Presented to: Federal Aviation Administration Problem Tenants At Airports California Airports Association By: Kathleen Brockman September 15, 2010

2 Federal Aviation Administration Problem Tenants September 15, Airport Grant Assurances Grant Assurances provide rights and powers to an airport sponsor to manage their airport in a safe manner and in accordance with reasonable minimum standards for tenants. There are 39 assurances: Complainants generally allege that an airport sponsor has violated one or more of these six assurances:

3 Federal Aviation Administration Problem Tenants September 15, Most Popular Grant Assurances #5, Rights and Powers #19 Operation and Maintenance #22 Economic Nondiscrimination #23 Exclusive Rights #24 Fee and Rental Structure #29 Airport Layout Plan

4 Federal Aviation Administration Problem Tenants September 15, Grant Assurance #5 Preserving Rights and Powers - The sponsor will not take or permit any action which would operate to deprive it of any of the rights and powers necessary to perform any or all of the terms, conditions and assurances…If an arrangement is made for management and operation of the airport…the sponsor will reserve sufficient rights and authority to insure that the airport will be operated and maintained in accordance with Title 49, U.S. Code, and the grant assurances.

5 Federal Aviation Administration Problem Tenants September 15, Grant Assurance #19 Operation and Maintenance - The airport and all facilities which are necessary to serve the aeronautical users of the airport…shall be operated at all times in a safe and serviceable condition and in accordance with the minimum standards as may be required or prescribed…for maintenance and operation. It will not cause or permit any activity or action thereon which would interfere with its use for airport purposes.

6 Federal Aviation Administration Problem Tenants September 15, Grant Assurance #22 requires that the sponsor… …will make its airport available as an airport for public use on reasonable terms and without unjust discrimination to all types, kinds, and classes of aeronautical activities, including commercial aeronautical activities offering services to the public at the airport.

7 Federal Aviation Administration Problem Tenants September 15, Grant Assurance #22(h) states that the sponsor… may establish such reasonable, and not unjustly discriminatory conditions to be met by all users of the airport as may be necessary for the safe and efficient operation of the airport.

8 Federal Aviation Administration Problem Tenants September 15, Grant Assurance #23 Exclusive Rights – requires that a sponsor not permit an exclusive right for the use of the airport by any person providing, or intending to provide, aeronautical services to the public.

9 Federal Aviation Administration Problem Tenants September 15, Grant Assurance #24 Fee and Rental Structure – requires that a sponsor maintain a fee and rental structure for the facilities and services at the airport which will make the airport as self-sustaining as possible under the circumstances at the airport.

10 Federal Aviation Administration Problem Tenants September 15, Grant Assurance #29 Airport Layout Plan – The sponsor will keep up to date at all times an airport layout plan of the airport.

11 Federal Aviation Administration Problem Tenants September 15, Examples of Problem Tenants Unauthorized use of hangars Insufficient business plans from commercial tenants Abuse of management contract Abuse of airport rules and regulations Abuse of airport minimum standards

12 Federal Aviation Administration Problem Tenants September 15, Unauthorized Use of Hangars

13 Federal Aviation Administration Problem Tenants September 15, Carpet Anyone?

14 Federal Aviation Administration Problem Tenants September 15, Airport Responsibilities The airport sponsor can fix this problem by having rules and regulations that govern hangars. Lease terms can also be enforced – if there is language in the lease the prevents this kind of use. The airport should reserve the right to inspect hangars on a regular basis.

15 Federal Aviation Administration Problem Tenants September 15, Insufficient Business Plans This was the business plan.

16 Federal Aviation Administration Problem Tenants September 15, Insufficient Business Plans This Complaint arose when the Airport began to review a general business proposal against its vague minimum standards through an informal process previously considered acceptable to both parties. Complainant stated that “When I was presented with my…agreement I was not given time to read it…If I had been given the opportunity to read this agreement…I would not have signed it”

17 Federal Aviation Administration Problem Tenants September 15, Insufficient Business Plans The Director found that “the Complainant has a responsibility to understand and adhere to reasonable business practices…This includes, but is not limited to, reading and understanding agreements before entering into such contracts, negotiating agreements in a timely manner, understanding and complying with the Airport’s minimum standards, and cooperating with requests from the airport management.”

18 Federal Aviation Administration Problem Tenants September 15, Insufficient Business Plans The Director was also concerned that the Airport failed to meet the requirements of #5, stating “The record documents informal business practices, ad hoc procedures, and non-transparent decision-making process on the part of the Respondent.

