mwaa response to rca re commercial development of mwaa-leased property

7/29/2019 MWAA Response to RCA Re Commercial Development of MWAA-leased Property

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RonaldReaganWashington National Airport, Washington, DC20001-4901 www.mwaa.com

While the Authority holds the Association in high regard and over the years hasdeveloped a respect for its advocacy efforts, I believe that its effort here has fallen considerablyshort of the mark.

In a letter to you, dated February 4, 2013, the Reston Citizens Association("Association") has presented concerns regarding "non-aviation-related commercialdevelopment" that may take place on land controlled by the Metropolitan Washington AirportsAuthority ("MWAA" or "Authority") at or near Dulles Airport. The Association expresses theview that it would be "fundamentally inequitable and unfair for MWAA" to pursue suchdevelopment without sharing the revenues it produces with Fairfax and Loudoun Counties and"users of the Dulles Toll Road" (DTR). The Association requests that you pursue an amendmentto the "MWAA Compact to assure the fair and equitable distribution of any income generated byMWAA's movement into commercial development not directly related to its aviation operationsand management mission." Itgoes on to recommend that all income be distributed to the twocounties and DTR users in approximately the same percentages that the "funding partners" forthe Dulles Corridor Metrorail Project ("Metrorail Project") have agreed to use in allocatingMetrorail Project costs to the counties and the DTR.

Dear Senators Warner and Kaine, Representatives Wolf and Connelly, Secretary LaHood andGovernor McDonnell:

.Re: February 4,2013, Letter from the Reston (Virginia) Citizens Association

TheHonorable Robert McDonnellOffice of the GovernorPatrick Henry Building1111E. Broad StreetRichmond, VA 23219

The Honorable Ray H. LaHoodSecretary of TransportationU.S. Department of Transportation1200New Jersey Ave., SEWashington, DC 20590

The Honorable Gerry ConnollyU.S. House of RepresentativesWashington, DC 20515The Honorable Frank WolfU.S. House of RepresentativesWashington, DC 20515

The Honorable Tim KaineU. S. SenateWashington, DC 20501

By E-mailThe Honorable Mark WarnerU.S. SenateWashington, DC 20501

March 5, 2013

+METROPOLITAN WASHINGTON AIRPORTS AUTHORITY


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I IntheTransfer Act, Congressauthorizedthecreation of theAirportsAuthorityby theCommonwealthof Virginiaand the District of Columbia, as well as the lease of Dulles and Reagan National Airports to the newly createdAuthority. SeeP.L. No. 99-591. The Transfer Act has been amendedover the years and now is codified at 49U.S.C. 49101etseq.

The Association's position also falls short of the mark because it runs directly counter tolongstanding federal aviation and airport policy, as reflected in federal statutes and regulations.For instance, under the Transfer Act, all revenues that the Authority is able to generate at Dullesand Reagan National Airports must be expended for the capital and operating costs of theairports; these revenues may not be used by the Authority off-airport, or distributed to thirdparties, for purposes unrelated to the airports. See 49 U.S.C 49104(a)(3). This mandate is in linewith general federal law regulating the use of airport revenues. See 49 U.S.C. 47107(b)

Finally, the recent amendment to the Authority'S federal lease that the Associationreferences was, in fact, made with the "approval of the U.S. Congress." In the FAAModernization and Reform Act of 2012" (P.L. No. 112-95), Congress amended the Authority'Sfederal "Transfer Act'" by expressly permitting the use of leased land at Dulles Airport that is"not inconsistent with the need of aviation," so long as the use is "approved by the Secretary" ofTransportation. See49 U.S.C. 49104(a)(2)(A)(iv) .

Most of the reasons the Association has given in support of its position are simply notvalid. For instance, the Association states: (i) that non-aviation-related commercial developmenton Authority land will not contribute to the cost of off-site infrastructure that will likely beneeded to support the development; (ii) that since the Authority is generally exempt fromtaxation, neither it nor the commercial entities developing and ultimately occupying its land atDulles will be responsible for the "taxes, fees, and other obligations that such a developmenteffort incurs"; and (iii) that a recent amendment to the Authority's lease with the federalgovernment authorizing land to be used at Dulles for any "business or activity not inconsistentwith the needs of aviation" with the approval of the Secretary of Transportation has beenexecuted "without the approval of the U.S. Congress .... "

