3, 2005), at 44-
45. See also New England Legal Foundation v. Massport, 883 F.2d 157
(1st Cir. 1989) (upholding
DOT administrative ruling which invalidated a flawed landing fee
methodology).
Accordingly, although Complainants do not dispute that the Director’s Determination was
correct to require the City to update its landing fees to reflect the
changed factual circumstances
of the Airport, the FAA erred by failing to address whether the
methodology previously utilized
to establish landing fees for the Airport was compliant with FAA
requirements. If new factual
data is input into a methodology which remains improper, the outcome
will still be improper. Thus
the consequence of the absence of the requested guidance in the
Director’s Determination is
significant for SMO – and also for airports across the U.S., since
such guidance will also inform
whether their methodologies for calculating landing fees comply with
their federal obligations.
This is very much a live issue. As an initial matter, the Director’s Determination specifies
that Santa Monica cannot be determined to be in compliance with its
federal obligations. See id.,
at 11. Further, in a prior Part 16 proceeding that specifically
involved Santa Monica, the FAA
confirmed that it may address current sponsor practices that are
likely to result in future noncompliance.
See National Business Aviation Association v. City of Santa Monica,
California, no.
16-14-04, Director’s Determination (December 4, 2015), at 9 (“the
issue here posed is one in
dispute now. Moreover, we may in limited circumstances, consider a
case where the current
situation portends the high likelihood of a future violation”). See
also JetAway Aviation LLC v.
Board of Commissioners, Montrose County, Colorado, no. 16-06-01,
Director’s Determination
(November 6, 2006), at 34; Town of Fairview, Texas v. City of
McKinney, Texas, no. 16-99-04,
Director’s Determination (July 26, 2000), at 17.
In this proceeding, the City specifically has defended its
methodology, and thus absent new
guidance can be expected to utilize the same methodology in the
corrective action plan, only
changing the starting data pointsto reflect the Airport’s changed
factual situation. The FAA should
prevent that from happening, because that would allow the substantive
issues raised in the
Complaint to evade review while providing the City a nominal
justification to increase its landing
fees still further, based on its prior faulty reasoning. Because the
Director’s Determination failed
to do so, the Associate Administrator should now address the following
issues, specifically raised
in Complainants’ prior pleadings and now incorporated by reference
into this appeal:
11
• Transparency and Documentation. The Complaint argued that the
process utilized by the
City to increase its landing fees was impermissible because it was
poorly documented –
key assumptions were not explained, or were inconsistent among the few documents
available to the public, and the City refused to make additional
documents available to the
public. See id., at 25-26 and 35. See also Complainants’ Reply (August
1, 2016), at 19-
21. Although the Director’s Determination instructed the City to start
afresh, it did not
address whether the City’s prior practices had been compliant. The FAA
should specify
that the prior procedures were not compliant, based on the briefing
already provided.
• Airfield Costs and Revenue. The increase in landing fees challenged
by the Complaint was
primarily premised on an alleged deficit between airfield costs and
airfield revenue.
Complainants argued that this rationale was invalid because it did
not: (i) accurately
measure the costs and revenue attributable to the airfield; (ii)
explain how costs were
allocated between airfield and non-airfield centers;10 and (iii) take
into account the overall
financial picture of the airport – including non-airfield costs and non-airfield revenue –
which was revenue-neutral if not revenue-positive. See id., at 23-25
and 31-33. See also
Complainants’ Reply (August 1, 2016), at 12. The Director’s
Determination briefly
describes the City’s accounting for non-airfield costs and revenues as “unclear” (see id., at
11), but did not make any specific findings about the City’s prior
practices nor provide any
guidance to the City for the methodology to be used going forward. To
ensure that the
pending corrective action will be meaningful, the FAA should specify
whether: (i) the
City’s measurement of airfield costs and revenue was compliant; (ii)
the methodology for
allocating costs between airfield and non-airfield centers was
compliant; and (iii) the
Airport’s overall finances must be considered even if an airfield
deficit exists.
