L.i.;' i I , . „^,,-r,-j-,^(j i BEFOR E TH E FEDERA L AVIATIO N ADMINISTRATIO N

WASHINGTON , D.C .

SKYDIV E SACRAMENTO ,

Complainant , V . TH E CIT Y O FLINCOLN , CALIFORNIA ,

Respondent . 

# ilKfeu^ E OC T 1 4 iuu a PAR T 1 6 DOCKET S Docke t No . 16-09-0 9

RESPONDENT' S REBUTTA L

Pleas e serve : Scott P . Lewi s Christin e M . Griffi n ANDERSO N & KREIGE RLL P On e Canal Park , Suit e 20 0 Cambridge , M A 0214 1 T : 617.621.650 0 F : 617.621.666 0 slewis@andersonkreiger.co m cgriffin@andersonkreiger.co m Counse l fo

r Responden t

Octobe r 13,200 9Tabl e o f Contents . Pag e Argumen t 1 I . SKYDIV E HA S ABANDONE D MAN Y O FIT S CLAIM S 2 A . Automobil e Liability Insuranc e - "Specifi c Violation s C an dE. " 2 B . Annua l Rat e o f

Ren t Increas e - "Specifi c Violatio n H. " 2 C . Leas e Term- "Specifi c Violatio n I. " 3 D . Us e o f

Dro p Zon e - "Specifi c Violatio n K. " 3 E . Indemnificatio n - "Specifi c Violation s L an dM. " 3 F . Tim e I s O f

Th e Essenc e - "Specifi c Violatio n N. " 3 n . THERE I S N O MERI T T O AN Y O FTH E REMAININ G CLAIM S 4 A . Th e City Has N o Obligatio n T o Allo w Skydiv e T o Operat e A Jump Zon e Without

Eithe r Providin g O r

Payin g Fo r

Adequat e Insuranc e 4 B . Skydive' s Tw o Remainin g Complaint s Abou t Boilerplat e Provision s In Th e Propose dLeas e Canno t Justif y Any Enforcemen t

Actio n B y FA A 8 Conclusio n 9BEFOR E TH E FEDERA L AVIATIO N ADMINISTRATIO N

WASHINGTON , D.C .

SKYDIV E SACRAMENTO ,

Complainant , V . TH E CIT Y O FLINCOLN , CALIFORNIA ,

Respondent . Docke t No . 16-09-0 9

RESPONDENT' S REBUTTA L Th e respondent , th e City o f Lincoln , Californi a(th e "City") , submit s thi s Rebuttal under 1 4 C.F.R . § 16.23(f

) i n suppor t

o f it s Mofio n t o Dismis s th e Complain t b y Skydiv e Sacrament o ("Skydive"). In it s Reply , Skydiv e ha s abandone dal l bu t four o f th e claim s initiall y raise di n it s Complaint . O n it s remainin g claims , Skydiv e ha s faile dt o establis h tha t th e Cit y i s currentl y violatin g an y applicabl e federal requirements , an dther e i s n o jusfificatio n for an y enforcemen t actio n b y FAA . Th e FA A shoul dtherefor e dismis s al l o f th e claim s b y Skydive . Argument . Th e Cit y showe di n it s initia l motio n paper s that Skydiv e ha dno t

me t it s burde n t o prov e any o f th e claim s i t

brough t agains t th e City . In thi s Rebuttal , th e City focuse s o n several point s that Skydiv e ha s raise di n it s Repl y an ddiscusse s newly-emergin g facts . Th e City otherwis e continue s t o rel y upo n it s Answe r an dit s Memorandu mi n Support o f it s Motio n t o Dismiss .I . SKYDIV E HA S ABANDONE D MAN Y O FIT S CLAIMS .

