The following
exchange between the Feds, MoDOT and the city went on over a period of six
months. The city as seen the last reply
agreed to raise the rent to Airevac, equal to the t-hangars. TWO MONTHS AFTER AIREVAC GOT A CUP FOR THE
SULLIVAN SIGHT.
On Airevac, This
is what the feds said.
Item
#4 Air Evac —
The fourth issue identified during the hotline complaint investigation relates to Air Evac’s
usage and operations at the airport. MoDOT’s July 25, 2012 letter advised the City of the FAA’s finding that:
The Air Evac unit at the airport appears to have been given special treatment not q[forded to other airport tenants.
The OIG investigation report found Air Evac’s rental arrangement could be inconsistent with the City’s federal obligations. Based on the documentation the City provided, it appears Air Evac’s rent has remained unchanged ($300/month) since 2004, while other airport tenants’ rent has increased approximately 45% during that same time frame (from $1 20/year in 2004 to $1 75/year in 2012). The OIG hotline complaint also included allegations that the City had given Air Evac additional building and helipad space during this timeframe without assessing Air Evac for same. In its August 27, 2012 correspondence, the City stated that:
Air Evac Life Team is a business entity of the type intended to be attracted to the fricility to provide benefit to the airport and the community. It is treated consistently with all business entities located at the airport. All other tenants are single-hangar rental pilots not subject to business entity considerations.
This response does not specifically identify the benefit Air Evac provides to the airport. The community benefit is clear, but that does not exempt the City from its obligation to make the airport available “for public use on reasonable terms and without unjust discrimination” (see Grant Assurance 22(a)). The City has not demonstrated how Air Evac is treated consistently with all business entities located at the airport, because the City did not submit its airport rules and regulations or other “business entity” leases. An airport sponsor may apply differing terms to users that are not similarly situated, but aeronautical fees may not unjustly discriminate against aeronautical users (See FAA Order 5190.6B ¶18.5).
In responding to the investigation, the City did not provide documentation or other information supporting its decision to provide Air Evac with certain favorable lease terms, which has the potential to result in findings of unjust discrimination (Grant Assurance 22), and the City did not provide an explanation or documentation supporting its fee and rate structure (Grant Assurance 24).
An acceptable corrective action plan will include documentation demonstrating that: the City’s actions in establishing the terms of its current leases are not unreasonable and not unjustly discriminatory; the City has not given Air Evac exclusive use of any of its public use infrastructure; and the airport’s fee and rental structure is not unjustly discriminatory against all its aeronautical users.
The
city responded with;
Item #4: Attached is the 2000 AirEvac lease, at a monthly rate of
$150, and copies of letters of support from local service organizations and
emergency responders requesting that the City secure a local site for AirEvac’s
use. We have not located documentation regarding negotiation of the current
lease, which was signed at a monthly rate of $300 with a five year term by
Mayor Mindy McCoy in 2005. This lease contained a provision to automatically
renew without increase in 2010 for another five years. While this’ does not
comply with FAA Order 51 90.6B p9.5.e, the Order was, not brought to the
City’s attention by the FAA at the time of original lease issuance, and
therefore is not possible to include at this date. When the lease is
renegotiated in 2015 the City will include a CPI indexing clause
linked to Midwest Urban, Size D (Non metropolitan [less than 50,000])
changes. The City will consider a CPI-based consideration on all lease rates,
but not as a sole determinant for any type of lessee. As with any form of
lease, the rate must reflect more than simple square footage used. Tenants
which require taxiways and runways require more area maintenance than tenants
which use neither. Tenants providing and maintaining their own approach lighting require less maintenance
than tenants demanding those items. Tenants with 24-hour staffing provide a
security presence which tenants using the facility on an intermittent basis do
not provide. Tenants who provide their own snow removal cost less to house than
tenants needing services. Additionally, we will not insert language from a
lease specific to one form of tenant (rotary, fixed, commercial, private, etc.)
into leases specific to additional forms of tenant unless the language is
directly applicable to each, per 18.2 Lb of the Compliance Handbook noting the
appropriateness of lease distinctions based on use.
