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Santa Monica Council OKs New Lease Terms for Airport Tenants

Santa Monica Real Estate Company, Roque and Mark

Pacific Park, Santa Monica Pier

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore
Kutcher & Kozal, LLP

By Hector Gonzalez
Staff Writers

March 26, 2015 -- Wary of triggering new legal challenges from the federal government, Santa Monica City Council members this week approved several measured steps aimed at giving the City a bit more control over Santa Monica Airport.

Tuesday’s five-hour public hearing drew 125 airport opponents and supporters. After listening to comments and two lengthy staff presentations, Council members approved new three-year lease agreements for the airport’s major tenants and month-to-month leases for other tenants on the non-aviation parts of the airport.

The Council also agreed to pursue taking over the subleases of two tenants, BMW-Audi and Milstein Adelman, L.L.P., a law firm, and to increase their sublease rents to market rates.

Council members struggled over which tenants should be on three-year leases and which should be granted month-to-month leases. Councilmember Sue Himmelrich expressed concerns about how the city would decide which companies should receive longer lease terms, saying it could be grounds for a legal challenge from the Federal Aviation Administration (FAA).

Apart from aviation uses, the airport is subleased by several non-aviation businesses and nonprofit groups, including restaurants, offices, and a museum. Some council members worried that giving shorter lease terms for non-aviation uses could drive away those subleasholders.

But Mayor Kevin McKeown said the City’s obligations to the FAA under a 1984 operating agreement for Santa Monica Airport give local officials more control over setting the lease terms for the non-aviation portions of the facility.

City Manager Marsha Jones Moutre said it “makes the most sense” to give longer leases to the airport’s major leaseholders, which manage about 400 subleases. Renegotiating and taking over those leases would be a “considerable” expense to the City and would take about a year to complete, Moutre told the Council.

In her report, Moutre called the expiration of the current leases in July “the City’s most substantial opportunity for effectuating change this year” at Santa Monica Airport.

She told the Council any efforts expended on banning jets, regulating emissions and mandating flight paths would all likely be met by legal challenges from the FAA.

Although the 1984 agreement between the City and the Federal Aviation Administration that guarantees aviation use at the property expires on June 31, 2015, the expiration “will not free the City to do as it pleases with the airport,” her report noted.

“To the contrary, the City will not have full control of the land that is now used for the airport unless and until the legal disputes” are resolved in court, the report said.

Three-year leases will give the City time “to resolve the legal issues, support tenants to make some improvements, and keep harder-to-lease buildings occupied,” Moutre told Council members.

Airport critics, however, opposed granting the three-year lease deals, saying the council should act immediately to close down Santa Monica Airport, which critics claimed is unsafe and generates harmful emissions that pose health risks to nearby residents.

“The day is fast approaching, what the community has been waiting for for years—that the airport be closed down,” Los Angeles City Councilman Mike Bonin told the Council.

“I realize you’re dealing with potential legal risks. But legal risks should be balanced against the risk of people suffering health problems, the risk of a plane crashing into a child’s bedroom. I’m asking that the City err on the side of the people.”

Lisa Pinto, a representative of U.S. Rep. Ted Lieu, whose district includes Santa Monica, said the congressman, after hearing from residents and anti-airport groups,  “concluded that current operations at the airport present a danger to the health and safety of residents.’

“We oppose any extension of the 1984 agreement between the City and the FAA and oppose any three-year lease agreement with jet operators,” she said.

But airport supporter Christian Fry said the airport “meets or exceeds every state and federal regulations of which we’re subject.”

“So to try to say that this airport is a giant safety issue or a health problem – there’s no statistical data to back that up.”

Ken Davidson of Davidson Aviation supported granting three-year leases for all of the airport’s tenants.

“I have nine employees and their families, and I’d like to know we’re going to be here for three years or more during litigation,” Davidson said. “I would appreciate the City letting us stay there for at least that time and beyond.”

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