McGill Aviation responds to invitation for FBO Ground Lease proposal

October 30, 2015 2:46 p.m.

Editor's Note: The Fernandina Observer received this correspondence from "Sean P. McGill, President by:John f McGill, Chairman in response to an invitation from the City of Fernandina Beach to submit a Fixed Based Operator proposal for the Fernandina Beach Municipal Airport. The letter is dated October 30, 2015 and we are printing the letter in its entirety.

The McGills mentioned  the Fernandina Observer posted a letter from City Attorney Tammi Bach to the McGill's prior to the McGills' receiving the letter. City Attorney Bach submitted to the letter to the Fernandina Observer and other media outlets on 10/22/15 a day after her letter was dated.

M c G I L L   A V I A T I O N

C O R P O R A T I O N

650 AIRPORT ROAD AMELIA ISLAND, FLORIDA 32034

EMAIL airrncgill@bellsouth.net

FACSIMILE 904 261 9036

TELEPHONE 904 261 7890

City of Fernandina Beach

204 Ash Street

Fernandina Beach, FL 32034

Attention:Tammi Bach, City Attorney

Subject:  INVITATION for FBO GROUND LEASE PROPOSAL

Madam City Attorney:

This letter responds to your Oct. 21, 2015 "Invitation for FBO Ground Lease Proposal", which you chose to publish in the Fernandina Observer (online newspaper) , on Oct. 22 before it was received by us on Oct. 23. We question not only the timing but also the sincerity of your "Invitation." The City's actions speak louder than your words.

After years of Commissioner Poynter consistently and insistently repeating that there is no future for McGill Aviation and that the City will be better off without a McGill in it, it is hard to believe Commissioner Poynter has now changed his position. His directing you "reach out" to us appears nothing more than a public CYA making it difficult for us to give your "Invitation" any serious weight.

After just leasing our business premises to another company, the City's attempt to renew discussions of our proposals is at best a hollow, self-serving gesture that does little more than add a City insult to our injury. The pre-publication of your "Invitation" demonstrates that the City is more interested in playing to public opinion, than actually negotiating with us,

On behalf of the City, you state that you "... look forward to continuing our relationship ...." Make no mistake, the October 20, 2015 City Commission action that was based on City Staff recommendations puts McGill Aviation out of business and costs a dozen people their jobs.

Your "Invitation" is too little, too late. It is clearly an artifice to try to cover-up what the City has done; or perhaps an attempt by individuals who have taken oaths to clear their consciences of their personal responsibility for actions that are based upon false statements , inconsistent with truth and honor, and totally lack fairness, integrity, and civility.

As you should know, for decades the City has required FBO's to install basic operating infrastructure at their sole expense. In fact, we heavily invested (hundreds of thousands of dollars) in those leasehold improvements (terminal, hangar, & fuel farm) on our current leasehold.

Two years & five months before our lease expires, that infrastructure has now been given to Eight Flags Aviation , LLC, not by public bidding, but by a negotiated lease. Eight Flags will not have to invest in basic operating infrastructure. Eight Flags will not even have to pay the City's published rates for building rent as its lease document only requires it to pay ground rent for existing structures.

Your "Invitation" offers us a "green grass" site on which we may rebuild to stay in business. In short, we will have to invest twice for basic infrastructure to stay in business. Eight Flags will never have to invest in or pay rent on the same infrastructure. The City will not even receive the economic benefit of renting these structures to any other entity. The City's action has tilted the playing field with a competitive advantage for one FBO and disadvantage for the other. This is federally prohibited discrimination favoring one tenant over the other.

Further, if there is any truth to the public statements of Brian Echard, owner of Eight Flags, to City Commission on October 13, 2015, that he would probably demolish our terminal & hangar, and that he intended to build his own fuel farm; then the only reason for the City to approve leasing our terminal, hangar, & fuel farm and 80% of the aircraft ramp to Eight Flags is to block our business or any other business from competing with Eight Flags by "banking" airport land. In short, the City is complicit with Eight Flags Aviation in creating a fueling monopoly on the airport by granting a de facto exclusive right.

Since it is Mr. Echard's publically declared business plan to build a new terminal, hangar, & fuel farm; the City might have leased Eight Flags the green grass site now offered to us, kept our business in its present location, and split the ramp equally between two competing FBO's. The City might have done the fair , right, & neutral thing and leveled the playing field.

Instead, the City chose to pick one side and to do everything in its power to make sure who won. The City is picking winners & losers, not the free marketplace. Anyone with a lick of sense can see what the City has done and understands why. The old Fernandina Fix was in.

If this blatant discrimination that creates an exclusive right were not bad enough; to pull it off, City Staff and the City's Airport Consultant had to resort to blatantly false representations to City Commission. City Commission approval of the negotiated lease was procured by the deceit detailed below.

Lie No. 1 and the Truth.

First, City Commission was expressly and repeatedly told that only "aportion" of our leasehold was included in the Eight Flags lease. Your "Invitation" repeats this lie when you state: "...some of the area....". In fact, all (100%) of our actual leasehold and even more airport land was leased to Eight Flags.

