Of SAN Tracy Municipal Airport: Development vs. Safety Zones*

R1

City Council direct staff to conduct a comprehensive review for the Council by September 30, 2014, of the FAA and Caltrans safety zone requirements related to development and mandated requirements on runway lengths at the Tracy Airport to insure the City is in compliance for future grant funds. 2.0 Business Proposal to the City It was alleged that City Council and staff had entered into a secret and illegal agreement with a local developer related to changes in the Airport's runway lengths. The investigation revealed the developer offered to pay a total of $425,000 to the City between 2013 and 2022 in exchange for the City meeting the contingencies listed in the developer's AAM. The investigation reviewed the AAM's requested contingencies from the City, and whether staff or City Council had entered into any agreement with the local developer without following City policies. Although this investigation discovered no evidence to substantiate the Complainant's allegations, there were, however, actions taken by the City directly related to the contingencies requested in the unsolicited AAM. The extent to which the various staff recommendations and actions were part of specific response to the AAM's requests, or were part of a general development project review was addressed by the Grand Jury due to the lack of minutes, notes or other documentations of the discussions between City staff and the local developer. However, testimony indicated that implementation of the contingencies in the AAM could have resulted in substantial financial benefit to the local developer from changes in the development within the safety zones. Contingencies A and B in the AAM requested that the City revise the Airport Layout Plan (ALP) and submit it to the FAA reflecting Runway 12/30 as a short general aviation runway when adopting an update of the Tracy Airport Master Plan, and physically re- mark Runway 12/30 to a maximum length of 3,996 feet. Tracy City Council and staff took the following actions regarding the Tracy Airport: On June 6, 2013, staff sent an e-mail to a consulting airport engineer requesting . the airport runway length be changed to 3,997 feet on the grant application to the FAAfor re-pavement. The engineer replied to staff on the same date that the revisions had been made on the application. On June 18, 2013, staff recommended to City Council that Runway 12/30 be reduced from 4,002 feet to 3,997 feet in length. Staff informed City Council that the runways at the airport were being completely reconstructed and brought up to current safety standards. The Runway 12/30 through the pavement design process would be 3,997 feet in length when completed. Staff also informed City Council that the runway changes would alter the possible land uses surrounding the airport: On the same date, City Council voted unanimously to reduce Runway 12/30 to 3,997 feet and authorized staff to submit an application to the FAA requesting funding for the repaving of the runways at the airport, including Runway 12/30, to a length of 3,997 feet. On July 1, 2013, staff wrote to the COG that the City was in the process of updating the ALP to reflect Runway 12/30 at 3,997 feet in length. On July 11, 2013, the local developer submitted an application to the City to amend the ESP to be consistent with a shortened runway. On August 6, 2013, City Council approved a contract with an airport consultant to 0 update the ALP to reflect Runway 12/30 to under 4,000 feet. On December 1, 2013, the fuel sales operator at the airport wrote to staff that he had agreed to support the City's decision to keep Tracy Airport as a 'boutique airport' in return for revisions on his business agreement with the City. The fuel sales operator said in his letter to the City that he was aware of the January 19, 2012, NOTAM filed by the City alerting pilots that Runway 12/30 was under 4,000 feet in length, and this could potentially eliminate the jet fuel business at the Airport if this facility was officially changed to a small airport classification by the FAA. Contingencies C and E in the AAM requested that the City notify the ALUC of the revised ALP, reflecting the length change to Runway 12/30, and to amend the ALUCP to reflect Runway 12/30 as a short general aviation runway if the ALUC did not agree to the amendment, and notify the ALUC of the City's intent to override the ALUCP and proceed accordingly with the override process. The amendment to the ALUCP would have allowed a change in the ESP development. In addition the City was to generate and process amendments to the ESP and the City's General Plan to reflect a safety compatible zone consistent with the 2011 California Transportation Safety Compatibility Zone designated for a short general aviation runway, and reflect zoning development in these areas accordingly. Tracy City Council and staff took the following actions in regards to the Tracy Airport: On July 1, 2013, staff notified COG that the City was in the process of updating the ALP to reflect Runway 12/30 at 3,997 feet in length. In August 2013, the developer submitted an ESP amendment to the ALUC with higher density building proposed in the airport's safety zone. On September 26, 2013, COG acting as the ALUC, ruled that the amendment to the ESP was inconsistent with the 2009 ALUCP. On October 15, 2013, City Council requested staff to research and return with information for its review as to what the override process for the ALUC decision would entail, and to schedule this issue for a meeting in early 2014. To date, the City has not placed this issue on the City Council agenda for public hearing and vote. Contingency D in the AAM requested that the City set the fuel flowage fee at no less than $0.07 per gallon, reimbursed to the local developer. The Tracy City Council took the following action: On June 18, 2013, the City Council approved an amendment revising the fuel flowage fee to a flat $0.07 per gallon on all aviation fuel sold at the airport by the contracted fuel sales operator. The AAM requested the City meet contingencies listed in exchange for a financial commitment by the developers company to the City over the next ten years. The developer stated the following: "We initially committed to funding an Airport shortfall for five years, however we have adjusted that commitment based on recent negotiations with the parties. There are a few important aspects that need to be addressed in the agreement ..." On June 19, 2013, a local developer drafted a $50,000 check to the City of Tracy "to assist Turlock Air Center" and "to create harmony at the Airport as well as create a positive neighborhood relationship with the pilots in that area". The check included a notation that it was for the 2009 ALUCP. The City accepted and deposited this payment. These series of actions related to changes in the Tracy Airport runway length and designation were not individually illegal or necessarily inappropriate for the City to take. Cumulatively, however, they appear to result in a single beneficiary – the local developer of the Ellis Specific Plan. The end result of the actions supporting the AAM's contingencies was not made known to the public through staff reports or public meetings. The Grand Jury is not making a determination on the appropriateness of the actions, but is concerned about the perception of collusion between the City and the local developer, and the lack of transparency to the public. Findings

