UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C.

AIR TRANSPORT ASSOCIATION OF 

AMERICA, INC. d/b/a AIRLINES FOR 

AMERICA, ALASKA AIRLINES, INC., 

AMERICAN AIRLINES, INC., ATLAS 

AIR, INC., FEDERAL EXPRESS 

AIRLINES, HAWAIIAN AIRLINES, INC., 

HORIZON AIR, JETBLUE AIRWAYS 

INC., SOUTHWEST AIRLINES CO., 

UNITED AIR LINES, INC., UNITED 

PARCEL SERVICE CO., and AIR 

CANADA, 

 Complainants, 

v. 

PORT OF PORTLAND, OREGON, 

 Respondent. 

FAA Docket No. 16-16-04 

REPLY OF COMPLAINANTS AIR TRANSPORT ASSOCIATION OF AMERICA, INC., 

D/B/A AIRLINES FOR AMERICA, ET AL. TO PORT OF PORTLAND ANSWER 

 Designated for service of process: 

David Berg 

Vice President & General Counsel 

Doug Mullen 

Assistant General Counsel 

Air Transport Association of America, Inc. 

d/b/a Airlines for America 

1275 Pennsylvania Avenue, N.W. 

Suite 1300 

Washington, D.C. 20004 

(202) 626-4234 

Email: dberg@airlines.org 

dmullen@airlines.org 

Counsel for Complainants 

Dated: May 25, 2016 

Roy Goldberg 

Steptoe & Johnson LLP 

1330 Connecticut Avenue, N.W. 

Washington, D.C 20036 

(202) 429-8028 

Email:rgoldberg@steptoe.com 
i 

TABLE OF CONTENTS 

Page 

INTRODUCTION AND SUMMARY ..........................................................................................2

ARGUMENT ..................................................................................................................................8

I. CHARACTERIZING THE OFFSITE STORMWATER 

MANAGEMENT AND SUPERFUND REMEDIATION FEES AS 

AIRPORT “OPERATING COSTS” IS CONTRARY TO THE 

STATUTORY PROHIBITIONS AGAINST DIVERSION OF 

AIRPORT REVENUE...........................................................................................8

A. The Plain Language of the Federal Statutes Demonstrates that 

the Imposition of the Fees Constitutes Unlawful Revenue 

Diversion. ....................................................................................................8

B. The Legislative History Behind the Prohibitions Against 

Diversion of Airport Revenue Further Demonstrates why the 

Fees are Unlawful. ....................................................................................12

C. Congress Did Not Exempt Fees Imposed by Local 

Governments that Do Not Own or Operate the Airport. .....................17

D. There is No Merit to the Port’s Argument that Imposition of 

the Fees Does Not Violate Federal Law. ................................................18

II. TREATING THE OFFSITE STORMWATER MANAGEMENT 

AND REMEDIATION FEES AS AIRPORT “OPERATING COSTS” 

IS CONTRARY TO THE FAA REVENUE USE POLICY. ...........................19

III. THE NON-FINAL JULY 30, 2015 LETTER FROM FAA DOES NOT 

OFFER ANY LAWFUL REASON FOR EXEMPTING THE FEES 

FROM THE PROHIBITIONS AGAINST DIVERSION OF 

AIRPORT REVENUE.........................................................................................32

IV. THE OFFSITE STORMWATER MANAGEMENT AND 

SUPERFUND REMEDIATION FEES ARE NOT AUTHORIZED BY 

FEDERAL ACCOUNTING REGULATIONS OR STANDARDS. ................34

V. THE OFFSITE STORMWATER MANAGEMENT AND 

SUPERFUND REMEDIATION FEES ARE NOT “OPERATING 

COSTS” PURSUANT TO PORT BOND ORDINANCE 155..........................39

VI. THE OFFSITE STORMWATER MANAGEMENT AND 

SUPERFUND REMEDIATION FEES ARE UNLAWFUL TAXES 

RATHER THAN APPROPRIATE USER FEES. ............................................44

VII. THE FEES ARE NOT AUTHORIZED BY THE ANTI-HEAD TAX 

ACT. ......................................................................................................................47

CONCLUSION ............................................................................................................................48

 
ii 

LIST OF EXHIBITS 

1. Declaration of D. Kirk Shaffer 

2. Declaration of Norwood (“Woody”) Jackson, Jr. 

 A. C.V. 

3. Declaration of Joan N. Stern, Esq. 

 A. C.V. 

 B. Port of Portland Bond Ordinance No. 155 

4. “Airport Revenue Diversion,” Hearing before the Subcommittee on Aviation, Committee 

on Commerce, Science and Transportation, U.S. Senate, Senate Hearing 104-629 (May 1, 

1996). 

 
iii 

TABLE OF AUTHORITIES 

Page(s) 

CASES

Acree v. Republic of Iraq, 

370 F.3d 41 (D.C. Cir. 2004) .....................................................................................................9 

Bolt v. City of Lansing, 

459 Mich. 152, 587 N.W.2d 264 (1998) ..................................................................................46 

Chizek v. Port of Newport, 

252 Or. 570, 450 P.2d 749 (1969) ...........................................................................................45 

City and County of Denver v. Continental Air Lines, Inc.,

712 F. Supp. 834 (D. Colo. 1989) ............................................................................................48

City of Santa Monica v. FAA,

631 F.3d 550 (D.C. Cir. 2011) .................................................................................................18 

Cmty. Housing Mgmt. Corp. v. City of New Rochelle,

381 F. Supp. 2d 313 (S.D.N.Y. 2005) ......................................................................................46 

FDA v. Brown and Williamson Tobacco Corp., 

529 U.S. 120 (2000) ...................................................................................................................9 

Fulton Cty. Taxpayers Ass’n v. City of Atlanta, 

No. 1999CV05897, 1999 WL 1102795 (Ga. Super. Ct. Sept. 22, 1999) ................................46 

Gates v. Syrian Arab Republic, 

580 F. Supp. 2d 53 (D.D.C. 2008) .............................................................................................9

Geier v. Am. Honda Motor Co.,

529 U.S. 861 (2000) .................................................................................................................19 

Hillsborough Cty. v. Automated Med. Labs., Inc.,

471 U.S. 707 (1985) ...........................................................................................................18, 19 

Knapp v. City of Jacksonville, OR, 

342 Or. 268, 151 P.3d 143 (2007) ...........................................................................................45 

Southwest Airlines Co. v. TSA, 

554 F.3d 1065 (D.C. Cir. 2009) ...............................................................................................10 

United States v. Morton, 

467 U.S. 822 (1984) ...................................................................................................................9 
iv 

Westwood Apex v. Contreras, 

644 F.3d 799 (9th Cir. 2011) ...................................................................................................10 

AGENCY PROCEEDINGS

In the Matter of Revenue Diversion by the City of Los Angeles at Los Angeles 

International, Ontario, Van Nuys, and Palmdale Airport, 

FAA Docket 16-01-96, 1997 FAA LEXIS 1535 (1997) .........................................................26 

STATUTES

49 U.S.C. § 40116 ..........................................................................................................................47 

49 U.S.C. § 40116(b) .....................................................................................................................47 

49 U.S.C. § 40116(e) .................................................................................................................7, 47 

49 U.S.C. § 47107(b) ............................................................................................................. passim 

49 U.S.C. § 47107(b)(1) ..................................................................................................................8 

49 U.S.C. § 47107(k) .....................................................................................................................20 

49 U.S.C. § 47107(k)(2)(A) ...................................................................................................3, 4, 10 

49 U.S.C. § 47107(k)(2)(B) ...............................................................................................11, 14, 15 

49 U.S.C.§§ 47133 ...................................................................................................................17, 48 

49 U.S.C. § 47133(a) ............................................................................................................. passim 

49 U.S.C. § 47133(c) .....................................................................................................................17 

O.R.S. § 307.090(1) .......................................................................................................................44 

LEGISLATIVE MATERIALS

Airport Revenue Diversion,” Hearing before the Subcommittee on Aviation of the 

Committee on Commerce, Science and Transportation, 104th Congress, S. Hrg. 104-

629 (May 1, 1996)....................................................................................................................13 

H. Rep. No. 104-714 (1996) .............................................................................................. 12-13, 17 

FEDERAL REGISTER

Audit Requirements for Federal Awards, 78 Fed. Reg. 78,589 (Dec. 26, 2013) .....................34, 18 

Passenger Facility Charge (PFC) Program: Eligibility of Ground Access Projects 

Meeting Certain Criteria, 81 Fed. Reg. 26,6111 (May 3, 2016) ....................................... 22-23 
v 

Policy and Procedures Concerning the Use of Airport Revenue, 64 Fed. Reg. 7696 (Feb. 

16, 1999) .......................................................................................................................... passim 

CODE OF FEDERAL REGULATIONS

2 C.F.R. Part 225 .......................................................................................................................6, 34 

2 C.F.R. § 200.225 ............................................................................................................. 34, 36-37 

2 C.F.R. § 225.45(b) ......................................................................................................................35 

14 C.F.R. Part 16............................................................................................................................33 

14 C.F.R. § 16.23(e).........................................................................................................................1 

INTERNET

Federal Accounting Standard Advisory Handbook, 

http://files.fasab.gov/pdffiles/2015_fasab_handbook.pdf ........................................................39 

Fran Spielman, Alderman seeks $1 surcharge on air travelers to fund police hiring,” 

Chicago Sun Times (Oct. 14, 2015) ,http://chicago.suntimes.com/chicagopolitics/7/71/1023944/alderman-proposes-1-surcharge-airline-passengers-bankrollpolice-hiring .............................................................................................................................31 

OTHER AUTHORITIES

Audit Report – FAA Oversight is Inadequate To Ensure Proper Use of Los Angeles 

International Airport Revenue for Police Services and Maximization of Resources, 

AV-2014-035, Office of Inspector General, U.S. Department of Transportation (April 

8, 2014) ....................................................................................................................................29 

FAA Airport Compliance Manual, FAA Order 5190.6B (2009) ...................................................28 
UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

AIR TRANSPORT ASSOCIATION OF 

AMERICA, INC. d/b/a AIRLINES FOR 

AMERICA, ALASKA AIRLINES, INC., 

AMERICAN AIRLINES, INC., ATLAS 

AIR, INC., FEDERAL EXPRESS 

AIRLINES, HAWAIIAN AIRLINES, INC., 

HORIZON AIR, JETBLUE AIRWAYS 

INC., SOUTHWEST AIRLINES CO., 

UNITED AIR LINES, INC., UNITED 

PARCEL SERVICE CO., and AIR 

CANADA, 

 Complainants, 

v. 

PORT OF PORTLAND, OREGON, 

 Respondent. 

FAA Docket No. 16-16-04

REPLY OF COMPLAINANTS AIR TRANSPORT ASSOCIATION OF AMERICA, 

INC., D/B/A AIRLINES FOR AMERICA, ET AL. TO PORT OF PORTLAND ANSWER

Pursuant to 14 C.F.R. § 16.23(e), Complainants Air Transport Association of America, 

Inc., d/b/a Airlines for America (“A4A”), Alaska Airlines, Inc., American Airlines, Inc., Atlas 

Air, Inc., Fedex Express Airlines, Hawaiian Airlines, Inc., JetBlue Airways, Inc., Southwest 

Airlines Co., United Airlines, Inc., United Parcel Service Co., and Air Canada (“Complainants”) 

submit this reply to the “Answer” of the Respondent Port of Portland (the “Port”) filed April 15, 

2016 (the “Port Answer”).1

 

 

1

 By order dated April 22, 2016, FAA extended Complainants’ time to file this Reply until May 

25, 2016. 
2 

INTRODUCTION AND SUMMARY 

Nothing in the Port Answer refutes the fact that, by requiring the airlines at PDX to pay 

the Offsite Stormwater Management Fees and the Superfund Remediation Fees (collectively, the 

“Fees”), and remitting the proceeds to the City of Portland (the “City”), the Port is violating 

federal statutes against diversion of airport revenue; federal Grant Assurance 25 - in which the 

Port promised not to divert airport revenue from the Portland International Airport (“PDX” or 

“Airport”); and the FAA’s Policy and Procedures Concerning the Use of Airport Revenue, 64 

Fed. Reg. 7696 (Feb. 16, 1999) (“Revenue Use Policy”). 

As set forth in the Complaint and not rebutted by the Port, the Fees are not being used to 

provide any services or facilities to the Airport. By including the Fees in the airline rates and 

charges and forwarding the paid Fees to the City, the Port is diverting airport revenue 

(specifically, the Fees) from the Airport and into the coffers of a separate government entity 

which is using the money for projects external to the Airport. 

