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FAA Decision Against Santa Monica Doesn't Go Far Enough, Aviation Plaintiffs Contend

Bob Kronovetrealty
We Love Property Management Headaches!

Have Extra Room for the Holidays 2019

Santa Monica Apartments

Santa Monica College
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Santa Monica, CA 90405
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By Jorge Casuso

December 12, 2019 -- On Monday the plaintiffs in a Federal Aviation Administration (FAA) compliant against the City filed an appeal seeking further reimbursement of airport funds and excessive landing fees.

The appeal filed by Santa Monica Airport tenants and two major aviation groups contends the FAA did not go far enough when it determined last month that the City has mishandled loans to the airport.

In a November 8 determination, the federal agency's top compliance officer ordered the City to adjust the outstanding allowable loan balances to reflect full payment of a $2,839,729 advance in 2004.

The FAA also ordered the City to credit improper interest payments and overpayments totaling nearly $1.5 million ("FAA Finds Santa Monica Mishandled Airport Loans," December 2, 2019).

In their appeal, the plaintiffs ask the agency to charge for all transfers, not only those deemed to be loans, including a $3,309,648 transfer made in Fiscal Year 2011-12 and a $400,000 transfer in April 2009.

In addition, the plaintiffs are requesting that the FAA "enter an interim order suspending the collection of landing fees at the Airport."

The FAA has the authority "to order the suspension of airport practices suspected to be non-compliant pending a final decision and corrective action," the plaintiffs wrote.

Landing fees at the airport are expected to total $490,000, a "minute component" of the airport's more than $13.6 million in operating revenues last year, according to the appeal.

The revised landing fees, however, "have been a substantial burden, ongoing since 2013, on individual Airport tenants and users," the plaintiffs wrote.

"The Airport clearly can defer this income for at least the duration of this proceeding, if not permanently."

Last month's determination also found the City restricted aviation tenants to month-to-month leases and charged below market rents to non-aviation tenants, including Santa Monica College (SMC), which was undercharged $1.1 million through 2016.

The November 8 decision gave the City 60 days to "update its methodology and fees to reflect current and actual costs in the use of the Airport."

On December 4, the City requested a 45-day extension of its filing deadline.

City officials said the FAA decision is under review.

Filed nearly four years ago, the complaint contends the City is financially "squeezing" airport tenants and users to drive them out of the airport ("City is “Squeezing” Santa Monica Airport Aviation Tenants, FAA Complaint Charges," February 10, 2016).

Under a January 2017 agreement with the FAA, the City will close the century-old municipal airport by December 31, 2028 ("City, FAA Agree to Close Santa Monica Airport in 2028," January 28, 2017).

The complaint was filed by Santa Monica Airport tenants, the Aircraft Owners and Pilots Association (AOPA) and the National Business Aviation Association (NBAA).

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