News

Palo Alto's airport takeover delayed until 2013

City's plan to take over airport operation from Santa Clara County about six months behind schedule

Palo Alto's plan to take over operation of Palo Alto Airport has fallen behind schedule because of vacancies and turnover in the city staff, according to a new report from the city manager's office.

The small but busy airport is currently operated by Santa Clara County under a 50-year lease that is set to expire in July 2017. County officials have indicated that they don't want to renew the lease, prompting the city to consider an early takeover to ensure that the Baylands facility doesn't deteriorate.

In December, the City Council directed staff to hire legal consultants and conduct environmental analysis to begin the process of taking over airport operations from the county. Staff was hoping to complete the takeover by July 2012. A recent business plan by the firm Ralph E. Wiedemann & Associates estimates that the city's profit from the airport could be as high as $16.2 million by 2037 if the takeover occurred in 2012.

That money would have to be reinvested in the airport under federal law.

But the city's schedule now looks highly unlikely. According to a report from City Manager James Keene's office, the city has completed the draft report of an environmental analysis on the site and has retained two law firms to assist with the airport takeover. Even so, the city is about six months behind schedule because of vacancies and retirements. The city is now looking to early 2013 as a more realistic time frame.

The new report states that staff believes the previous schedule was "overly aggressive, optimistic, and not practical given the project complexity and scope."

"There are many reasons for the current scheduling status," Danille Rice wrote in the report. "No one could have predicted the number of unanticipated key staff vacancies, retirements, and competing priorities."

Palo Alto officials are still considering which business model to adopt for the airport operations. The Wiedemann report identified three options: running the airport with city staff; turning over airport management to fixed-base operations; and hiring a third-party to run the facility.

The City Council is scheduled to discuss the takeover of the airport in the fall.

Comments

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Posted by Anon.
a resident of Crescent Park
on Jul 28, 2011 at 1:08 pm

> Palo Alto officials are still considering which business model to adopt for the airport operations.

> running the airport with city staff;
> turning over airport management to fixed-base operations;
> and hiring a third-party to run the facility.

Another Palo Alto boondoggle in the making .... how much is this going to cost all of us? Why can't we just get some peace and quiet out there at the Baylands and get rid of this albatross around our necks.

The city of Palo Alto has shown over and over that not only can it not manage that which it is primarily responsible for competently, but when they get contractors to come in a do it - BETTER WATCH OUT.

Get rid of this airport, the costs, and the less than honest people who want to keep it any cost to the rest of us in money and or risk.


Like this comment
Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 28, 2011 at 1:17 pm

An airport management company with experience in running a sound operation in other similar facilities sounds like the way to go to me. We don't want inexperienced City staff (or county staff either) to try and do something they have no experience or desire to do.


Like this comment
Posted by Anon.
a resident of Crescent Park
on Jul 28, 2011 at 2:17 pm

>> An airport management company with experience in running a sound operation in other similar facilities

You make a good argument Resident, at least against the city of Palo Alto trying to run the airport, but what makes you think the city can find a good management company. Our city has been ramrodded and jerked around by every deal they have made with everyone contracting company they do business with, either in cost overruns, underperformance of service - or both.

What give you your optimistic attitude that this is going to work?

It seems to me that what would make sense would be for the city make a decision, what can we do the best and cheapest that would be best for the people and the city.

Getting rid of the airport and making recreational area out by the Baylands, something we have both in the Baylands and at Foothill park - that is that is big enough to serve the public, and big enough and relevant enough to demand that we devote significant resources and bandwidth to something that would both fit with the city and serve the people.

I believe it is possible that with proper oversight and attention, which park users would supply, the city of Palo Alto might be able to do one good thing itself, thus both saving money, headaches and our environment for everyone.

We want this city to be relevent and pleasant, well we do not get that on the track that we are on, we are just going to sell off piece after piece until no one really cares anymore. If we commit to a green environment, let's commit, use our two fantastic resources and go all out.

There is no place for an increasingly risky and expensive airport in Palo Alto anymore, and lots of reason with more people to utilize our land and what we have in the best most productive way possible. That means getting rid of the airport and expanding our recreational facilities to make Palo Alto a better more quiet, more natural place - a city that has the guts to say no to special interests and buck the trend of never-ending development.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 28, 2011 at 2:30 pm

Once again Anon ignores the fact that the City has a legal obligation to keep the airport open based on receiving millions of dollars from the FAA for airport improvements and in return for which the City agreed to keep the airport open for at least 17 years from the latest FAA payment.


