SANTA CLARA COUNTY PILOTS FILE SUIT

OVER NEW AIRPORT FEES (1989) WITH

IMPLICATIONS FOR CITY OF PALO ALTO’s
OPERATION OF THE PALO ALTO AIRPORT
Over the years, the Santa Clara Airport Administration, under the control of the Santa
Clara County Supervisors, has encountered difficulties operating the County’s airports,
due, in part, to the lack of a true-cost, and transparent. financial management system.
Most government agencies seem to provide services based on the cost of labor, while
ignoring the capital costs associated with the facilities where these services are provided.
At some point in time, government agencies “wake up” to a crisis in the maintenance of
“infrastructure”, calling for a voter-approved bonds that shift a significant portion of the
cost of government-provided services from those using the service to those who are
(typically) property owners--whose property taxes are used to retire the bonds sold to
fund these various infrastructure-building projects.

In the mid-1980s, it became clear that the Santa Clara General Aviation airports needed
more money, in order to deal with various capital-intensive projects. The County
Supervisors believed (at the time) that the pilots and aircraft owners were the best source
of these funds, since they were the only users of, and clear beneficiaries of, these airports:

County supervisors adopted the new user fees in September to raise money for
airport operations, which transportation agency officials say fell about $18,000
short in fiscal year 1987-'88. The fees also were designed to pay for capital
improvements, such as runway repairs and modifications to the Reid-Hillview
Airport terminal.

The pilots of the time seemed only concerned about themselves, showing disdain for the
Supervisors’ suggestions that they had an obligation to help provide funding to help properly
maintain these facilities. The pilots claimed that their “rents” were the only expenses associated
with airport use they should be expected to pay:

County supervisors adopted the field-use fee last fall over the objections of pilots
and the county airports commission. The fee would allow aircraft owners to use
airport taxiways and runways -- something pilots say their rent payments already
cover

There was little in the news media of the time that suggests that the pilots had any concern about
“true cost” pricing for their use of the County’s airport facilities, as the articles below recount. The
pilots sued the County over these fee increases, and at some point—the County caved into their
demands to rescind the proposed fee increase.

Implications For Palo Alto

While these newspaper articles are now about twenty years old, the attitudes exhibited by
the pilots of that era seems to be little changed in the pilots of this era. There seems to
have been little change in the attitude of the pilots/aircraft owners actually carrying all of
the costs of the Palo Alto Airport, or even having the true costs tallied on a yearly basis,
and made public via a published budget. And the continued problems of safety around
this airport became more than obvious on when the Feb. 17th, 2010, crash in East Palo
Alto, destroyed a key electrical transmission cable, rendering Palo Alto, and parts of East
Palo Alto and Menlo Park without power for about ten hours. There has been little on the
part of the “aviation community” to consider terminating Instrument Flight Rating (IFR)
landings and take-offs, which was a contributor to this crash.

It is difficult to believe that this group of people, convinced that they taxpayers, and
residents, of Palo Alto have an obligation to provide a highly-subsidized airport for their
use—will ever be “good neighbors”, no matter what they say to the contrary.

If there should be any doubt, the behavior of this group in the past should be considered
as prelude to the future.

COUNTY RAISES FEES AT THREE AIRPORTS

San Jose Mercury News (CA)

September 12, 1989
Author: BRANDON BAILEY, Mercury News Staff Writer

Despite protests from private pilots and aircraft owners, the Santa Clara County Board of
Supervisors unanimously agreed this morning to establish new fees at three county-owned
airports.

''It's going to put businesses at the airports out of business," pilot Bill Dunn complained about the
plan to establish annual airplane parking fees of $290 this year and $360 starting July 1.
The board also approved a $20 charge to remain on a waiting list for the 1,300 parking spaces
available at county airports. Temporary parking fees also will increase.

Dunn, vice president of the Reid-Hillview Airport Association, charged that the fees will put an
unfair burden on businesses that rent planes or hangar spaces at the airports.

Board members disagreed. "We all pay taxes," said Supervisor Zoe Lofgren, who added that
county tax money has been used in past years to subsidize operation and maintenance costs at
the airports.

