Atlantic Aviation is suing to halt plans for ’s fixed-base operation development project at Mineta San Jose International Airport in an effort to negotiate a deal that would preserve the existing businesses at the airport.
Atlantic is citing environmental and safety concerns over the deal in its lawsuit.
The San Jose City Council on April 16 voted 10-1 to approve a 50-year lease for the FBO, which is to be developed on 29 acres on the west side of the airport. Signature, which hoped to begin construction this year on the project, also has plans to relocate its western regional headquarters from Orlando, Fla., to the new California base.
Signature had won the contract over bids from Ross Aviation and Atlantic Aviation, which is currently the primary FBO on the airport. City staff had called the Signature proposal “both thorough and very high quality” and said the proposed capital investment went well beyond the minimum required by the request for proposals. The deal is expected to generate $2.6 million in annual rent, a guaranteed minimum of $400,000 in annual fuel flowage fee revenues and tax revenues up to $300,000.
Atlantic had submitted a proposal for the parcel that essentially sought a real estate option over a five-year period. A company spokesman says the Atlantic proposal was designed to provide additional revenue to the airport and more time for the airport and its businesses to hash out a plan that would solve runway safety issues.
The airport had closed Runway 11-29 – primarily used for general aviation aircraft – because it did not comply withdesign standards for separations and clearances. To reopen the runway, the airport would need to relocate Taxiway V to the west, cutting into ramp space and land currently leased by existing tenants, including Atlantic Aviation, private fuel provider AvBase and Hewlett Packard.
The airport had discussed setting aside land on its west side to enable businesses to move should the runway reopen, the spokesman said. But Atlantic now fears that the Signature project is so large, ”there is zero land available for relocation now.”
“San Jose is putting a fast buck ahead of prudence” says Atlantic CEO Louis Pepper. “In the city’s desperation to cash in on airport lands in the short run, they have failed to address critical runway safety issues and have completely ignored their obligation to analyze the project’s impact on the environment, the public and existing businesses.”
Atlantic claims that the proposed Signature development would increase the risk of runway incursions and says it has urged airport and city leaders for nearly three years to address runway configuration and airfield layout issues. Atlantic has urged the city to conduct appropriate environmental planning to address issues surrounding Runway 11-29, which has been closed due to safety concerns, Atlantic says.
Atlantic says that action would cripple its business on the airport, where it has invested nearly $60 million in facilities since 2007. The city is still assessing the status of the runway.
Atlantic’s petition alleges that the city is not complying with the California Environmental Quality Act, California planning law, the airport’s master plan and the city’s municipal code. Atlantic is asking the court to conduct an environmental and safety analysis before beginning construction on new corporate jet facilities.
City attorneys have not yet reviewed the complaint, a city spokesman says, but adds that the city expects to be able to fully defend the project. The city in the meantime is proceeding with the Signature project and anticipates groundbreaking later this year. The next step after award will be finalizing the contract. Signature, which has teamed with Google executives on the project, is calling the development one of its largest ever.
The lawsuit comes after Atlantic in late March had appealed the initial recommendation to award the FBO bid to Signature. The city, however, had declined that appeal, saying Atlantic’s proposal was deemed “non-responsive” because it failed to provide a proposal bond, financial references, a financial proforma, a management plan, a rent proposal, property, sales and use tax proposals, and the city’s required labor peace/employee work environment form. “Accepting a proposal with such material omissions would result in Atlantic gaining a competitive advantage over the proposer that complied with all of the [request for proposal] submittal requirements,” the city says.