• Indirect Cost Reimbursement. The increase in landing fees challenged
by the Complaint
also was premised in part on the Airport’s reimbursement to the City
of indirect costs. The
Complaint argued that the City should not have been allowed to rely on
those figures,
because of the lack of any explanation thereof, including both the
amounts and the
allocation methodology, as well as a significant but unexplained
year-over-year increase
in the figures relied upon by the City. See id., at 26-28. See also Complainants’ Reply
(August 1, 2016), at 13-15. It is well-established that an airport
sponsor has the burden to
document the municipal expenditures that it claims are payable by an
airport. See
Complainants’ Reply (August 1, 2016), at 4-5. The Director’s
Determination briefly
describes the City’s allocations as “unclear” (see id., at 11), but
did not make any specific
findings about the City’s prior practices nor provide any guidance to
the City for the
methodology to be used going forward. The FAA should specify whether undocumented
indirect cost reimbursement may be considered at all in setting
landing fees – and if
allowed, how it should be allocated between airfield and non-airfield
cost centers – to
ensure that the pending corrective action will be meaningful.
• Legal Expenditures. The increase in landing fees challenged by the
Complaint further was
premised in part on certain legal fees incurred by the City. The
Complaint argued (see id.,
10 Santa Monica belatedly submitted an exhibit which purported to
explain the allocations, but that exhibit comprises
either a post hoc rationale or was improperly withheld from the public
at the time the landing fees were adopted – the
City has not specified which. See Complainants’ Objections (September
19, 2016), at 1-2.
12
at 28-29; see also Complainants’ Reply (August 1, 2016), at 15-16)
that those fees, in
addition to being undocumented, also should not have been payable with
airport revenue
(irrespective of whether they were allocated to an airfield or
non-airfield cost center), to
the extent that they were not incurred in support of the Airport, but
rather in support of an
unsuccessful effort by the City by ordinance to restrict Class C/D
aircraft operations at
SMO – an effort rejected by both the FAA and the courts. See, e.g.,
City of Santa Monica
v. FAA, 631 F.3d 550 (9th Cir. 2011). The Director’s Determination
does not even
mention this issue, much less make a finding. As above, this issue
must be addressed by
the FAA if corrective action is to be meaningful.
• Amortization Costs. Another foundation for the Complaint’s challenge
to the increase in
landing fees was the amortization costs cited by the City, which also
lacked supporting
documentation and further did not appear to be properly categorized,
given the consistent
disparity between them and the data recorded in the City’s audited
CAFRs (see id., at 29-
30; see also Complainants’ Reply (August 1, 2016), at 16-18). This is
another item that
the Director’s Determination briefly describes as “unclear” (see id.,
at 11) but about which
there are no specific findings about the City’s prior practices nor
any guidance to the City
for the methodology to be used going forward. As above, this issue
must be addressed by
the FAA if corrective action is to be meaningful.
• Double Charges. The Complaint’s challenge to the City’s increase in
landing fees
additionally was premised in part on the fact that the fees previously
applied only to
transient aircraft, but as revised applied to all aircraft, with the consequence that based
operators now are effectively double-charged for costs already
accounted for through other
fees they pay such as tie-down fees, hangar fees, and fuel flowage
fees (see id., at 31; see
also Complainants’ Reply (August 1, 2016), at 18). The Director’s
Determination does not
address this issue. This is yet another issue that must be considered
by the FAA if
corrective action is to be meaningful.
• Loans and Interest. The Director’s Determination specifies that a
defect in the fee
methodology previously used by the City was that it improperly
presumed that the
payments made to the Airport by the City were valid loans and thus
payments of interest
(and presumably also payments of principal, although not mentioned by
the FAA) were
required. See id., at 11. The Complainants concur – but as discussed
above, the Director’s
Determination does not identify all of the principal and interest that
must be reimbursed,
nor does it include the complete data necessary for the computation of
the reimbursement
required.
11 As a result, the Associate Administrator’s resolution of the appeal
of issue #1,
including revised guidance for and calculations of the reimbursement
that is due, is
essential for the corrective action required in connection with issue
#3 to be meaningful.
• Facial Reasonableness. The Director’s Determination acknowledged
that the landing fees
at SMO on a per-pound basis had increased by 264% (and the collected
revenue initially
increased by 500%). See id., at 11. Nevertheless, it did not address
the Complaint’s
11 The City’s FY2018 CAFR states that the outstanding advances from
other funds to the Airport comprise $7,748,971.
That does not account for improper past payments of principal and
interest, or statutory interest – but suffice to say
that at the conclusion of this proceeding, the Airport’s surplus is
likely to exceed $20 million.