The county owns Palo Alto Airport, Reid-Hillview in East San Jose and South County Airport in
San Martin.

The new fees will be used to pay for repaving and other maintenance that has been deferred for
years, officials said. The increase next year will repay the county for about $4 million in past
subsidies.

A dozen pilots and business owners who lease space at the airports complained that the county
has done a poor job of managing the runways and grounds. They also argued that the airports
contribute to the county's tax revenue in other ways by bringing business to the area.

Amelia Reid, whose family has been associated with Reid- Hillview Airport for decades, urged
supervisors to reconsider.

''Do not choke the airports out of existence," she said.

But Supervisor Dianne McKenna and others said they were raising fees in part because they
want to improve the services available to pilots.

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SOME TLC FOR AIRPORT USER FEES GENERATED FROM PALO ALTO AIRPORT
SHOULD GO TOWARD REPAIRS THERE

San Jose Mercury News (CA)

April 13, 1989

PALO Alto Airport ought to be one modern, well-maintained facility. After all, its users pay the
highest general-aviation airport fees in California, and the airport is the busiest of its kind in Santa
Clara County.

But Palo Alto's taxiways are pitted, the terminal needs paint, pilots say additional runway lighting
is needed, and soon the main runway will need resurfacing.
Money is being made at the airport, but the repairs aren't.

Santa Clara County operates three general-aviation airports, and leases the Palo Alto airport from
the city for $25. The airport brings in about $390,000 in yearly revenue, but the county will spend
about $230,000 in Palo Alto this year. And only $28,000 has been projected for maintenance and
improvements.

Since the lease began in 1967, the county has spent $500,000 on Palo Alto improvements -- and
$3.5 million on the other two airports.

County transportation officials say they spend the money where the needs are greatest, but Palo
Alto officials say it's more than a matter of policy. The county's lease states that money left after
operating expenses are paid shall go toward "maintenance, operation or capital improvement of
the premises."

We can't fault the county's airport managers for wanting some spending flexibility: South County
airport operates at a deficit, and costly studies are investigating a new location for Reid-Hillview.
But if the lease requires Palo Alto surpluses to be spent on the Palo Alto airport, the county
should pony up.
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COUNTY DEFENDS P.A. AIRPORT MONEY

San Jose Mercury News (CA)
April 19, 1989
Author: LISA LAPIN, Mercury News Staff Writer

Yes, profits from the Palo Alto Airport are being spent on other airports.

But the airport hasn't yet begun to repay the $1.1 million that Santa Clara County has invested in
improvements there over the years, says a county Transportation Agency report released
Tuesday in response to criticism by pilots and Palo Alto officials.
Thus, the report concludes, the county has lived up to its 1967 lease with the city, which specified
that any profits go to improve the airport.

Critics of the way the airport money is being spent knocked that conclusion Tuesday, noting that
the county failed to keep individual records for each of the three airports it runs until 1985.
''If they were never accounting it that way, how do we know if they have been complying with the
lease?" asked Bob Whitworth, a pilot and president of the Palo Alto Airport Association. "The
county may have already reimbursed itself for the $1.1 million, but you can't tell."

Also, the critics noted some discrepancies between the county report and the report of an outside
auditor the county hired to examine the airport books. The auditor, the Harvey Rose Accountancy
Corp., determined the Palo Alto Airport had a $45,000 profit in 1988. The county report lists the
1988 profit as $3,000.

Because records weren't kept for individual airports until 1985, most of the annual figures in the
county report were calculated based on patterns for the past three years.

The estimates indicate Palo Alto Airport has operated at a profit since new airport parking and
runways were installed in 1982. But from 1972 through 1988, the county spent $46,792 more
than it took in at the airport. (Records are not available for the first five years the county ran the
airport.)

The report was requested by Supervisor Dianne McKenna, who said Tuesday that she believes it
should put an end to complaints that the county is using money from the Palo Alto Airport to pay
for other airports.

Pilots and city officials have complained that profit from the Palo Alto Airport is being diverted to
other county airports even though Palo Alto has rutted taxiways, a run-down terminal and $70
monthly plane parking fees -- the highest in California.

