HomeMy WebLinkAboutStaff Report 3793 City of Palo Alto (ID # 3793)
City Council Informational Report
Report Type: Informational Report Meeting Date: 6/17/2013
June 17, 2013 Page 1 of 7
(ID # 3793)
Council Priority: Land Use and Transportation Planning
Title: Airport Update
Subject: Informational Update Report on the Transition of Management and
Control of the Palo Alto Airport (PAO) from Santa Clara County to the City of
Palo Alto
From: City Manager
Lead Department: Public Works
This report is provided to the Council as an informational update on the staff’s
efforts to transfer management and control of the Palo Alto Airport (PAO) from
Santa Clara County (County) to the City. No further Council action is required.
Executive Summary
In 2010, the Council directed staff to undertake the process for the City to take
over management and control of PAO. The County currently operates and
provides administrative guidance of PAO under a long-term ground lease that
commenced in 1967 and is due to expire in 2017. Under the terms of the ground
lease, operational management and control of PAO was granted to the County,
including the right to sublease to the Fixed Base Operators (FBOs) and other
interested parties. Development and maintenance of PAO was also administered
by the County. The most recent major project conducted at PAO was a runway
rehabilitation project in fiscal year 2003. Since that time no other major project
has been pursued at PAO.
In summer 2011, the City hired CommuniQuest to provide airport advisory
services. CommuniQuest reviewed the Weidemann report and the County Airport
Fund’s financial documents. Based on review of these documents, meetings with
the PAO tenants and the County, the City team (aided by an analysis provided by
CommuniQuest) concluded the best and most viable option for both the City and
the PAO is the City’s operation and management of PAO. A draft timeline that was
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established included a key step in the hiring of an Airport Manager. The Airport
Manager was hired in April 2013 and has begun serving as the City’s liaison to the
County and the Federal Aviation Administration (FAA) and is vital to the transition
of PAO from the County to the City and the long-term management of PAO.
City staff anticipates presenting an assignment and assumption agreement with
the County (and other parties) for its consideration by September 2013 in
connection with the transition of the PAO’s management and control from the
County to the City. The original proposed timeline for the effective transfer of
airport operations to the City had a target date of between July 1 and December
31, 2013 (FY 2014). At that time, this was determined to be an ambitious
timeframe but potentially feasible considering the variety of tasks to be
completed or soon underway. Recently, staff has updated the schedule to reflect
an estimated time table based on a multiple agency review, approval process, and
document preparation to transfer the PAO from the County to the City. The
updated estimated completion time is no earlier than between July 1, 2014 and
December 31, 2014.
Background
When the County informed the City that it was no longer interested in operating
the PAO, and after PAO tenant complaints continued to emerge, the Council
began to examine a variety of options for the future operation of the PAO. Studies
were conducted to explore the direction the City should pursue; those included
the Palo Alto Airport Working Group (PAAWG) report and the R.A. Weidemann &
Associates report. An Airport Master Plan (AMP) was also developed under the
direction of the County; however, this document was not adopted by the City in
that developments included in the AMP were in conflict with the Baylands Master
Plan (BMP).
Currently, the County operates and provides administrative guidance of the PAO
under a long-term ground lease that commenced in 1967 and is due to expire in
2017. Under the terms of the ground lease, operational management and control
of PAO was granted to the County, including the right to sublease to the Fixed
Base Operators (FBOs) and other interested parties. Development and
maintenance of the PAO was also administered by the County. Development
projects that involve PAO’s operations area have been primarily funded by
Federal Aviation Administration (FAA) grants; matching funds have been provided
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by the County, either through direct contribution from the PAO enterprise fund
revenues or revenues derived from the other two County airports, Reid-Hillview
and South County. The most recent major project conducted at PAO was a
runway rehabilitation project in fiscal year 2002/03. Since that time no other
major project has been pursued at PAO.
There are also two FBOs operating at PAO. The County leases to Roy-Aero
Enterprises and Airport Management Group, Inc. (Dr. Brandt), which are both due
to expire concurrently with the ground lease to the County in 2017. Among the
several contracts that the City must account for during this transition are the
County leases with the FAA for the control tower, the two FBOs leases that
facilitate the provision of airport-related services, and about a dozen contracts
between the FBOs and the special air services organizations (SASOs). For
outstanding FAA grant agreement purposes, when the City assumes management
and control of the PAO, the FAA will most likely require that the City be the sole
sponsor of the PAO, so this matter will be addressed as well.