13
allegation that the revised landing fees at SMO are facially
unreasonable. See id., at 33-
35; see also Complainants’ Reply (August 1, 2016), at 16. In
Bombardier Aerospace Corp.
v. City of Santa Monica, no. 16-03-11, Director’s Determination
(January 3, 2005), at 39,
the FAA observed that the landing fee then imposed at SMO was the
highest in the United
States, and although that comparison did not mean that the fee was
inherently unreasonable,
“it does illustrate that the SMO landing fee methodology is not the
result of generally
accepted practices used within the industry.” In this case,
Complainants documented that
the revised landing fee also was out of sync with other comparable
airports – one source
of evidence being the City’s own data. Accordingly, irrespective of
any new data that the
City could provide, the FAA should have addressed whether the revised
landing fee was
facially impermissible – or, at a minimum, that it was evidence of
improper methodology,
re-emphasizing why the issues set forth above should also have been
addressed by the
Director’s Determination, and on this appeal must be addressed.
The Ongoing and Growing Revenue Surplus Should Also Have Been
Addressed – and Remedied
The FAA has recognized that landing fees and surpluses are intertwined
matters – and that
unjustified surpluses are another compliance issue of major concern to
the agency. See, e.g., Order
5190.6B, § 17.9; 49 U.S.C. § 47101(a)(13); Sound Aircraft Services v.
East Hampton Airport, no.
16-14-07, Director’s Determination (January 2, 2019), at 12 (“the
existence or absence of a surplus
will … play an important role in determining if such a fee is
reasonable”). As discussed above,
the Director’s Determination failed to fully address the landing fee
issues at the Airport, but did
give them some attention, and required the City to recalculate the
fees. Yet the Director’s
Determination barely mentioned – and took no action to address – the
surplus which existed and
continues to exist at the Airport, intertwined with the landing fees.
That was an error which must
now be corrected by the Associate Administrator.
As a preliminary matter, the Airport’s surplus is not a new issue in
this appeal. The
Complaint alleged that the Airport’s overall finances prior to the
revision of its landing fees was
at least neutral if not in the black, and that the consequence of the
revision of the landing fees
would be the accumulation of an impermissible surplus (see id., at
21-25 and 31-33; see also
Complainants’ Reply (August 1, 2016), at 13).12 The Complaint was
correct, despite the City’s
response that “it is obvious that there is no ‘surplus’ at the Airport
– nor any realistic expectation
that surplus will progressively accumulate there any time soon.” See
City’s Answer (July 1, 2016),
at 24. The City also may assert that the growth in the surplus can be attributed to factors such as
12 Moreover, the Director’s Determination in its ruling on issue #3
itself established that subsequent developments are
relevant to and will be considered in this proceeding. The FAA
indubitably has the discretion to expand the scope of
a Part 16 investigation beyond the allegations made in a complaint and
to collect additional evidence. See, e.g., 14
C.F.R. § 16.29; Town of Fairview, Texas v. City of McKinney, Texas,
no. 16-04-07, Final Agency Decision
(November 30, 2005), at 20. In any case, to the extent necessary, the Complainants petition for the current surplus –
and other public City data post-dating the 2016 briefing – to be taken
into consideration pursuant to 14 C.F.R. §
16.33(f). There is good cause to do so, given that the changed factual situation of the Airport was introduced as an
issue by the FAA itself; the current status of the surplus and other
financial reporting was, by definition, information
not previously available to the Complainants; and the growth of the
surplus directly bears upon the intertwined landing
fees. See also National Business Aviation Association v. City of Santa
Monica, California, no. 16-14-04, Final Agency
Decision (August 15, 2016), at 7-8 (accepting supplemental affidavits
from the City); Martin v. City of Prescott,
Arizona, no. 16-97-01, Final Agency Decision (October 7, 1997), at
footnote 2.
14
growth in non-aeronautical revenue – but that still would not justify
a surplus, and if anything
provides a further justification for corrective action such as the
reduction or elimination of landing
fees at SMO (as discussed further below). Non-aeronautical revenue
should be used to reduce the
economic impact on aeronautical users. See, e.g., Bombardier Aerospace
Corp. v. City of Santa
Monica, no. 16-03-11, Director’s Determination (January 3, 2005), at
43.
