Santa Monica Airport (Daniel Archuleta

The Santa Monica Airport Commission did not endorse a new leasing policy for the airport at its March 15 meeting after two commissioners were unable to get answers to their questions from airport advisor Nelson Hernandez.

Hernandez came to the commission to preview a new airport leasing policy in advance of the City Council meeting on March 22. The report asked the commission to endorse the policy but, with several members absent, the four-person panel deadlocked 2-2. At least three votes are necessary for passage of a measure at a five-person board.

Leases at the airport have been controversial. Last year, council provided some 3-year leases to non-aviation tenants, but declined to provide long-term leases to aviation businesses. At the time, council asked for more information on master tenant/sublease contracts.

There are a total of 629 leases at the airport. About half are direct leases with the city, but 323 tenants are subleases from one of six master tenants. Leases can cover entire buildings, office space or just a “tie-down” location for a single aircraft.

At the Airport Commission meeting, Hernandez previewed the Council report. The new policy has six principles for evaluating leases, including harmony with airport neighbors, contributing to a sustainable airport fund, being in compliance with the city’s legal rights and legal obligations, opportunities for arts/education/culture, providing procedures for administration/evaluation, and environmental sensitivity.

“We’re looking for tenants that are compatible with the local community and that’s going to be an important criteria,” Hernandez said.

Hernandez said a comprehensive leasing policy was necessary to make equitable and efficient decisions.

“We’re going to have quite a few leasing decisions to make in the next few months because, as you know, just about all the tenants at the airport are on short-term leasing agreements,” he said.

Leases account for about 67 percent of total airport revenue and the proposal calls for all tenants to move to market-rate leases to help the airport become self-sustaining and erase a $13.1-million debt it owes to the city’s general fund.

“We will improve lease terms to market rate,” he said. “That’s the way we sustain the airport, that’s public property and we have a fiduciary responsibility to lease it at market rates and that’s what we intend to do.”

Hernandez described a phased approach to leases that would eliminate all master tenants while allowing the city to phase out “incompatible tenants.”

Commissioner Lael R. Rubin ultimately voted against the policy. She said the policy as written would open the city to a new round of litigation because she felt it amounted to a stealth prohibition on aviation tenants.

Rubin said that, because the FAA has mandated the airport remain open through 2023, some level of aviation-related business will be required. And because the leasing policy specifically mentions some kinds of business, it should acknowledge aviation uses will be part of the property mix.

“I really don’t want to see the city spend more money getting involved in litigation when it doesn’t have to, when there might be some specific tweaking of this language,” Rubin said.

Hernandez defended the policy, saying the leasing policy doesn’t explicitly prohibit aviation uses.

Commission Chair Peter Donald also felt the proposal was legally dubious.

“I’m a little uncomfortable with an airport leasing policy that nowhere mentions aviation and I feel, I can see the lawyers lining up waiting to get a hold of this and putting their kids through college on it,” he said.

Hernandez said aviation businesses have a right to apply for a new lease, at which point they will be evaluated to see if they meet the city’s standards. However, exactly what those standards are also became a point of contention.

Commissioner Stephen M. Mark asked what metrics, standards or index would be used to determine environmental and neighborhood compatibility.

Hernandez said leases would be judged on a case-by-case basis and there are no objective measurements that will be used to determine what is environmentally friendly or compatible with the neighborhood.

Mark said objective measurements are needed to guarantee the decisions are made without bias.

“It seems that some people feel some aviation users do have a negative effect on the environment,” he said. “If there’s not some standard for that then you’re going to end up with double standards … By not spelling this stuff out it’s leaving a vague feeling as to what you intend, and the public doesn’t know either.”

Mark said he was befuddled by the lack of published standards and asked if the intent was to force applicants to provide their own environmental studies.

Hernandez said that was an option staff could look at before being rebuked by Deputy City Attorney Ivan Campbell.

“We can’t do that,” said Campbell, citing state and federal rules that limit the city’s jurisdiction over some environmental concerns.

Rubin made a second attempt to extract information from Hernandez, this time asking about the stated intent in the leasing policy to phase out some tenants.

When asked to provide examples of the current tenants that could be phased out as incompatible, Hernandez refused to give his opinion, saying his advice was reserved for the city manager due to his position as a senior advisor.

“I’d advise [Rick Cole] and he would make that decision, so I’m not going to preclude what decision he would make,” he said.

Rubin said Hernandez was not aiding the commission in its attempts to understand the scope of the proposal.

“We have questions and it doesn’t seem like we’re getting answers,” Rubin said.

Rubin and Mark voted against accepting the report while Donald and Commissioner Joseph Schmitz voted in favor.

The failure to endorse the proposal does not prevent the policy from advancing to the City Council meeting on March 22, where the commissioners have been invited to attend and explain their various positions.