Skydive' s Complain t

allege dtha t

variou s provision s i n th e Leas e th e City offere dfo r a "dro p zone " a

t th e Lincoln , Californi aRegiona l Airport (th e "Airport" ) violat e federal aviatio n law because , accordin g t o Skydive , the y (a ) constitut e unjus t economi c discrimination ; (b ) impos e unattainable conditions ; o r (c ) constructivel y grant

unlawfii l exclusiv e rights . Th e Cit y denie s that

i n attemptin g t o accommodat e Skydive' s desir e for adro p zon e a

t th e Airpor

t th e Cit y ha s violate dan y o f

it s obligation s a s an AI P gran t sponsor . I n it s Reply , Skydiv e ha s droppe dth e followin g claim s agains t th e City: ' A . Automobil e Liabilit y Insuranc e - "Specifi c Violation s C an dE. " Skydiv e had allege dtha t

th e automobil e liability insuranc e coverag e th e Cit y require s i s unavailabl e t o Skydiv e an dthat

th e Cit y ha s not

require dothe r

tenant s t o obtai n comparabl e coverag e (se e Complain t

^j ^ 57 , 60) . After

reviewing th e City' s answe r an dsupportin g evidence , Skydiv e ha s acknowledge dthat

it s allegation s wer e mistake n an dha s give n u p thi s clai m(se e Repl y a t 8) . B . Annua l Rat e o f

Ren t Increas e - "Specifi c Violatio n H. " Skydiv e ha d complaine dthat

th e 5 % armual ren t

escalato r sough t b y th e City wa s unlawfu l (se e Complain t ^ 67) . Skydiv e no w concede s that th e ren t adjustmen t

propose db y th e City i s th e sam e a s th e ren t adjustmen t

th e City ha s require di n lease s with othe r similarly-situate dtenants , an dSkydiv e i s no t pursuin g thi s clai m(se e Repl y a t 8) .

' In it s Answe r

(T [ 60) , th e City note dthat

Skydiv e neve r

sough t t o revie w th e City' s lease s wit h other airpor t tenant s before filin g it s complain t unde r Pt . 1 6 allegin g that

th e Cit y wa s discriminatin g agains t Skydive . Skydiv e ha s no t dispute dthi s point . No w Skydiv e ha s belatedl y acknowledged , afte r reviewin g th e lease s submitte db y th e Cit y wit h it s Answer , that

"th e City' s propose dleas e doe s treat Complainan t

equall y with othe r

commercial operator s i

n anumbe r

o f specifi c areas " (Repl y a

t 8 , emphasi s added) . A s aresult , Skydiv e ha s droppe dmos t o f it s claim s o f unjus t discrimination .C . Leas e Ter m- "Specifi c Violatio n I. " Skydiv e ha dcomplaine dthat th e propose dLeas e provide dfor onl y atwo-year

leas e term(se e Complain t T I 68) . Skydiv e n o longe r claim s arigh t

t o along-termleas e an dha s droppe dthi s clai m(se e Repl y at 8) . D . Us e o f

Dro p Zon e - "Specifi c Violatio n K. " Skydiv e ha dcomplaine dtha t th e propose dLeas e onl y permitte dSkydiv e t o us e th e dro p zon e for skydivin g an ddi dno t

permi t Skydiv e t o erec t

an y structur e at

th e propose ddro p zon e sit e (se e Complain t Tn | 73-78) . Skydiv e no w concede s tha t

th e City ha s offere dadequat e justificatio n for declinin g t o allo w Skydiv e t o erec t an y structure s a

t th e jum p zon e an dn o longe r claim s arigh t

t o us e th e dro p zon e for

non skydivin g purpose s (se e Repl y a t 8-9). ^ E . Indemnificatio n - "Specifi c Violation s L an dM. " Skydiv e ha dcomplaine d that th e indemnificatio n provision s containe di n th e propose dLeas e are unjustl y discriminatory an dotherwis e unlawfu l (se e Complain t Yl i 79-80) . Skydiv e no w acknowledge s that th e City "treat s commercia l tenant s equall y i n thi s regard " an dha s abandone dthes e claim s (se e Repl y a t 9) . F . Tim e I s O f

Th e Essenc e - "Specifi c Violatio n N. " Skydiv e ha dcomplaine dthat th e propose dLeas e mad e "tim e o f th e essence " for

Skydive' s performance , bu t no t fo r th e City' s (se e Complain t

I f 81) . Skydiv e ha s give n up thi s inconsequentia l clai m(se e Repl y a t 9) .