The FAA should take administrative notice of the City’s CAFRs
(publicly available at
https://finance.smgov.net/budgets-reports/annual#/), which show that
the factual situation at the
Airport includes a tripling of its unrestricted cash and investments
since 2016. At the end of
FY2015 (June 30, 2015) – the most recent figure available at the time
the Complaint was filed –
they amounted to $4.2 million, but increased to $7.2 million at the
end of FY2016 (June 30, 2016),
$12.3 million at the end of FY2017 (June 30, 2017), and $12.9 million
at the end of FY2018 (June
30, 2018).13 Notably, that latest increase occurred despite airport
revenue having been used to
finance the initial truncation of the Airport’s runway in FY2018.
Moreover, much of this revenue
comes from long-term, high-PSF non-aeronautical leases, which are
anticipated to continue
through 2028. For example, in 2016 the Airport entered into a
five-year lease – with a five-year
renewal option – with Snapchat, Inc. (now Snap, Inc.) for
non-aeronautical uses, which alone
generates more than $3 million in annual revenue.
14 The surplus will only continue to grow.
This rapid growth in the Airport’s cash on hand, without any clear
purpose for the funds,
should be of serious concern to the FAA. There is no dispute that
airports can and should maintain
a reserve account sufficient to cover anticipated – and even
unanticipated – future expenses. See,
e.g., Order 5190.6B, § 17.9; H. Rpt. 103-677, at 68 (August 5, 1994).
But an outright runaway
accumulation of monies is not justifiable. In this case, there is no
analysis of future expenses or
contingencies to justify the surplus. Contrast Sound Aircraft Services
v. East Hampton Airport,
no. 16-14-07, Director’s Determination (January 2, 2019), at 13. In a
Part 16 proceeding involving
a similar general aviation airport, Aerodynamics of Reading v. Reading
Regional Airport
Authority, no. 16-00-03, the FAA held that an unrestricted cash
balance of $462,000 – of which
$362,000 was specifically designated to be a reserve account – was
“within the bounds of
reasonableness in the context of the airport’s financial
contingencies, debt service, and future
development.” See Final Decision and Order (July 23, 2001), at 21. In
contrast, in this case the
Airport’s unrestricted cash position amounts to nearly 2800% of RDG’s
cash position – far beyond
the boundaries of reasonableness.
Moreover, this is a unique case, given the settlement agreement
between the City and the
FAA which provides the City the discretion to close the Airport after
the end of 2028 – an
opportunity which the City’s political leadership publicly insists
will be taken.15 In light of that
13 The CAFRs also calculate the airport’s net position. Although
there is no indication in FAA guidance that this
figure – which includes fixed assets – should be used to evaluate an
airport’s “surplus,” the Complainants note that it
shows even more growth than the Airport’s cash position. At the end of
FY2015, it was negative $5.5 million; at the
end of FY2016, it was $200,000; at the end of FY2017, it was $6.1
million; and at the end of FY2018, it was $7.6
million.
14 See
https://publicdocs.smgov.net/WebLink/DocView.aspx?id=2341197
(May 10, 2016) (approving proposal
previously submitted as Complainants’ Exhibit 84).
15 See, e.g., A Resolution of the City Council of the City of Santa
Monica Implementing the Consent Decree and
Authorizing All Actions Necessary to Ensure the Closure of Santa
Monica Airport Effective as of Midnight on
15
position, the Airport’s need for long-term financial reserves is
drastically reduced. Nor should it
be permissible for the Airport to accumulate surpluses today that are
not intended to ever be used
for aeronautical purposes, but rather to be retained until after the
Airport has been closed and then
used to repurpose the property for non-aeronautical purposes and/or
for general municipal
purposes. Such a practice would amount to transparent – and
impermissible – revenue diversion.16
Under these circumstances, the Director’s Determination should not
just have required the
City to prepare an updated fee methodology but also to prepare a
corrective action plan for the
surplus in the Airport’s accounts. At a typical airport, a means to
achieve compliance once a
surplus had been identified might be to “convert a reasonable amount
of the airport revenues into
improvements that would enhance the value of the airport to the
community (T-hangars, aircraft
parking areas, terminal buildings, etc.).” See FAA Order 5190.6A, §
4-20(c) (1989); FAA Order
5190.6, § 70(d) (1973). But, as discussed above, given the City’s
stated intent to close the airport
in just over nine years, there would be no justification for the
surplus being repurposed for
significant aviation-related capital expenditures. Given the
improbability if not impossibility of
the City being able to identify legitimate Airport capital
expenditures for which the surplus
accumulated can be used, the proper solution would be for the surplus
to be used to reduce the
operational costs of the Airport’s users – foremost by eliminating the Airport’s landing fees
(including, as moved for above, their immediate suspension – and
ultimately their refund).17
Finally, the Director’s Determination also should have required the
City to consider using
the surplus to reduce the tie-down and rent and fuel flowage fees paid
by aeronautical tenants at
the Airport. Even if landing fees are suspended going forward, that
would reduce the surplus by
only $4.5 million over the nine remaining years of the Airport’s
guaranteed lifespan. Given the
lack of appropriate capital projects to which those funds could be
deployed, the only other means
to bring the surplus back within the zone of reasonableness is to
reduce the other fees collected by
Airport users. The Director’s Determination having failed to address
this issue, the Associate
Administrator should now do so.
