Cottonwood Airport land uses questioned by FAA
COTTONWOOD -- The City of Cottonwood is under fire from the Federal Aviation Administration for its handling of airport leases and grant-funded land.
Morgan Scott, Cottonwood's Assistant Development Services Manager and Airport Manager, was sent a report in mid-May based on a two-day inspection of the airport properties one year earlier, May 21-22, 2013. The FAA is required to make inspections and report any irregularities of land use operations that have received Federal assistance.
Tony Garcia of the FAA Airports Division, in a letter dated May 15, stated while "airfield operation land uses generally complied with federal regulations, land side areas of the airport with lease and land-use arrangements did not fully comply with Grant Assurances."
Many of the issues identified as violation of grant assurances are linked to the assumption of control of the Cottonwood Airport land by a single tenant in 1983 under former city administrations.
The city took over control of the historic airstrip from Yavapai County in 1968, but, in 1983, Cottonwood entered into a lease agreement with Cottonwood Airpark, Inc, surrendering tenant control of the airport including the airstrip to a single tenant for a 100-year period. The rental rate for the land was set at $125 per acre per year, but the sublease was converted to 1-cent per acre per year. There were no apparent provisions to increase rates.
Over the subsequent years, lease assignments were made to individual businesses for economic development, but of non-airport related uses. The city is required by terms of airport grants to make operations as self-sustaining as possible.
The city also used parcels of the airport land for a terminal building, ramp and taxiway, but also leased to Yavapai College and the Humane Society for a cost of $1 per year and used some of the land for its wastewater holding pond and public works building, all non-aeronautical uses.
The FAA found that the agreements do not meet Fair Market Value standard.
"In some cases, the city is effectively providing free rent," the FAA report states.
Since the agreements do not allow for adjusting the rates for inflation or changing conditions, "They will remain below fair market value indefinitely. While the cost of operating and maintaining the airport will continue to increase, the rental revenue to pay for it will not."
The report continues, "The original lease of P52 (the airport) is underperforming when it comes to making the airport as self-sustaining as possible. The opportunity to revise and update the original lease presented itself when the lease assignments were requested and before they were approved. Unfortunately this was not done."
Cottonwood has been given 60 days to detail corrective action for the issues identified.
City Attorney Steve Horton said Cottonwood is taking the matter very seriously. Cottonwood is already in active in discussion with the FAA and has contracted a special counsel, an aviation specialist, Tim McCullough, who has worked with the FAA on other compliance matters. "With his assistance we will walk through the process with other stakeholders at the table," said Horton.
Much of the content of the federal concerns originated 31 years ago during a prior Cottonwood administration.
"We are having a conversation with the FAA, trying not to impair or alter existing lease agreements," said Horton.
Cottonwood council watchdog Bob Oliphant in the past routinely criticized the council about unrealized lease potential of the airport land. "But we cannot escape the conclusion that we have legally binding contracts in place," said Horton.
It is unknown if the city faces financial penalties from the FAA.
"I don't read the letter as threatening penalties, but they are insisting on an action plan be implemented," Horton said.
In terms of possible future airport grants, Horton said, "We will certainly do what we are required to do, to not impact our grant eligibility."
Contact the reporter at firstname.lastname@example.org or Twitter @_jhutchinson
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