April 09--SAN JOSE -- The San Jose City Council on Tuesday is poised to bolster the city's cash-strapped airport by approving an $82 million facility for private and corporate jets, including the growing fleet owned by Google's co-founders Larry Page and Sergey Brin now parked up at Moffett Field.
But the city's top choice of Signature Flight Support and its primary tenant Blue City Holdings, a company that manages aircraft for Page, Brin and Google's executive chairman Eric Schmidt, hit a snag recently when the chief competitor to develop the west side of the airport appealed the city staff's recommendation so the council will first consider Atlantic Aviation's case before taking a vote on the project.
Atlantic was disqualified because it didn't fulfill the requirements of the bidding process.
Mayor Chuck Reed has called Atlantic's appeal a delay tactic. Reed said that when the bid parameters were published for aviation development on the 29-acre site, Atlantic did not return to the city with "a proposal to do development. They just want to hold onto the lands," he said, thereby avoiding any competition with another fixed-base operator.
"They chose not to respond to that and just assert their position that we do nothing," said Reed.
In documents filed with the city on Monday, aviation experts hired by Atlantic allege that the airport's proposed west side development will "introduce significant concerns relative to safe airfield
operations."
In an email to this newspaper, Atlantic CEO Louis Pepper also reiterated the possible negative impact the development would have on his company.
"Atlantic Aviation has serious concerns about the airport's intention to move forward with new development before addressing all safety and planning issues that impact airport operations," Pepper said. "We've asked the airport to address these issues for over two years. Atlantic is still faced with the possibility of losing close to 50 percent of our ramp space, crippling our business. ... We support Google coming to the airport, we simply believe these safety and planning issues must be resolved first."
Aviation Director Bill Sherry adamantly denied allegations of safety problems.
"Safety of the flying public is our number one priority," said Sherry, who backs Signature's proposal. "We never ever do anything that would compromise that -- and I take that very seriously."
Like Reed, Sherry pointed out that Atlantic's appeal will be decided by the City Council based on documents provided by Atlantic to the city -- which the city attorney's office also has deemed to be an inadequate response by Atlantic. The company said it offered the airport up to $295 million over 25 years to ensure the airport's vacant land was put to its highest and best use.
In an April 4 letter to the mayor and City Council, City Attorney Rick Doyle and senior deputy city attorney Kevin Fisher wrote that Atlantic failed to respond to nine items that were "material provisions" of the bid, including a proposal bond; financial references; a financial pro forma; a management plan; a rent proposal; property, sales and use tax proposals; and the city's required labor peace-employee work environment form.
"The city cannot waive Atlantic's errors, because accepting a proposal with such material omissions would result in Atlantic gaining a competitive advantage over the proposer that complied with all of the ... submittal requirements," said the memo.
Signature proposes seven airplane hangars, five of which would house the Google fleet and two others that would accommodate private jets used by other members of Silicon Valley's corporate elite.
But Atlantic, which has invested $60 million since 2007 to expand and upgrade its operations, has said that it already has the capacity to meet current demand for corporate and private pilots.
The Signature deal would provide at least $3 million annually in rent and other fees to the city-owned airport. The new facility would include 270,000 square feet of building space on the west side of the airport grounds. Sherry has estimated the project would create 150 to 200 airport and regional construction jobs, 36 permanent jobs and as many as 370 other jobs.
Ken Ambrose of Blue City Holdings is hoping the council will endorse the Signature proposal and allow his company to break ground this summer because Google's executives' lease at Moffett Field runs out by next summer.
"That would be a best-case scenario," he said, adding that officials at NASA, the federal agency that controls Hangar One, which Google executives had offered to pay $33 million to renovate in exchange for the right to use, have never responded.
"We didn't jump, we were pushed," said Ambrose of their plight to relocate to another airport facility.
Contact Tracy Seipel at 408 275-0140.
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