FAA grant has strings
Venice City Council held an emergency meeting this week after the Federal Aviation Administration added eleventh-hour conditions to its $7.1 million grant to rehabilitate runway 4-22, the Venice Municipal Airport’s noise-mitigation runway.
Council already approved acceptance of the grant, but agreed unanimously to the latest conditions after-the-fact.
The agreement commits the city to resolving noncompliance issues within one year.
The choice offered to the city: Either raise rents to fair market value for property leased to Sharky’s on the Pier, or purchase the FAA’s obligations on the property. A recent appraisal, which the FAA found acceptable, placed the value at $2.2 million.
The city is also required to purchase federal obligations for two acres on Senior Friendship Centers property controlled by the West Coast Inland Navigation District.
Mayor John Holic estimated the value of that property at $100,000 to $150,000. An appraisal will be forthcoming.
The city already owns both parcels, but must comply with FAA obligations and grant assurances that came along with deed acceptance.
Airport Administrator Chris Rozansky said purchasing those obligations would remove long-unresolved noncompliance issues.
“Typically the FAA does not issue grants to airports that have significant compliance issues,” Rozansky said. “They mentioned there would be a special condition about Sharky’s lease. We were surprised to learn (last) Friday they had also added a special condition regarding the Senior Friendship Centers.”
Renegotiating the lease contract with Pier Group, which owns Sharky’s, appears to be a nonstarter, potentially inviting litigation.
In all likelihood, said officials, if the city agreed to the demand for higher rents, the city would have to make up the difference.
Rozansky said he preferred maintaining the steady stream of around $400,000 each year from nonaeronautical leases, as it helps diversify among aviation and nonaviation revenue.
“As the airport manager, that airport rental has been a valuable source of revenue,” Roszansy said.
“We are fortunate to have the nonaeronautical revenue we do. I’d prefer to keep that revenue stream as long as possible. However, this is a longstanding” issue.
City Manager Ed Lavallee and council appear to be leaning toward the FAA’s preference to buy out the obligations.
“The FAA seems to be of the opinion that release of the property is the cleanest way to resolve it and get it off their desk as a compliance issue,” Lavallee said.
Either way, the money will come out of the city’s general fund and be deposited into its airport fund.
City officials estimated it would take five years to pay off.
The city has a year to decide which option to act on.
An audit conducted by the Department of Transportation’s Office of Inspector General, which issued a report on Sept. 29, 2011, found the FAA wasn’t diligent in its oversight of airport leases that in many cases didn’t charge fair market rents.
Some people called them “sweetheart deals.” The city has since addressed some of the leases.
The FAA said low rents were undermining the ability of the general aviation airport to remain self-sufficient.
The Senior Friendship Centers issue dates back to 1963, when the WCIND was deeded 48 acres as a spoils area for Intracoastal Waterway maintenance.
In 1986, the county and city entered into an agreement regarding construction of the Senior Friendship Centers in Venice.
The city requested FAA consent, but the FAA replied it could not consent unless there was rent provided to the airport. The city signed off on the lease agreement anyway. It’s been a compliance issue ever since.
The WCIND maintains it still needs 46 acres as a potential spoils area, leaving two acres of vacant land to consider.
According to Roszansky, the FAA stipulates no property has to change hands.
“They (FAA) don’t care who owns the property as long as the airport is paid fair market value for future airport obligations,” he said.