The Unlawful Landing Fees Collected To Date Must Be Refunded
Between August 1, 2013 and the present, the City has continued to
charge Airport users
landing fees that are among the highest in the country, despite its
failure to properly advise, and
receive informed input from, affected parties; its repetitive
manipulation of underlying financial
data; its rejection of its own analysis of other airports’ landing
fees demonstrating the inherent
December 31, 2028, and the Shortening of the Santa Monica Airport
Runway Pending Closure, no. 11026 (February
28, 2017)
(
https://publicdocs.smgov.net/WebLink/DocView.aspx?id=2344542). See
also Complaint, at 7-9.
16 The Western-Pacific Region’s informal determination dated October
21, 2019 warned Santa Monica that doing so
would be non-compliant. Likewise, nothing in 49 U.S.C. § 47133
suggests that the closure of an airport releases from
its obligations any revenues previously collected under its auspices.
17 The City – in the Capital Improvement Program that is part of its
FY2019-21 Adopted Biennial Budget – has
proposed to spend up to $7.3 million annually on street, sidewalk, and
building projects. These expenditures either
are unconnected to aviation, or must be premised on the funded
projects continuing to be used after the closure of the
Airport, for entirely non-aeronautical purposes. This is an inversion
of FAA policy – the City in effect is assessing
higher fees for aeronautical users in order to subsidize facilities
for non-aeronautical users. Contrast United States
Construction Corporation v. City of Pompano Beach, Florida, docket no. 16-00-14, Final Agency Decision (July 10,
2002), at 21 (“[o]perating the airport for aeronautical use is not a
secondary obligation; it is the ‘prime obligation’”).
16
unreasonableness of the SMO fees; its refusal to account for
non-aeronautical income – the
Airport’s principal income stream – in establishing and maintaining
the rate base; and its continued
maintenance of its landing fees in the face of an enormous and growing
surplus. The landing fees
were thus not just improper but unlawful from their inception, and as
the surplus includes revenues
from those fees, the Director’s Determination also should have
included in its corrective action
directive a requirement that the City address how those fees should be
refunded to the affected
users.
The Complainants are aware that the FAA previously has opined that
Part 16 is not an
appropriate forum in which to request monetary damages. See, e.g.,
Consolidated Services
Engineers and Constructors, Inc. v. City of Palm Springs, no.
16-03-05, Director’s Determination
(June 10, 2004), at 28. But those statements are not determinative
here; what is proposed is not a
request for damages, but rather that for corrective action that is
needed to bring an airport into
current compliance, in the form of reimbursement; that is clearly
within the FAA’s authority. This
remedy is particularly appropriate under the unique current
circumstances, in which there are not,
nor will there be, legitimate expenditures for which those funds
possibly can be used.
The FAA has not previously been asked in Part 16 proceedings to apply,
and thus has not
applied, a critical element of its authority, as identified by 14
C.F.R. § 16.109(a) – to issue “an
order directing the refund of fees unlawfully collected.” Nothing in
the language or history of that
regulation limits the meaning of the term “unlawfully,” but the FAA consistently has described
general violations of grant assurances to be “unlawful.” See, e.g.,
Pelzer v. State of Michigan, 16-
16-05, Director’s Determination (May 16, 2018), at 26; Bodin v. County
of Santa Clara,
California, no. 16-11-06, Director’s Determination (December 19,
2011), at 21-22; Skydive Paris,
Inc. v. Henry County, Tennessee, no 16-05-06, Director’s Determination
(January 20, 2006), at
19; Clarke v. City of Alamogordo, New Mexico, 16-05-19, Director’s Determination (September
20, 2006), at 23; United Aerial Advertising, Inc. v. County of Suffolk
Board of Commissioners,
no. 16-99-18, Director’s Determination (May 8, 2000), at 17.