The Port makes no allegation that the City is “managing the stormwater runoff” at the 

Airport, or that the Superfund investigation and cleanup relating to the Willamette River in 

downtown Portland includes “stormwater runoff and sewer overflow” originating from the 

Airport. Instead, the Port’s proffered defense to the allegation of revenue diversion is to engage 

in a game of semantics by asserting that (1) because the Fees relate to the treatment of water by a 

city government, they are properly classified as “utility” charges, (2) utility fees are properly 

included within the definition of “operating costs,” and (3) payment of fees that are classified as 

“operating costs” does not constitute airport revenue diversion. 

The fundamental fallacy in the Port’s rationale is that it ignores the unassailable fact that 

the Fees are not being imposed by the City in exchange for any services or facilities that are 

actually provided to the Airport. In order not to constitute unlawful diversion of airport revenue, 
3 

the charges in question must be for “operating costs” of the Airport. However, the Fees 

represent “operating costs” of the City for projects unrelated to the Airport. The fact that the 

Fees are “operating costs” is irrelevant given that they are not Airport “operating costs.”

1. The Port’s argument that the Offsite Stormwater Management and Superfund 

Remediation Fees are “operating costs” of PDX is contrary to 49 U.S.C. § 47133(a), which states 

that “the revenues generated by an airport that is the subject of Federal assistance may not be 

expended for any purpose other than the capital or operating costs of – (1) the airport; (2) the 

local airport system; or (3) any other local facility that is owned or operated by the person or 

entity that owns or operates the airport that is directly and substantially related to the air 

transportation of passengers or property.” (Emphasis added); see also 49 U.S.C. § 47107(b) 

(same language required to be agreed to by airports in Grant Assurances). The Offsite 

Stormwater Management and Superfund Remediation Fees are not “operating costs” of the 

Airport and also are not “directly and substantially related to the air transportation of passengers 

or property.” The term “operating cost” cannot be interpreted and applied in a manner that 

ignores the clear directive in sections 47133(a) and 47107(b)(1) for payments to third parties to 

be “directly and substantially related to the air transportation of passengers or property.” 

In addition, 49 U.S.C. § 47107(k)(2)(A) makes it clear that payments made by the airport 

to a third party (such as the City) must “reflect[] the value of services and facilities provided 

to the airport.” (Emphasis added). The Offsite Stormwater Management and Superfund 

Remediation Fees do not reflect “the value of services and facilities provided to” PDX. The Fees 

are not being imposed in connection with any services or facilities provided to PDX. Rather the 

services and facilities related to the Fees are exclusively for City of Portland projects external to 

the Airport. 
4 

The Port asserts that the Fees “are among various utility charges the Port incurs as a 

consequence of owning and operating the Airport.”2 But this characterization is irrelevant as 

nowhere does the Port maintain that the “utility charges” in question (i.e., the Fees) are imposed 

in exchange for the provision of any services or facilities by the City to the Airport. The Port 

does not actually contend that the Fees are imposed to compensate the City for services received 

or for operating or maintaining any aspect of the Airport, much less provide any supporting 

evidence for such a position. Rather, the undisputed evidence is that the Fees are used to pay for 

City expenses relating to the operation and maintenance of offsite stormwater and environmental 

investigation and remediation projects entirely external to the Airport. 

The Port’s assertion that “the Port is not being singled out for some sort of special 

assessment” (Answer, at 2) is irrelevant. There is no exception to the laws against diversion of 

airport revenue merely because the fees are also being paid by non-Airport entities. Unless the 

fees being charged to the airport are in exchange for services or facilities provided to the airport, 

the fees constitute unlawful diversion of airport revenue. 

The Port also contends that the Offsite Stormwater Management Fees help pay for 

cleaning of “streets (and highways)” that “are used by origin and destination passengers, as well 

as Airport and Airport tenant employees, for traveling to and from the Airport.”3

 Once again, 

this is irrelevant. The relevant federal statutes require that the payments of airport-generated 

revenue be tied to costs incurred to operate the airport or be “directly and substantially related 

to the air transportation of passengers or property,” 49 U.S.C. § 47133(a), § 47107(b), or be 

in exchange for “services and facilities provided to the airport,” § 47107(k)(2). Services 

 

2

 Port Answer, at 2. 

3

 Port Answer, at 2-3. 
5 

provided to roadways outside of the Airport for general public benefit do not fall into any of 

these narrow categories. 

2. Treating the Fees as PDX “operating costs” is also contrary to the FAA Revenue 

Use Policy. Among other things, payments of airport revenues may not “exceed the fair and 

reasonable value of those services and facilities provided to the airport.”

4

 The Fees are not 

imposed in exchange for any services or facilities provided to PDX. Kirk Shaffer, a former FAA 

Associate Administrator for Airports and general counsel of Nashville International Airport, has 

30 years' experience in the U.S. commercial aviation industry, and particular expertise in federal 

policies and industry practice relating to airports and their relationships with airlines.5

 Mr. 

Shaffer’s opinion is that the imposition by the City of the Off-Site Stormwater Management and 

Superfund Remediation Fees on the Airport and its airline tenants constitutes unlawful diversion 

of Airport revenue in violation of the Revenue Use Policy.6

 Mr. Shaffer categorically rejects the 

Port’s assertion that the Fees constitute “operating costs” of PDX: 

In order to constitute an airport operating cost, a fee must be 

imposed in exchange for a service or facility actually provided to, or 

being used by, the airport. The Fees are not operating costs of the 

Airport because they are not imposed in exchange for any 

service or facility actually provided to or used by the Airport. 

Rather, the Fees relate to services and facilities that are being 

provided external to, and not for use by, the Airport.7 

3. The July 30, 2015 letter from FAA official Randy Fiertz (Complaint Ex 12), on 

which the Port places great reliance, does not support imposition of the Fees at PDX. Mr. 

 

4

 Section VI(B)(1), 64 Fed. Reg. at 7720 (emphasis added). 

5

 “Declaration of D. Kirk Shaffer” (“Shaffer Decl.”), Exhibit 1 hereto, ¶¶ 1, 11-12. 

6

 Shaffer Decl. ¶ 4. 

7 Id. (emphasis added). 
6 

Fiertz’s characterization of the Fees as a “legal obligation incident to the airport’s possessory 

interest in land” is expressly non-final, reflects solely his personal opinion, and cannot be 

squared with the prohibition in federal statutes, Grant Assurance 25, and the Revenue Use Policy 

against the Airport being charged fees for services it does not receive. 

4. The Fees also are not allocable to the Airport based on the criteria described in 2 

C.F.R. Part 225 (formerly OMB Circular A-87), and therefore are not an allowable use of 

Airport revenue. Exhibit 2 to this Reply is the Declaration of Norwood (“Woody”) Jackson, Jr. 

(“Jackson Decl.”). Mr. Jackson is a certified public accountant with 40 years of knowledge of, 

and experience with, generally accepted accounting principles (“GAAP”), and regulations, 

requirements, policies, and practices relating to federally funded projects and contracts, and the 

accounting regulations and related documents concerning allocation of costs referenced by FAA 

in its Revenue Use Policy.8

 His experience includes serving as the Deputy Controller at the U.S. 

Office of Management and Budget (“OMB”), Office of Federal Financial Management, and 

being a partner at the accounting firm KPMG LLP.9

 

Mr. Jackson opines that the Offsite Stormwater Management Fees and the Superfund 

Remediation Fees are not an allowable use of Airport revenues because they are not imposed in 

exchange for the provision of any services or facilities by the City to the Airport. The expenses 

incurred by the City for the management of offsite stormwater located outside the Airport, and 

the investigation and remediation of a Superfund site not involving the Airport, do not represent 

 

8

 Jackson Decl. ¶ 1. 

9

 Jackson Decl. ¶ 5 and Exhibit A thereto. 
7 

services to the Airport for purposes of allocating costs under the controlling principles, policies, 

law and guidance materials.10

5. There is equally no merit to the Port’s assertion that the Fees are Airport operating 

expenses pursuant to Bond Ordinance 155 (the “Bond Ordinance”).11 As set forth in the 

Declaration of Joan N. Stern (a public finance attorney with 40 years’ experience) (“Stern 

Decl.”) (Exhibit 3 hereto), neither the Bond Ordinance nor custom and practice in the bond 

industry supports treating the Fees as Airport operating costs or expenses. The fact that section 

13.1(g) of the Bond Ordinance includes “costs of utility services” in the definition of “Costs of 

Operation and Maintenance” is irrelevant with regard to the Fees. In order for utility charges to 

constitute “operating costs” or “operating expenses” of the Airport, the utility services must be 

actually provided to the Airport. However, the Fees are not being imposed in exchange for any 

services actually provided to the Airport. Rather, the services in question are being provided to 

the Portland, Oregon municipality, and for projects and operations completely external to the 

Airport. The Fees are not “operating costs” or “operating expenses” under the Bond Ordinance. 

6. In addition, the Fees may not be imposed on the airlines at PDX because they are 

unlawful taxes rather than appropriate user fees. Furthermore, pursuant to Section VI(B)(5) of 

the Revenue Use Policy, payments “in lieu of taxes” may not “exceed the value of services 

provided.” Because the City provides no services whatever to the Airport, in may not impose 

any fees “in lieu of taxes.” 

Finally, the Fees are not authorized by the Anti-Head Tax Act because they do not fall 

within any of the limited exceptions for charges under the AHTA, 49 U.S.C. § 40116(e). The 

 

10 Jackson Decl. ¶ 4. 

11 The Port’s Answer attaches some excerpts from the Bond Ordinance. The entire Bond 

Ordinance is attached as Exhibit B to the Stern Declaration. 
8 

Fees do not constitute property taxes, net income taxes, franchise taxes, or sales or use taxes on 

the sale of goods or services; or reasonable rental charges, landing fees, or other service charges 

for using airport facilities of an airport owned or operated by that taxing entity. 

In sum, the Fees are not “operating costs” of the Airport and, therefore, may not be paid 

to the City with Airport revenues, including the rates and charges paid by the airlines at PDX. If 

FAA were to rule that use of Airport revenues to pay the Offsite Stormwater Management and 

Superfund Remediation Fees does not constitute unlawful diversion of Airport revenues, it 

would be contrary to federal statutes (49 U.S.C. § 47133(a) and §§ 47107(b) and (k)), FAA’s 

own Revenue Use Policy and Grant Assurance 25, and would be arbitrary and capricious, an 

abuse of discretion, and otherwise contrary to law. 

ARGUMENT 

I. CHARACTERIZING THE OFFSITE STORMWATER MANAGEMENT AND 

SUPERFUND REMEDIATION FEES AS AIRPORT “OPERATING COSTS” IS 

CONTRARY TO THE STATUTORY PROHIBITIONS AGAINST DIVERSION 

OF AIRPORT REVENUE. 

The Port’s proffered rational for requiring the airlines to pay the Fees – characterizing the 

Fees as “operating costs” of the Airport – is contrary to the plain meaning of the federal statutes 

which prohibit diversion of airport revenue. 

A. The Plain Language of the Federal Statutes Demonstrates that the 

Imposition of the Fees Constitutes Unlawful Revenue Diversion. 

To begin with, 49 U.S.C. § 47133(a) states that “the revenues generated by an airport that 

is the subject of Federal assistance may not be expended for any purpose other than the capital or 

operating costs of – (1) the airport; (2) the local airport system; or (3) any other local facility 

that is owned or operated by the person or entity that owns or operates the airport that is directly 

and substantially related to the air transportation of passengers or property.” (Emphasis 

added). The same prohibition is set forth in 49 U.S.C. § 47107(b)(1). The Offsite Stormwater 
9 

Management and Superfund Remediation Fees are not “operating costs” of the Airport and also 

are not “directly and substantially related to the air transportation of passengers or property.” 

Therefore, using Airport revenues to pay the Fees clearly violates the plain language of 49 

U.S.C. § 47133(a) and § 47107(b). 

The term “operating cost” cannot be interpreted and applied in a manner that ignores the 

clear directive in sections 47133(a) and 47107(b)(1) for payments to related entities to be 

“directly and substantially related to the air transportation of passengers or property.” 

Congress dictated that payments be limited to the capital or operating costs of the airport. The 

statutory language allows airport payments to be made to an entity other than the airport, 

provided that the recipient is “owned and operated” by the same entity that owns and operates 

the airport. And even then, the payments to the related entity are not permitted unless the 

amounts are “directly and substantially related to the air transportation of passengers or 

property.” 

Given this context and framework, a cost cannot be deemed to be an airport “operating 

cost” unless, at a minimum, it is “directly and substantially related to the air transportation of 

passengers or property.” Statutes are to be construed as a whole, with all provisions considered. 