Each of these statements is incorrect. Development of land at Dulles Airport for nonaviation commercial purposes that will have substantial off-airport impacts will be undertaken inclose cooperation with Loudoun County, just as it has been in the past. That cooperation willinclude consideration of the nature of the development, the manner in which the developmentwill be integrated into adjacent county "infrastructure" systems (e.g., roadways, sewers andutilities), and any contributions that may bemade by the developer toward the cost of off-airportinfrastructure enhancements made necessary by the development.As to taxes, while it is correct that the Authority is generally exempt from taxation,commercial entities that operate at Dulles Airport are not. Thus, non-aviation commercialdevelopment at Dulles will produce real estate, sales, personal property, BPOL and other taxrevenues for Loudoun County, as well as income tax revenues for the Commonwealth ofVirginia, similar to the tax revenues now produced by the operations of commercial tenants atthe airport.

The Honorable Mark Warner et alMarch 5,2013Page 2


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2 Section 17.11of theFAA ComplianceManual provides: "Rates charged for non-aeronautical uses of the airportmust bebased onfair market value . . .. If market rent for non-aeronautical uses results in asurplus, that surpluscanbeusedtosubsidizeaeronautical costsof theairport. Itis tothebenefit of aviationandthetravelingpublic thataeronautical users beableto usethe airport at rates and chargesbelow the cost of providing the aviation facilitiesandservices if these areeffectively subsidizedbynon-aeronautical revenues. [TheFAA] promotes thepractice ofusing non-aviation revenues to subsidize aeronautical activities since it reduces the economic impact on aviationusersandtheaviationpublic."

I have no doubt as to theAssociation's sincerity in advancing the position set out in itsFebruary 4 letter. However, for the reasons expressedabove, I believetheposition is seriouslyflawed, is inconsistent with the best interests of the metropolitan region, and should not beadvanced.

Finally, and importantly, the Association's position is in conflict with the fundamentalmission of theAirportsAuthority,which is to developandoperatethemetropolitan region's twopremier airports in a manner that both serves the region's always-increasing demand for airtransportation services andmaximizes the airports' contribution to the economic growth of theregion. In2008, theAuthorityvoluntarily assumedtheresponsibilitytodesignandconstructtheMetrorail Project, to operate the Dulles Toll Road, and to use revenues from the toll road tofinancetheMetrorail Project's construction, all inaccordancewithnumerous intergovernmentalagreements. The Authority's decision to take on these responsibilities rested on a firm andunyieldingprinciplethatwassharedby all itsMetrorail Projectpartners- namely, that thesenewresponsibilities would not diminish in any manner the Authority'S core aviationmission andresponsibilities, or impose obligations on the Authority and its aviation operations to fund theMetrorail Project beyond those specifically defined in the partners' intergovernmentalagreements. Thepositionadvancedby theAssociationdisregardsthis critical principle.

Moreover, federal aviation policy calls for all domestic public airports to become as"self-sustaining" as possible (see 49 U.S.C. 47107(a)(13)(A)), including by undertaking nonaviation commercial development on airport land in order to develop revenues that may be usedto reduce the fees that the airport would otherwise assess the airlines and other aviation entities.Under this airport "self-sustaining" policy, airports are expected to maximize revenues derivedfrom non-aviation uses of their property in order to reduce airline fees, thereby benefiting thetravelling public. See FAA Compliance Manual, section 17.11.2 A requirement that theAuthority distribute revenues generated by the commercial development of land at Dulles tothird parties for expenditures unrelated to the airport would run counter to this clear nationalpolicy.

("revenue generated by apublic airport will be expended for the capital or operating costs of ...the airport; . . . the local airport system or . . . other local facilities owned or operated by theAirport [that are] directly and substantially related to the air transportation of passengers orproperty." Sharing revenues generated at Dulles Airport with Loudoun and Fairfax Counties, assuggested by the Association, would put the Authority in direct conflict with these statutoryprovisions.

The Honorable Mark Warner et alMarch 5, 2013Page 3


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cc: RestonCitizensAssociationMW:jep

rJ ;!E ~~President andChief Executive OfficerSincerely,

Ifyou or your staff have any questions regarding this matter,Invite you to giveme acall at 703.417.8610.

The Honorable Mark Warner et alMarch 5, 2013Page 4

mwaa response to rca re commercial development of mwaa-leased property

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