SMO — City Council will consider raising the rates for tenants of the Santa Monica Airport, some significantly so.
Many tenants — some that serve the aviation community and some that don’t — currently pay rents substantially below market rate.
City Hall and the Federal Aviation Administration disagree on the intent and expiration dates of some agreements that dictate control over the 227-acre airport, but everyone agrees that one key agreement expires in July of next year.
Anticipating this agreement’s expiration, city officials set all airport leases to end on or before July of 2015.
In March, council directed staff to develop new leasing guidelines at SMO and tonight council will consider them.
Under the proposed guidelines, all leases can be extended up to three years with one-year renewals to be granted at the discretion of City Hall.
“All new and renewed leases will be leased at market rate based on the appraisal commissioned by the City in 2014,” city officials said of the proposed guidelines. “The initial lease rates will be adjusted by the change in the Consumer Price Index (CPI) to stay accurate with market conditions as new/renewed leases arise.”
Revenue from the current leases comprise about 63 percent of the airport’s total revenues.
Residents living near the airport have long complained about the noise and pollution caused by the aircraft. They also fear for their safety, with the runway located just a few hundred feet from homes.
Proponents of SMO claim it would be instrumental in the case of a widespread disaster. They point to the economic stimulus it creates for the community.
Several aviation tenants currently pay below the market rate, a bone of contention for those who hate the airport.
Many artists’ studios and cultural spaces are also rented at lower rates. Council has passed on millions of dollars worth of potential revenue in favor of the subsidies over the years.
Some members of the community and the Airport Commission would like City Hall to use a previous zoning standard as a model for the guidelines — a standard that would rule out the allowance of all but a few aviation tenants. City attorneys are recommending against this for now noting that, while other agreements remain in place, the standard may not stand up to litigation.
Under the proposed guidelines, City Hall would ask flight schools and tenants of SMO to use quieter aircraft or noise reducing technologies. They would also ask them to avoid flying during certain hours and days. Tenants willing to do so would be given leasing preference.
City Hall would also be allowed to require certain operators to replace gas and diesel-powered vehicles with those that use alternative fuels.
In the 2012-13 fiscal year, the General Fund subsidized the airport $13.6 million. The next year, the airport was free of additional General Fund subsidies due in part to the adoption of increased landing fees.
“Given that the Airport’s future is presently unknown and that it may take years until the City’s legal authority is clarified by the courts,” city officials said, “lease revenues at the Airport must be maintained to promote the Airport’s ongoing self-sufficiency, avoid future subsidies from the General Fund, and repay the General Fund, which has historically subsidized the Airport.”