There is no negative impact on the General Fund. The Airport Enterprise Fund will cover the cost of any legal action.

License Requirements; FAA Requirements  
  
In July 2015, the County entered into a license agreement with OverWatch Flight & Conditioning, dba OverWatch F/C (“Tenant”), which permits the Tenant to use a hangar and office space at Buchanan Field Airport to operate a business devoted to flight education and training, with a limited fitness component. Under the terms of the license agreement, the hangar may only be used for a purpose that the Federal Aviation Administration (FAA) would deem to be an aeronautical use, i.e., activities that involve or are directly related to the operation of an aircraft. These requirements are intended to ensure that the Airport remains in compliance with requirements imposed on the County by the FAA.  
  
The FAA provides financial assistance, including grants, to general aviation airports like Buchanan Field Airport. As a recipient of FAA grants, the County must comply with FAA requirements known as grant assurances. If the County fails to comply with the grant assurances, the County is at risk of being denied future grants from the FAA and of having to repay grants it has already received.   
  
One grant assurance limits non-aeronautical use of hangars. Non-aeronautical use of a hangar is allowed only if there is no current aviation need and the proposed use is (i) a short-term occupancy, (ii) the occupant pays the market rate for a non-aeronautical use, and (iii) the occupant is required to vacate the premises if an aeronautical user expresses an interest in using the hangar.   
  
Evidence of Fitness Business  
  
County staff has concluded that Tenant’s use of the hangar does not comply with the terms of the license or the FAA requirements. The evidence shows that the Tenant is operating a fitness business rather than a flight school. The Tenant pays $3,010 in rent per month. County staff estimates the market rate for a non-aeronautical business at the hangar to be $6,729 per month.  
  
The license requires the Tenant to submit quarterly reports detailing its aeronautical use of the hangar. The reports must identify the number of students enrolled in the program, the students’ progress toward achieving meaningful milestones, students’ hours for ground school, flight training and fitness services, students’ expected completion of ground school and/or obtaining a pilot license, and the like. The Airport received the second quarterly report on January 11, 2016, the third on April 10, 2016, and the fourth on July 8, 2016.  
  
The reports and other evidence do not support the Tenant’s claim that the hangar is used primarily for flight education and training, as discussed below:   
  

• The hangar is equipped mostly with fitness equipment. Photos of the interior of the hangar, taken on May 24 and 25, 2016, by County staff performing a site visit to address a water leak reported by the Tenant, are attached to this board order. Those photos show mostly fitness equipment and very little aeronautical equipment. In contrast are the interiors of the two hangars operated by the other flight training schools on the Airport. Those two photos, taken May 25, 2016, show what County staff would expect to see in a hangar that is being used for aeronautical purposes.

• Fitness training appears to be the primary activity at the hangar. County airport operations staff is able to observe activities at the Tenant’s hangar and on the airfield ramp daily. County staff reports that ninety-nine percent of the time the activity they have observed is fitness training. In the last twelve months, County staff has observed limited use of the Tenant’s aircraft.

• Most of Tenant’s customers get flight training from other providers. The Tenant reported that seven of its customers have passed the written portion of the FAA’s licensing exam. However, in the fourth quarterly report, the Tenant acknowledges that two of those students completed the ground school with another company. In addition, two of the remaining students appear to attend a flight training school operated by another Airport tenant: Sterling Flight Academy (the students’ ‘first solo flight’ jerseys are hanging on the wall at Sterling’s Flight school to commemorate their first flight).

• The Tenant seldom uses the aircraft that is onsite. According to supplemental information provided by the Tenant on June 6, 2016, the onsite aircraft (a Cessna 140), which the Tenant is required to use for flight instruction, has been used for flight instruction by two students, on six occasions, over a three-month period. Both of the individuals identified as students are already pilots. In fact, one owns the aircraft. Furthermore, there is no evidence that (i) the hangar licensed to the Tenant is being actively used for flight education and training, or (ii) that the Tenant is conducting any flight education or training directly. The information provided by the Tenant shows that Tenant uses Sterling’s aircraft, flight and ground school instructors, and flight simulator, to the extent Tenant provides flight education and training.

• The ratio of students to flight instructors and to rental aircraft reported by the Tenant is higher than the ratios reported by other flight schools on the airfield. The Tenant reports a ratio of 56 students to 2 instructors and 1 aircraft. Sterling Aviation reports a ratio of 20 students to 12 instructors and 4 aircraft. PSA reports a ratio of 60 students to 17 instructors and 14 aircraft.

• The Tenant’s reported ground and flight training results do not meet industry norms. According to staff of the other two flight training schools on the Airport, a person is actively pursuing ground or flight training if that person completes ground training in three months or has flight training at least twice a week. Using these benchmarks, approximately 68% of the Tenant’s customers are not actively pursuing ground or flight training, based on reports received from the Tenant. Instead, the Tenant’s fourth quarterly report shows that the training received by 42 of its 61 students (i.e., 68%), consists of having taken 20-minute safety quizzes at the beginning of a fitness session. These quizzes are not a standard or recognized part of flight education or training, and are not described in the course outline or training manual that the Tenant provided to the County. Furthermore, the number of hours customers engage in fitness appears to be disproportionate to the number of quizzes taken. For example, one customer had 103 total fitness hours for the year but completed only three fitness quizzes. The quizzes do not show that all of the Tenant’s customers are actively engaged in ground school or flight training to obtain a pilot’s license. One individual identified by the Tenant (on the FlightCircle.com detail in the June 6 report) as one of its flight instructors, when contacted by Airport staff, advised that he has never heard of the Tenant and that he, in fact, works for another flight school.

Failure to terminate OverWatch F/C’s occupancy could result in noncompliance with FAA requirements, which could put future FAA grant funding at risk and diminish the hangar space available to the County’s aviation community.   
  
  

Speakers:  DeWitt Hodge, OverWatch F/C; Michael Brun, Airport Business; James Greninger, OverWatch F/C.