This year, the Palo Alto Airport is expected to make $389,000 from fees and rentals, but only
$230,300 of that will be spent on actual expenses at the airport. The rest will help pay for
administrative overhead at the county transportation department.

That means $159,000 will be spent on items such as insurance, administrative salaries and other
expenses that are shared by the three airports, which include Reid-Hillview in San Jose and the
South County Airport in Morgan Hill.

Overall, the three airports have made an average of $16,000 a year since 1972 but have been
losing money since 1985, the report says.

At McKenna's suggestion, the board agreed Tuesday that county staff should provide a similar
report annually so officials can monitor spending at the airports. Supervisors voted to accept the
report without taking any further action.

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PILOTS FILE SUIT OVER NEW COUNTY FEES
San Jose Mercury News (CA)
December 28, 1989
Author: FRANK SWEENEY, Mercury News Staff Writer
Estimated printed pages: 3

After 29 years of operating a flying school at Reid-Hillview Airport in East San Jose, Amelia Reid
will tell you it is not the path to wealth.

And next month, unless a lawsuit filed by Reid and more than 40 other airplane owners succeeds,
she will have to pay more than $10,000 for a new user fee that pilots claim is illegal and unfair.
By Jan. 15, the owners of the 1,300 light planes based at the three county-operated airports --
Reid-Hillview, Palo Alto and South County in San Martin -- must pay $290 for each plane for the
fiscal year that ends June 30. In each following fiscal year, the fee will be $410 per plane.

County supervisors adopted the field-use fee last fall over the objections of pilots and the county
airports commission. The fee would allow aircraft owners to use airport taxiways and runways --
something pilots say their rent payments already cover.

For Reid, the new fee means paying $10,440 by next month. After that, she will pay $14,760 a
year for 36 airplanes. Of those, 11 are used only as reserves, or for air shows or are in various
stages of repair.

''I can't pay it without having to borrow money," said Reid, who teaches flying at Amelia Reid
Aviation. "We just don't make that kind of money. I raised the rates a small amount that I thought
the customers could absorb, but it wasn't enough to pay the fee."

A coalition of pilots and fixed-base operators -- firms that teach flying or rent and repair airplanes
-- filed suit in Santa Clara County Superior Court last week to block collection of the new user fee.

The legal action is the latest salvo fired in a long-running battle between airplane owners and
pilots and Santa Clara County officials.

The airplane owners argue that the new fee is a special use tax that is illegal because it was not
approved by county voters as required under Proposition 13. The county contends its actions
were legal. A hearing on the pilots' request for a temporary injunction against the county is
scheduled Jan. 8.

The suit also asks the court to block collection of new daytime parking fees of $2 to $5 for visiting
planes and a $20 non-refundable charge that the county plans to charge plane owners to stay on
a waiting list to rent tie-down or hangar space at the three airports.

Funds for airport operation

The county's transportation agency proposed the new user fee because it says it needs more
money to operate its airports. The county airport system has a $1.1 million budget this year. But
officials say more money is needed to restore cuts in airport maintenance and security. The new
fees are expected to raise about $533,000 a year.

The pilots, however, contend that their rent already covers their use of the airport where their
planes are based. A tie- down space costs $846 a year, while a hangar with storage space runs
$4,236 per year.

Airplane owners either rent parking space from the county or from fixed-base operators -- airport
businesses such as flight schools and repair shops that lease space from the county.

''The county is trying to charge for something they're already being paid for because, in the
written leases, they have given the fixed-base operators and their customers the right to use the
airport," said the pilots' attorney, Neil Reid of Corte Madera.

Reid, who is no relation to Amelia Reid, argues that individual airplane owners who rent directly
from the county also have a right to use the airport without paying an additional fee.

Imposing the fee, Reid said, "is like renting a garage to someone for their car and then charging
them for the use of the driveway to get out to the street."
County supervisors adopted the new user fees in September to raise money for airport
operations, which transportation agency officials say fell about $18,000 short in fiscal year
1987-'88. The fees also were designed to pay for capital improvements, such as runway repairs
and modifications to the Reid-Hillview Airport terminal.