Consistent with that guidance, the
existence of a surplus at SMO that is incompatible with grant
assurances #24 and #25 – and was
built on the backs of excessive user fees, as alleged in the Complaint
(see id., at 22-23) – can and
should be the basis for an FAA order directing refunds.
Moreover, even if the Section 16.109(a) authority for the first time
should be construed to
be limited to statutory violations, revenue diversion is a statutory
violation pursuant to 49 U.S.C.
§ 47133 – and the Complaint alleged that the maintenance of a surplus
by the Airport amounts to
a violation of not just grant assurance #24 but also of grant
assurance #25 (see id., at 22-23). The
mere existence of an excessive surplus, in which funds are parked and
not used for aeronautical
purposes, standing alone amounts to revenue diversion – and in this
case, the City may have a
further, ulterior motive to retain the surplus for impermissible
post-closure use. See also Sound
Aircraft Services v. East Hampton Airport, no. 16-14-07, Director’s Determination (January 2,
2019), at 12 (noting linkage – unreasonable fees are “a circumstance
leading to revenue diversion,
or an inappropriate revenue surplus”).
Finally, nothing in Part 16 generally prohibits the FAA from
recommending that a
corrective action plan incorporate restitution to users who have
previously paid excessive fees. As
discussed above, since the truncation of the runway the landing fees
collected by the Airport have
declined, but previously they peaked at more than $1.5 million
annually (in FY2014) – a
17
significant, unwarranted expense for users of the Airport, which also
cynically served the purpose
of driving traffic away from the Airport. Again, this is an unusual
case, given the length of time
that elapsed between the filing of the Complaint and the Director’s Determination; the enormous
surplus that has been accumulated; and the changes in the Airport’s
factual situation – including
the establishment of a timeframe for its closure – in the interim.
Thus the Associate Administrator
at a minimum should conclude that the corrective action instructions
to the City should have been
broader in scope, including reimbursement of unlawful landing fees,
given the unprecedented
surplus compliance problem in Santa Monica.
Conclusion
For the reasons set forth above, the Associate Administrator should
revise the Director’s
Determination, in connection with issue #1, to specify that none of
the transfers between the City
and the Airport identified in the Complaint were adequately documented
to comprise loans, and to
modify the reimbursement obligations of the City based on both that
finding and the other errors
and omissions in the Director’s Determination that are identified in
this appeal, as well as require
that the City provide supplemental data to the extent necessary for
revised calculations to be made
of the City’s exact reimbursement obligations.
In connection with issue #3, the Associate Administrator should
resolve the compliance
issues identified in the Complaint but not addressed in the Director’s Determination. Although
the City has been instructed to update its landing fees because of
subsequent changes in the factual
situation of the Airport, the methodological issues identified in the
Complaint are relevant to the
parameters of the corrective action and are capable of evading review
if not addressed at this time.
Moreover, the current factual situation includes an excessive and
growing surplus, which is
intertwined with the landing fees; the Director’s Determination should
not have ignored this issue
– which it specifically recognized – and pending the preparation and
approval of a corrective action
plan, should have ordered remedies, such as the suspension of landing
fees at SMO and refunds to
Airport users of fees that not only created an excessive surplus but
were thus illegal. The Associate
Administrator should now provide redress, including by the requested
interim order.
18
Respectfully submitted,
Jol A. Silversmith, Esq.
Barbara M. Marrin, Esq.
KMA Zuckert, LLC
888 17th Street, N.W., Suite 700
Washington, DC 20006
(202) 298-8660
jsilversmith@kmazuckert.com
bmarrin@kmazuckert.com
Richard K. Simon, Esq.
1131 Camino San Acacio
Santa Fe, NM 87505
(310) 503-7286
rsimon3@verizon.net
19
Certificate of Service
[continued in next message]
--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)