^ Skydive' s Repl y (at 2-3 ) question s whethe r

th e propose ddro p zon e sit e i s denote da s a"non-aviation " or "aviatio n reserve " are ain th e Airport Layou t Plan . Th e Cit

y inadvertentl y misstate din it s Answe r (^ AF6 ) that

th e dro p zon e woul db e locate dentirel y withi n a"non-aviation " area . Th e City acknowledge s that th e site o f

th e propose ddro p zon e woul dpartiall y fal l withi n a n "aviatio n reserve " are aan dpartiall y withi n a"non-aviation " area . Thi s distinctio n i s o f

n o conceivabl e consequenc e i n thi s case , however , sinc e Skydiv e doe s no t contes t th e site that ha s bee n offere db y th e City for us e a s adro p zone .11 . THER E I S N O MERI T T O AN Y O FTH E REMAININ G CLAIMS .

Onl y four issue s remai n t o b e resolve db y th e FAA : tw o relat e t o insurance , an dtw o t o boilerplat e provision s i n th e propose dLease . Ther e i s n o evidenc e befor e th e FA A that woul d warran t afinding agains t

th e City o n an y o f

thes e claims . A . Th e Cit y Ha s N o Obligatio n T o Allo w Skydiv e T o Operat e A Jum p Zon e Withou t Eithe r Providin g O r

Payin g Fo r

Adequat e Insurance . Skydive' s complain t

frame dthre e distinc t

insuranc e issues : ha s th e Cit y violate dit s gran t assurance s (a ) b y requirin g Skydiv e t o procur e liability coverag e for skydivin g incident s that i s unavailabl e t o commercia l skydiv e operator s (se e Complain t W48-54 , "Specifi c Violatio n A, " an dTI1f.58-59 , "Specifi c Violatio n D") ; (b ) b y requirin g Skydiv e t o obtai n for it s subcontractor s th e sam e insuranc e coverage i t mus t hav e fo r itsel f (^ee Complain t

Y i 55-56 , "Specifi c Violatio n B") ; o r (c ) b y requirin g Skydiv e t o reimburs e th e City for th e cost s th e Cit

y wil l incu r t o insur e itsel f

agains t claim s arisin g ou t

o f Skydive' s activitie s (se e Complain t H t 61

- 64 , "Specifi c Violatio n F") . Skydiv e n o longe r

challenge s th e City' s requiremen t that Skydive' s subcontractor s hav e th e sam e coverag e a s Skydiv e itsel f (^ee Repl y a

t 9-10) . S o th e insuranc e issue s i n thi s cas e boi l dow n t o these : can a

n airport sponso r requir e askydivin g operato r eithe r t o procur e o r

pay fo r reasonabl e limit s o f

liability coverage for

claim s arisin g ou t

o f skydivin g incident s - o r

mus t a n

' Skydiv e continue s t o insinuat e i n it s Repl y that

th e Cit y ha s administere dit s large-volum e fue l discoun t programi n a n impruden t

o r unjustl y discriminatory manne r {see Repl y a

t 3-4) . Skydiv e point s t o a n Airport newslette r

date dJanuary 200 9 whic h state s that avolum e discoun t

i s availabl e "fo r

purchase s o f

30 0 gallon s or mor e o f Je t A fiiel" (se e Skydiv e Ex . 7) . Ther e i s nothin g in that newslette r

that contradict s th e City' s statemen t that Skydiv e ha s faile dt o qualif y for that programbecaus e i

t ha s neve r

hadasingl e purchas e o f more than 30 0 gallon s o f je t fuel . Th e Cit

y ha s administere dit

fue l discoun t programi

n areasonabl e an dnondiscriminator y manner . Skydiv e ha s mad e n o attemp t

t o prov e tha t

an y similarly-situate dfue l purchaser s hav e bee n treate ddifferentl y than Skydive , an dSkydiv e seek s n o relie f with respec t

t o th e fiie

l discoun t offere db y th e Cit

y (se e Repl y a

t 17) . Ther e is , a s a result , n o basi s fo

r th e FA A t o tak e an y enforcemen t actio n agains t

th e Cit y wit h respec t t o th e discoun t

i t offer s t o large-volum e fue

l purchasers .airpor

t sponso r assum e substantial uninsure drisk s associate dwith awould-b e commercia l tenant' s skydivin g business ? Th e Cit y ha s approache dthes e insuranc e issue s firomapruden t an dpractica l perspective : th e Cit y believe s tha t

skydivin g i s a

n inherentl y dangerou s activity tha t can b e expected , fi"om tim e t o time , t o resul t