Like this comment
Posted by bru
a resident of Crescent Park
on Jul 28, 2011 at 2:52 pm

bru is a registered user.

Peter, I am not ignoring anything, obligations are a secondary issue to a vision of the future. You always make sure to pop up with something that attacks my opinion, which I've never said was more or less than my opinion. You have yours, why don't you express it without attacks and assumptions about other people's actions and motivations?

If you know specifically about the obligations of the city towards the airport and what it is based on, please post a link or some information to educate all of us more about what exactly is forcing us to maintain an airport in our city.

If it takes 1 day or 17 years the right thing for Palo Alto and Palo Altans to do is to get rid of the airport at the earliest opportunity.


Like this comment
Posted by Anon.
a resident of Crescent Park
on Jul 28, 2011 at 2:53 pm

Ooops ... yeah, and that goes double for me! ;-)


Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 28, 2011 at 3:01 pm

I made no 'attack' but simply pointed out the the Anon continues to ignore the City's responsibilities under its Grant Assurances with the FAA (which have been well and often explained under numerous previous airport related threads on this Forum).

"B. Duration and Applicability.
1. Airport Development or Noise Compatibility Program Projects Undertaken by a Public Agency Sponsor. The terms, conditions and assurances of the grant agreement shall remain in full force and effect throughout the useful life of the facilities developed or equipment acquired for an airport development or noise compatibility program project, or throughout the useful life of the project items installed within a facility under a noise compatibility program project, but in any event not to exceed twenty (20) years from the date of acceptance of a grant offer of Federal funds for the project."
Web Link


Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 28, 2011 at 3:04 pm

"f. If an arrangement is made for management and operation of the airport by any agency or person other than the sponsor or an employee of the sponsor, the sponsor will reserve sufficient rights and authority to ensure that the airport will be operated and maintained in accordance with Title 49, United States Code, the regulations and the terms, conditions and assurances in the grant agreement and shall ensure that such arrangement also requires compliance therewith."


Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jul 28, 2011 at 3:21 pm

Previous postings on the FAA Grant Assurances:

Posted by foobar, a resident of another community, on Jan 17, 2007 at 4:24 pm

If the Palo Alto airport has received money from the FAA for improvements, they will have signed a grant assurance to keep the airport operating for 20 years. Check into that.

There was a move recently to close the Concord airport which failed due to having received these funds and also because the land was donated by the federal government to act as an airport in perpetuity. When the developers realized they would not get a hold of the land, they gave up.
********************
Posted by Peter Carpenter, a resident of Atherton, on Mar 13, 2010 at 9:27 am


CessnaTwinPilot asks:"did PAO accept any FAA grants for improvements"

Yes - the County, with the concurrence of the City, has accepted FAA improvement grants as recently as 2008, thus obligating the City to keep the airport open for 20 years or pay back ALL grants made within a 20 year period of the date of closure of the airport - a very big financial obligations that is non-negotiable. Here are the specifics of the Airport Improvement Program grant obligations:

. Take A Look At The Grant Assurances

First, take a look at the documents in your possession – the grant agreements you received from the FAA and signed as a condition of receiving the grants. As you are no doubt aware, under various Federal grant programs, you have agreed to assume certain statutorily defined obligations pertaining to the operation, use and maintenance of the Airport [49 U.S.C. § 47107(a)], that are described and implemented in FAA Order 5190.6B and memorialized in the application for Federal assistance as Grant Assurances, which become a part of the grant offer and bind the grant recipient contractually upon acceptance. 49 U.S.C. § 47107(a); FAA Order 5190.6B, “Guide To Sponsor Obligations” pp. 2-13 to 2-18.

The Grant Assurances primarily relevant to a proposed Airport closing or “deactivation” and reuse for non-aviation purposes are as follows. First, you, the airport sponsor, may not “sell, lease, encumber, or otherwise transfer or dispose of any part of its title or other interests in the property ... for the duration of the terms, conditions, and assurances in the grant agreement without approval by the Secretary [of Transportation].” See, e.g., Grant Assurance C.5.b. FAA regulations expand on this requirement. All of the land shown on Exhibit A to each grant constitutes the airport property obligated for compliance under the terms and covenants of the grant agreements. FAA Order 5190.6B. The airport sponsor is obligated to obtain FAA consent to delete any land so described and shown. Id. FAA consent shall be granted only if it is determined that the property is not needed for present or foreseeable public airport purposes. Id. Accordingly, if the airport sponsor’s Airport deactivation planning includes the sale, lease, encumbrance, or other transfer or disposition of its interests in the Federally obligated property, it: (1) must first obtain approval from the Secretary; by (2) establishing that the land to be alienated is no longer “needed” for public airport purposes.