These lies were later defended by showing City Commission a survey of our leasehold. That survey, however, shows our leasehold before 35% of that land was unilaterally "taken" by the City. As to that 35%, we are not allowed to use it, we do not pay rent on it, or both. That survey was ordered by an Arbitrator as a base from which to determine exactly how much of our leasehold had been "taken" by the City. Our actual leasehold is only 65% of what City Commission was shown as our leasehold.

That 65%, that is, all of our actual leasehold, not "a portion" not "some of the area", has now been leased to Eight Flags. All statements to the contrary are lies. You were present at the litigation. You know the truth. The City's Airport Consultant is also well-aware of the truth, having profited off of the construction projects that took 35% of our leasehold . Nevertheless, neither of you told City Commission the truth.

Lie No. 2 and the Truth.

The next overt misrepresentation was that all bidders to RFP 15-101.2 bid to the same location and same leasehold. That representation is not only false, it is totally inconsistent with the RFP-15-101.2 document. The RFP clearly shows two alternative terminal locations. Appendix No. 1 to the RFP states no specific leasehold has beendetermined. City Staff and the City's Airport Consultant knew the truth, but did not speak it.

The truth is that that the bidders responded to the same RFP, not the same locations, nor the same leaseholds. The truth is that the primary purpose of the RFP was to obtain private financing for a new public terminal, not to determine who would get our FBO lease when it expires. Who ever won the RFP, won the right to negotiate a location & leasehold; not the right to City discrimination & an exclusive right. After the provisional award, this financing RFP was hijacked behind the scenes by insiders in a public/private scheme using a negotiated lease to take our investment and put us out of business. City Commission equated the RFP, the location, & the leasehold; and neither City Staff nor the City Airport Consultant corrected their misunderstanding with the truth.

Lie No. 3 and the Truth.

"Eight Flags simply presented a better bid." That was said over and over. Did they really? The City refused our Public Records Request for a copy of the Eight Flags bid. The public record also does not show that City Commission ever received a copy of either bid proposal. How does anyone know which is financially better for the City? A good place to start would be by comparing the proposals.

We are told Eight Flags offered $1.2 million for both the City's new terminal and a new hangar for itself; but their proposal provides that Eight Flags gets all that money back as a rent credit. If true, the Eight Flags proposal is simply a loan to the City to be paid back from future airport rents. It will take approximately 16 years before the City gets any rent from Eight Flags. We offered to grant $500,000 for the City's new terminal (we already paid for our hangar) and to pay rent from Day 1. Which financial proposal is really better for the City?

We asked City Commission to directly consider the two financial proposals. Commission Poynter, the only commissioner to publicly articulate his thinking, said that $1.2 million beats $500,000 , and it's as simple as that. Well, maybe; or maybe it is "apples to oranges." The truth seems to be whether $1.2 million in new City debt is better than a $500,000 grant plus a steady future income stream? Until City Staff brings the financial proposals out into the sunshine, that truth will remain hidden in the shadows.

Why the hiding and the lies? Unfortunately that answer is all too easy to find. Several years ago, Commissioner Poynter told us to our faces. It is also found in the transcripts of City Commission Executive Sessions. Just last week in a Fernandina Observer testimonial (October 23 , 2015) local realtor Phil Griffin recalled his meeting with City Staff in which the City Manager quipped that our lease would never be renewed, and the City Attorney (you) nodded in agreement. Why? Because it made City Staff and the City's Airport Consultant look bad when we prevailed in our contractual arbitration and the several City lawsuits against us. "Retaliation" is the word the Arbitrator chose to use. Lies, discrimination and exclusive rights are simply the method for City Hall to reach that goal.

The one consistent thread in our 17 years of dealing with the City on this airport is the City's bad faith in its performance of our agreement. Even though we have learned to expect the City's bad faith, we are still surprised at the lengths to which the City is willing to take it.

We have spent almost two decades struggling to build a small business on this airport. We want to stay. The City, however, has now given the fruits of our labor (terminal, hangar, fuel farm) and 80% of the available aircraft ramp to a start-up competitor packed with City Hall insiders. Our consolation is supposed to be the City's new offer to allow us to rebuild on a green grass site. That would require a prohibitive multi-million dollar investment that could never be recovered from small business operations.

Eight Flags knows that. The City knows that. That is why the City and Eight Flags put all our investment and 80% of the aircraft ramp in their lease. Their new lease minimizes the Eight Flags investment, "banks" airport land & pavement to block competitors, and makes it impossible for us to stay by requiring a prohibitive investment for only 20% of the available ramp from which to serve aircraft.

Just because you plant the City's most recent narrative in the local press that does not mean anyone believes it.

If and when the City is prepared to negotiate a renewal of our FBO-ULA that includes the terminal, hangar, & fuel farm we paid for and 50% of the available aircraft parking ramp; then we are prepared to immediately renew our negotiations in good faith.

Respectfully submitted,

/

Sean P. McGill, President

by: &:cUt/John f McGill, Chairman

cc: City Commission

Airport Advisory Commission City Manager

FAA-Airports Division, Atlanta

E. Booth, Jr. Esq. Fernandina Observer Fernandina News Leader