A lot, as usual, is going on in Santa Monica, mostly of the garden-variety category, such as people filing petitions to stop change, but 30 years from now historians of the city are going to look back to our time mainly at two things: one, that on May 20, 2016, mass transit returned to Santa Monica, and two, that in 2016 the City and its residents were working hard to turn Santa Monica Airport (SMO) into the great park that people 30 years from now will take for granted. This post is about the airport.
To start, tomorrow night the Santa Monica Airport2Park Foundation is hosting an event where the public can learn more about the process, both procedural and intellectual, that is to going lead to the creation of a 12-acre expansion of Airport Park, representing the beginning of the conversion of the airport into parkland.
The event is a talk by designer Mark Rios, whom the City of Santa Monica has hired to design the new parkland. Tomorrow night Rios will give a preview of the public process for designing the park expansion that gets underway officially with a city-sponsored workshop in June. Rios will discuss his own process when tasked with designing a park, and what he sees as the challenges for this project. It’s worth mentioning that Rios is one of the most accomplished park designers in the country, if not the world. Among many other projects, he recently designed Grand Park in downtown Los Angeles. (He has also worked often in Santa Monica, so he knows the territory.)
Readers may also recall that in October 2013 Rios gave a fantastic talk, also sponsored by Airport2Park, showing how all over the world cities were turning airports and other industrial sites into parks. It was that talk that energized the political process to replace the airport with a park. Consider this is a return engagement for Rios.
The event is tomorrow night, at the Mt. Olive Church, 14th and Ocean Park Boulevard. Doors open at 6:30. For more information, and to RSVP, click here.
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In March I wrote about a new “Part 16 Complaint” that aviation interests, including the National Business Aviation Association (NBAA) and the Airport Owners and Pilots Association (AOPA), had filed against the City with the Federal Aviation Administration (FAA). The NBAA and AOPA, and aviation businesses and pilots using SMO, alleged various ways by which the City was violating laws and FAA regulations in its operation of SMO. In particular, they complained that the City was not giving aviation businesses long-term leases.
When I wrote about it in March, the next step in the case was the City’s response to the complaint, which was due in April. The City filed its brief about a month ago. It is a relatively short (16 pages), but fascinating document. The City has engaged new aviation lawyers for this case, a firm called Anderson & Krieger, which has both an environmental practice and a strong practice representing municipal airports.
Initially the new lawyers’ brief follows, I have to say, a line of argument that I anticipated in my March post, namely that the City would use this new Part 16 action to make the argument that it has no obligations to any of the complainants because the City is no longer obligated to operate SMO. This is a logical argument to make from the twin facts that (i) the City has brought a case in federal court to prove that it has no obligations to operate the airport under the 1948 “Instrument of Transfer” by which the federal government returned to the City control of the airport after World War II, and (ii) the City is appealing the FAA’s 2015 administrative ruling that the City has to operate the airport until 2023 because of money the City received from the FAA in 2003. (In case you’ve lost track, the FAA’s “final” decision in that case is due June 15; if the FAA rules against the City, the City will appeal the case to the U.S. Court of Appeals.)
As anyone who has followed the federal litigation knows, the FAA has gone to extraordinary lengths to keep the question of the validity of the 1948 agreement out of court, and the City’s case about that is still marooned in the Ninth Circuit Court of Appeals. By bringing this case against Santa Monica, the aviation industry has, however, given the City the opportunity to litigate the 1948 agreement. As this latest brief, along many others the City has filed, shows, it’s not pretty for the FAA because in 2000 the FAA ruled, in another case involving leases, that after 2015 the City would have no obligation to operate SMO. The FAA is going to have to try to explain to a judge why it was wrong then.
