A Difference of Opinion

Sept. 6, 2005
SAN DIEGO — Montgomery Field, located just north of this serene city, is owned and operated by the City of San Diego. It sees some 275,000 annual operations and is home to 650 based aircraft as well as, for nearly 70 years, fixed base operator GIBBS Flying Service, Inc.

SAN DIEGO — Montgomery Field, located just north of this serene city, is owned and operated by the City of San Diego. It sees some 275,000 annual operations and is home to 650 based aircraft as well as, for nearly 70 years, fixed base operator GIBBS Flying Service, Inc. While both the city and owner of GIBBS Flying Service, William “Buzz” Gibbs, agree on the future of the general aviation airport and the market it serves, Gibbs says the city would prefer to take over his business for the revenue, while the city contends it’s doing what is in the best interests of the airport.

The history of the Gibbs family and Montgomery Field are closely tied. Buzz’s father, Bill Gibbs, founded the airport in 1937. The city purchased the airport in 1948 and GIBBS Flying Service has leased land from the city since. The FBO is home to some 1,000 members of six flying clubs.

The long-term lease which GIBBS Flying Service had with the city for some 24 acres expired June 1, 2005, says Gibbs. It was a 35-year lease, “and there had been numerous leases before that,” he points out.

According to Gibbs, he has been trying for several years to renegotiate his lease with the city, but was turned away each time. “We’ve had many meetings over the years,” he says. “I sent them one proposal in January of 2003. I had my facility appraised; I had the airport land values appraised; I had all the drawings and improvements laid out. Three months later I get a letter back that says thank you for your interest, but we’re not interested in talking with you at this time.”

Gibbs says he sent similar letters to the city every six months following the first letter. He says other tenants at Montgomery Field went “down to the wire” with negotiations with the city and “my assumption was that everything is going to stay the same — nobody gets serious until everything gets right to the end and then everybody gets serious. This particular time, they got serious in a different way. Instead of trying to work something out, they just wanted to take it away — which was their right.”

In a meeting with the city, Gibbs says officials “basically said tear everything down and start over again. And I said that makes no sense.”

Gibbs says the city’s argument was that the buildings were 35 years old and needed to be replaced. “I said if I’m going to build them, I’d build the exact same. They haven’t changed the design of single-engine T-hangars.”

According to Tracy Means, A.A.E, airports director for the City of San Diego, the proposals provided by Gibbs were never accepted by the city and moved forward to the city council. “Our real estate asset department negotiates/handles leasing matters. The process is when they receive a proposal that they think is in the best interest of the city, then it moves forward to the mayor and council for adoption approval. My understanding is that none of the proposals that had been received from Mr. Gibbs were acceptable to the real estate department.”

While Means says she was not involved with reviewing Mr. Gibbs’s proposals, “I suspect that a lot of what happened with the Gibbs matter was that the investment didn’t meet the criteria that the real estate department [established]. Because why would you turn down a good plan?”

According to Means, the real estate department frequently receives “unsolicited proposals and they make a determination based on their professional expertise and determine which ones will be accepted and which ones will be rejected.”

‘Strictly Money’

According to Gibbs, the city is interested in the rental income he collects from his hangars and tie-downs at Montgomery Field. “I think it was strictly money,” he says. “Nobody’s saying I’m doing a lousy job. It’s strictly dollars and cents.”

Rental income from hangars and tie-downs at Montgomery Field totals some $700,000 annually for Gibbs. “And that’s what they [the city] wanted from me. They didn’t want to share that with me; they wanted it themselves.”

Gibbs says the FBO has built 150,000 square feet of hangar space at Montgomery Field and some 800,000 square feet of asphalt, with 60 tie-down spaces.

Lease Stay Granted

In May, says Gibbs, the city council overruled the airport’s decision and agreed to a one-year lease extension for the FBO. “They wrote a one-year hold over for a minimum of a year,” he explains. “Basically it kept all the same legal terms and conditions [of the previous lease]; it’s just that we paid a new rental amount — more fair to everybody, according to them [the city council].”

Gibbs expects the city will issue a request for proposals (RFP) to lease the facilities and land and says he will again submit a proposal.

The annual agreement that the city entered into with Gibbs allows the city some flexibility in issuing the new RFP without a gap in service, says Means.

She says the city is reviewing its options for the area currently occupied by Gibbs. “The facilities and structures are old,” she says. “Some of them may need to be replaced or the entire area redeveloped.”

At this time, Means is uncertain as to when the RFP will be issued, stating that the city’s real estate department is currently involved in another RFP, “I think they want some closure on that first.”

Montgomery Field’s Future

Montgomery Field is largely built out, says Means, in terms of what land is available for development. She adds that the city is not interested in getting into the FBO business. “I would never recommend that the city get into the FBO business. I think the private sector is better suited for that.

“I’ve heard rumors that the city was trying to take over GIBBS. The city would never want to take over GIBBS Flying Service. When the lease was written it was clearly spelled out that the improvements would revert to the city at the termination of the lease.”

The 20-year master plan for Montgomery Field, explains Means, “calls for redeveloping the existing facilities that have either outlived their useful life or will be aging. Over the years, the airport has grown and developed into facilities that probably made sense when they were laid out that way in the ‘50s. But if you were to redo it today, you’d do it a little differently. For example, we don’t have a real terminal building. The master plan does discuss developing a real terminal building.” The new terminal which Means describes would redevelop/modernize existing facilities.

Because of the constraints of the location of Montgomery Field, both Gibbs and Means agree that it will always be a light aircraft airport. Means says a “fear” in the community is that if GIBBS leaves Montgomery Field, the city will begin pursuing higher-end jet traffic — displacing the single-engine pistons. “That doesn’t make sense for us because our runway (4,600 feet) is too short for jets,” says Means. The airfield is also restricted to 20,000 pounds maximum gross takeoff weight.

Gibbs admits that originally, when his proposals to renegotiate the lease were rejected, he wasn’t going to fight to stay at Montgomery Field. “In my second meeting with the city, I said I’d like to keep our other little office and hangar so we could dispose of all the stuff, and they agreed to let me stay for six months to dispose of everything. But then we just got so much sympathy and support from our customers that we changed our mind. I’m close to retiring, but I want to do it on my own terms. “Our initial response was ‘okay.’ But the heart really wasn’t in it. But I didn’t have any legal way — there was nothing illegal the city did.”

Gibbs cautions other airport-based businesses to work to renegotiate leases as early as possible. He says he did approach the city about renewing his lease several times much earlier, “but probably didn’t approach it as thoroughly as I could have. This is a cyclical business.

There are times when everything’s going great. And other times it dies down and you say, boy I’m glad I didn’t put a whole bunch of money in here. I think that’s what it is; my timing and their timing obviously didn’t match.”

When the city issues the RFP for the 24 acres and facilities, Gibbs expects to submit a proposal similar to those he has in the past. This includes increasing his leasehold by seven acres to develop a transient facility at the airport.