For Item 4,
which relates to Air Evac’s lease, MoDOT and the FAA agree that inclusion of a
CPI indexing clause in the next Air Evac lease will help to ensure that Air
Evac’s monthly rental rate reflects current economic conditions. MoDOT and the
FAA also agree that different categories of tenants can have different rental
rates, so long as a consistent methodology is utilized to establish fees for
comparable aeronautical users of the airport.
Although the City’s letter indicates it will include a CPI indexing clause in its next lease agreement with Air Evac, the letter does not state whether the base monthly rental rate for Air Evac will increase from $300/month when the Air Evac lease is next negotiated. Without this information, MoDOT and the FAA cannot determine whether the City’s proposed corrective action plan for Item 4 is acceptable.
The City’s March 26 letter stated that its lease rates reflect a variety of factors that differentiate certain types of tenants from one another. The differences between Air Evac and the fixed wing tenants may substantiate different rental structures for businesses operating at the airport and for other fixed wing tenants, but without any type of documentation outlining the City’s rental structure for businesses
operating at the airport, MoDOT and the FAA cannot determine whether Air
Evac’s lease agreement is consistent with such rental structure.
In order to address the remaining questions relating to Item 4, any future Air Evac leases should reflect a similar percentage increase in the base monthly rate to the increases experienced by other tenants from 2007-2013 pursuant to Title 49 United States Code Section 47107. In the alternative, the City should provide its cost
allocation methodology for its rental rates. This methodology should be consistent with the FAA’s Rates and Charges Policy.
MoDOT is available to work with the City to address these remaining corrective action plan items and to identify steps the City can take to ensure future compliance. If you have any questions, please do not hesitate to contact me. As soon as a response is received on these remaining items, I will coordinate with the FAA to determine whether the City’s corrective action plan is acceptable.
comparable aeronautical users of the airport.
Although the City’s letter indicates it will include a CPI indexing clause in its next lease agreement with Air Evac, the letter does not state whether the base monthly rental rate for Air Evac will increase from $300/month when the Air Evac lease is next negotiated. Without this information, MoDOT and the FAA cannot determine whether the City’s proposed corrective action plan for Item 4 is acceptable.
The City’s March 26 letter stated that its lease rates reflect a variety of factors that differentiate certain types of tenants from one another. The differences between Air Evac and the fixed wing tenants may substantiate different rental structures for businesses operating at the airport and for other fixed wing tenants, but without any type of documentation outlining the City’s rental structure for businesses
operating at the airport, MoDOT and the FAA cannot determine whether Air
Evac’s lease agreement is consistent with such rental structure.
In order to address the remaining questions relating to Item 4, any future Air Evac leases should reflect a similar percentage increase in the base monthly rate to the increases experienced by other tenants from 2007-2013 pursuant to Title 49 United States Code Section 47107. In the alternative, the City should provide its cost
allocation methodology for its rental rates. This methodology should be consistent with the FAA’s Rates and Charges Policy.
MoDOT is available to work with the City to address these remaining corrective action plan items and to identify steps the City can take to ensure future compliance. If you have any questions, please do not hesitate to contact me. As soon as a response is received on these remaining items, I will coordinate with the FAA to determine whether the City’s corrective action plan is acceptable.
And with;
In order to
demonstrate compliance with federal grant obligations, a corrective action plan
is required which documents that the City’s current lease agreement with
AirEvac is consistent with the City’s rental structure for businesses operating
at the Airport. An acceptable corrective action plan would also include a City
commitment to modifying its lease with AirEvac at the next available
opportunity to include an escalation provision which would increase AirEvac’s
rent at the same rate as the other airport tenants in order to work towards
achieving airport self-sufficiency.
The city
responded by;
Item 4, AirEvac
Lease: The City will ensure that all future hangar lease agreements with AirEvac LifeTeam subsequent to the
completion of their current lease in 2015 will specifically link the percentage
increase of said lease(s) to the lease rate increases levied on fixed-wing
tenants, and that all such increases shall comply in full with FAA Rates and
Charges Policy.
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