A $1.3 million federal grant for security fences, runway lights and a weather station at the Palo Alto Airport may be in jeopardy because the city and Santa Clara County can't come to terms over the airport's long-range future.
The grant dispute is the latest chapter in a long history of city-county wrangling over the money-losing airport. There's even a possibility that the airport could eventually close.
The issue revolves around an airport lease that's been in effect for 38 years and won't expire until 2017.
Following its standard procedure, the FAA says it won't approve the grant unless someone guarantees, in writing, that the airport will continue for another 20 years, until 2025.
The problem is that neither the city, which owns the airport and the land beneath it, nor the county, which operates the airport under the terms of the 50-year lease, is willing to guarantee that the airport will remain open after the lease expires in 12 years.
''This is indeed a very unusual situation,'' said Donn Walker, an FAA spokesman.
Michael Murdter, Santa Clara County's director of roads and airports, said he can't make the assurances because the county doesn't know if it will have control of the land past 2017. The city is balking, too, fearing it would have to repay the FAA for some portion of the grant if the airport closed.
Signing the guarantee ''would put us on the hook for the value of those improvements if for some reason the airport went away,'' City Manager Frank Benest said in an interview.
''I believe that the potential liability is too great,'' he wrote in a letter to Murdter last week.
The airport, at the end of Embarcadero Road by San Francisco Bay, is home to hundreds of propeller airplanes and sees roughly 200,000 flights per year.
Nancy Fouquet, a director of the Palo Alto Airport Association, said the single-runway facility is important to Silicon Valley businesses, flying commuters and medical flights, as well as recreational pilots.
It is one of three small-plane airports run by the county. The other two, Reid-Hillview Airport in San Jose and the South County Airport in San Martin, are financially self-supporting, officials say, largely because they own a large number of one-plane hangars that are rented to owners.
The county would like to build hangers on existing space at the Palo Alto Airport, but the city has blocked the idea, saying it wanted to limit construction adjacent to the Baylands Nature Preserve, said Carl Honaker, the director of county airports.
A potential resolution to the grant standoff: renegotiating the lease between Palo Alto and Santa Clara County to extend past 2017. Honaker said the county is willing, but not under the current terms. The county wants more flexibility, not just to build revenue-generating hangars but also for projects such as security measures, he said.
The county is projecting a $175,000 loss for the airport in the 2005-06 fiscal year, he said.
Benest said the city is waiting for the completion of two studies, one a city revision to the Baylands Master Plan, and the other a county master plan for its three airports.
The county airports department has recommended for years that the airport be handed back to the city in 2017 if the city won't budge on development. County Supervisor Liz Kniss, a former Palo Alto mayor, said her fellow supervisors have made clear ''they wouldn't mind at all giving the Palo Alto Airport back to Palo Alto.