i n seriou s injur

y o r deat h t o th e skydiver s themselve s an dcan als o leadt o third-party claim s for

bodil y injur

y o r property damage . A s th e proprieto r o f th e Airport , th e Cit y contends tha t

i t ha s th e righ t

t o deman dtha t

Skydiv e Sacrament o eithe r (a ) provid e adequat e insuranc e t o protec t

th e City fromliability o r (b ) reimburs e th e City for th e incrementa l cost s th e Cit y incur s t o procur e adequat e insuranc e coverag e fo r itsel f Th e City als o contends that i f adequat e insuranc e i s not available , the n th e Cit

y ha s n o obligatio n t o allo w Skydiv e t o operat e a t it s Airport . Skydiv e protest s tha t

th e coverag e th e Cit

y seek s - whic h woul dprotec t th e Cit y fro m claim s b y jumper s beyon dth e $50,00 0 limi t o f coverag e carrie db y Skydiv e an dfromthird-party claim s abov e th e $300,00 0 limi t o f coverag e carrie db y Skydiv e - i s unavailabl e t o Skydiv e i n th e insuranc e market . It

follows , accordin g t o Skydive , that th e City can neithe r

as k Skydiv e t o procur e highe r

limit s o f coverage becaus e the y are "unattainable " no r deman dthat

Skydiv e reimburs e th e City for

it s ow n insuranc e cost s (se e Repl y a t 9-15) . Whe n atenan t

claim s tha t

a n insuranc e requiremen t

i s unattainabl e o r

prohibitivel y expensiv e i n th e insuranc e market , n o curren t violatio n wil l b e foun db y th e FA A wher e th e Airport work s wit

h th e tenan t

t o identif y attainabl e insuranc e coverage tha t wil l satisf

y th e Airport . Se e Flightlin e Aviation , Inc . v . Cit y ofShreveport , 200 8 W L 595535 5 at "^24-2 5 (Marc h 7 , 2008 ) (Director' s Determination) . That i s precisel y wha t

th e City ha s bee n attempfin g t o do .A t

th e tim e it

filedit s Answer , i t

wa s th e City' s hop e an dexpectatio n that Skydiv e woul d b e abl e t o rais e th e limit s o f coverage o n it s ow n policie s for skydive r bodil y injur

y claim s s o that i f th e Cit y bought coverage attachin g t o claim s a t o r abov e $1,000,000 , th e City woul db e fully insured . Th e City understood , at that time , that

it woul db e abl e t o procur e ane w Cit y polic y o f tha t kin dfromAI G an dthereb y eliminat e th e exclusio n for skydivin g claim s that

i s containe di n th e City' s curren t policy , a t a n incrementa l annua l cos t o f abou t $7,00 0 - $8,00 0 (se e Answer, ^ 61) . I n it s Reply , however , Skydiv e continue s t o protes t that th e existin g limit s o f

it s ow n coverag e are al l tha t

Skydiv e wil l b e abl e t o provid e t o th e City . Th e City ha s bee n investigatin g th e insuranc e marke t

sinc e receivin g Skydive' s Repl y an dacknowledge s tha t Skydive' s assertio n may b e correct.' * After

receivin g Skydive' s Reply , th e City wen t bac k t o it s insuranc e provider s t o determin e whethe r

th e Cit y woul db e abl e t o procur e aliability polic y tha t woul dattac h a

t th e limit s o f coverag e Skydiv e ha s bee n abl e t o obtain. ^ Th e City ha s recentl y learne dthat i t ma y b e possibl e t o purchas e apolic y containin g suc h additiona l coverag e a t a n incrementa l annual cos t that coul dexcee d$15,00 0 - $20,000 ; th e Cit y ha s no t yet bee n able , however , t o obtai n a commitmen t

o r abindin g quot e froman y insuranc e carrie r (se e City Ex . 31 , attached). ^ In order t o resolv e th e issu e o f

insurance , an dwithou t

concedin g that

th e insuranc e i t

ha s aske dSkydiv e t o obtai n i s "unattainable, " th e City proposes , a s aconditio n o f adro p zon e leas e with Skydive ,