With the forthcoming expiration of the ground lease with the County, studies
were conducted to determine PAO’s future. The PAAWG report and the
Weidemann report provided options for future governance and administration,
but both suggested that the City should assume control of PAO. There are two
primary options for the management of PAO: Third Party Management by an
Independent Contractor/Lessor or City Operation and Management of PAO.
In summer 2011, the City hired CommuniQuest to provide airport advisory
services. CommuniQuest reviewed the Weidemann report and the County Airport
Fund’s financial documents. Based on the review of these documents, meetings
with the PAO tenants and the County, the City team aided by an analysis provided
by CommuniQuest concluded the best and most viable option for both the City
and the PAO is the City’s operation and management of PAO.
In December 2011, the FAA issued a Determination of Non-Compliance to Santa
Clara County Airports – FAA Docket No. 16-11-06. This Non-Compliance
Determination was issued by the FAA Director, Office of Airport Compliance and
Management Analysis on December 19, 2011. The Director determined that Santa
Clara County is in violation of a federal grant agreement’s grant assurances 5 and
22, and the County has appealed this non-compliance determination. The
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County’s non-compliance has ramifications for the City. Because the violation is
specific to the airport sponsor, the County, all airports under the management
and control of the County (PAO, Reid-Hillview and South County) are affected.
This means that PAO is subject to the consequences of the County’s violation,
which relates to an application for a skydiving operation at South County Airport
that the County has deemed unsafe. The FAA has rejected the County’s position,
thus, until this matter has been resolved, the FAA will not act upon any request
for financial assistance made by the County.
City staff, CommuniQuest, and Santa Clara County Airport staff met with the FAA
on March 7, 2012. A discussion took place regarding the condition of the
pavement at PAO, the need for rehabilitation as safety is a concern and how PAO
could acquire federal grant funding for needed pavement work. The FAA
conveyed that, as long as the County is the operator and airport sponsor of PAO,
federal funding will not be forthcoming until the County’s non-compliance matter
has been resolved. FAA staff also informed the City that the City will need to
create an updated Airport Layout Plan (ALP) prior to effective date of transfer of
management and control of PAO from the County to the City.
Discussion & Update
Since staff last provided an update to the Council in May of 2012, there have been
the following new developments at PAO.
In Fall 2012, staff began the solicitation process of request for qualifications (RFQ)
# 146402 Airport Layout Plan and narrative report. The ALP Update and Narrative
Report is to be prepared in accordance with FAA requirements, including Advisory
Circular 150/5300‐13 Airport Design (as amended) and Advisory Circular
150/5070‐6B Airport Master Plans (as amended), in order to be able eligible to
request reimbursement through the federal grant program. Staff is currently
negotiating a contract for services with the number one ranked firm and
anticipates the project to begin July 2013. If an acceptable contract cannot be
negotiated, the second most qualified firm may be asked to negotiate a contract.
On April 13, 2013, the Airport Manager was hired and has begun serving as the
City’s liaison to the County and the FAA. His office is currently located at City Hall,
though the plan is to establish a one-day-a-week presence at the PAO, and be
available to the PAO users and tenants. On May 2, 2013, City staff met with the
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FAA Airport District Office (ADO) to ensure that the ALP update met the FAA’s
requirement to transfer PAO. Staff is waiting the FAA’s following determinations:
Whether it will be possible to reimburse the City for the ALP preparation
cost.
If a Narrative Report will be required for the ALP being prepared to support
sponsor transition.
Numerous documents are required in order to obtain the required FAA approval.
The most significant is the development of the ALP. The City is proposing to
update the ALP to support the City’s future role of airport sponsor. The ALP will
show the physical layout of existing facilities at the PAO. Future issues to be
addressed will be limited to:
1. Elimination of the aligned taxiway
2. Restriping of apron and taxiways to eliminate wingtip clearance issues
3. Evaluation of whether trees adjacent to the airport are obstructions
Following completion of an ALP to support sponsorship transition, the City would
utilize FAA grant funds to prepare an Airport Master Plan (AMP) to address long-
term facility needs. The AMP will need to reflect the policy guidance in the City’s
Baylands Master Plan. Extensive outreach efforts will be needed to support
adoption of a new AMP.
When staff met with the FAA ADO on May 2, 2013, there was an additional
discussion regarding the need for pavement rehabilitation due to heightened
safety concerns. Staff pointed out that this concern was highlighted in prior years
and a concern held by all users of the field. The City Manager recently co-signed
with Santa Clara County Airports Director a (FAA) grant application for the County
to secure funding for construction work associated with the repair and
rehabilitation of the PAO runway and taxiways. Once the County receives a grant
offer letter from the FAA, the project is scheduled to be bid in June and go to the
Board of Supervisors in August to allow for an estimated project start in
September. Staff is currently working with the County to coordinate projects and
the annual airport open house scheduled on September 29, 2013.