R2

The Tracy City Council adopt a policy by September 30, 2014, requiring full disclosure of any actions taken by the City on proposed substantial changes to major development projects within the City of Tracy. City Acceptance of Third Party Payments 3.0 The City of Tracy accepted and deposited a check from a local development company, in the amount of $50,000. The check was identified as an initial payment for the fuel sales operator's contractual debt to the City. When the check was received, City staff and representatives of the City Attorney's office met to discuss what to do with the check because staff was not aware of what actions should be taken as a result of receiving the check. The Grand Jury was not able to learn of the result of that discussion. It was determined that the City currently has no policy of how to handle a third party payment for an obligation to the City. In this specific instance, there is no indication that the payment was illegal or inappropriate. However, in light of the other actions taken by the local developer and the City the perception that it was part of a quid pro quo related to the changes in the Airport's designation is very strong. Finding

R3

The Tracy City Council adopt a policy by September 30, 2014, relating to the acceptance of third party payments for contractual obligations to the City of Tracy. 4.0 Airport Classification and Future Development The Ellis Specific Plan was originally approved by the City in 2008. In January 2013, the ESP was modified and approved by the City, with a specific number of housing units and commercial buildings permitted. The FAA airport classification has no effect on the total number of units agreed to be built under the specific plan. However, an airport's classification does change the allowable densities and locations of housing units and commercial buildings permitted to be built. The FAA mandates specific sized safety zones based on an airport's designated classification, which is based on an airport's runway length. An airport with runways less than 4,000 feet in length is classified in the small airport category, a medium airport is 4,000 feet to 5,999 feet and a large airport is 6,000 feet or more. The protected safety zone size and requirements between a small and medium-sized airport are considerable and the types of developments allowed between these two classifications could be substantial. In this specific instance the change from a medium airport to a small airport would have allowed changes to the ESP that could result in substantial financial benefits to the local developer. If the airport designation change was approved the overall change to the development project and any potential benefit to the City would need to be further reviewed by the City. Finding

R5

The Tracy City Council adopt a policy by September 30, 2014, requiring the review of the current status of a business' State license when any applicable City contract is proposed to be amended or renewed. Conclusion The Mayor and City Council are expected by the citizens they represent to require that their staff conduct thorough reviews of all information regarding City matters prior to making recommendations to the City Council. If staff and management are not held to a high standard of performance regarding their review process on all City matters, the degree of accuracy for the information provided to the City Council could be in question. This could lead to decisions being made by City Council that are based on flawed facts, as well as actions being taken that are not in the best interest of the citizens of Tracy. This investigation discovered no evidence to substantiate the complainant's allegations of a secret and illegal business agreement having officially been entered into between a local developer, City staff, and the City Council. However, there is an alarming number of City actions taken directly related to the contingencies in the AAM that bring cause for concern. This investigation discovered that City staff and City Council in Tracy made recommendations and took actions that if completed would have met most of the contingencies listed in the AAM. This could have brought about changes to the Tracy Airport that would permanently affect its current uses. The Grand Jury questions whether these were a specific quid pro quo between the City and the developer for political or other considerations, or just a City attitude of knowing what the results would be but "wink-wink" we won't say anything. There are many ways to deceive the public – don't give complete information; give partially accurate information; or turn a blind eye to the real issue and hope no one notices. These can be used by private enterprise, City staff or elected City officials. Whatever the reason, whatever the approach, there is a victim. In this case it is the City's credibility with its citizens. City Council Members are the sentinels of the City and the citizens they represent. If the City Council and staff conducted City business as if they were in a glass room with unobstructed view by the citizenry, then transparency would not be an issue and the trust from the people they represent would be earned. Disclaimers Grand Jury reports are based on documentary evidence and the testimony of sworn or admonished witnesses, not on conjecture or opinion. However, the Grand Jury is precluded by law from disclosing such evidence except upon the specific approval of the Presiding Judge of the Superior Court, or another judge appointed by the Presiding Judge (Penal Code Sections 911, 924.1(a) and 929). Similarly, the Grand Jury is precluded by law from disclosing the identity of witnesses except upon an order of the court for narrowly defined purposes (Penal Code Sections 924.2 and 929). This report was issued by the Grand Jury with the exception of one member of the jury. This juror was excluded from all parts of the investigation including interviews, deliberations, and the writing and approval of the report. Response Requirements California Penal Code Sections 933 and 933.05 require that specific responses to all findings and recommendations contained in this report be submitted to the Presiding Judge of the San Joaquin County Superior Court of receipt of the report. Tracy City Council shall respond to all of the findings and recommendations contained in this report. Mail or hand deliver a hard copy of the response to: Honorable Lesley D. Holland, Presiding Judge San Joaquin County Superior Court P.O. Box 201022 Stockton, CA 95201 Also, please email a copy of the response to Ms. Trisa Martinez, Staff Secretary to the Grand Jury at grandjury@sjcourts.org Appendices