CITY OF EL PASO DE ROBLES
"The Pass of the Oaks"
Airport Ad Hoc Committee Meeting
Thursday, April 18, 2024, 2:00 PM
Library/Conference Center Council Chamber
1000 Spring Street
Paso Robles, CA 93446
Members of the public are welcome to attend in person. As a reminder, Ad hoc committees consist of 1 or 2 members of the City Council who are appointed by the City Council to perform specific tasks, usually working with staff or representatives from local organizations. An ad hoc committee functions for a limited period of time, reporting back to the full Council periodically during the duration of the committee or at its termination.
AMERICANS WITH DISABILITIES ACT Any individual, who because of a disability needs special assistance to attend or participate in this meeting, may request assistance by contacting the City Clerk’s Office (805) 237- 3960. Whenever possible, requests should be made four (4) working days in advance of the meeting.
Pages
A. A. PUBLIC COMMENT 2 - 6
ACI Jet Ad Hoc Letter
B. COMMITTEE MEMBERS
Steve Gregory, Councilmember
Sharon Roden, Councilmember
Eric Cook, Chair Airport Commissioner
Ben Andros, Airport Commissioner
C. CITY STAFF
Freda Berman, Public Works Director
Mark Scandalis, Airport Manager
If Available:
Ty Lewis, City Manager
Chris Huot, Assistant City Manager
Melissa Boyer, City Clerk
D. SUBJECT MATTER EXPERT
Robert Trimborn, Senior Consultant, Aviation Management Consulting Group (AMCG) E. DISCUSSION
1. Legal Presentation 7 - 24
Thomas Rice, Assistant City Attorney BBK
F. ADJOURN
Next scheduled Ad Hoc Committee meeting is for May 2, 2024.
Airport /Ad Hoc Committee Meeting April 18, 2024
April 10, 2024
Paso Robles City Council, Ad Hoc Committee Members & Associated Staff Council Chambers
1000 Spring St.
Paso Robles, California 93446
Via Electronic Mail:
Honorable City Council & FBO RFP Ad Hoc Committee Members, The FBO RFP Ad Hoc Committee made a request at its most recent meeting for staff to look into any litigation history related to the two respondents. This letter responds to that request by providing an attached summary with appropriate context that may not be easily discernible through a simple electronic search.
In addition, ACI Jet would also like to suggest a few other areas that may be of interest to the Ad Hoc Committee / City Council in determining the best path forward for Paso Robles.
Track Record and Ability to Actually Complete the Proposed Improvements:
ACI Jet plans to begin construction of the proposed improvements as soon as possible, whereas the competing proposal originally asked for an initial 5 year period with an option to extend “if” they begin construction. Looking at the history of the two companies, ACI has $35M+ of airport development experience that dramatically transformed the airports at which it has long-term leases. Additionally, its sister company, Freeman Holdings Group (“FHG”), completed $130M+ of development at over 20 other locations, giving PRB the added benefit of networking with numerous other airports throughout the country. This, combined with the fact that ACI’s principals and leadership team are stable long-time members of the local community with no intention of selling, provides the City of Paso Robles with the assurance that this project will be a success.
By contrast, it is generally understood that the other respondent has been actively engaged in considering the potential sale of the business. If true, the City should fully understand how that might affect their ownership structure and ultimately their financial ability to fund the proposed improvements.
At many airports, changes in ownership are prohibited until the proposed improvements are completed to prevent material changes from going unnoticed. In the case of this RFP, Section 5.7 specifically required that each proposer identify “the sources and the funds available to provide working capital to initiate the proposed activities and make any proposed capital investment.” Ensure the Entire Community is Accurately Represented in the Selection Process:
ACI Jet encourages the City to review the individual scoring of the proposals/interviews, as well as who was selected to participate in each, to obtain additional context on the perspectives represented. While the needs of light general aviation (GA) are a critical element that should be strongly considered, Airport /Ad Hoc Committee Meeting April 18, 2024
represented, and protected, it should not solely drive policy or economic development. While light GA does comprise the majority of the traffic at the airport, it does not drive a corresponding percentage of the revenue, nor can it alone bring the transformative change the City is looking for.
It is also important to recognize that the airport belongs to all citizens of Paso Robles. The owners and employees of hotels, wineries, restaurants, etc., have just as much right to benefit from the airport as a local light GA aircraft owner. In fact, these people represent the vast majority of the population, so it is critical to ensure that their interests are proportionately represented in the process. This is one of the reasons that most airports make the proposals and their scores (with individual names redacted) public once scoring is completed.
