The Federal Aviation Administration says Fort Lauderdale illegally used executive airport dollars to support the city’s operating budget and it wants $5 million paid back.
The amount could be reduced if city officials provide justification for the payments that satisfies FAA regulations, federal officials said.
City Manager Lee Feldman, who has hired a consultant to assist with a plan, said he thinks the final result “will be pretty much a wash” and the city might not have to pay any money back.
The federal government turned Fort Lauderdale Executive Airport over to the city after World War II, but it maintains oversight “to make sure the revenue generated by the airport is not used inappropriately,” Feldman said.
Because the airport is city-owned, it doesn’t pay property taxes. Instead, the airport pays the city a fee equal to what it would pay in taxes for fire and police services, road and infrastructure maintenance, and transportation and mobility services.
But that didn’t fly with the FAA, which began looking into the situation last year after an article mentioning the payments was brought to its attention.
“The FAA has made a preliminary finding that there has been unlawful diversion of airport revenues,” the FAA’s director of airport compliance, Kevin C. Willis, wrote in a March 31 letter to the city seeking repayment.
Feldman said the city thought it was following regulations, but because of the FAA’s concern, it stopped the annual transfer for the current budget year that began in October.
“The city has always believed that [the payment], and the city’s applied methodology, was acceptable” under FAA rules, Feldman wrote in a Nov. 21 letter to the FAA after it first questioned the payments.
Although the payments have been being made for at least 18 years, FAA regulations only allow it to go back six years in recovering illegally diverted funds. The payments over the past six fiscal years total $5 million, ranging from $526,837 in 2012 to $1.32 million in 2016.
City consultants are in the process of developing a “cost allocation plan” for charging the airport for direct services the city provides, Feldman said. It is expected to be ready by June.
Commissioners on Wednesday will consider hiring a special counsel for $150,000 to help in negotiations with the FAA regarding the payments and on another airport matter.
The city over the years has relied on money from its revenue-generating enterprises to help offset the city’s own operating expenses. Besides the executive airport, other enterprise funds include water and sewer, storm water, wastewater treatment plant and parking funds.
The water and sewer and wastewater treatment plant funds contributed $20 million to the city’s budget this year. Some critics have said the money collected should stay in these funds and be used to replace or repair aging city pipes.