See United States v. Morton, 467 U.S. 822, 828 (1984) (“We do not, however, construe statutory 

phrases in isolation; we read statutes as a whole”); FDA v. Brown and Williamson Tobacco 

Corp., 529 U.S. 120, 133 (2000) (“It is a fundamental canon of statutory construction that the 

words of a statute must be read in their context and with a view to their place in the overall 

statutory scheme”) (citation and internal quotation marks omitted); Acree v. Republic of Iraq, 

370 F.3d 41, 52 (D.C. Cir. 2004)12 (it is a “cardinal rule that a statute is to be read as a whole 

 

12 Superseded by statute – Gates v. Syrian Arab Republic, 580 F. Supp. 2d 53 (D.D.C. 2008). 
10 

since the meaning of statutory language, plain or not, depends on context” and in interpreting a 

statute a court must “consider not only the bare meaning of the critical word or phrase but also its 

placement and purpose in the statutory scheme”) (citations and internal quotation marks 

omitted); Westwood Apex v. Contreras, 644 F.3d 799, 804 (9th Cir. 2011) (it is “inappropriate to 

construe a statute by reading related clauses in isolation or taking parts of a whole statute out of 

their context”). 

The Port contends that although section 47133(a) and 47107(b) do not define the term 

“operating costs,” the “ordinary or natural meaning” of the term includes the Fees because they 

“were enacted and are billed as utility charges.”13 This argument not only ignores the statutory 

language “directly and substantially related to the air transportation of passengers or property,” 

but it also omits the existence of the airport as modifying the term “operating costs.” It is 

patently not sufficient that the costs in question may be characterized as “utility charges” or 

“utility fees” in some general sense. In order not to result in unlawful revenue diversion, the 

utility charges or fees must be for a service or facility actually provided to the Airport. See 49 

U.S.C. § 47107(k)(2)(A) (the policies and procedures against diversion of airport revenue “shall 

prohibit, at a minimum . . . (A) Direct payments or indirect payments, other than payments 

reflecting the value of services and facilities provided to the airport”) (emphasis added). To 

construe “operating costs” as broader than costs linked to running the Airport is legally 

erroneous. See, e.g., Southwest Airlines Co. v. TSA, 554 F.3d 1065, 1069-70 (D.C. Cir. 2009) 

(faulting TSA for attempting to construe the statutory phrase “screening passengers” broadly to 

include “the entire set of activities undertaken to promote passenger safety” rather than its 

 

13 Port Answer, at 23. 
11 

intended meaning within the context of the statute: namely, “the process of searching airline 

passengers at an airport security checkpoint”). 

Examination of the sample bill from the City to the Port dated June 4, 2014, and provided 

as Exhibit 3 to the July 1, 2014 letter from David Berg to DOT General Counsel Kathryn 

Thomson (Complaint Exhibit 10), makes it clear that the Offsite Stormwater Management and 

Superfund Remediation Fees are not linked to any service actually provided to the Airport. 

These charges appear separate from the water and sewer charges, which are based on meter 

readings for the actual provision of water and sewer services to the Airport. By contrast, the 

Fees are not based on any actual utilization of any services or facilities by the Airport. Rather, 

they are based solely on the fact that the Airport purportedly accounts for 33,772,000 square feet 

of impervious area in the City.14

Moreover, Congress has made it clear that the policies and procedures against diversion 

of airport revenue also must prohibit “use of airport revenues for general economic 

development, marketing, and promotional activities unrelated to airports or airport 

systems.” 49 U.S.C. § 47107(k)(2)(B) (emphasis added). So, the fact that the fees may promote 

the general economic development of a city in which an airport is located, or marketing and 

promotional activities, is insufficient to justify the imposition of the fees for activities “unrelated 

to airports or airport systems.” 

 

14 Exhibit 1 to the Port Answer is the “Declaration of B. Jonas Biery” (April 14, 2016) (“Biery 

Decl.”). The Biery Declaration provides no support for finding that the Fees are lawful. Biery is 

the “Business Services Manager for the Bureau of Environmental Services (‘BES’).” Biery 

Decl. ¶ 1. He does not appear to have any involvement with the Airport and his declaration does 

not even purport to offer any evidence to suggest that the Fees are related to any costs actually 

incurred to provide any service or facility to the Airport. 
12 

B. The Legislative History Behind the Prohibitions Against Diversion 

of Airport Revenue Further Demonstrates why the Fees are 

Unlawful. 

The legislative history behind the prohibitions against diversion of airport revenue fully 

supports Complainants’ position and contravenes the Port’s attempt to justify its payment of the 

Fees. In the 1990s Congress became very frustrated with FAA’s failure to enforce the 

prohibition against diversion of airport revenue, and made it clear that the laws were intended to 

ensure that revenues generated by an airport remained on the airport, rather than used for nonairport projects. 

In 1996, the Committee on Transportation and Infrastructure of the U.S. House of 

Representatives stated that it “continue[d] to have significant concerns about the diversion of 

airport revenues for non-airport purposes and the failure of the FAA to take timely and firm 

action in some cases.”15 The law against revenue diversion was deemed necessary by the 

Committee because “[g]iven that most airport users do not vote in the area of the airport but are 

merely visiting or making connections, it was feared that local officials would be tempted to 

raise airport fees rather than local taxes [so] those fees could be used for non-airport projects.”16 

“The revenues diversion prohibition ensures that any money raised at the airport will be spent on 

the airport. In light of the important safety, security, capacity, and noise mitigation needs at most 

airports, it is vital that the money is spent in this way.”17 

The House Committee also stated that the “revenue diversion prohibition was . . . 

imposed in recognition of the fact that money is fungible. Congress did not want an airport to 

 

15 H. Rep. No. 104-714, at 37 (1996). 

16 Id. 

17 Id. at 37-38. 
13 

receive an AIP grant for a specific project and then divert a like amount of money off the airport 

for a non-airport purpose. The revenue diversion prohibition ensures that all airport and AIP 

money is used for airport purposes.”18 The House Committee stated: 

[I]t is not merely the integrity of AIP grants that causes the 

Committee’s concern about revenue diversion. Ultimately, it is the 

passenger who must pay when airport revenue is diverted. When 

an airline’s rates and charges are increased to make up for the 

revenue lost by the diversion, the higher cost is ultimately passed 

on to the passenger. Therefore, revenue diversion burdens 

interstate commerce even if the airport is no longer receiving 

grants.19 

The Committee further stated: “In the Committee’s view, revenue diversion is harmful whether it 

takes the form of a direct payment from the airport to a non-airport entity or an indirect payment 

such as the inclusion of AIP grant or PFC revenue in the gross revenue of the airport for the 

purposes of calculating that airport’s rent to another political entity.”20 

During a U.S. Senate hearing on May 1, 1996, the problems of airport revenue diversion, 

and the lack of FAA enforcement of the prohibition against revenue diversion, were fully aired.21 

Senator John McCain stated: 

The current disturbing trend of unlawful airport revenue 

diversion must stop. Recent audits conducted by the Inspector 

General’s Office of the Department of Transportation, finding more 

than $170 million in revenue diversion from 1992 to 1995, have 

revealed far too many local governments are attempting to solve 

 

18 Id. at 38. 

19 Id. 

20 Id. 

21 “Airport Revenue Diversion,” Hearing before the Subcommittee on Aviation of the Committee 

on Commerce, Science and Transportation, 104th Congress, S. Hrg. 104-629 (May 1, 1996), 

Exhibit 4 hereto. 
14 

their fiscal problems by taking money away from their airports 

and using it for non-airport purposes.

22 

Senator McCain added that “The Inspector General audit shows that many city and county 

governments blatantly disregard Federal law that prohibits airport revenue diversion to pay for 

city services on the backs of air travelers.”23 The Senator further stated: 

For example, airport revenue – that is, money that air carriers, the 

traveling public and others pay when using airport facilities – has 

been wrongfully used to sponsor an Orange Bowl party, cosponsor 

local golf tournaments, purchase tickets for State legislators to attend 

the Orange Bowl and a Miami Dolphins game, support local softball 

teams, fund floats for the Tournament of Roses Parade, acquire land 

not needed for airport purposes, pay for highway projects that do not 

facilitate access to an airport, construct an activity center and 

develop a community park not related to an airport, and reimburse 

lobbyist fees for work on issues contrary to the airport’s interest.24 

Senator McCain also stated that “Because airports are meant to be self-sustaining, and because it 

is intended that federal grant money to airports must be used for airport purposes, Congress has 

had a long-standing policy that diversion of airport revenues to local governments for non-airport 

purposes is illegal.” Id. at 3. See also id. at 4 (Statement of Sen. Pressler) (“The bar against 

diversion also was imposed to ensure federal funds remained at airports. Because money is 

extremely fungible, an airport could receive an AIP grant for a specific project and them simply 

divert that or a like amount of other money for a non-airport related project. Simply put, the 

prohibition on revenue diversion was intended by Congress to ensure AIP money is truly 

used for airport improvement”) (emphasis added); id. at 5 (Statement of Sen. Ford) (“When 

we created the airport grant program, it was decided that if we are going to provide Federal 

 

22 Id. at 1 (emphasis added). 

23 Id. at 2. 

24 Id. at 2. 
15 

funds, moneys collected from landing fees and other sources should be used to build and expand 

the facilities. We did not want to give Federal grants to airports and then have those airports 

write checks to pay for non-airport services.”) 

The DOT Inspector General testified before the U.S. Senate that: 

FAA certainly has not done enough to stop revenue diversion. 

Airport revenue is being used for city politics, mayors offices, 

dinners, country clubs, lobbyists, lawyers, Rose Bowl Parade floats, 

and a visit by the Pope, to name only a few. Yet local governments 

run to the Federal Government to get money from the aviation trust 

fund to keep the airport going and to make needed airport 

improvements. Thus, you are robbing the aviation users who pay 

into the trust fund to pay for those city functions that the city 

political leaders and the city taxpayers do not have the fortitude to 

tax and pay for themselves. Airports have become this country’s 

latest cash cow, and the victims are the flying public, once again, 

also the airlines who pay additional fees and taxes.

25 

The Inspector General added that her office “had to conclude, unfortunately, that, at least to date, 

the FAA has not had the necessary fortitude for enforcement on this issue.”26 Moreover, “the 

floodgates” of revenue diversion had “been opened by many reasons – by FAA inaction, by 

bizarre non-opinions that have been issued by the Department of Transportation, and by 

the approval of more and more diversion schemes.”

27

These words – spoken by the DOT Inspector General two decades ago – are fully 

applicable to FAA’s failure to date to take action to prevent the Port from engaging in revenue 

diversion through payment of the Fees to the City (and the related imposition of such costs on 

the PDX airlines). It is once again only through a “bizarre non-opinion” (the Randy Fiertz letter 

 

25 Id. at 7 (emphasis added). 

26 Id. at 7. 

27 Id. (emphasis added). 
16 

of July 30, 2015) that FAA could attempt to justify what is undeniably diversion of Airport 

revenue because of the Fees. 

The Port asserts that “Complainants fail to show how the Airport could operate 

efficiently if the City failed to manage stormwater on the City’s rights-of-way.”28 However, this 

proffered rationalization for imposition of the Fees on the Airport would create an exception to 

the prohibition against airport revenue diversion that could easily “swallow the rule.” There are 

an infinite number of conditions that could impact the usefulness of roadways located throughout 

the City and external to the Airport – under the Port’s position, the Airport can be saddled with a 

portion of all categories of expenses relating to upkeep of the roadway network throughout 

Portland. This would be directly contrary to the prohibition against revenue diversion. 

In any event, it is the City which would have the burden of proving that the Airport 

cannot operate efficiently without the offsite stormwater management and Superfund 

remediation provided (and charged) by the City and the City has not (and cannot) meet that 

burden. Moreover, even if it could make such a showing (which it cannot), it would not change 

the plain fact that the Fees are being used for services and facilities being provided external to 

the Airport and, therefore, constitute unlawful diversion of airport revenue. 

The Port also contends that Complainants are asking FAA to “second-guess” as “to the 

value and benefit of the service provided.”29 This is not correct. The facts are undisputed that 

the City is not providing any service to the Airport in exchange for the Fees. There is, therefore, 

no judgment to be made as to “value” or “benefit” of services which are not actually being 

provided to the Airport. Indeed, this argument underscores why Congress insisted that airports 

 

28 Port Answer, at 33. 

29 Port Answer, at 33-34. 
17 

clearly receive services for airport operations or services that directly and substantially relate to 

the air transportation of passengers or property to payments to non-owner governmental bodies, 

so that questions about “value” or “benefit” are avoided. 