Second, the airport sponsor is obligated to “suitably operate and maintain the airport and facilities. . . Any proposal to temporarily close the airport for nonaeronautical purposes must first be approved by the Secretary . . . [the Sponsor] will not cause or permit any activity or action thereon which would interfere with its use for airport purposes.” See, e.g., Grant Assurance C.19.a. This obligation to maintain the Airport includes the responsibility to operate the aeronautical facilities and common use areas for the benefit of the public. FAA Order 5190.6B, p. 2-15. Therefore, the airport sponsor “is more than a passive landlord of specialized real estate,” and has a continuing obligation to operate and maintain the Airport facilities. Id. For this reason, the airport sponsor may not cease to operate the airport prior to obtaining a release of its Grant Assurances from the FAA.

Third, “[f]or land purchased under a grant for airport development purposes (other than noise compatibility), [the airport sponsor] will, when the land is no longer needed for airport purposes, dispose of such land at fair market value or make available to the Secretary [of Transportation] an amount equal to the United States’ proportionate share of the fair market value of the land.” See, e.g., Grant Assurance 31.b.1. The United States’ share will either be reinvested in the national airport system or be deposited in the Aviation Trust Fund. Accordingly, the airport sponsor must either dispose of the land obtained with Federal grant funds at fair market value, paying a proportionate share to the Secretary, or make that proportionate share available to the United States without disposing of the property. Therefore, whether the airport sponsor chooses to dispose of the property purchased with Federal funds, maintain it for a public purpose other than aviation, or use it for non-public purposes, the airport sponsor must repay a proportionate share of the current fair market value of the land to the Federal government. There is no longer any limit on the duration of the terms, conditions, and assurances regarding real property acquired with Federal funds. [See, Grant Assurance B.1; FAA Order 5190.6B, p. 2-14]

Federal regulations distinguish between the treatment of grants for the purchase of real property and those for airport development or improvement purposes. With respect to facilities developed or equipment obtained with Federal funds, the Assurances remain in effect for the useful life of the facilities developed or equipment acquired [See Grant Assurance B.1; FAA Order 5190.6B, p. 2-13], although this period may not exceed twenty (20) years from the date the grant offer was accepted. Id.

In summary, deactivation of the Airport would require approval by the Secretary of Transportation and payment of the FAA’s proportionate share of the FMV of all real property acquired with Federal funds, as well as coordination with the FAA with respect to the disposition of grants made for airport development or improvement.


Like this comment
Posted by Bill
a resident of Barron Park
on Jul 28, 2011 at 4:51 pm

Another example of naive City Council members voting the City into a no-win situation. If Peter is correct, we taxpayers are saddled again with a questionable site to maintain. If it is such a good asset, why doesn't Santa Clara Co. continue to operate the facility?

This is not a profit making enterprise quoting the above article: "That money (profits) would have to be reinvested in the airport under Federal Law." So why should Palo Alto take over a facility that can't put profits into our General Fund but could lose money. Guess who makes up for any losses.


Like this comment
Posted by qq
a resident of Barron Park
on Jul 28, 2011 at 10:26 pm

To all the naysayers that say the city can't get rid of the airport because of some FAA payoff (isn't the FAA out of biz for the moment right now? no funding...), remember Meigs Field in Chicago.

Web Link

One man in a bulldozer during the middle of the night could close the airport for good.

qq


Like this comment
Posted by Anon.
a resident of Crescent Park
on Jul 28, 2011 at 11:08 pm

I am not sure I really see whether it is necessary or contractual for the city to host the airport ... we are just being paid to do it - implying if we take the money we are on the hook for hosting the airport . Where is the exact language in there that says the city cannot terminate the agreement or under what circumstances the agreement holds or does not apply?


Like this comment
Posted by daniel
a resident of Embarcadero Oaks/Leland
on Jul 29, 2011 at 7:04 am

This is a lose-lose situation. The residents of Palo Alto are allowing the airport to use very valuable public land for free. The airport is losing money. In the unlikely event the airport turns profitable, the profits must be reinvested in the airport without even one penny going into the general fund. Tails you win, heads I lose. This is the most scandalous rip-off in the history of Palo Alto, and the public isn't even aware of it.


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Posted by Peter Carpenter
a resident of Atherton
on Jul 29, 2011 at 8:12 am

There is a lot of misinformation posted above.

The airport makes and will continue to make a profit.
Any PA General Funds that might be spent on the airport can be recovered within the Grant Assurance terms.