• * Th e inability o f

commercia l skydiv e operator s t o obtai n highe r limit s o f coverag e suggests , o f

course , tha

t thei r operation s presen t

risk s o f los s that insurer s are unwillin g t o cover . Th e absenc e o f coverag e fo

r skydivin g operator s i s o f

n o comfor

t t o th e Cit

y an dunderscore s th e City' s nee dt o protec t itsel f fi^ompotentia l claims . * Th e Cit

y note s i n passin g that

durin g th e pendenc y o f

Skydive' s complaint , Skydive' s ow n airport premise s liability polic y wa s cancelle da s aresul t o f Skydive' s nonpaymen t

o f premium . Th e cancelle dpolic y was , th e Cit y ha s bee n notified , recentl y reinstated . ^ Cit

y Exhibi t 3 1 i s acurren t

report o f effort s b y th e City' s insuranc e provider , Allian t Insuranc e Services , Inc. , t o obtai n skydivin g coverag e fo r th e City .t o purchas e suc h apolic y - i f on e can b e foun d- an dt o bil l Skydiv e fo r th e City' s incremental cost s o f obtainin g coverag e for

claim s arisin g solel y ou t o f Skydive' s activities. ^ Skydiv e canno t

reasonabl y complai n that thi s woul db e a

n unlawfu l conditio n upo n whateve r federally-protecte dright , i f any , Skydiv e may hav e t o operat e adro p zon e a t th e Airport . Th e City ha s n o federal obligatio n t o allo w Skydiv e t o operat e adro p zon e a t th e Airport withou t havin g adequat e insuranc e protectio n no r i s ther e an y federal obligatio n fo r th e Cit y to bear th e cost s o f

an y ne w polic y i t

mus t obtai n s o that

th e City ha s coverag e for skydivin g claims . Th e City' s ow n liabilit y polic y currentl y ha s askydivin g exclusio n (se e Answer , ^ 48) . Skydivin g i s th e onl y aeronautica l activity exclude dfromth e City' s liability policy . T o obtai n reasonabl e coverage t o protec t th e Cit y fromclaim s arisin g ou t o f Skydive' s activities , th e Cit y woul dhav e t o purchas e additional coverag e throug h ane w polic y tha t i t woul dno t

otherwis e hav e (id.). Ther e i s nothin g unreasonabl e o r discriminatory abou t

th e City' s proposa l tha

t Skydive bear

th e incrementa l cost s associate dwith th e City' s nee dt o procur e skydivin g coverage . Chargin g Skydiv e for th e cost s o f

insuranc e coverag e require dsolel y a s aresul t o f Skydive' s activitie s i s consisten t wit h familia r principle s o f

fai r an dreasonabl e airport

rate settin g that

seek t o allocat e t o airport

users th e cost s associate dwith th e activitie s the y conduc t an dth e us e the y mak e o f

airport facilities . In fact , i f

th e Cit y wer e t o see k

t o recove r

th e cost s o f skydivin g insuranc e coverag e fro mal l o f it s tenants , th e Cit

y coul db e faulte dfor

unjus t discriminatio n agains t

them . Se e Polic y Regardin g Airport Rate s an dCharges , ^ 3.4.1 , 6 1 Fed . Reg . 3199 4 (Jun e 21 , 1996) , a s amende da t 7 3 Fed . Reg . 4043 0 (Jul y 14 , 2008) . Se e als o

' Th e Cit

y wil l als o requir e that

Skydiv e obtai n fromeac h o f it s jumper s asuitabl e waive r o f liabilit y that inure s t o th e benefi t

o f both Skydiv e an dth e City . Th e Cit y ha s n o reaso n t o expec t thi s t o b e problematic .Northwes t Airlines , Inc. , v . Indianapoli s Airport Authority , 200 8 WL 397646 1 (Augus t 19 , 2008 ) (Director' s Determination ) (notin g tha t FA A policie s regardin g rate s an dcharge s prohibi t a n airpor t sponso r fromchargin g aeronautica l user s o r use r group s for

cost s properl y allocabl e t o othe r user s o r use r groups) ; Je t

I Center , Inc . v . Naple s Airpor t Authority , 200 5 WL 38921 8 a t *2 6 (January 4 , 2005 ) (Director' s Determination ) (same) . Give n th e Airport' s obligatio n under 4 9 U.S.C . § 47107(a)(13 ) an dGran t Assuranc e 2 4 t o maintai n afe e an drenta l structur e tha t make s th e airport