19 Federal Aviation Administration Problem Tenants September 15, Airport Responsibilities In a case like this, the airport sponsor has the responsibility to make sure that they have adequate minimum standards for commercial activities. Impose conditions that will ensure safe and efficient operation, are reasonable, attainable, uniformly applied and reasonably protect providers of aeronautical services from unreasonable competition.

20 Federal Aviation Administration Problem Tenants September 15, Management Agreement In this case, the FBO with a mgmt agreement leased to itself three primary buildings used for most airport operations, thereby attempting to continue its largely exclusive use of the airport.

21 Federal Aviation Administration Problem Tenants September 15, Management Agreements “…pursuant to the terms of the (Management Agreement), the management of the Airport was the sole and exclusive obligation and responsibility of Goodrich.” “Mr. Goodrich, as the manager and operator of the Airport, had and has the ability to establish the rent for each tenant” and “…Mr. Goodrich was not seeking approval from the Village to raise the rental rates, but was merely advising the Board…”

22 Federal Aviation Administration Problem Tenants September 15, Management Agreements These assertions by the Complainants conflict with the Respondent’s obligations under Grant Assurance 5, Preserving Rights and Powers.

23 Federal Aviation Administration Problem Tenants September 15, Management Agreements With the expiration of the Management Agreement, the Village “got out of” being in violation of Grant Assurance 5, but the Director cautioned the Village that it is required to preserve its rights and powers to enforce the grant assurances should it wish to engage in future management arrangements.

24 Federal Aviation Administration Problem Tenants September 15, Abuse of Rules and Regulations SeaSands was a Certificated Air Carrier, authorized by the USDOT to operate and conduct common carriage operations. During its operations at the Airport, SeaSands was a T- Hangar tenant of the Authority and held an operating permit from the Authority, allowing it to provide services to clients at the Airport on their aircraft.

25 Federal Aviation Administration Problem Tenants September 15, Abuse of Rules and Regulations The Airport terminated the T-Hangar Lease for non- payment; terminated the Maintenance Operating Permit for non-compliance. Personnel of Signature Flight Support at the Airport also reported an incident involving Complainant. The dispatcher described profane, abusive and apparently intoxicated behavior.

26 Federal Aviation Administration Problem Tenants September 15, Abuse of Rules and Regulations The Authority’s termination of SeaSands’ Operating Permit and T-Hangar Lease was based upon several grounds. First, both the requirement to pay rent and to provide insurance coverage were violated on numerous occasions. Second, because SeaSands was ultimately determined to be a safety risk at the Airport, it was decided that he and any employees under his direct supervision and control could not be permitted unescorted access to the secure area.

27 Federal Aviation Administration Problem Tenants September 15, Airport Responsibilities When the sponsor imposes reasonable and not unjustly discriminatory minimum standards for airport operations, and the sponsor then denies access or services based on those standards, the FAA will not find the sponsor in violation of the assurances regarding exclusive rights and unjust discrimination

28 Federal Aviation Administration Problem Tenants September 15, Abuse of Minimum Standards The FAA has previously adjudicated three complaints filed by Kent Ashton challenging the City of Concord’s airport regulations and minimum standards and the cancellation of his aircraft storage permit. The Airport stated that the reason for terminating the hangar permit was that Ashton photographed, bothered, and harassed other tenants at the airport under the guise of collecting information concerning the airport.

29 Federal Aviation Administration Problem Tenants September 15, Abuse of Minimum Standards Additionally, the Respondent contends that Ashton used the airport for non-aeronautical purposes and entered areas of the airport he knew he was not entitled to enter. The Airport argued that in order to maintain a safe and efficient operation of the airport, they must have the ability to refuse to lease storage space to those persons who have shown an inability to accept and abide by the rules and standards imposed by the Airport.

30 Federal Aviation Administration Problem Tenants September 15, Abuse of Minimum Standards Following a Court of Appeals decision upholding FAA determination, Ashton wrote to the airport and stated, “No court has held, and neither has the FAA held, that we do not have a right to operate our aircraft out of our public airport or that we do not have rights to store our aircraft on the airport. With the law on our side, and the issues undecided, why should we stop litigating?" " We have every expectation to bring another complaint, based on your latest refusal to comply with State law.“

31 Federal Aviation Administration Problem Tenants September 15, Airport Responsibilities a sponsor is under no obligation to permit aircraft owners to introduce onto the airport equipment, personnel, or practices which would be unsafe, unsightly, detrimental to the public welfare, or which would affect the efficient use of airport facilities. Close attention to the development of airport minimum standard – rather than the ‘boilerplate’ versions that are around – is strongly advised. Requiring tenants to abide by reasonable minimum standards is within your rights and responsibilities.

32 Federal Aviation Administration Problem Tenants September 15, Thoughts?