Fresno pays off $8 million Gap settlement – to itself

Taken to the Woodshed

The 2006 letter to Souza is from Charles Erhard, manager of the FAA’s airports compliance division.

Erhard wrote that airports receiving FAA grants must get FAA permission before selling airport property.

“To date,” Erhard wrote, “the FAA has not granted the City authorization to release or dispose of the 200.91 acres of what is now GAP property.”

It’s safe to assume that nothing in Erhard’s 11-page letter came as a surprise to City Hall. The FAA had been expressing its concerns with the Gap deal to City Hall since at least January 2003. If FAA was right, and the 201 acres were sold as four parcels between 1997 and 2002, then the feds sounded the alarm soon after the last parcel was sold.

Erhard noted in his letter that his staff had conducted an on-site investigation between Jan. 23 and Feb. 10, 2006.

Negotiations between the city and the FAA began soon after the on-site investigation. The two sides didn’t see things the same way.

The city initially appraised the value of the 201 acres at $4.6 million. The FAA would later say the land was worth $6.2 million.

City officials in 2006 said the FAA had no beef because the city had already spent $4.9 million ($300,000 more than the city’s appraisal) on projects that enhanced the value of the airport.

Why is this important? Airports is an enterprise department. It’s supposed to generate enough money through fees for service and grants to pay its own way. Since it was investing funds from other pots of money into the airport, city officials said, the city should be allowed to apply those funds against the $4.6 million bill for the 201 acres transferred to Gap, Inc. “Offsets” was the city’s term for such credits.

Nearly $4 million of the $4.9 million came from Redevelopment Agency projects. Another $818,795 came from Measure C funds invested in city streets near the airport.

Nice try, Erhard wrote in his 2006 letter, but no dice.

The largest proposed offset of nearly $4 million was “for Airport projects constructed by the Fresno Redevelopment Agency,” Erhard wrote. “The Airport funded a large amount of these projects through a loan. Projects completed with the Airport loan cannot be used to offset the sale of the GAP property.”

As to the $818,795 from Measure C, Erhard wrote, highway projects “located off-Airport do not meet the Policy standard and are not accepted as an offset.”