a s financially self-sustainin g a s possible , th e Airport ha s an obligatio n t o charg e Skydiv e for

th e incrementa l cost s o f

insuranc e that

th e City wil l incu r

solel y a s th e resul t o f Skydiv e operatin g adro p zon e at th e Airport . I f th e City i s unabl e t o procur e it s ow n skydivin g insuranc e coverag e at limit s tha t dro p dow n t o th e coverage carrie db y Skydiv e - o r i f Skydiv e refuse s t o pa y th e City for suc h coverag e - th e FA A shoul dfindthat th e City ha s n o obligatio n t o provid e aleas e t o Skydive . Th e AI P gran t

assurance s d o not

requir e airpor

t sponsor s t o assum e uninsurabl e risk s associate d with inherentl y dangerou s tenan t activities . B . Skydive' s Tw o Remainin g Complaint s Abou t Boilerplat e Provision s I n Th e Propose dLeas e Canno t Justif y An y Enforcemen t

Actio n B y FAA . Skydiv e continue s t o complai n that certai n o f

th e recital s containe da

t th e beginnin g o f th e propose dLeas e ar e "insulting " and , accordin g t o Skydive , unfairl y impug n skydivin g (se e Complain t

^ 65-66 , "Specifi c Violatio n G" ) an dthat th e draf t leas e prepare db y th e Cit y contain s conflictin g term s with respec t t o complianc e with federal regulator y requirement s (se e Complain t

Tf^ I 69-72 , "Specifi c Violatio n J" ) (Repl y a t 15-16) . Neithe r

o f thes e claim s raise s any federa l issue s tha t

coul dpossibl y justif

y aPar t 1 6 complaint , a s th e City ha s previousl y argue d (se e Memorandu mi n Support o f Respondent' s Motio n t o Dismis s at 16-17) . Th e Cit

y remain s willing , i n any event , t o resolv e thes e issue s b y rewordin g th e recital s t o remov e an y perceive d"insults " an db y eliminatin g an y inadverten t appearanc e o f

conflic t betwee n th e requirement s o f § 5 an d§ 8 o f

th e propose dLeas e (id.) . Conclusion . Fo r al l o f thes e reasons , an dth e reason s offere di n th e City' s Memorandu mi n Support o f it s Motio n t o Dismiss , th e FA A shoul ddismis s Skydive' s Complain t with prejudice . Respegtfiill y submitted . Scjeft t P . Lewi s ristin e M . Grfffin 'ANDERSON^TKREIGE RLLP On e Canal Park , Suit e 20 0 Cambridge , MA 0214 1 T : 617.621.650 0 F : 617.621.666 0 slewis(^andersonkreiger.co m cgriffin@andersonkreiger.co m Counse l for

Responden t Octobe r 13 , 200 9CERTIFICAT E O FSERVIC E

I hereb y certif

y i n accordanc e with 1 4 CFR§ 16.15(a ) that toda y I serve dth e foregoin g Respondent' s Rebutta l o n th e followin g person s a t th e followin g addresse s b y Federal Express : Richar dJ . Durde n Attorne y at

La w 2798 7 Richmon dHil l Roa d Conifer , C O 8043 3 Offic e o f Chie f Counsel , Attention : FA A Part 1 6 Airport

Proceeding s Docke t AGC-61 0 FEDERA L AVIATIO N ADMINISTRATIO N 80 0 Independenc e Avenue , S W Washington , D C 2059 1 Date dthi s 13" " day o f

October , 200 9

1 0Pag e 1 of 2

Scot t Lewi s From : Dav e Dal y[ddaly@ci.lincoln.ca.us ] Sent : Tuesday , Octobe r13 , 200 9 3:5 8 P M To : Scot t Lewi s Co : Christin e M . Griffi n Subject : Cit yo f Lincol n - Skydiv e Sacrament o Statu s Scott Pleas e se e th e repor t fro m Allian t below . Dav e Daly , Airpor t Manage r Lincol n Regiona l Airpor t 148 0 Flightlin e Driv e Lincol n C A 9564 8 916-645-344 3 Fax : 543-020 8

