Judge: Air board can continue to collect fuel-flow fees

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May 12--JEFFERSONVILLE -- The Clark County Board of Aviation Commissioners was offered somewhat of a reprieve Wednesday in its fuel-flow fee lawsuit.

Clark County Superior Court No. 2 Judge Jerry Jacobi ruled the air board could continue to collect fuel fees while the remaining issues in a case against Aircraft Specialists Inc. and its appeal is being decided.

Jacobi previously granted a partial summary judgment in favor of Aircraft Specialists and said during Wednesday's hearing he found there was no reservation clause in the contract to allow the implementation of the fuel-flow fees.

However, he said the partial summary judgment issued is not a final order, unless it's certified. And the interlocutory appeal outlined in his partial summary judgment allowed for an immediate appeal to be filed with the Indiana appeals court.

Several issues remained that Jacobi did not offer a ruling on -- including a claim by the air board that the terms of the lease were breached and that ASI said the suit is frivolous and is requesting $70,900 in fuel-flow fees assessed from May 1 through Feb. 24 be paid back to the Aircraft Specialists if they prevail.

Once the legal paperwork has been filed, a decision by the appeals court is expected to be returned swiftly and it will be the final order.

"This is not anticipated to be a long process," Jacobi said.

FINANCING FLAK

The fuel-flow fees are 10 cents on every gallon of gasoline purchased by fixed-based operators, or FBOs, which are required to pay the fees within 30 days of delivery. The air board protested the ruling and said removing the fees would devastate its finances.

"I don't think it would be prudent on anybody's part to terminate that fee," said Board of Aviation Commissioners Attorney Jack Vissing.

There are two FBOs at Clark County Regional Airport -- the second being Honaker Aviation -- and Vissing said if the ruling goes against the air board, Honaker also would no longer be charged the fuel-flow fees.

According to the air board's annual reports for 2009 and 2010, fuel-flow and landing fees generated $76,000 and $116,900, respectively. Totals for the fuel-flow fees alone in the annual report show the airport collected $42,985 in 2009 and $85,000 in 2010. Of the fuel-flow and landing fees collected in 2010, more than $58,600 was generated from Aircraft Specialists.

In 2010, the air board reported expenses exceeding $192,600. Subtracting landing and fuel-flow fees from the revenue generated in 2010 -- a total of $227,500 -- the airport would go from a $34,900 surplus to a $50,100 deficit.

"If the air board did not need the money of the fuel-flow fees, we would not have asked for it," Vissing said. "We have no way of replacing this money at this time."

Funding issues for the airport date back even further than the lawsuit, which stretches back to 2005. The original lease agreed to between the airport and Aircraft Specialists came in 1993, which included 11 acres, at a cost $25,000, for a 40-year term.

When the lease was agreed to, Vissing -- who was not the air board's attorney at the time -- said the Clark County Council had a levy that subsidized the airport. He said if the levy were in place today, it would generate $200,000 for the air board.

The funding situation from the county has since changed.

"The council has not even appropriated enough money to match the grants we have coming," Vissing said, referring to a 3.75 percent funding match for Federal Aviation Administration loans.

He said because of the generous leases that are in place for the FBOs, the airport needed another source of revenue and enacted the fuel-flow fees, a common revenue generator for other airports.

"This is what is done everywhere," Vissing said. "This was a way to determine a basic fixed number of revenue that will come in for the airport."

CONTRACT DISPUTE

Douglas Bates, the attorney representing Aircraft Specialists, said the company is being charged an additional fee that was not part of the two entities' original contract.

"It would have been our hope the airport would have found legitimate ways to fund their budget and not put it on our backs," he said.

Bates explained that when the contract was signed, Aircraft Specialists reached the long-term deal because it was going to build its own buildings at the airport and make a substantial investment. But then the air board added the fuel-flow fee because its revenue situation changed with the county and it also took a hit because of the poor economy.

"They unilaterally imposed a fee on us," Bates said. "[Aircraft Specialists] agreed to take on some serious risk to locate at that airport. They were willing to do that based on the provisions of the contract."

He defended what some county officials and the attorneys for the air board have described as overly generous leases.

"This is not a sweetheart deal, as [the air board] keeps wanting to say," Bates said. "We took on almost all the risk out there for our operations. We're still paying on those obligations that we have. It's improper to paint ASI as someone who is taking advantage of the situation."

With the decision handed down by Jacobi Wednesday, the attorneys will prepare for a hearing with the court of appeals and he justified offering a partial ruling on the case, which effectively would send the final decision to the court of appeals.

"You will get a final judgment, and you will get a final judgment quicker," Jacobi said.

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