C. Congress Did Not Exempt Fees Imposed by Local Governments 

that Do Not Own or Operate the Airport. 

Additionally, there is no merit to the Port’s argument that Congress did not intend for 49 

U.S.C. § 47133(a) to apply to local governments that do not own or operate an airport, except for 

the narrow category of “aviation fuel taxes.”30 The overriding purpose of section 47133 was to 

stop the diversion of revenue from airports to local governments. See, e.g., H. Rep. No. 104-714, 

at 37 (“The Committee continues to have significant concerns about the diversion of airport 

revenues for non-airport purposes . . . . Indeed, the controversy about various payments by the 

Los Angeles International Airport to the City continues . . . .”) (emphasis added). When 

Congress said that the “revenues diversion prohibition ensures that any money raised at the 

airport will be spent on the airport” (id.), it was not limiting its concern to the owners and 

operators of airports. Congress was well aware of the political pressure cities and counties can 

bring to bear on local airports to funnel money off-airport to shore up local finances. 

That Congress intended to apply the ban to state and local governmental entities which do 

not own or operate an airport is further demonstrated by 49 U.S.C. § 47133(c), which states that 

“Nothing in this section may be construed to prevent the use of a State tax on aviation fuel to 

support a State aviation program or the use of airport revenue on or off the airport for a noise 

mitigation purpose.” (Emphasis added) If Congress did not think the revenue diversion 

prohibition in section 47133 applied beyond airport owners and operators, it would not have 

created this narrow exception from the revenue diversion prohibition for certain taxes imposed 

 

30 Port Answer, at 33. 
18 

by state governments – which generally do not own and operate airports – to be expended for 

state aviation programs and noise mitigation purposes. See 78 Fed. Reg. at 69,792 (“The 

provisions permitting certain uses of a ‘state tax’ in section 47107(b)(3) and 47133(c) would be 

unnecessary and meaningless unless state taxes were included in the requirements”). 

D. There is No Merit to the Port’s Argument that Imposition of the 

Fees Does Not Violate Federal Law. 

Finally, the FAA should reject the Port’s argument that a ruling in favor of the airlines 

would unlawfully interfere with the City’s “historic police powers” because federal law does not 

preempt Ordinance 185610 and the Fees.31 This argument raises a “red herring.” Complainants 

are not making a preemption argument and FAA does not need to find that the federal laws and 

policies against diversion of airport revenue preempt Ordinance 185610 and the Fees in their 

entirety to find the Fees constitute unlawful revenue diversion. 

But that does not give the Port (and the City) carte blanche to require the Airport and its 

airlines to pay charges to the City where, as is the case here, there are no services or facilities 

that are provided in exchange for the Fees. The Port’s collection and remission of the Fees to the 

City violates its obligations under Grant Assurance 25. That finding alone would moot the Port’s 

argument that the Fees are not preempted. See, e.g., City of Santa Monica v. FAA, 631 F.3d 550, 

559 (D.C. Cir. 2011) (“Having held that the FAA did not act arbitrarily or capriciously when it 

concluded that the [Santa Monica] ordinance was inconsistent with [the City of Santa Monica’s] 

contractual obligations under grant assurance 22,” there was no need for the court “to consider 

the preemption issue”). 

 

31 Port Answer, at 33. 
19 

For its preemption argument, the Port cites Hillsborough Cty. v. Automated Med. Labs., 

Inc., 471 U.S. 707, 715 (1985). There, the Court held that federal regulations governing 

collection of blood plasma from paid donors did not preempt local ordinances governing 

collection of blood plasma from paid donors. The Court stated that for a local law to be 

preempted by a federal regulation, there must be “a showing of implicit pre-emption of the whole 

field, or of a conflict between a particular local provision and the federal scheme, that is strong 

enough to overcome the presumption that state and local regulation of health and safety matters 

can constitutionally coexist with federal regulation.” Id. at 716. Even if that standard were to 

apply here (to the question of whether federal statutes preempt a local fee or tax intended to raise 

revenue) it is easily met with regard to the attempt to use the Fees to require the diversion of 

revenue generated at the Airport into the accounts of a third party local government agency 

which is not providing any service or facilities to the Airport in exchange for the charges. There 

is, in short, a direct conflict between the laws and policies against diversion of airport revenue, 

and the payment of the Fees to the City using Airport-generated revenues for City services that 

are not provided to the Airport. See Geier v. Am. Honda Motor Co., 529 U.S. 861, 874 (2000) 

(defective design claims against automobile manufacturer was preempted by federal statute 

because of an actual conflict between the claims and the federal law). 

For the reasons set forth above, imposition of the Fees at PDX violates the federal 

statutory prohibitions against diversion of airport revenue, and nothing in the Port Answer 

refutes this fact. 

II. TREATING THE OFFSITE STORMWATER MANAGEMENT AND 

REMEDIATION FEES AS AIRPORT “OPERATING COSTS” IS CONTRARY 

TO THE FAA REVENUE USE POLICY. 

The Port’s attempt to justify the Fees as “operating costs” of the Airport also violates the 

FAA Revenue Use Policy, which makes it clear that payments by an airport operator to a third 
20 

party may only be for goods and services directly and substantially related to the air 

transportation of passengers or property, which the Fees clearly are not. 

Tracking the federal statutes against airport revenue diversion, the Revenue Use Policy 

defines “revenue diversion” as “the use of airport revenue for purposes other than the capital or 

operating costs of the airport, the local airport system, or other local facilities owned or operated 

by the airport owner or operator and directly and substantially related to the air 

transportation of passengers or property . . . .”32 Under the Revenue Use Policy, prohibited 

uses of airport revenue include but are not limited to: “Direct or indirect payments that exceed 

the fair and reasonable value of those services and facilities provided to the airport.”33 This 

language sets forth FAA’s policy, consistent with the revenue diversion statutes, that an airport 

and its airline tenants cannot be charged amounts that “exceed the fair and reasonable value of 

[the] services and facilities provided to airport.” 

Also consistent with 49 U.S.C. § 47107(k), the Revenue Use Policy prohibits “Marketing 

and promotional activities unrelated to airports or airport systems.”34 Accordingly, the fact 

that an expense may provide a general benefit to the community as a whole does not justify the 

expense being included within the airport rates and charges. 

This principle is further demonstrated by FAA’s statement in the Revenue Use Policy 

that “[e]xpenditure of airport funds for support of community activities, participation on 

community events, or support of community-purposes uses of airport property” is only permitted 

“if such expenditures are directly and substantially related to the operation of the airport.” 

 

32 Revenue Use Policy, Section VI(A), 64 Fed. Reg. at 7720 (emphasis added). 

33 Section VI(B)(1), 64 Fed. Reg. at 7720 (emphasis added). 

34 Section VI(B)(4), 64 Fed. Reg. at 7720 (emphasis added). 
21 

Section V(A)(8), 64 Fed. Reg. 7718 (emphasis added). In other words, the fact that the City of 

Portland as a whole may benefit from the offsite stormwater management or Superfund 

remediation is irrelevant if such expenditures are not “directly and substantially related to the 

operation of” PDX. 

The Revenue Use Policy also prohibits “Impact fees assessed by any governmental body 

that exceed the value of services or facilities provided to the airport.”35 This language 

reiterates the FAA position that charges imposed on the airport and its airline tenants may not 

exceed the value of services or facilities provided to the airport. 

Under the Revenue Use Policy, “Airport revenue may be used for the capital or operating 

costs of those portions of an airport ground access project that can be considered an airport 

capital project, or that part of a local facility that is owned or operated by the airport owner 

or operator and directly and substantially related to the air transportation of passengers or 

property, including use by airport visitors and employees.”36 This language yet again reflects 

the fact that in order for a project to be funded with airport revenues the project must be “directly 

and substantially related to the air transportation of passengers or property.” See also id. at 7719 

(“FAA has approved the use of airport revenue for the actual costs incurred for structures and 

equipment associated with an airport terminal building station and a rail connector between the 

airport station and the nearest mass transit rail line, where the structures and equipment were (1) 

located entirely on airport property, and (2) designed and intended exclusively for the use 

of airport passengers”) (emphasis added). 

 

35 Section VI(B)(10), 64 Fed. Reg. at 7720 (emphasis added). 

36 Section V(A)(9), 64 Fed. Reg. 7718-19 (emphasis added). 
22 

An example of a rail connector project at an airport is San Francisco’s BART spur which 

serves San Francisco International Airport (“SFO”). The BART station on SFO and the spur 

from the mainline were constructed with airport revenue only because they serve the airport and 

only the airport. The same is true for airport connector roadways. Only that portion of the 

roadway which is on airport property or within right-of-way owned by the airport and which 

serves only the airport can be legally funded with airport revenue.37

On May 3, 2016, FAA proposed to modify its policy regarding use of FAA-approved 

passenger facility charges (“PFCs”) for airport rail projects to permit use of PFC-generated funds 

for some rail-related expenses even if the rail line does not terminate at the airport and is thereby 

not exclusively dedicated to the airport.38 However, even the proposed new PFC-rail policy – 

pursuant to which “on-airport rail access projects are no longer treated identically to access 

roads”39 – would still require an actual connection between the airport and the “on-airport rail 

access line.” By contrast, the Fees are for stormwater and environmental remediation services 

and facilities entirely unconnected to the Airport. 

In addition, in proposing to modify its rail policy, FAA made it clear that railroads are 

different from roadways and that “[g]iven the open and variable nature of road systems, it is 

critical for the FAA to apply strict eligibility criteria that tie the funding of the on-airport project 

to the exclusive use of the airport.”40 FAA must also apply the same “strict eligibility criteria” 

with regard to funding of utility costs imposed by a municipal government. FAA stated that 

 

37 Shaffer Decl. ¶ 36. 

38 Passenger Facility Charge (PFC) Program: Eligibility of Ground Access Projects Meeting

Certain Criteria, 81 Fed. Reg. 26,6111; Shaffer Decl. ¶ 37. 

39 Id. at 26,612. 

40 Id. 
23 

without use of “strict eligibility criteria” for a roadway project, “users of the infrastructure could 

benefit from federally-approved funds designed to improve access to the national air 

transportation system without ever intending to visit, or actually visiting, the airport.”41 

Similarly here, without FAA applying “strict eligibility criteria” for the Offsite 

Stormwater Management and Superfund Remediation Fees, users of offsite stormwater 

management and Superfund remediation services throughout the City of Portland could benefit 

from federally-approved funds designed to improve access to the national air transportation 

system, without even visiting PDX.42

Underlying the Revenue Use Policy is the Congressional objective of having an 

integrated national system of safe, efficient airports which are financially self-sufficient to the 

greatest extent possible and which do not rely on local and state taxes to fund their operations 

and capital programs. A corollary to the Revenue Use Policy is Congress’s support of safety, 

security, capacity, and noise mitigation capital projects through grants from the federal Airport 

and Airway Trust Fund. These grants are measured in billions of dollars each year and are 

derived from federal ticket taxes, freight waybill taxes, and fuel taxes paid by users of the 

aviation system. The FAA is responsible for achieving Congress’s objectives and administering 

the Trust Fund.43 

As the aviation industry has matured, large airports like PDX have become financial 

engines in their own right, capable of generating substantial amounts of revenue, funding very 

 

41 Shaffer Decl. ¶ 38 (citing 81 Fed. Reg. at 26,612); see also id. (“Without a very strict 

exclusive use requirement, users of access roads could take advantage of that infrastructure, and 

make a choice to never pass through the airport itself”). 