From : Maryli n Keile y[mailto:MKelley@alliantinsurance.com ] Sent : Tuesday , Octobe r13 , 200 9 12:5 3 P M To : Dave Dal y Subject : Cityo f Lincol n - Skydiv e Sacrament o Statu s Dave : Her e i s th e curren t statu s o f you rreques t fo ra quote fo rinsuranc e coverag e a t th e Lincol n Airport tha t v^roul d includ e coverag e fo rth e Cit yo f Lincol n a s respect s on-Airpor t skydivin g activitie s b ya contractoro f th e Airport . 1 . You rcurren t carrie rfo rAirpor t Liabilit yCoverag e i s Phoeni xAviatio n Managers . A s yo u ar e av^are , you rinsuranc e polic ywit h Phoeni xexclude s parachuting/skydivin g coverage . Th e premiu m fo ryou rcurren t insuranc e coverag e wit h Phoeni xi s $20,94 6 annuall yfo r$2 5 millio n i n Airport Liabilit ycoverag e an d $1,000,00 0 i n coverag e fo rHanga rKeeper s Liability . 2 . W e originall ysearched , i n earl y2009 , fo rinsuranc e coverag e fo rth e Airpor t tha t woul d includ e coverag e fo rth e Cit yo f Lincol n fo ran yclaim s namin g th e Cit yarisin g ou t o f parachuting/skydivin g activitie s o f a contracto rwit h th e Cit yAirport . AI G woul d hav e provide d you wit h a polic ywit h th e abov e coverag e limit s an d a n additiona l $ 1 millio n i n limite d parachuting/skydivin g coverag e contingen t upo n Skydiv e Sacrament o havin g it s ow n liabilit y polic yi n place , namin g th e Cit yo f Lincol n a s a n additiona l insure d an d providin g $ 1 millio n i n coverage . Th e cos t fo rsuc h a n AI G polic yincludin g thi s optio n was quote d a s $27,99 2 annually . Thi s quote assume d tha t th e othe rcoverag e i n plac e was a t a limi t o f $1,000,000 . 3 . W e hav e aske d AI G i f i t ca n offe rthi s sam e coverag e bu t ove ra lowe rothe rinsuranc e limit . AIG ha s sai d tha t i t can . However , th e AI G Underwrite ri s ou t o f th e offic e an d I hav e no t ye t bee n abl e t o obtai n a quot e fo rthi s coverag e o radditiona l detail s o n wha t leve l o f lowe r Cit y Exhibi t

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insuranc e AIG woul d require . 4 . M ygues s i s tha t addin g thi s additiona l coverag e wil l cos t i n exces s o f a n additiona l $15,000 - $20,000 , dependin g o n th e level s o f lowe rinsuranc e coverag e tha t AI G requires . Thi s i s m ygues s onl yan d i s no t i n an ywa ya quotation . I als o d o no t kno w ho w lo w a n attachmen t poin t th e Underwrite rwil l approve . 5 . Stacy , fro m m yoffice , spok e wit h AIG , an d the ysai d tha t thi s propose d polic ywoul d nee d t o b e approve d b yth e AIG Underwritin g Manager . AI G wa s no t willin g t o commi t o n coverag e o rpric e withou t havin g referre d an d gotte n approva l fro m management . Thi s mean s tha t ther e i s a possibilit ytha t th e City' s reques t fo rinsuranc e wil l b e denied . 6 . A s Stace ydiscusse d wit h yo u earlie rthi s week , sh e approache d fou rothe rUnderwriter s o f Aviatio n Insuranc e carrier s an d the ydecline d t o provid e thi s leve l o f coverage . Marily n Keile y Vic e Presiden t Allian t Insuranc e Services , Inc . 10 0 Pin e Street , 11t h Floo r Sa n Francisco , C A 9411 1 (415)403-140 2 mkelley@allian t insurance.co m Thi s e-mai l an dal l attachment s t o i t ar e fo r th e sol e us e o f

th e intende drecipient s an dmay contai n proprietary informatio n an dtrad e secret s o f Alliant Insuranc e Services , Inc . an dit s subsidiaries . Thi s e mai l may als o contai n informatio n whic h i s confidential o r whic h i s protecte dfromdisclosur e b y privilege . An y unauthorize duse , disclosur e o r distributio n o f

thi s e-mai l an dit s attachment s i s prohibited . I f

yo u ar e no t

th e intende drecipient , let u s kno w b y repl y e-mai l an dthe n eras e an ddestro y all electroni c o r

othe r copie s o f thi s message .

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