FAA audit claims ASG illegally seized airport land
A federal audit of the airport land use found that the American Samoa Government didn’t comply with requirements in provisions of federal grants when more than 300 acres of land, initially dedicated for the airport, were transferred to other ASG agencies without Federal Aviation Administration approval.
According to the FAA’s Land Use Audit/Inspection Report, land dedicated to the airport was originally about 865 acres, until 1973. Thereafter, the airport was reduced to about 540 acres, a loss of approximately 325 acres which has since been used for various purposes including housing, parks, government facilities and commercial business.
The FAA audit is pursuant to a 1999 Congressional mandate which directs the federal agency to conduct land-use inspections of airports that have received federal grants in order to detect and correct inappropriate or unapproved land use, according to a letter last month from Ron V. Simpson, the FAA manger of the Honolulu Airports District Office, to ASG Port Administration director Taimalelagi Dr. Claire Poumele.
In addition, the FAA must provide Congress with a report of the results of inspections, according to the letter, which also states a corrective action plan is required of ASG to prevent it from being included in the annual report to Congress that American Samoa is in non-compliance with federal grants.
It should be noted that currently Airport property is all the real estate within the airport fence — including the areas occupied by the McConnell Dowell plant and offices, and the U.S. Army Reserve.
According to the audit report, reduction of the airport size was made without prior review and approval of the FAA.
And since the entire 865 acres had been legally obligated to serve airport purposes as a condition for receiving federal financial assistance — the removal of the land without FAA approval did not comply with three provisions of Grant Assurances, which focus on the ability of the airport to be self-sustaining, while allowing for needed development.
By reducing the airport boundary, the report says, this had a long term negative impact on the financial viability of the airport, which lost the opportunity to benefit from the development of the land and the income it would produce.
It also says that ASG benefited from the transferred land, while the airport “became less self-sufficient and without the means to produce sufficient income to support all its capital and operating costs.”
In the audit report, the FAA says that while past decisions cannot be changed, new policies can be adopted to provide the airport with equitable compensation from the land that was withdrawn from the airport. The report suggests that a “plan is needed to enhance the airport’s ability to be self-sustaining and to provide sufficient resources to undertake needed airport development.”
Another requirement of the Grant Assurance would require the airport to be compensated for taking the land. If no payments were made at the time, the report recommends that subsequent payments — along with interest — should be made to the airport to amortize the unpaid debit obligation.
Additionally, the taking of the airport land - without compensation - would represent revenue diversion.
Among data included with the report is the Industrial Park Tenant's Database, which shows how much each tenant pays on a monthly and yearly basis, as well as the total acreage of land each tenant occupies.
LAND USE/ RATE STRUCTURE
The ASG decision to downsize the airport prevented full compliance with other provisions of the Grant Assurance pertaining to ‘Fee and Rental Structure’ and the ‘Policy and Procedures Concerning the Use of Airport Revenue” — which stipulates that the airport should be as self sustaining as possible.
Additionally, the Revenue Use Policy mandates that fair market value rental rates be applied to all non-aeronautical uses of airport property. During an inspection of the Industrial Park tenants, the lease rates vary widely, and many are well below fair market value.
According to the report, other airport land use practices also need attention, and currently the airport property has non-aeronautical uses taking place on land that is still obligated to be used for airport purposes.
Non-aviation uses include solar panel arrays, general storage, an Army Reserve Center, and mining operations by McConnell Dowell, the report says, and points out that there is ample space within the 325-acre parce l— which was taken away from the airport — for non aeronautical uses.
In the future, ASG land-use planning should assign aviation and non aviation tenants to the location where they belong, says the report. However, it also says that a proposal for non-aviation use of obligated airport property must undergo an FAA review to determine if it is justified, and can be allowed.
The report also states that Revenue Use Policy stipulates that non-aviation tenants must be subject to fair market value rental rates, however, McConnell Dowell — which occupies about 13.4 acres of airport land — has proposed reducing or eliminating rental and royalty payments in a new lease agreement being negotiated with ASG.
Based on provisions of the Revenue Use Policy, the report declared that “free or reduced rent should not be an option.”
It also states that using obligated airport property for non-aviation use does not represent the highest and best use of airport property, which is intended to serve an airport purpose, therefore, where non-aviation uses exist, fair market value should be paid for airport land.
More in tomorrow’s Samoa News edition on the FAA’s follow-up.