42 Shaffer Decl. ¶ 40. 

43 Shaffer Decl. ¶ 5. 
24 

substantial capital projects, and issuing highly rated debt. Congress has recognized that, 

especially in times when municipalities are faced with rising costs of providing basic services or 

a declining tax base or both, the temptation to divert that substantial airport revenue “downtown” 

or treat the local airport as a “cash cow” can be very strong, even overwhelming. Thus, for 

decades now, Congress has passed increasingly strong prohibitions against revenue diversion 

such as the Portland Fees. The FAA in response has published increasing strong policy 

statements and orders in support of the Congressional requirements and restrictions on airport 

revenue use. The Revenue Use Policy is one example.44 

If FAA were to allow the City to impose the Offsite Stormwater Management and 

Superfund Remediation Fees on the Airport and its airline tenants, it would directly and 

substantially undermine the airport funding system which Congress has mandated and 

strengthened over many years. For example, any airport capacity project (e.g. runway, taxiway) 

in current times is a very expensive proposition normally requiring a combination of grants, debt, 

and local airport revenue to complete. If an airport permits (or is forced to permit) its revenue to 

be committed to non-airport projects elsewhere in the city, it will have to generate even more 

revenue by raising its rates and charges which are paid by airlines and other airport users to make 

up the difference and remain self-sufficient. Airlines will be charged higher rates and charges, 

which in turn may lead to increased airfares and shipping charges. Permitting diversion like the 

Portland Fees is an indirect, illegal transfer from the federal treasury to the local government.45 

Imposition of the Fees on the Airport and its airline tenants would create a dangerous 

precedent pursuant to which cities and other local governments will siphon money from their 

 

44 Shaffer Decl. ¶ 6. 

45 Shaffer Decl. ¶ 7. 
25 

airports for municipal projects – not only for off-site stormwater management and Superfund 

cleanup expenses – but also other local functions, such as general safety and security, 

commercial development, and civic pride – simply because the airport is being treated the same 

as other persons and entities within the city. In short, the Port is seeking an “exception” to the 

prohibition against diversion of airport revenue that threatens “to swallow the rule.”46 

The only way to protect against diversion of airport revenue is to follow a hard-and-fast 

rule that revenue generated on the airport remains on the airport. Airport generated revenues can 

be used for the provision of services and facilities to the airport. But the Offsite Stormwater 

Management and Superfund Remediation Fees are not being imposed in exchange for services 

and facilities being provided to PDX. This results in a classic case of unlawful revenue 

diversion.47 

The Offsite Stormwater Management and Superfund Remediation Fees do not reflect 

“the value of services and facilities provided to” PDX. Representatives of the City and the Port 

do not even assert that facilities are provided to PDX or that the services of any City facilities or 

non-airport Port facilities related to stormwater management or Superfund cleanup are provided 

to PDX.48 

The fact that the fees may promote the general economic development of a city in which 

an airport is located, or marketing and promotional activities, is insufficient to justify the 

imposition of the fees for activities “unrelated to airports or airport systems.”49 A specific 

 

46 Shaffer Decl. ¶ 8. 

47 Shaffer Decl. ¶ 10. 

48 Shaffer Decl. ¶ 22. 

49 Shaffer Decl. ¶ 23. 
26 

example of the prohibition against use of airport revenues for general economic development is 

the inability of a federally funded airport to participate generally in a city-wide promotional 

campaign sponsored by the local chamber of commerce. It is quite typical for a commercial 

service airport to be a chamber of commerce member, as airports are economic drivers in most 

communities they serve. Nonetheless, paying for promotional activities which market the city as 

a whole without direct relation to the airport are prohibited as revenue diversion, and the FAA 

has routinely reaffirmed this principle.50 

The Black and Veatch study (2014) cited by the Port states that according to its survey of 

stormwater management: (1) “The charges assessed [for stormwater services] are proportional to 

the property’s contribution and impact of stormwater runoff”; and (2) “The charges assessed are 

‘voluntary’ in that the user has the opportunity to limit the use of the service . . . .” Answer 

Attachment E at 3 (bullets 3 and 4). Yet neither is true for the Fees imposed on PDX and its 

airline tenants. First, the Fees are not proportional to any contribution by the Airport to 

stormwater management requirements in the City, or to the impact of any stormwater runoff in 

the City caused by the Airport. Second, the Fees are in no sense “voluntary” for the Airport: 

there is nothing it can do to avoid being charged the Fees by the City. 

The requirement of linkage between fees and airport-generated costs has been the policy 

of the FAA at least since In the Matter of Revenue Diversion by the City of Los Angeles at Los

Angeles International, Ontario, Van Nuys, and Palmdale Airport, FAA Docket 16-01-96, 1997 

FAA LEXIS 1535 (1997). The record here is clear that that PDX receives no goods or services 

related to the Fees.51 

 

50 Shaffer Decl. ¶ 24. 

51 Shaffer Decl. ¶ 31. 
27 

In its Answer, the Port contends that the Offsite Stormwater Management and Superfund 

Remediation Fees “are operating costs within FAA’s Revenue Use Policy” because they are 

“utility fees.”52 However, merely because a charge imposed on the Airport is labeled a “utility 

fee” does not transform it into an operating cost of the Airport. The Offsite Stormwater 

Management and Superfund Remediation Fees may be a type of “utility fee” imposed by the 

City. However, they are not “utility fees” with regard to the Airport because no utility services 

are being provided to the Airport in exchange for the Fees.53 

The Port Answer ignores this fact. The Answer offers many definitions, concepts about 

allocation methodology, and discusses the ability of a municipality to impose utility fees. Over 

and over again, however, the Port ignores the simple fact that PDX receives no services or 

facilities in exchange for the Fees. 

The Port contends that the Revenue Use Policy explains that “[e]xpenditures that are 

directly and substantially related to the operation of the airport qualify inherently as operating 

costs of the airport.”54 However, the Fees are not directly or substantially related to the operation 

of PDX. Rather, they are directly and substantially related to the management of offsite 

stormwater in areas of the City not within the Airport, and to the cleanup of a river (the 

Willamette) having no connection to the Airport. 55 

The Port also claims that in “addition to the Revenue Use Policy, FAA’s Airport 

Compliance Manual . . . is further support that utility costs are Airport operating expenses for 

 

52 Port Answer, at 28. 

53 Shaffer Decl. ¶¶ 50-51. 

54 Port Answer, at 28 (citing 64 Fed. Reg. at 7705). 

55 Shaffer Decl. ¶ 52. 
28 

which airport sponsors may utilize airport revenues.”56 This is not correct in this instance 

because simply labeling a charge as a utility fee does not make it so where, as here, the so-called 

utility is not delivered to or received by the airport. FAA Airport Compliance Manual, FAA 

Order 5190.6B § 15.9(a) (at page 15-4) (2009) states that “Sponsors may use their airport 

revenue for the capital or operating costs of the airport, the local airport system, or other local 

facilities owned or operated by the airport owner or operator and directly and substantially 

related to the air transportation of passengers or property.” Thus, Order 5190.6B is consistent 

with federal statutory prohibitions against diversion of airport revenue in 49 U.S.C. § 47133(a) 

and § 47107(b) and the Revenue Use Policy.57 

Section 15.9(a) of Order 5190.6B adds that appropriate airport costs include 

“reimbursements to a state or local agency for the costs of services actually received and 

documented” by the airport. (Emphasis added) Here, PDX did not “actually receive” either 

stormwater or Superfund cleanup services from the City. 

There can be no exemption from the prohibition against unlawful revenue diversion for 

municipal utility charges where, as here, the Fees are not related to actual services or facilities 

provided to the Airport. The document “Legal Research Digest 2, Theory and Law of Airport 

Revenue Diversion” from the “Airport Cooperative Research Program” (May 2008) (“ACRP 

Document”) (Exhibit 7 to the Complaint) states: 

The fiscal problems facing local governments more generally 

(including, for example, the needs of urban roads, water, sewage, 

parks, schools, hospitals, and other infrastructure, and fire and 

police protection) coupled with a declining tax base have forced 

many to search for new sources of revenue. Redirecting revenue 

from airports to fund non-airport municipal needs appears attractive 

 

56 Port Answer, at 29 (citing FAA Order 5190.6B, at 15-4). 

57 Shaffer Decl. ¶ 53. 
29 

to some local political leaders. Yet Congress has stepped in to 

promulgate laws to circumscribe the ability of federally funded 

airports to divert airport revenue “downtown.” Conflicts over 

locally owned and operated airports and federal funding and 

regulation are by no means unique to revenue-diversion issues, but 

they manifest themselves here as well. Id. at 3 (Emphasis added). 

The ACRP Document also states that “the purchase or operation of road maintenance equipment 

and services or police and fire services not directly in support of the airport are deemed 

impermissible.”58

The fact that the community as a whole may benefit from off-site stormwater treatment 

and environmental remediation cannot justify inclusion of such expenses in costs allocated to the 

Airport and its airline tenants, as illustrated by the approach taken by FAA and DOT to law 

enforcement costs. FAA and DOT undertake significant efforts to ensure that the general costs 

of law enforcement are not allocated to airports. An example is the Audit Report – FAA 

Oversight is Inadequate To Ensure Proper Use of Los Angeles International Airport Revenue for 

Police Services and Maximization of Resources, AV-2014-035, Office of Inspector General, U.S. 

Department of Transportation (April 8, 2014) (“2014 LAX Audit Report”).59 

The 2014 LAX Audit Report states that the Inspector General “identified about $7.87 

million in unsupported charges without adequate documentation for services provided by the Los 

Angeles Police Department (LAPD) . . . .”60 The LAX 2014 Audit Report adds: “Without 

adequate documentation or support, it is unclear if these charges were used for the capital or 

operating costs of” LAX.61 The Report further states: “In 2012, LAWA and FAA stated [that] a 

 

58 ACRP Document, at 25; Shaffer Decl. ¶ 55. 

59 Exhibit 11 to Complaint; Shaffer Decl. ¶ 56. 

60 Exhibit 11 to Complaint, at 2. 

61 Id.
30 

record-keeping system to track LAPD non-airport work time would be implemented to address 

allegations of unlawful revenue diversion. . . . However, because the City [of Los Angeles] has 

yet to fully implement such a record-keeping system, LAWA may be incorrectly spending 

additional revenue on LAPD non-airport work.”62 

The same concerns apply equally to the Portland Fees. It would make no sense for 

federal authorities to ensure, on the one hand, that an airport pays only for law enforcement 

services it receives but then, on the other hand, allow an airport to be allocated a portion of and 

pay the costs of utility-type services it does not receive and which have no actual relationship to 

the airport.63 

The Port asserts that it is “essentially impossible for anyone within Portland’s boundaries 

to reach PDX without traveling on city streets.”64 Even if true this statement is irrelevant. Such 

supposition likely is equally true of virtually every commercial service airport in the country. 

The fact that there are expenses involved with maintaining City streets located outside of the 

Airport does not mean that the Airport can be charged with those costs, including keeping water 

off the streets. And once again, the Port ignores that admitted fact that those expenses are not 

directly and substantially related to air transportation. If the roadway in question was dedicated 

to accessing the Airport, then the costs might be included within the Airport cost base. 

Otherwise, the allocation of the roadway maintenance costs to the Airport constitutes revenue 

diversion under the Revenue Use Policy.65 

 

62 Id. 

63 Shaffer Decl. ¶ 58; see also id. at ¶¶ 26-28. 

64 Port Answer, at 32-33. 

65 Shaffer Decl. ¶ 59. 
31 

It is vital that FAA enforce the prohibitions against revenue diversion. The unlawful 

revenue diversion at PDX is typical of efforts by local governments to look to airports and 

airlines to fund municipal financial requirements. For example, in October 2015, a Chicago city 

alderman proposed to impose a surcharge on air transportation to “leverage the value” of O’Hare 

and Midway Airports to bankroll the hiring of at least 100 additional police officers to combat 

crime in the City of Chicago.66 The resolution introduced to the Chicago City Council called on 

airlines at O’Hare and Midway to “voluntarily” impose a $1 surcharge on the 100 million 

passengers who flow through O’Hare and Midway each year.67 

With regard to the laws against revenue diversion from U.S airports, the alderman argued 

that if the U.S. Senate can make an exception by directing $9.2 billion in airport revenue to the 

federal highway trust fund as the DRIVE Act requires, then Chicago should be free to use airport 

revenue to “save lives.”68 The alderman also sought to levy a “security fee” on airport 

concession contracts.69 

These sorts of efforts to have airports and airlines pay for general city services, in 

violation of federal law, will continue unless the FAA is vigilant in enforcing the laws against 

airport revenue diversion, including ruling that the Fees violate Grant Assurance 25, and the 

federal statutes and policies against diversion of airport revenue.70 

 

66 See Fran Spielman, Alderman seeks $1 surcharge on air travelers to fund police hiring,” 

Chicago Sun Times (Oct. 14, 2015), http://chicago.suntimes.com/chicagopolitics/7/71/1023944/alderman-proposes-1-surcharge-airline-passengers-bankroll-police-hiring.

67 Id.

68 Id.

69 Id.

70 Shaffer Decl. ¶ 62. 
32 

III. THE NON-FINAL JULY 30, 2015 LETTER FROM FAA DOES NOT OFFER 

ANY LAWFUL REASON FOR EXEMPTING THE FEES FROM THE 

PROHIBITIONS AGAINST DIVERSION OF AIRPORT REVENUE. 