All of this was spelled out in the staff report at the time that the Council decided, in open session with full public comment, to take back the operation of the airport from the County.

No scandal and the only people who are not aware of these facts are those choose to be uninformed.


Like this comment
Posted by Roger Overnaut
a resident of Evergreen Park
on Jul 29, 2011 at 10:07 am

Palo Alto gets a reprieve before it takes over this money loser. If wise heads continue to prevail, maybe it can be stalled indefinitely.


Like this comment
Posted by Pilot Bob
a resident of Barron Park
on Jul 29, 2011 at 12:01 pm

I've been at the PA airport since 1970, and several hundred others as well. Here are my observations:

Most ALL GA airports LOSE money or make far less than they can due to the "good old boy" network and self serving long term leases. We need to insure we only enter into 1-3 year agreements at most. These agreements need to be open, competitive bid.

There is no such thing as an "airport management firm" and turning the airport over to an FBO should insure more self serving one sided rules that would guarantee a dismal environment for the flying public. Our only option is a City-staff manager and airport commission to oversee it.

No airport ever takes into consideration alternative uses or the value of land and fixed assets when determining profit and loss.

Sure, we signed grant assurances, but it's our airport! We should either rent it out at whatever the market will bare, or bulldoze it and make a park. We owe this to ALL Palo Alto residents!


Like this comment
Posted by Anon.
a resident of Crescent Park
on Jul 29, 2011 at 12:25 pm

>> We need to insure we only enter into 1-3 year agreements at most. These agreements need to be open, competitive bid.

Who is "we" in this statement. It is clear that the Palo Alto City government does not represent "we" the people, but disproportionately and prejudicially special interests and money. A little bit of this is OK, but over the years it has grown into the cancerous self-serving power monopoly that we now have where contracts are made deliberately to lock in corruption or money for these special interests well into the future.

We need some kind of audit report on our city government that is clear and simple enough for us to see if we are having any of the kinds of problems other communities are having, such as the 300K/year lifeguards in Southern CA, or other sweetheart deals that ripoff the city.

I just have to believe that if we look closely at the Palo Alto airport, and consider what we now have and what we could have that having an airport is not in the best interests of most Palo Altans - on multiple dimensions. There needs to be a clear way to severe Palo Alto from the airport agreement, and take back our land for the best use.

Can you imagine Mountain View having Shoreline Amphitheater or Parks if Moffett field was letting planes take off every minute or two?

Go out to the Baylands and look at the huge park we have just created on the landfill, and then wonder what it is going to be useful for when you cannot hear yourself even think when you are out there.

There will not be enough people to justify funding its improvement while the airport remains active, to say nothing of the inherent airport risk that has been discussed before.

The only real solution is for the pilots at the airport to find another location for their planes and the let the city of Palo Alto use its finite resources for its people's own best interests. Then when we start to have a nice Bayfront area to go to, we will see spending, reasonable environmental development and an improved lifestle for Palo Altans, and a better environment.


Like this comment
Posted by daniel
a resident of Embarcadero Oaks/Leland
on Jul 29, 2011 at 1:01 pm

It is a scandalous rip-off, because the Council decided to cater to a small special interest group, comprised of mostly moneyed non-residents whose hobby is being subsidized by the general public. What we get in return is a plane flying low over our houses at 5:00 on a Sunday morning, as was the case last wekend, and I don't even live near the airport. Additionally, all talk about the airport making a profit is bogus. Even if it did, and it doesn't, the profits would all have to be reinvested in the airport. The public is being shamelessly bilked here. I also doubt very much that the FAA would even notice if we shut it down. The teabaggers are trying to defund and shut down the FAA and right now the FAA is thinking about survival. If we decided to shut down, it could be done overnight and quite easily.


Like this comment
Posted by baumgrenze
a resident of Triple El
on Aug 1, 2011 at 9:10 pm

I find it curious that the most conservative Republicans in the House are up in arms about subsidizing commercial air service to rural airports. This is provided in the FAA budget. I've heard not one word about cutting off FAA support for "hobby airports" like the one in Palo Alto.

A few will remember the day when the underside of the wings of small aircraft carried an ID number on the undersides of its wings that filled them and was easily readable from the ground. Today, the number is on the tail stabilizer which is a vertical surface unreadable from the ground. You cannot responsibly report uncivil flying over Palo Alto to the tower because you cannot easily identify the plane. This rule was changed under the presidency of the "great communicator," the former governor of California.

Tell your Tea Party friends that it is time to cut off subsidies to airports like the one in Palo Alto, dedicated to hobby fliers who want to enjoy their fun at our expense.


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