Thursday, January 31, 2013

Fernandina Beach Municipal (KFHB), Florida: City faces another legal battle over airport

Charging "flagrant discrimination," Brian Echard, manager of 8 Flags Aviation LLC, filed a complaint Thursday with the Federal Aviation Administration against the city of Fernandina Beach.

Claiming what he called the city's "preferential treatment" of its lone fixed-based operator, McGill Aviation, Echard said the city publicly promotes economic development at the Fernandina Beach Municipal Airport but "chooses not to act on their words."

Last September, Echard submitted a commercial lease and operating permit application to City Manager Joe Gerrity, which was presented to commissioners at a meeting in October, although there was no vote on the permit.

Echard told commissioners at the time that the FAA requires the city to "negotiate in good faith and on reasonable terms with prospective aeronautical service providers" if the city is not already providing identical services. Although commissioners agreed to hold a workshop to discuss the matter, it has not been held to date.

According to Echard's letter to the FAA, Gerrity told him in June that the city "had concerns" about a second fixed-base operator because of alleged insufficient fuel volume to support it. He said Gerrity also voiced concerns about additional litigation from McGill Aviation, which was involved in a complicated lawsuit against the city beginning in 2004. That lawsuit ultimately cost the city almost $2 million.

According to Echard, Gerrity also said the city may be required to solicit proposals for a second fixed-base operation and that it "may wish to open its own FBO in the future."

Later, Gerrity also allegedly told Echard the city "would not consider (8 Flags') proposal until at least three of the city commissioners voiced their support." Gerrity also allegedly said that a second FBO application would not be considered until January because he had "too many responsibilities," the complaint states. Gerrity took over as airport manager after Richard Johnson retired last May.

According to Echard, he met with Gerrity and City Attorney Tammi Bach on Nov. 6 along with his attorney Paul Lange and aviation consultant Michael Hodges. At that meeting, he allegedly was told the city "would reject (8 Flags Aviation's) proposal to locate a second FBO on the north side of the airport." The city also hired aviation counsel Edward M. Booth Jr. around the same time.

"The city's new-found objection was incomprehensible, given that there had never been the slightest hint that the north side development was not acceptable," Echard wrote in his complaint. "The north airport parcel is a designated aeronautical development area and contains a basic infrastructure ... nonetheless, the city stated they would direct all future development to the currently undeveloped east side of the airport."

According to Echard's letter, the city "hoped that by eliminating the prime site location, (8 Flags) would simply drop their plans to develop a new FBO."

"The city's refusal to lease the north side location for a new FBO not only favors the existing FBO with the prime location," Echard told the FAA, "but also protects the existing FBO from having to compete directly with a new service provider."

"As a business owner and Fernandina Beach resident, this is not how I choose to conduct business," noted Echard. "The city's flagrant discrimination against me, and preferential treatment toward the existing FBO (McGill Aviation), leave me with no other choice."

Echard also claimed that 8 Flags' financial proposal for the FBO was based on a current market lease rate of 15 cents per square foot, but that there are "concerns over equitability" because the city's lease agreement with McGill Aviation is at 2 cents per square foot.

Echard also complained that McGill Aviation "enjoys the economic benefit of not having to provide the initial capital expense of fuel tanks and is allowed to pay fuel flowage fees (to the city) after its own retail sales are made."

"There is a surprising lack of transparency between fuel delivered and fuel sold that could potentially prove detrimental to the city," Echard wrote.

He also claimed the city must comply with federal codes in order to be assured of grants from the federal government, but is not doing so because of discrimination and inequity in fees.

In his complaint Echard has asked the FAA to "find the city in violation of its FAA Grant Assurances and exercise all appropriate remedies to bring the city into compliance, including but not limited to withholding any additional airport grant in aid funds pending the city's compliance."

Last year the city lost a lawsuit against McGill Aviation regarding an airport land lease dispute, which ended up costing the city $2 million in damages and attorney fees. McGill has been the airport's fixed-base operator since 1998 and mainly handles fuel sales and light ground support. Its lease is set to expire on March 31, 2018.


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