FAA does not release airport acreage to ASG, instead gives “Land-Use Change”

With conditions…

The American Samoa Government has promised a subsidy of up to $2.5 million annually for the Pago Pago International Airport, as part of its corrective action plan following a land use audit of the Tafuna airport released two years ago by the US Federal Aviation Administration.

The FAA requires that the ASG subsidy, which is for 10-years, be deposited into the airport account and ASG must “devote the payment exclusively for airport purposes,” according to a May 3, 2016 letter from Ron V. Simpson manager of the FAA Honolulu Airports District Office to Port Administration director Taimalelagi Dr. Claire Poumele.

Samoa News received information last Friday that ASG has submitted a corrective action plan, which was required by the FAA following the land use audit, where the federal agency found that of approximately 865 acres of land approved by the FAA in 1973 for airport use, about 325 acres have been removed from the airport and used for other ASG purposes — including the Tafuna Industrial Park.

And according to the Commerce Department’s 3rd quarter performance report, the FAA issue have been resolved and therefore three leases, which have been on hold due to FAA issues, have been forwarded to appropriate ASG officials for approval.

Responding to Samoa News questions, FAA spokesman Ian Gregor confirmed that ASG submitted their corrective action plan to the FAA on Feb. 15, 2016. “We accepted the corrective action plan, and are monitoring ASG's progress in addressing the audit report findings,” he said last Friday.

Simpson’s letter in May provides a summary of the ASG corrective action plan as well as FAA’s response.

UNAUTHORIZED TRANSFER OF LAND

In his letter, Simpson says the loss of 325 acres of land handicapped the airport’s ability to become as self-sustaining as possible in the ensuring years. Additionally, this action had negative consequences for the airport that severely hampered the airport’s ability to earn revenue to support its operations, maintenance and capital costs.

ASG, in the corrective action, estimates that of the 325 acres, only 150 acres are available to be leased at market rate — approximately 100 acres from the Industrial Park area; 50 acres from general ASG land area, Administrative Service area and Parks and Recreation areas.

ASG requested the “release” of the 325 acres from the airport and saying that ASG would pay an annual subsidy to the airport “of up to $2.5 million” through direct appropriation from the Legislature as well as earmarks from the hotel tax, clearance fee and other revenue measures enacted into law to support the airport. (Samoa News wasn’t able to obtain clarification from ASG on what exactly the “clearance fee” referenced.)

“The FAA agrees in principle to ASG’s proposal for corrective action,” Simpson informed Taimalelagi. “However, the FAA will more appropriately treat the proposed transaction as a ‘Land-Use Change’ authorizing an interdepartmental change in jurisdiction for the 325 acres rather than a ‘release’ for the disposal of airport property.

Additionally, the FAA has determined the proposed corrective action acceptable “provided the $2.5 million annual subsidy is for a minimum of 10 years to cover airport, maintenance and capital improvements.”

Further, ASG is to revise the language of ASG’s proposal to reflect that the request is for “Land-Use Change, authorizing the use of 325 acres for non-aeronautical and revenue generations purposes.”

ASG was also required to submit a “Resolution and Reinvestment Agreement”, which is “an official government declaration” that “obligates the ASG to make an annual contribution of $2.5 million to the airport account and devote the payment exclusively for airport purpose.”

ASG’s proposed fiscal year 2017 budget shows $1 million for the ASG subsidy and $367, 500 under the hotel room tax (instead of $36,500 for hotel room tax, as cited in a Samoa News story Aug. 24 regarding Airport Division loses.)

According to the 5% hotel room tax law, which went into effect last summer, 75% of revenues collected goes to the Airport Division of Port Administration and 25% to the general fund.

RATE STRUCTURE

In its audit report, the FAA raised concerns that the airport is not able to be financially self-sustaining because it does not earn any income from the land that was formerly part of the airport, which today may not be receiving fair market value rental rates from tenants who presently use airport property for non-aeronautical commercial purposes.

ASG, in its corrective action, notes that ASG will pay an annual subsidy of up to $2.5 million, which the FAA has determined acceptable based on a minimum 10-year period.

JET FUEL TANKS

The FAA, in its audit report, found the current location of the jet fuel farm represents a safety risk for people and property because of its proximity to the airport public parking lot and the airport terminal.

In its corrective action, ASG says it has secured federal funds from the US Department of Interior’s Office of Insular Affairs for the jet fuel tanks relocation. Additionally the FAA is currently assisting in the preparation of an environmental assessment report.

According to Simpson’s letter, the FAA has determined the proposed corrective action acceptable.

The jet fuel relocation was one of the issues discussed during a meeting early this month at the Tradewinds Hotel between Gov. Lolo Matalasi Moliga and US Transportation Secretary Anthony Foxx, who stayed overnight in Pago Pago en route from New Zealand to the US.

Port Administration director Taimalelagi Dr. Claire Poumele said during a briefing with reporters at Tradewinds that Foxx has informed the governor that the FAA is going to find the funding from federal Airport Improvement Program to fund the relocation project, which is estimated to cost between $6 million and $8 million. (See Samoa News edition Aug. 8th for details).

(Samoa News noted at the time of its report that some of the proceeds from ASG bond sales have been allocated for the relocation costs — this prior to the Foxx meeting. The government has not indicated what it would use the earmarked funds for instead.)

Later this week Samoa News will report on other issues in the ASG action plan.

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