Light GA & Moving Forward:
We care deeply about this airport and want what is best for the entire community. To achieve measurable success, the City needs to look at the airport like a business and make its decisions accordingly. With more than 1,300 acres, doing so does not need to come at the expense of light GA. In fact, ACI Jet would gladly build light GA hangars elsewhere on the airport to meet demand, but they are not best located on the prime commercial property near the main entrance. There are numerous examples of airports that have spent tens of millions of dollars to correct this type of mis-development later in the airport’s life cycle.
This is 100% consistent with our willingness to subsidize light aircraft maintenance in PRB while keeping our Avgas prices an average of $1.34/gallon lower than the other respondent for the last 10+ years* – proof that we are an ardent supporter of light GA while still balancing the business and forward-looking needs of our government partners.
At the end of the day, ACI Jet has been a trusted and reliable partner for the City of Paso Robles for well over a decade. In addition to helping the City at a time of great need, we have grown dramatically over the course of this relationship and have clearly demonstrated our ability to bring positive, meaningful change to the airports where we operate. We hope the City of Paso Robles agrees and the final decision represents the will of the entire community, not a few select individuals.
Sincerely,
William Borgsmiller
President & CEO
ACI Jet
[email protected] | (805) 548-1310
CC: Mayor John Hamon, Mayor Pro Tem Steve Gregory, Council Member Sharon Roden, Council Member Chris Bausch, Council Member Fred Strong, Committee Member Ben Andros, Committee Member Eric Cook, Airport Manager Mark Scandalis, Public Works Director Freda Berman, City Attorney Elizabeth Hull, and Assistant City Attorney Thomas Rice. *ACI offers self-serve Avgas to lower costs. The other respondent could likely do so but does not. When comparing “truck prices,” average price over the last 14 years was over $0.50 lower. 4751 Aviadores Way, San Luis Obispo, California 93401 | (805) 782-9722 | www.acijet.com Airport /Ad Hoc Committee Meeting April 18, 2024
ACI JET & RELATED ENTITIES LITIGATION HISTORY
This summary responds to the request made at the last Ad hoc Committee Meeting to look into each Respondent’s litigation history.
For a company of ACI Jet's size and complexity, it has not been involved in much legal action over the majority of its 26-year history. However, just as the City of Paso Robles is frequently involved in routine legal matters, ACI with 350+ employees, multiple large-scale facilities, and a long history of construction and development also works through an appropriate number of legal matters. Something that is likely an asset as the City seeks to expand the relevance and economic activity of the airport.
Such ordinary course of business filings includes the following cases with associated descriptions:
30-2017-00911680 When ACI Jet was awarded the lease in Orange County, Signature Flight Support filed an action against Orange County which included ACI as a respondent. This case was found to be without merit and ultimately dismissed / resolved in the County’s & ACI’s favor.
30-2022-01252406
30-2021-01191204
Routine employment related actions that were both resolved very early on without the need for any formal hearings.
30-2020-01146233 A towbar-less aircraft tug malfunctioned and released a customer aircraft that then rolled into another customer aircraft. ACI invited its customers to file an action against ACI as it was the best path for all parties to navigate this issue with the tug manufacturer that was located in Germany. This case was settled in a manner beneficial to ACI and its clients, who still do business with us today.
CV130610 Routine construction related action to ensure that a statute of limitations was not exceeded while ACI worked with its contractor to resolve a defective floor sealant. This was resolved and the case was dismissed without any material court involvement.
Most importantly, ACI Jet has never been involved in any litigation against its Airport Sponsors (County of San Luis Obispo, County of Orange, & City of Paso Robles.) (Continued on next page)
Airport /Ad Hoc Committee Meeting April 18, 2024
ACI JET & RELATED ENTITIES LITIGATION HISTORY
(Continued)
Beyond what ACI Jet would consider ordinary course of business filings, it and its subsidiary (ACI Jet Orange County, LLC) have been subject to extensive litigation over the past few years that all in some way relates to an individual who was a former ACI employee and who owns a small minority interest in ACI’s Orange County FBO. (This person has no ownership in ACI Jet, which is the entity responding to this RFP.)
This individual was terminated for repeated violations of ACI’s sexual harassment and prohibited conduct policies in 2019 and has since engaged in an extensive campaign of litigation either directly or indirectly with other entities. In addition to the cases listed below, he has unsuccessfully sued his other business partners and lost.