Where the new brief goes further than any argument I predicted is that in it the City argues that the very fact that it is litigating its claims in good faith changes the legal landscape. While so far the aviation industry has used FAA administrative complaints to muddy the waters when it comes to the City’s rights, the City is turning the tables and arguing that the claims that it is litigating strengthen its rights as the owner of the airport land. As the brief states, “[u]ntil the City’s claims to be free of any continuing federal obligation to operate SMO as an airport have been resolved, the FAA cannot properly compel the City to give up the proprietary rights it is advancing in those [cases].”
Meanwhile, as has been reported, a major aviation business at SMO, and one of the complainants in the new Part 16 case, Justice Aviation, has settled with the City and is moving out. Justice is not the first nor will it be the last aviation business to leave. The City is already earning much higher rents from non-aviation tenants at SMO than it was from aviation businesses, rents that will someday pay for the operations of a park.
Thanks for reading.
P.S. After I posted this article earlier today, Airport2Park posted a terrific video interview of Mark Rios by Gavin Scott. The video was shot in Rios’ offices and it’s a great preview for his talk tomorrow night. To see the video, click here.
Niel, You asked “Who are these new non-aviation businesses that have come in to replace aviation businesses and are paying these higher rents?” Well, have you heard of SNAPCHAT? They are taking over the VW/Audi lease and they just signed a 5 year lease with options at much higher market rates paid directly to the city instead of subleasing from the Aviation companies who were previously pocketing the profits.
Snapchat will be paying market rate of $3.00+ per square foot for about 3 MILLION dollars per year. Additionally they will be paying another million to improve the property. Pretty nice deal for the city with the added community advantage that SNAPCHAT is a quiet non-polluting company that we should be leasing to on this property. Plus once we pay of the airport’s current 13 million dollar debt, we should use the money to pay for the park.
I was not aware of the Snapchat deal when I made my comment. I didn’t hear about it until the S.M. Mirror published a story about it on Friday.
As a taxpayer and as an airport user, I am extremely pleased that the council was willing to approve a lease with a duration that made sense for Snapchat (10 years, including the option) and that the airport will be taking in that sort of additional money.
For all the attention that airport foes (including this blog) gave to the fact that airport used to run small deficits ($300k in FY12-13, for example), no one seems to have noticed that the airport fund ran a $2 million surplus (of which it paid $1 million to the general fund) in FY14-15–before the city took over the master leases. Add to that the new money from Snapchat and from former subtenants, and this is now an extremely profitable airport.
But, even with the Snapchat deal, I’m not seeing an aviation tenant that has been replaced by a non-aviation tenant. I’m seeing a car company and a law firm being replaced by an Internet company.
Who are these new non-aviation businesses that have come in to replace aviation businesses and are paying these higher rents? As far as I’m aware, the city has managed to lose what I believe were the two largest non-aviation businesses at the airport: VW/Audi and Milstein Adelman LLP, partly as a result of the city’s lengthy dithering over granting new leases of a commercially realistic length to non-aviation tenants. At the moment, the city’s leasing agent is still advertising both spaces for rent on 27-month lease terms. Who is going to rent a 50,000 square-foot space that is currently configured to be an auto design studio for 27 months? And be willing to pay anything like what VW/Audi was paying?
It’s very likely that the city would be making more money today if they had just signed timely new master leases with Atlantic and Gunnell (or other new master tenants) at rents that would of course have been much higher than their 1980s-negotiated ground leases, instead of the current mess where they are paying management companies about half a million a year to fill space that the city’s politics have rendered un-rentable.
There may be many reasons to support closing the airport and building a big park, but don’t kid yourself into thinking that you are doing the city’s finances any favors by doing so.
Neil — your concerns are valid, at least in the short term, but from what I hear (from the grapevine) the City will soon announce good tenants to replace those that are leaving, and in any case ultimately the City will make much more money from non-aviation tenants than from aviation tenants.
You are the worst most evil person i have ever heard of. I hope you catch HIV and die a miserable death.
To readers: I don’t usually publish anonymous comments, but I made an exception with this one, just to show the level of discourse you get from at least some of the pro-airport people.