Atlantic Takes Legal Action To Stall New FBO

 - June 1, 2013, 2:30 AM

The confrontation over the development of a new FBO at San Jose, Calif., has taken another twist with the announcement that Atlantic Aviation filed a pair of lawsuits against the City of San Jose for its decision to award a 50-year FBO lease to a partnership between Signature Flight Support and Blue City Holdings, a corporation that represents the personal aircraft of the principals of Google, headquartered nearby in Mountain View.

Atlantic’s first complaint, filed May 9 in California State Superior Court, alleges that the city failed to comply with the California Environmental Quality Act, California planning law, the airport’s own master plan and the city’s municipal code in its approval of the 29-acre development. The FBO chain’s second suit, filed a week later, claims that the city showed favoritism to the Signature bid, overlooking deficiencies in the proposal and allowing the BBA Aviation subsidiary to “alter its bid at the last minute.” According to Atlantic’s complaint, the city also allowed Signature to eliminate certain protections regarding the airport’s curfew in its FBO lease. That provision prompted Landmark Aviation to state in a letter to the airport’s director of aviation that “Had Landmark known that the terms and conditions of the agreement were negotiable after the deadline set forth in the RFP, Landmark would have reconsidered its decision not to respond to the RFP.”

Airport: Atlantic Proposal ‘Non-Responsive’

Atlantic operates the sole FBO at the airport and claims tens of millions in investment at SJC, including construction of a new terminal and hangars in 2008 and renovations to another pair of terminals and hangars (formerly belonging to San Jose Jet Center and ACM Aviation). The FBO submitted a proposal for consideration that, according to the airport officials, was dismissed because it “did not address, or failed to include, several documents that were required by the RFP and was therefore determined to be non-responsive.”

Atlantic appealed the airport evaluating staff’s initial endorsement of the Signature plan in February. The San Jose City Council rejected Atlantic’s argument and voted overwhelmingly in April to approve the Signature deal, which would provide the Silicon Valley airport with $2.6 million in annual rent and a minimum guarantee of $400,000 in annual fuel flowage fee revenue. A statement from Signature in response to the litigation said it remains “as committed and excited as ever to work with San Jose and its leadership” and that the company’s $82 million development project “remains full speed ahead, with a projected groundbreaking in the fall.”

Atlantic has been at odds with the airport for several years over its hesitation to close inactive Runway 11/29, whose taxiway abuts Atlantic’s leasehold at the airport. The company claims that according to airport plans, if the runway is reactivated, the FBO will likely lose a sizable portion of its ramp as a result of FAA safety requirements that would require the relocation of a taxiway. City documents show that the possibility of having to relocate some existing businesses was considered, with 12 acres of property initially to be held in reserve for that purpose, yet from Atlantic’s perspective that potential reserve apparently evaporated with the Signature deal.

“San Jose is putting a fast buck ahead of prudence,” said Atlantic CEO Louis Pepper. “In the city’s desperation to cash in on airport lands in the short run, [it has] failed to address critical runway safety issues and [has] completely ignored [its] obligation to analyze [its] project’s impact on the environment, the public and existing businesses.”

In its first suit, Atlantic is seeking a hold on development of the new FBO until the city completes the required analysis and documentation required for the closure of the runway, a process that could take up to two years if so ordered by the court, while the second complaint calls for the court to nullify the results of the RFP process and reissue it.

“I think both [complaints] are without merit,” said Richard Doyle, city attorney for San Jose. “This has more to do with Atlantic feeling threatened by some competition than it is about any legal issues. We’ll just have to fight it out in court, and hopefully get this thing dismissed or taken care of as soon as possible.”