Considering the length to which he has gone in the past and the fact that he had a representative attend the walk through at the beginning of the RFP process, it would not be surprising to learn that he is in some way attempting to influence the outcome.
The legal system has however served to resolve all concluded cases (shown in blue) in a manner favorable to ACI. The actions in orange are still pending, with one of them being a petition from ACI for a Court Order to dissociate this individual from the company based on his extensive history of bad behavior.
We expect that these remaining two cases will be resolved in ACI’s favor by the end of 2024 and do not anticipate any additional actions.
RESOLVED:
A-21-842434-C
8:2020cv02344
8:21cv00096
8:2021cv00200
30-2021-01179687
30-2021-01176849
23CVP-0036
PENDING:
30-2023-01306989
30-2024-01379682
Airport /Ad Hoc Committee Meeting April 18, 2024
Airport /Ad Hoc Committee Meeting April 18, 2024
BBKLAW.COM © 2024 Best Best & Krieger LLP April 18, 2024 Paso Robles – FBO RFP
Litigation Check for Proposers
Airport /Ad Hoc Committee Meeting April 18, 2024
Direction from Ad Hoc Committee
• To look at the litigation involving each proposer and any cease and desist letters against the proposers
• To provide feedback to the Ad Hoc Committee on April 18, 2024 Airport /Ad Hoc Committee Meeting April 18, 2024 2
Bottom Line
• While each proposer has been involved in litigation to some extent, there is nothing that cause’s the City Attorney’s Office any significant concern. • Recommendation: The Ad Hoc Committee should base its
recommendation on the proposals, the expert consultant’s comparison, and on their judgment regarding the best fit for the Airport.
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BBKLAW.COM
ACI Jet
Airport /Ad Hoc Committee Meeting April 18, 2024 4
30-2017-00911680 - Signature Combs, Inc. vs.
County Of Orange
• Lawsuit filed against Orange County and ACI Jet regarding bidding process for FBO Lease; also filed FAA Complaint
Asked to nullify Board of Supervisors vote awarding FBO Lease to ACI Jet Signature was the incumbent FBO. Signature was the top ranked proposer while ACI Jet was the second-to-last ranked applicant
Alleged that ACI Jet and County Supervisors improperly influenced the bidding process • FAA Complaint was dismissed
County followed proper procedures when it awarded the lease to run the Airport’s private-plane terminals to ACI Jet) County supervisors were deemed to have been motivated to search for a new operator due to fuel prices posted by Signature and Atlantic Aviation – the Airport’s other longtime private-plane terminal operator – were frequently within pennies of one another and much higher than at Long Beach Airport, where Signature also operates • Case was dismissed also
Airport /Ad Hoc Committee Meeting April 18, 2024 5
30-2022-01252406 - Keriacoss v. ACI Jet, et al.
• Wrongful Termination Case in Orange County Superior Court • Plaintiff alleged misconduct by supervisor led to her to quit • Resulted in a settlement agreement and dismissed with prejudice Airport /Ad Hoc Committee Meeting April 18, 2024 6
30-2021-01191204 - Kaser v. ACI Jet, et. al.
• Employment Action in Orange County Superior Court
• Plaintiff alleged failure to properly pay overtime pay and provide breaks • Resulted in stipulated settlement agreement and dismissed Airport /Ad Hoc Committee Meeting April 18, 2024 7
30-2020-01146233 - Sterling Motors, Ltd. vs.
Aviation Consultants, Inc.
• Negligence action in Orange County Superior Court
• Alleged that Defendant's aircraft tug malfunctioned and released aircraft that rolled into another customer's aircraft
• Also involved a product defect action against the aircraft tug manufacturer • Settlement agreement entered into and case was dismissed Airport /Ad Hoc Committee Meeting April 18, 2024 8
CV130610 - Aviation Consultants, Inc. vs. C&L
Coatings, et al.
• Professional negligence action in San Luis Obispo Superior Court where ACI Jet was the Plaintiff
• Hired Defendant to apply epoxy coatings on floors of two aviation hangars.