Paying back general fund

The money raised by the new fees also will be used to pay back to the county's general fund $4.1
million that was pumped into the airport system in the 1960s for property acquisition and
development. Money to run the airports is now separate from the general fund.

The airports commission, an advisory body to the supervisors, said the county should raise
money by increasing rents. The commission also said there is no evidence that $4.1 million is the
correct amount borrowed from the general fund or that the county intended that it be paid back.

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PUSH COMES TO SHOVE IN DISPUTE BETWEEN COUNTY, PILOTS
San Jose Mercury News (CA)
December 27, 1989
Author: BRANDON BAILEY, Mercury News Staff Writer

The director of a Palo Alto flying club says he was physically assaulted by the chief of airports for
Santa Clara County in the latest episode of a continuing feud between private pilots and county
officials.

Bert Postma, 46, told San Jose police that county aviation director Donald Flynn, 55, shoved him
backward and tried to grab papers from Postma's hands during a confrontation at county aviation
headquarters.

The dispute between the two men -- each 6-feet 2-inches tall and weighing at least 200 pounds --
turned into a brief "shoving match" that ended when Flynn got control of the documents and left
the room, Postma said Tuesday. Neither man was seriously injured.

Flynn declined comment on the Dec. 14 episode, saying that he would wait until the county
executive's office completes a formal investigation of Postma's complaint.

A preliminary review showed no reason to relieve Flynn of any duties as manager of the three
county airports, said Louis Montini, assistant director of the county transportation agency.

San Jose police confirmed that Postma's attorney, Jerry Dunn, reported the incident as a case of
alleged assault and battery.

''Whether we have either one" -- assault or battery -- "at this point, I don't know," said Sgt. Gary
Rosso of the assaults investigation unit. No criminal charges have been filed and police are
interviewing witnesses, he said.

But Postma said Tuesday he is still outraged by the confrontation, which he said took place at
aviation headquarters at Reid-Hillview Airport in San Jose. ''I thought he'd lost his judgment,"
Postma said. "I think it's uncalled for. How can I work with an aviation director who's basically at
war with (airport) users, flying clubs . . . the people who pay for his job?"

Postma, director of the Stanford Flying Club, says he went to Flynn's office Dec. 13 to get a list of
businesses that lease space at the three county airports. The list was for Dunn, who is advising
pilots on a possible lawsuit over recent fee hikes enacted by the county, Postma said.

Both the county counsel's office and one of Flynn's aides knew Postma was coming and had
agreed to provide the information as a public record, Dunn said in a letter to county officials.

Postma said he was using a photocopy machine, with the permission of Flynn's staff, when the
aviation chief approached and asked him why he wanted the information.

''I said: 'For Mr. Dunn, the attorney.' And he said, 'Well, I'll have to stop you right there.' And he
started to pull things out of my hands," Postma said. Postma said he did not fight back except by
holding onto the papers and putting his foot on a stack of documents on the floor that included his
own files.

One official, County Counsel Steven Woodside, said Tuesday he has been told the dispute may
have started because Postma was given the wrong documents to copy. But Postma says he
would have handed over any papers if Flynn had explained that.

''There was no explanation, no request," Postma said. He added: "Nothing justifies assault and
battery."

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PILOTS, P.A. PROTEST HIGHER AIRPORT FEES GROUP RAISING MONEY TO SUE SANTA
CLARA COUNTY
San Jose Mercury News (CA)
October 4, 1989
Author: LISA LAPIN, Mercury News Staff Writer

Private airplane pilots and Palo Alto city officials are protesting a recent Santa Clara County
decision to enact new fees at Palo Alto Airport.

Pilots say they fear the fees -- which will boost the rent charged to park a plane at the airport to
$1,200 from $800 a year -- will force pilots and airport businesses to locate at less expensive Bay
Area facilities.

Pilots plan to take the county to court over the fee hikes, and have formed a coalition to raise
money for legal costs.

Palo Alto City Manager Bill Zaner said he is opposed to the fees, because the county doesn't plan
to use the money to make improvements in Palo Alto. Instead, the county will use the fees to
repay its general fund $4 million in past "subsidies" to the three airports it runs.