The Port seeks to justify its position that the Fees are not revenue diversion because of 

the July 30, 2015 letter from Randy Fiertz.71 Mr. Fiertz expressly stated that his position was not 

the final position of the FAA.72 Moreover, the letter does not articular a reasoned explanation or 

rationale for treating the Fees as “operating costs” of the Airport. Instead, Mr. Fiertz concludes, 

without supporting analysis, that the Offsite Stormwater Management Charge is an “operating 

cost of the airport, because it arises as a legal obligation incident to the airport’s possessory 

interest in land necessary for the provision of aeronautical services.”73 

This explanation is fatally circular: According to the Fiertz letter, because the Port has a 

possessory interest in land within the City, the payment of the Fees by the Port to the City cannot 

constitute unlawful revenue diversion. However, merely because the City sends a bill to the Port 

does not mean that the Port is justified in using Airport funds to pay the bill. The Fees constitute 

unlawful revenue diversion because they are not being imposed in connection with the provision 

of any service or facility at or to the Airport which is directly and substantially related to air 

transportation. Mr. Fiertz’s statement ignores this obvious fact.74 

If fees could be imposed on an airport simply because of the airport’s possessory interest 

in land (as the Port asserts in its Answer), the federal government’s policy against diversion of 

airport revenue would be gutted. Non-owner/operator local governments would have virtually 

 

71 Port Answer, at 21, at 41. The Letter is provided as Exhibit 12 to the Complaint. 

72 Letter, at 2. 

73 Letter at 1 (emphasis added). 

74 Shaffer Decl. ¶ 41. 
33 

unlimited ability to bill airports for charges unrelated to the capital or operating costs of an 

airport or the transportation of passengers or property by air. 

Moreover, every owner/operator of a federally funded airport could spin its airport off to 

an independent port authority or airport authority and thereby bleed the airport dry of funds 

under the guise of uniform ratemaking and cost allocation, all without providing any actual 

service or facility to the airport.75 

Mr. Fiertz’s conclusion also contradicts every Director’s Determination and Final 

Decision and Order which the FAA has published pursuant to 14 C.F.R. Part 16, Rules of 

Practice for Federally-Assisted Airport Enforcement Proceedings, on the subject of revenue 

diversion since the beginning of the Part 16 program. Any attempt to change FAA policy in 

regard to revenue diversion was beyond Mr. Fiertz’ former authority as Director of Compliance 

and Management Analysis.76

Based on Mr. Fiertz’ reasoning, the City could demand as a “legal obligation” that the 

airport pay a city-wide fee to construct a new football stadium or convention center or to hire 

additional police officers to keep the streets of the city crime free. But neither would relate to an 

“operating cost” of the airport. Yet under the Fiertz letter, the fee could be imposed by the city 

on the airport, charged to airlines and paid with airport revenues without running afoul of the 

revenue diversion laws.77 

 

75 Shaffer Decl. ¶ 9. 

76 Shaffer Decl. ¶ 41. 

77 Shaffer Decl. ¶ 42. 
34 

The Port asserts that Complainants have not “developed a ‘more robust record’” as 

invited in the Fiertz letter.78 This contention misstates Complainants’ challenge to the Fees and 

unfairly seeks to require Complainants to prove a negative. The fact remains that the Fees have 

no connection whatever to any services or facilities actually provided to the Airport. Given the 

undisputed fact that the Fees relate entirely to projects external to the Airport, there is no other 

factual record to be developed. As a legal matter, imposition of the Fees on the Airport and its 

airline tenants constitutes unlawful revenue diversion. 

IV. THE OFFSITE STORMWATER MANAGEMENT AND SUPERFUND 

REMEDIATION FEES ARE NOT AUTHORIZED BY FEDERAL ACCOUNTING 

REGULATIONS OR STANDARDS. 

There is no merit to the Port’s assertion that the Offsite Stormwater Management and 

Superfund Remediation Fees constitute airport “operating costs” under Attachment B to OMB 

Circular A-87.79 The Fees are not allocable to the Airport based on the criteria described in 2 

C.F.R. Part 225 (formerly OMB Circular A-87), and cannot properly be deemed to be PDX 

operating costs that may be funded with Airport revenues.80 

In December 2013, OMB replaced OMB Circular A-87 with 2 C.F.R. § 200.225.81 As a 

result, what previously was Attachment A to A-87 is now Appendix A to 2 C.F.R. § 200.225. In 

addition, what was Attachment B to A-87 is now Appendix B to 2 C.F.R. § 200.225. 

 

78 Port Answer, at 34. 

79 Port Answer, at 24. 

80 Jackson Decl. ¶ 3. 

81 See Uniform Administrative Requirements, Cost Principles, and Audit Requirements for 

Federal Awards, 78 Fed. Reg. 78,589 (Dec. 26, 2013) (Final Guidance) (OMB “is streamlining 

the Federal government’s guidance on Administrative Requirements, Cost Principles, and Audit 

Requirements for Federal awards. . . . This final guidance supersedes and streamlines 

requirements from OMB Circulars A-21, A-87, A-110, and A-122 (which have been placed in 
35 

Under well-established accounting principles, the Offsite Stormwater Management and 

Remediation Fees are not allocable to the Airport because they are not associated with any 

service or facility that is actually provided to the Airport. Rather, the costs relate entirely to 

services performed outside of the Airport property for the benefit of the City, which is a 

separate legal entity from the Port.82 

As a general proposition, an airport is subject to utility bills like other entities, provided 

however that the utility bills are for services or facilities provided to the airport. So, if a 

municipality provides water and electricity to an airport it can bill the airport a reasonable and 

otherwise appropriate charge based on the amount of water and electricity used by the airport. It 

similarly follows that if the City performed stormwater management services on the Airport, or 

even with regard to water originating at or generated by the Airport, the City could charge a 

reasonable fee for such services. But that is not the situation with regard to the Offsite 

Stormwater Management and Superfund Remediation Fees. These charges are being imposed at 

the Airport despite the fact that the City provides no services or facilities at the Airport. The 

City does not manage or dispose of the storm water generated at the Airport. Further, there is no 

evidence that the Airport caused any of the environmental problems being addressed by the 

Superfund Remediation Fee.83 

The Port asserts that the Fees are “recognized operating costs under the [OMB] Circular 

A-87” and “Generally Accepted Accounting Principles.”84 When Mr. Fiertz issued his July 30, 

 

OMB guidances)”); 2 C.F.R. § 225.45(b) (“This part supersedes OMB Circular A-87”); Jackson 

Decl. ¶ 15. 

82 Jackson Decl. ¶ 21. 

83 Jackson Decl. ¶ 22. 

84 Port Answer, at 23-27. 
36 

2015 letter, and the Port filed its Answer, OMB Circular A-87 had been replaced by 2 C.F.R. § 

200.225. Presumably, Mr. Fiertz and the Port intended to refer to section 200.225 rather than the 

superseded OMB Circular A-87. In any event, neither 2 C.F.R. § 200.225 nor its predecessor 

OMB Circular A-87 defines allowable “operating costs.” Rather, both regulatory documents 

include “Selected Items of Cost” that are allowable if they meet the allocability and 

reasonableness criteria. These are, essentially, a list of cost categories. OMB did not presume in 

Circular A-87, nor does it now presume, that the referenced costs are allowable by virtue of 

inclusion on the list of “Selected Items of Cost.”85 

The Port maintains that the Fees are Airport “operating costs” under OMB Circular A-87 

[now, 200 C.F.R. § 200.225] and GAAP as “utility charges.”86 However, the fact that the Fees 

are for utility-type services is irrelevant given the fact that the “utilities” are not being provided 

at or to the Airport. Inclusion on the list of “Selected Items of Cost” does not in and of itself 

make the cost allowable. The overriding criteria of allocability and reasonableness must be met 

first. In the case of the Airport, the costs of the services in question are not allocable since the 

Airport receives no services from the City in exchange for the Fees.87 

The Port contends that section 25 of “Attachment B to OMB Circular A-87” (presumably 

a reference to section 25 of Appendix B to 2 C.F.R. § 200.225) “speaks directly to ‘the cost of 

utilities’ and finds such costs permissible in the circumstances here.”88 Again, it is irrelevant 

that the Fees relate to “utilities” where, as here, the alleged utilities are not being provided to or 

 

85 Jackson Decl. ¶ 23. 

86 Port Answer, at 22-25 

87 Jackson Decl. ¶ 24. 

88 Port Answer, at 24. 
37 

at the Airport. Because the Airport receives no services, the costs of the Fees are not allowable 

since they do not meet OMB’s criteria for cost allocation.89 

Although section 25 of Appendix B to 2 C.F.R. § 200.225 refers to the “cost of utilities,” 

it provides that such costs are “allowable to the extent that they” keep the subject property “in an 

efficient operating condition.” However, the Offsite Stormwater Management and Superfund 

Remediation Fees do not keep the Airport “in an efficient operating condition.” The Fees have 

no connection to the Airport. The Fees may be for services that help to keep roads outside the 

Airport in “an efficient operating condition,” and help compensate the City for the environmental 

cleanup of a river (the Willamette) not connected to the Airport. But the charges do not keep 

PDX in an “efficient operating condition.”90 

The fact that 2 C.F.R. § 200.225 and other regulations, standards and policies allow for 

the allocation of some indirect costs is not relevant to the Fees because in order for indirect costs 

to be allocated they must be related to operating (or capital) costs of the airport. For example, if 

a city owns and operates an airport, the city may be able to allocate a portion of its overhead 

expenses to the airport, given that some level of city government management will relate to 

operation of the airport. However, that is not the case with PDX and the Fees, because the City 

of Portland does not own or operate the Airport. The City does not have overhead or other 

indirect expenses that it can allocate to the Airport. As stated above, “the costs allocated must 

themselves be eligible for expenditure of airport revenue under section [49 U.S.C. §] 

47107(b).” 64 Fed. Reg. at 7706 (emphasis added). See also id. (“The cost items that may be 

charged to airport revenue are determined by the requirements of section 47107(b)” 

 

89 Jackson Decl. ¶ 25. 

90 Jackson Decl. ¶ 26. 
38 

(emphasis added); id. (neither the airport operator nor FAA can “rely solely on compliance with 

OMB Circular A-87 to assure that the costs items charged to the airport in a Federally 

approved cost allocation plan are consistent with section 47107(b)”). Because the costs 

associated with the Fee are incurred for the benefit of the City and not the Airport, they are not 

allocable to the Airport.91 

The Port also asserts that “all ratepayers in the City” – “including the Airport” – benefit 

from the removal of stormwater from the City’s public rights-of-way . . . .”92 For cost 

accounting purposes this is an irrelevant statement. There could be any number of facilities and 

services provided external to the Airport which may provide some sort of indirect “benefit” to 

the Airport. The potential list is infinite. It includes, without limitation, a thriving economy, 

reasonable taxes, a professional and trained police, fire and rescue and ambulance force 

throughout the City, street lighting, public parks and attractions, a modern public transit system 

and various other municipal amenities. But none of these services and facilities would be 

deemed to keep the Airport in an “efficient operating condition;” nor do the Offsite Stormwater 

Fees or the Superfund Remediation Fees.93 

The Port additionally contends that “[s]upport for the treatment of utility costs under 

GAAP is found in the Federal Accounting Standard Advisory Board, FASAB Handbook of 

Federal Accounting Standards and Other Pronouncements, as Amended (June 30, 2015) (the 

‘FASAB Handbook’).”94 The Port’s reliance on the FASAB Handbook is erroneous. Statement 

 

91 Jackson Decl. ¶ 27. 

92 Port Answer, at 25 (emphasis added). 

93 Jackson Decl. ¶ 28. 

94 Id. at 39 (emphasis added). 
39 

of Federal Financial Accounting Concepts (SFFAC) 5 in the FASAB Handbook states that 

“[g]enerally accepted accounting principles recognize the importance of reporting transactions 

and events in accordance with their substance.”95 In considering whether the Fees constitute 

“operating costs” of the Airport, one must not ignore the “substance” of the transaction – which 

is that the Fees reflect expenses incurred for projects external to the Airport for the benefit of 

the City and not the Airport.

96 

V. THE OFFSITE STORMWATER MANAGEMENT AND SUPERFUND 

REMEDIATION FEES ARE NOT “OPERATING COSTS” PURSUANT TO 

PORT BOND ORDINANCE 155. 