Epoxy was allegedly applied incorrectly and caused a hazard • Case was ultimately settled and dismissed
Airport /Ad Hoc Committee Meeting April 18, 2024 9
Delux Public Charter LLC / JSX Cases
• Several cases: 30-2021-00176849, 30-2021-01179687, 8:2021cv0096, 8:2021cv00200, 8:2020cv02344
• As Plaintiff:
Unlawful detainer actions starting in Orange County Superior Court with complicated procedural history Alleges that JSX continued to use property after expiration of a 2018 License Agreement entered into by ACI Jet and JSX
2018 License Agreement allowed JSX use of ramp space and an office suite ACI Jet alleged that it was owed damages regarding this holdover Removed to Federal Court and stayed until resolution of other federal case between ACI Jet and JSX is resolved
Judgment ultimately in favor of ACI Jet on unlawful detainer Airport /Ad Hoc Committee Meeting April 18, 2024 10
Delux continued . . .
• As Defendant (last case only):
Lawsuit filed by JSX in Federal Court that alleged that the airport failed to provide accommodations for a public air carrier to operate.
Alleged that airport “discriminatorily chose to terminate JSX’s access to the airport in favor of two large airlines [Spirit and Allegiant Airlines] who plan to provide more of the same type of inconvenient, regularly scheduled service already available.” The new terms prohibit FBOs from subleasing space in their respective facilities for the provision of scheduled flights. JSX Air subleased space from ACI Jet. ACI Jet did not include JSX in its bid proposal due to the proposed restrictive lease terms. Court granted a TRO in favor of JSX and County removed the restrictive terms from the Lease. Unlawful detainer action mentioned earlier was consolidated into this one.
Airport /Ad Hoc Committee Meeting April 18, 2024 11
Daichendt Cases
• Several cases: 30-2023-01306989 (D), 30-2024-01379682 (P), 23CVP-0036 (3rd Party) • As Defendant:
Breach of fiduciary duty, and contract breach claim in Orange County Superior Court Ownership dispute regarding distribution of profits between executives at ACI Jet pursuant to internal Operating Agreement • As Plaintiff (similar to counter-claim):
Alleging misconduct of Joe Daichendt and seeking to expel him from LLC membership • As Third Party (related to above again)
San Luis Obispo Superior Court case regarding a third party subpoena (Borgsmiller) for documents arising out of a Nevada Case
Discovery dispute that's going through appeal process (appeal brief filed on January 9, 2024) • All Still Ongoing
Airport /Ad Hoc Committee Meeting April 18, 2024 12
Cease and Desist / Warning Letters
• On November 12, 2019, the City’s Public Works Director sent a letter to ACI indicating concern of possible default should ACI Jet terminate the agreement with AirJav Aviation due to requirement to provide maintenance and repair services for GA aircraft.
• On August 14, 2023, the City Attorney’s Office issued a formal reminder to ACI Jet relating to its obligations as part of the RFP process during the initiation review by the Evaluation Committee and prior to Council consideration.
Airport /Ad Hoc Committee Meeting April 18, 2024 13
BBKLAW.COM
Loyd’s Aviation
Airport /Ad Hoc Committee Meeting April 18, 2024 14
RG11-600721 - Center for Environmental
Health v Aerodynamic Aviation, et al.
• Complaint for declaratory relief in Alameda County regarding flight services companies failure to warn the public exposure from their use of Avgas • Ended in an Amended Consent Judgment (essentially a settlement agreement) that required:
clear and reasonable warnings via the posting of signs at the airport locations identified in the complaint regarding issues with use of Avgas.
ensuring that the flight services companies distribute and sell airplane fuel with the lowest lead content that is commercially available.
Airport /Ad Hoc Committee Meeting April 18, 2024 15
1:11-at-0039 - Loyd’s Aviation v Center for
Environmental Health
• Federal Lawsuit filed by 39 flight service companies to stop the California Attorney General from enforcing Prop 65, which banned the sale of leadbased fuel for airplanes. In response to Alameda County action. • Flight service companies alleged that applying Prop 65 to air carriers was a regulation of air carrier routes and services which is solely the responsibility of the Federal Government and therefore preempted by Federal law.
• Ultimately dismissed by the court
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BBKLAW.COM
Conclusion
Airport /Ad Hoc Committee Meeting April 18, 2024 17
Bottom Line
• While each proposer has been involved in litigation to some extent, there is nothing that cause’s the City Attorney’s Office any significant concern. • Recommendation: The Ad Hoc Committee should base its
recommendation on the proposals, the expert consultant’s comparison, and on their judgment regarding the best fit for the Airport.
Airport /Ad Hoc Committee Meeting April 18, 2024 18