NATA Sees Red Flags in 'Stop Eviction' Ordinances

 - May 19, 2020, 1:10 PM

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

With many local governments and municipalities issuing stop eviction ordinances intended to provide short-term relief to local commercial businesses during the Covid-19 crisis, NATA sees this as a potential problem situation in the case of airports, one which might cause them to run afoul of their FAA grant assurance compliance.

In a white paper released this week, the organization noted that “any county or city council action or amendment that puts an airport enterprise fund at risk by allowing the airport commercial tenants to forgo paying rent without showing and having confirmed evidence of financial need, and without facing any repercussion of eviction, thereby interferes with the airport’s ability to comply with Grant Assurance 24 because it directly and significantly reduces the collection of revenues by the airport.”

NATA observed that due to the current downturn in operations as a result of the pandemic, most public-use airports are struggling to meet their own operating expenses and financial obligations, and any unilateral ordinance allowing deferment of rent or fees without penalty could result in negative cash flow.

Likewise, master leaseholders, who are required to make expensive capital improvements to their leasehold and are dependent upon monthly payments from subtenants while still being required to make full payments to their lenders, could be put in a default situation by such an ordinance.

Airports that receive grants under the CARES Act stimulus have legal methods that fall within FAA guidelines to provide relief to aviation-related businesses and, in response, NATA advises municipalities to recognize the unique nuances present in airport commercial leases, as well as allow airports to work individually with their commercial tenants in establishing relief efforts under those guidelines.