On March 12, 2013, the Santa Clara County Department of Environmental Health
(DEH) closed a case relating to three underground tanks that were removed in
1988 and 1989 by the City. The tanks were used for waste oil and gasoline and
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were adjacent to the hangar building currently occupied by West Valley Aircraft
Services. Monitoring wells associated with the case were properly destroyed in
late January 2013. The DEH case number was 05S2W32E01f.
Currently, there is an open DEH case (number 05S2W31H02s) for contamination
initially discovered during the Phase II Environmental Site Investigation performed
by Northgate Environmental Management, Inc. (Northgate) for the City in 2011.
Santa Clara County Department of Roads & Airports (SCDRA) has taken the lead to
further investigate this issue.
Working for SCDRA, Stantec Consulting Services, Inc. (Stantec) completed
additional investigation in December 2012 and confirmed contamination adjacent
to the existing fuel tank farm. Northgate reviewed the Stantec recommendations
and suggested that additional sampling be performed to verify that
contamination is not migrating via preferential underground pathways. An
example of a preferential pathway is the storm pipeline bedding downstream of
the open creek channel from the golf course that enters the storm pipe directly
beneath the tank farm. Northgate also recommended that the current code
compliance of the tank farm be evaluated. Stantec submitted a work plan to DEH
for additional sampling on April 22, 2013 and DEH approved the work plan on
April 26, 2013. The work plan only addressed the request for preferential
pathway investigation. It did not address the code compliance status of the fuel
tanks, underground piping and dispensers.
The City anticipates presenting an assignment and assumption agreement to the
County for its consideration by September 2013 in connection with the transition
of the PAO’s management and control from the County to the City. At the
present time, the DEH has directed the SCDRA to conduct a site assessment of the
PAO, Voluntary Cleanup Case No. 05S2W3H02s. The SCDRA must submit to DEH
an Additional Site Assessment Report by August 30, 2013, at which time the City
would be able to finalize the draft contract. Staff will continue to monitor and
make adjustments prior to presenting agreements to County.
Resource Impact
There has been an increase of one full time equivalent staff (1 FTE) in the Public
Works Department, Airport Fund. The position is Airport Manager with estimated
compensation at approximately $140,000 excluding benefits and was included
and approved by Council as part of the Public Works budget requests for FY 2013.
The Council appropriated $300,000 for the Airport Enterprise Fund through
funding provided by the General Fund. An additional $310,000 is loaned in Fiscal
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Year 2013. In Fiscal Year 2014, $325,000 will be loaned. These funds will be
reimbursed from the Airport Enterprise Fund once PAO starts to generate surplus
revenue.
Staff anticipates incurring legal costs of approximately $100,000 additional
consulting costs of approximately $80,000 (ALP plan update) and related costs.
The anticipated legal costs and ALP plan update are included in the Airport Fund’s
FY 2014 operating budget. If the legal costs are higher, staff will need to return to
Council for additional appropriations. As federal law permits the City to seek
reimbursement of its costs incurred in connection with management and control
of PAO over a six-year ‘look back’ period, the City must implement the necessary
actions to enable the City to successfully apply for cost reimbursement.
Timeline
The proposed timeline included in the May 2012 Informational Staff Report (ID#
2721) establishes a preferred target date of between July 1 and December 31,
2013 (FY 2014) for the effective transfer of airport operations to the City. This was
determined to be a potentially feasible date considering the variety of tasks to be
completed or at least soon will be underway. Staff anticipates that legal,
regulatory, land use and environmental considerations could negatively impact
the City’s ability to achieve the transition within the proposed timeline. Recently
staff has updated the schedule to reflect estimated time table based on
coordination of multiple agency reviews, approval processes and document
preparation to transfer, estimated to complete no earlier than between July 1,
2014 and December 31, 2014.
Staff has prepared a project timeline (Attachment A) for all major components of
the transition process with key deliverables identified.
Policy Implications
Actions recommended in this report are consistent with previous Council
guidance and discussions.
Attachments:
PAO Transition Timeline (PDF)
5/28/2014
6/02/2014
Assignment and Assumption Agreement
State Lands Commission Lease Reassignment
State Division of Aeronautics Reassignment of Airport Permit
Airport Layout Plan Update (ALP)
Property Map Preparation
Federal Aviation Administration Review & Approval Process
ALP Consistency Determination by Santa Clara County Airports
Commission ‐ Meeting Date
City Council Presentation ‐ Meeting Date
Project Timeline (Major Components)
Transition of Palo Alto Airport from the County to City