Zaner contends that Palo Alto has already paid more than its fair share of money to the county,
and its lease with the county specifies that money made at the airport should stay at the airport.

''We believe that all reimbursements to the general fund have taken place, and that the Palo Alto
Airport does not 'owe' the general fund any moneys," Zaner wrote in a letter to the county.
"Consequently, we believe (our lease) will require all new revenues derived from this proposed
fee to be expended at the Palo Alto Airport."

The fee increases, approved by county supervisors last month, will apply at all three local airports
run by the county: Palo Alto, Reid-Hillview in San Jose and South County in Gilroy.
The new "field use" fee is to be charged for every airplane kept at an airport whether in a hangar
or on the tarmac. That fee will be $290 for the last half of this fiscal year, from January through
June, and then climbs to $410 annually starting July 1. Aircraft owners already pay $800 a month
for a "tie-down" fee to park planes on an airport tarmac, and more if they park planes in a private
hangar.

The board also approved a $20 charge to remain on a waiting list for the 1,300 airplane parking
spaces available at county airports. And pilots who do not keep their planes at a county airport,
but simply fly in for business or pleasure, will be charged $2 to $5 for temporarily parking their
planes.

The county justified the fees because, it says, $4 million in county tax money has been used in
past years to subsidize operations and maintenance at the airports.

County transportation officials and independent auditors recommended the fee system to also
help pay for repaving and other maintenance that has been deferred for years.

Pilots say they should not have to pay for deferred maintenance neglected by the county over the
years. They have formed the Coalition for Responsible Airport Management and Policy, and are
soliciting contributions for a litigation fund.

Copyright (c) 1989 San Jose Mercury News

Record Number: 8903240295

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SANTA CLARA COUNTY EXPECTED TO RESCIND AIRPORT USER FEES
LAWYERS URGE BOARD TO SETTLE LAWSUIT BY PILOTS, TENANTS
San Jose Mercury News (CA)
June 23, 1990
Author: BRANDON BAILEY, Mercury News Staff Writer

Santa Clara County supervisors will vote Tuesday on repealing a controversial $290 airport user
fee that enraged pilots and tenants who sued the county.

The attorney for a coalition of fee opponents, Neil Reid, said Friday he believes the county would
have lost had the case gone to trial. Opponents call the fee an illegal tax.
But after the recommendation of their lawyers, Supervisors Susanne Wilson and Zoe Lofgren
said they want to end the lawsuit so they can focus on a separate controversy over the county's
decision to close Reid-Hillview Airport in East San Jose.

''We've really determined this is no time to go to court over fees," said Wilson, chairwoman of the
board of supervisors.

''There's no guarantee we could win it," Lofgren said. "It just seemed to me we would be better off
spending our time working on the (Reid-Hillview) closure."

Supervisors enacted the fee last September, saying it would help cover $400,000 a year in airport
maintenance costs and repay $4 million in past airport subsidies from the county general fund.
But hundreds of aircraft owners have refused to pay the $290 fee, which was scheduled to
increase to $410 next month. A spokeswoman said the county has collected $140,582 on 485
planes. More than 1,000 planes are based at the three county airports: Reid-Hillview, Palo Alto
and South County.

If the fee is repealed, money collected so far will be refunded, said Deborah Wetter,
spokeswoman for the County Transportation Agency.

County officials said the fee was a way for aircraft owners to pay for services they received. But
opponents argued that the fee was too high and questioned whether it would actually be spent to
improve airport safety.

Palo Alto officials also complained that the revenue would go into the county general fund rather
than be spent on the Palo Alto airport. The city owns the airport but leases it to the county.

The primary legal objection raised by Reid was that the fee amounted to an illegal tax under
Proposition 13 because it was never approved by county voters.

County lawyers discussed the case with the supervisors in a closed meeting last week, before
making a formal recommendation to repeal the fee. But attorneys were reluctant to comment
before the board takes a public vote Tuesday.

''I don't want to say anything . . . that would jeopardize the vote," Reid said Friday.

Deputy County Counsel Harrison Taylor, who advises the county on airport matters, declined to
explain the recommendation. "It just seems like a good idea," he said.

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