The Port erroneously asserts that “under the terms of” the Bond Ordinance, the Offsite 

Stormwater Management and Superfund Remediation Fees “are properly categorized as 

operating expenses of the Airport.”97 Veteran public finance attorney Joan Stern opines that 

neither the Bond Ordinance nor custom and practice in the municipal bond industry supports 

treating the Offsite Stormwater Management and Superfund Remediation Fees as Airport 

operating costs or expenses.98 

The fact that section 13.1(g) of the Bond Ordinance includes “costs of utility services” in 

the definition of “Costs of Operation and Maintenance” is irrelevant with regard to the Offsite 

Stormwater Management and Superfund Remediation Fees. In order for utility charges to 

constitute “operating costs” or “operating expenses” of the Airport, the utility services must be 

actually provided to the Airport. That is not the case here, and the Fees are not being imposed in 

 

95 Id. (emphasis added); http://files.fasab.gov/pdffiles/2015_fasab_handbook.pdf. 

96 Jackson Decl. ¶ 29. 

97 Port Answer, at 28. 

98 Stern Decl. ¶ 5. 
40 

exchange for any services actually provided to the Airport. For this reason, the Fees are not 

“operating costs” or “operating expenses,” whether characterized as costs of “utilities” or 

something other cost under the Bond Ordinance. 99

The Bond Ordinance states that it was enacted November 10, 1971, and amended and 

restated in 1993, 1994 and 1999.100 The Bond Ordinance provides certain covenants as to the 

revenues derived from PDX “AND THE USE AND APPLICATION OF SUCH REVENUES.” 

Bond Ordinance, Title, at 1.101 Section 2(c) of the Bond Ordinance defines “Airport” to mean 

Portland International Airport. Section 2(m) states that “Costs of Operation and Maintenance” 

shall have “the meaning given to such term in Section 13 hereof.” 

Section 13 of the Bond Ordinance is titled “The Airport Revenue Fund; Application of 

Revenues.” It states that “the Port shall create and establish a special trust fund of the Port, to be 

known and designated as ‘The Port of Portland Airport Revenue Fund’ (herein defined and 

referred to as the ‘Airport Fund’) and to be held and administered by the Port hereunder so long 

as any of the Bonds are outstanding.” Section 13 adds that “the moneys deposited, or to be 

deposited, in the Airport Fund shall not be commingled with any other moneys of the Port; shall 

be used and applied only in the manner and for the purposes hereinafter provided in this section; 

and shall be withdrawn from said Fund for said purposes only if in accordance with such 

procedure as is provided by law.” 102

 

99 Stern Decl. ¶ 6. 

100 Bond Ordinance, cover page. 

101 Bond Ordinance, Title, at 1. 

102 Stern Decl. ¶ 12. 
41 

Section 13.1 of the Bond Ordinance states that the “Revenues in the Airport Fund shall be 

. . . first used and applied by the Port to the payment of the Costs of Operation and Maintenance 

of the Airport.” Section 13.1 defines the term “Costs of Operation and Maintenance” of the 

Airport to mean: “the reasonable and necessary current expenses of the Port included as a Cost of 

Operation and Maintenance in the annual Airport budget required by Section 15 hereof for 

operating, maintaining and repairing the Airport.” (Emphasis added) The bold language 

makes clear that in order to be a “Cost of Operation and Maintenance” the expense must be for 

the express purpose of “operating, maintaining and repairing the Airport.”103 

Subsection 13.1(g) of the Bond Ordinance includes “costs of utility services” within the 

definition of “Costs of Operation and Maintenance.” However, reading Section 13.1 as a whole, 

and in the only possible reasonable manner, it is clear that in order to be included within the 

“Costs of Operation and Maintenance” of the Airport, the “costs of the utility services” must be 

incurred for utility services received in connection with “operating, maintaining and repairing the 

Airport.”104 

There is no merit to the Port’s assertion that the Offsite Stormwater Management and 

Superfund Remediation Fees constitute “operating costs” or “operating expenses” of the Airport 

pursuant to the Bond Ordinance. The Port asserts that the “Bond Ordinance” defines the term 

“costs of operation and maintenance” as “the reasonable and necessary current expenses of the 

Port included as a cost of operation and maintenance in the annual Airport Budget,” and that 

under the Bond Ordinance, the “Cost of Operation and Maintenance” includes the “costs of 

utility services.” Port Answer, at 28 (citing Bond Ordinance, §§ 13.1, 13.1(g)). Although that 

 

103 Stern Decl. ¶ 13. 

104 Stern Decl. ¶ 14. 
42 

may be a correct statement of what the Bond Ordinance states, it does not establish that the Fees 

are, in fact, PDX operating expenses and begs the question whether the Offsite Stormwater 

Management and Superfund Remediation Fees are imposed in connection with actual services 

provided to the Airport for the operation, maintenance or repair of PDX. Here, the Airport does 

not receive actual services in exchange for the Fees, and, as stated above, they are not “operating 

costs” or “operating expenses” permissible under the Bond Ordinance as “costs of utility 

services.”105 

To the extent that the Fees are considered to be “costs of utility services,” the “utility 

services” are being provided to the City of Portland – and not to the Airport. The inclusion of 

“costs of utility services” in section 13.1(g) of the Bond Ordinance in the enumeration of “Costs 

of Operation and Maintenance necessarily implies that the utility services in question have been 

provided to the Airport.106 

Airport bond ordinances are carefully drafted to be precise in their meaning. Here, the 

drafters of the Bond Ordinance unmistakably intended to limit the scope of relevant “utility 

services” to utility services that have been provided “for operating, maintaining and repairing 

the Airport.” The Offsite Stormwater Management and Superfund Remediation Fees are not 

based on any services relating to the operation, maintenance or repair of PDX.107 The Port 

asserts that it “is unlikely that the Port could have successfully marketed its bonds if investors 

did not regard ‘the costs of utility services’ as proper airport operating expenses.”108 However, 

 

105 Stern Decl. ¶ 15. 

106 Stern Decl. ¶ 16. 

107 Stern Decl. ¶ 17. 

108 Port Answer, at 28. 
43 

the only “costs of utility services” that may be treated as Airport operating costs under the Bond 

Ordinance are utility services actually provided to the Airport. That is not the case with the 

Fees.109

The custom and practice in the United States airport bond industry is to use revenues of 

the airport pledged to debt service on airport bonds to pay costs and expenses actually incurred 

by the airport as operating expenses, not costs and expenses relating to services that are not 

provided to the airport. Airport bond ordinances or indentures do not authorize an airport to use 

airport revenues to pay for “utilities” or other expenses for services not actually provided to the 

airport and which are unrelated to the operation, maintenance or repair of the airport.110 

Section 13.1(m) of the Bond Ordinance provides as the final enumerated category of 

Costs of Operation and Maintenance “all other costs and expenses of operating, maintaining and 

repairing the Airport arising in the routine and normal course of business (emphasis added).” 

The use of this phrase in this clause means that all Costs of Operation and Maintenance arise in 

the routine and normal course of business of the Airport. The Fees by their nature do not fit 

within this definition.111 

The Port Answer (page 27) refers to a Transportation Research Board policy paper and 

quotes language stating that the “bond indenture defines what may or may not be included in the 

definition and computation of airport revenues and expenses.” This is correct. However, for the 

reasons set forth above, the Bond Ordinance does not include the Offsite Stormwater 

 

109 Stern Decl. ¶ 18. 

110 Stern Decl. ¶ 19. 

111 Stern Decl. ¶ 20. 
44 

Management and Superfund Remediation Fees within its definition of Airport operating costs or 

expenses.

112 

The Port Answer also refers to the PDX 2015-2016 budget, which is attached as Exhibit 5 

to the Port Answer. Pages 72 and 104 of the Airport budget in Exhibit 5 (cited in the Port 

Answer, at 28) do not specifically reference either the Offsite Stormwater Management Fee or 

the Superfund Remediation Fee. However, even if the amounts of the Fees are included in the 

Airport budget under the general category of “utilities,” they still would not be authorized by the 

Bond Ordinance unless the Fees were “reasonable and necessary current expenses of the Port 

included as a Cost of Operation and Maintenance . . . for operating, maintaining and 

repairing the Airport.” Bond Ordinance § 13.1 (emphasis added). As set forth above, the Fees 

are not necessary for either the operation or maintenance of the Airport. Rather, the Fees are for 

services provided entirely outside of the Airport property.113 

VI. THE OFFSITE STORMWATER MANAGEMENT AND SUPERFUND 

REMEDIATION FEES ARE UNLAWFUL TAXES RATHER THAN 

APPROPRIATE USER FEES. 

The Complaint asserts “the City’s fees, collected and remitted by the Port, cannot be 

justified as a “tax” because Oregon state law prohibits the City from imposing a tax at the 

Airport.114 Specifically O.R.S. § 307.090(1) states: 

Except as provided by law, all property of the state and all public 

or corporate property used or intended for corporate purposes of 

the several counties, cities, towns, school districts, irrigation 

districts, drainage districts, ports, water districts, housing 

authorities, public universities . . . and all other public or municipal 

corporations in this state, is exempt from taxation. 

 

112 Stern Decl. ¶ 21. 

113 Stern Decl. ¶ 22. 

114 Complaint ¶ 77. 
45 

(Emphasis added); see Chizek v. Port of Newport, 252 Or. 570, 572, 450 P.2d 749, 751 (1969) 

(“Taxes could not validly be levied against the parcel when it was property of the Port because 

the Port is tax exempt”). 

In response, the Port asserts that the Fees are not a “tax” because they “are imposed not 

on a property’s owner, but on its occupant – the person ‘who has the right to possession of a 

property.’”115 In support, the Port cites Knapp v. City of Jacksonville, OR, 342 Or. 268, 151 

P.3d 143 (2007), where the Oregon Supreme Court ruled that a $15 public safety surcharge was 

not an unauthorized municipal tax because it was imposed solely on persons responsible for 

paying sewer and water bills, rather than the owners of the property where such persons resided. 

Knapp is inapposite because the City imposes the Fees on the Port of Portland as the owner and 

operator of the Airport. And the Port’s reliance on Knapp is directly contrary to its adoption of 

the reasoning in the Fiertz letter – namely, that the Fees are lawful because the Port owes them as 

a result of the “airport’s possessory interest in land necessary for the provision of 

aeronautical services.”116 

The Port alternatively concedes that the Fees “bear indications of being a tax” because 

they are “imposed by a legislative body on all property occupants,” and “‘imposed by the 

legislature upon a large segment of society, and [are] spent to benefit the community at 

large.’”117 The Port adds that the Fees “are imposed to address or remediate transportation and 

environmental issues that impact a broad segment of the population.”118 

 

115 Port Answer, at 41 n. 20. 

116 Letter at 1 (emphasis added). 

117 Port Answer, at 41 n. 20 (citation and internal quotation marks omitted). 

118 Id. 
46 

This concession by the Port that the Fees appear to be a tax is highly significant, as the 

Fees therefore would be in excess of the City’s authority. See Fulton Cty. Taxpayers Ass’n v. 

City of Atlanta, No. 1999CV05897, 1999 WL 1102795, at *2-3 (Ga. Super. Ct. Sept. 22, 1999) 

(stormwater charge imposed by the City of Atlanta was an unlawful tax rather than a legal fee 

because it was “intended to generate revenue to be used for public or governmental purposes” 

rather than as “a payment for services rendered); see also id. at *3 (“If the Court were to find that 

the assessment was a fee, the fee would be unlawful because ‘a municipality cannot impose a fee 

for services that have not been provided. An assessment levied in excess of the benefit 

arbitrarily deprives a person of his property’”); Bolt v. City of Lansing, 459 Mich. 152, 159, 587 

N.W.2d 264, 272-273 (1998) (“the storm water service charges imposed by Ordinance 925 is a 

tax and not a valid user fee. To conclude otherwise would permit municipalities to supplement 

existing revenues by redefining various government activities as ‘services’ and enacting a myriad 

of ‘fees’ for those services”); Cmty. Housing Mgmt. Corp. v. City of New Rochelle, 381 F. Supp. 

2d 313, 320 (S.D.N.Y. 2005) (city user fee for refuse collection and disposal was a “tax” rather 

than a “user fee” where the tax was imposed “upon all owners of improved properties in the City, 

not just on those property owners who use the refuse collection services provided by the City”). 

Because the City lacks power to tax the Airport, the Fees are unlawful. The Port cannot 

try to shirk its obligations under Grant Assurance 25 and federal statutes and policies against 

revenue diversion by agreeing to pay “taxes” to the City which the City is prohibited from 

imposing on the Port. 

In addition, if FAA agrees that the Fees are a “tax” rather than a “fee,” it must find that 

the Fees violate the Revenue Use Policy because there is no linkage between the amount of the 

charges and any services actually provided to the Airport. Section VI(B)(5) of the Revenue Use 
47 

Policy states that “Prohibited uses of airport revenue include . . . Payments in lieu of taxes, or 

other assessments, that exceed the value of services provided or are not based on a reasonable, 

transparent cost allocation formula calculated consistently for other comparable units or cost 

centers of government.” (Emphasis added). Thus, a payment “in lieu of taxes” cannot be 

charged if the payment either (1) exceeds “the value of services provided,” or (2) is not based on 

a “reasonable, transparent cost allocation formula calculated consistently for other comparable 

units or cost centers of government.” Even assuming, for the sake of argument, that the Fees are 

applied uniformly across the City, the fact remains that there is no service provided by the City 

to the Airport in exchange for the Fees. Thus, as a matter of law the Fees exceed “the value 

of services provided” to the Airport. 

VII. THE FEES ARE NOT AUTHORIZED BY THE ANTI-HEAD TAX ACT. 

The Fees cannot be found to be lawful under the Anti-Head Tax Act (“AHTA”), 49 

U.S.C. § 40116. The AHTA provides that a “State,” and “a political subdivision of a State” 

“may not levy or collect a tax, fee, head charge, or other charge on – (1) an individual traveling 

in air commerce; (2) the transportation of an individual traveling in air commerce; (3) the sale or 

air transportation; or (4) the gross receipts from that air commerce or transportation.” 49 U.S.C. 

§ 40116(b). The AHTA contains a limited exception for “a State or political subdivision of a 

State” to “levy or collect – (1) taxes (except those enumerated in subsection (b) . . .), including 

property taxes, net income taxes, franchise taxes, and sales or use taxes on the sale of goods or 

services; and (2) reasonable rental charges, landing fees, and other service charges from aircraft 

operators for using airport facilities of an airport owned or operated by that State or subdivision.” 

49 U.S.C. § 40116(e). 

The Offsite Stormwater Management and Superfund Remediation Fees do not qualify 

under any provision of the AHTA. The Fees are not property taxes, net income taxes, franchise 
48 

taxes or sale or use taxes on the sale of goods or services. They also are not reasonable rental 

charges, landing fees or other service charges “for using airport facilities of an airport owned or 

operated” by the City. 119

In its Answer, the Port asserts that if the Fees are “deemed to be a tax for purposes of 

Federal law, they would be outside the prohibition of the Anti-Head Tax Act.”120 To make this 

argument, the Port asserts that the “safe harbor provisions” in section 46110(e) of the AHTA are 

“illustrative, not exclusive” as to the “types of taxes permitted.” That is irrelevant. What is clear 

is that nothing in the AHTA authorizes a government entity that does not own or operate an 

airport to impose purported user fees or utility charges that are not provided in exchange for 

services or facilities actually given to the airport. Moreover, because the City lacks authority to 

impose a tax on PDX, the characterization of the Fees as a “tax” means that they Fees are 

unlawful. 

CONCLUSION 

For the reasons set forth above, and in the Complaint, Complainants respectfully request 

that the FAA issue a final order declaring that the Offsite Stormwater Management and 

Superfund Remediation Fees violate federal statutes against diversion of airport revenue (49 

U.S.C.§§ 47133, 47107(b) and 47107(k); Grant Assurance 25; the FAA Revenue Use Policy; 

and FAA policy and practice relating to diversion of airport revenue. 

 

119 See City and County of Denver v. Continental Air Lines, Inc., 712 F. Supp. 834, 840 (D. Colo. 

1989) (“This Court is convinced after examining the legislative history and purpose of the AntiHead Tax Act that in order to avoid the double taxation of air passengers in air commerce 

through local and federal use taxes, Congress prohibited the imposition of such local taxes, fees, 

and charges that would be passed on to the flying public except where those taxes, fees, and 

charges are to be used to operate and maintain the presently existing airport facilities”). 

120 Port Answer, at 41 n. 20. 
49 

 Respectfully submitted, 

/s/ David Berg 

David Berg 

Vice President & General Counsel 

Doug Mullen 

Assistant General Counsel 

Air Transport Association of America, Inc. 

d/b/a Airlines for America 

1275 Pennsylvania Avenue, N.W. 

Suite 1300 

Washington, D.C. 20004 

(202) 626-4234 

Email: dberg@airlines.org 

dmullen@airlines.org 

Dated: May 25, 2016 

/s/ Roy Goldberg 

Roy Goldberg 

Steptoe & Johnson LLP 

1330 Connecticut Avenue, N.W. 

Washington, D.C 20036 

(202) 429-8028 

Email: rgoldberg@steptoe.com 
CERTIFICATE OF SERVICE 

 I hereby certify that on the 25th day of May, 2016, I caused the foregoing Reply of 

Complainants Air Transport Association of America, Inc. et al. to be served electronically by or 

via email on the following: 

Pablo O. Nuesch, Esq. 

Spiegel & McDiarmid LLP 

1875 Eye Street, N.W. 

Suite 700 

Washington, D.C. 20006 

Email: Pablo.nuessch@spiegelmcd.com 

Counsel for Respondent Port of Portland 

Roy Goldberg 

Roy Goldberg 
AMENDED CERTIFICATE OF SERVICE 

 I hereby certify that on the 25th day of May, 2016, I caused the foregoing Reply of 

Complainants Air Transport Association of America, Inc. et al. to be served electronically by or 

via email on the following: 

Pablo O. Nuesch, Esq. 

Spiegel & McDiarmid LLP 

1875 Eye Street, N.W. 

Suite 700 

Washington, D.C. 20006 

Email: Pablo.nuesch@spiegelmcd.com 

Counsel for Respondent Port of Portland 

Roy Goldberg 

Roy Goldberg 
EXHIBIT 1 

DECLARATION OF D. KIRK SHAFFER 
2

UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

AIR TRANSPORT ASSOCIATION OF 

AMERICA, INC. d/b/a AIRLINES FOR 

AMERICA, ALASKA AIRLINES, INC., 

AMERICAN AIRLINES, INC., ATLAS AIR, 

INC., FEDERAL EXPRESS AIRLINES, 

HAWAIIAN AIRLINES, INC., HORIZON AIR, 

JETBLUE AIRWAYS INC., SOUTHWEST 

AIRLINES CO., UNITED AIR LINES, INC., 

UNITED PARCEL SERVICE CO., and AIR 

CANADA, 

 Complainants, 

v. 

PORT OF PORTLAND, OREGON, 

 Respondent. 

FAA Docket No. 16-16-04 

DECLARATION OF D. KIRK SHAFFER

I, D. Kirk Shaffer, hereby declare and state as follows, under penalty of perjury: 

1. I am an aviation attorney and former Federal Aviation Administration official in 

Washington, D.C., with 30 years' experience in the U.S. commercial aviation industry, and 

particular expertise in federal policies and industry practice relating to airports and their 

relationships with airlines. 

2. I have been retained as an expert by the Air Transport Association of America, 

Inc., d/b/a Airlines for America (“A4A”), and its member airlines, with regard to the abovereferenced Federal Aviation Administration (“FAA”) proceeding under 14 C.F.R. Part 16 

relating to “Offsite Stormwater Management Fees” and “Superfund Remediation Fees” 

(collectively, the “Fees”) imposed by the City of Portland, Oregon (the “City”) at Portland 
3

International Airport (“PDX” or “Airport”). This Declaration is being submitted in connection 

with the A4A reply filed with FAA on May 25, 2016. 

3. I specifically have been asked to evaluate and respond to statements relating to 

the Fees made by FAA official Randy Fiertz in a letter dated July 30, 2015, in his previous role 

as the Director of Airport Compliance for FAA, and assertions made by the Port in the Port 

Answer claiming that the Fees constitute “operating costs” of the Airport, and, therefore, do not 

constitute the unlawful diversion of Airport revenue. 

4. It is my opinion, which I hold to a reasonable degree of professional certainty, 

that the imposition by the City of the Off-Site Stormwater Management and Superfund 

Remediation Fees on the Airport and its airline tenants constitutes unlawful diversion of Airport 

revenue in violation of the FAA “Policy and Procedures Concerning the Use of Airport 

Revenue” 64 Fed. Reg. 7696 (Feb. 16, 1999) (“Revenue Use Policy”). I categorically reject the 

Port’s assertion that the Fees constitute “operating costs” of PDX. In order to constitute an 

airport operating cost, a fee must be imposed in exchange for a service or facility actually 

provided to, or being used by, the airport. The Fees are not operating costs of the Airport 

because they are not imposed in exchange for any service or facility actually provided to or used 

by the Airport. Rather, the Fees relate to services and facilities that are being provided external 

to, and not for use by, the Airport. 

5. Underlying the Revenue Use Policy is the Congressional objective of having an 

integrated national system of safe, efficient airports which are financially self-sufficient to the 

greatest extent possible, and which do not rely on local and state taxes to fund their operations 

and capital programs. A corollary to the Revenue Use Policy is Congress’s support of safety, 

security, capacity, and noise mitigation capital projects through grants from the federal Airport 
4

and Airway Trust Fund. These grants are measured in billions of dollars each year and are 

derived from federal ticket taxes, freight waybill taxes, and fuel taxes paid by users of the 

aviation system. The FAA is responsible for achieving Congress’s objectives and administering 

the Trust Fund. 

6. As the aviation industry has matured, large airports like PDX have become 

financial engines in their own right, capable of generating substantial amounts of revenue, 

funding very substantial capital projects, and issuing highly rated debt. Congress has recognized 

that, especially in times when municipalities are faced with rising costs of providing basic 

services or a declining tax base or both, the temptation to divert that substantial airport revenue 

“downtown” or treat the local airport as a “cash cow” can be very strong, even overwhelming. 

Thus, for decades now, Congress has passed increasingly strong prohibitions against revenue 

diversion such as the Portland Fees. The FAA in response has published increasing strong policy 

statements and orders in support of the Congressional requirements and restrictions on airport 

revenue use. The Revenue Use Policy is one example. 

7. If FAA were to allow the City to impose the Offsite Stormwater Management and 

Superfund Remediation Fees on the Airport and its airline tenants, it would directly and 

substantially undermine the airport funding system which Congress has mandated and 

strengthened over many years. For example, any airport capacity project (e.g. runway, taxiway) 

in current times is a very expensive proposition normally requiring a combination of grants, debt, 

and local airport revenue to complete. If an airport permits (or is forced to permit) its revenue to 

be committed to non-airport projects elsewhere in the city, it will have to generate even more 

revenue by raising its rates and charges, which are paid by airlines and other airport users, to 

make up the difference and remain self-sufficient (as the law requires). Airlines will be charged 
5

higher rates and charges, which in turn can lead to increased airfares and shipping charges. 

Permitting diversion like the Portland Fees is an indirect, illegal transfer from the federal 

treasury to the local government. 

8. Imposition of the Fees on the Airport and its airline tenants would create a 

dangerous precedent pursuant to which cities and other local governments will siphon money 

from their airports for municipal projects – not only for off-site stormwater management and 

Superfund cleanup expenses – but also other local functions, such as general safety and security, 

commercial development, and civic pride – simply because the airport is being treated the same 

as other persons and entities within the city. In short, the Port is seeking an “exception” to the 

prohibition against diversion of airport revenue that threatens “to swallow the rule.” 

9. If fees could be imposed on an airport simply because of the airport’s possessory 

interest in land (as the Port asserts in its Answer), the federal government’s policy against 

diversion of airport revenue would be gutted. Moreover, every owner/operator of a federally 

funded airport could spin its airport off to an independent port authority or airport authority and 

thereby bleed the airport dry of funds under the guise of uniform ratemaking and cost allocation, 

all without providing any actual service or facility to the airport. 

10. The only way to protect against the unlawful diversion of airport revenue is to 

follow a hard-and-fast rule that revenue generated on the airport remains on the airport. Airport 

generated revenues can be used for the provision of services and facilities to the airport. But 

the Offsite Stormwater Management and Superfund Remediation Fees are not being imposed in 

exchange for services and facilities being provided to PDX. This results in a classic case of 

unlawful revenue diversion. 
6

 BACKGROUND AND EXPERIENCE 

11. From January 2007 to January 2009 I served as the FAA Associate Administrator 

for Airports, where I was the senior federal official with responsibility for policy matters 

affecting the nation’s system of commercial airports. In that role I was the final agency decisionmaker for airport compliance issues, including airport obligations under federal Grant 

Assurances. 

12. For the 18 years prior to my service with the FAA I was the general counsel for 

the Metropolitan Nashville Airport Authority. In that position I was in charge of legal issues 

relating to the airport’s compliance with its federal Grant Assurance obligations resulting from 

its acceptance of federal funds for airport projects.1

 

The Off-Site Stormwater Management and Superfund Remediation Fees 

13. On September 9, 2012, the City adopted Ordinance 185610 (the “Ordinance”), 

which imposes a new methodology for charging for storm water management services. Under 

the methodology, the Port – as the owner and operator of PDX – must pay a portion of the costs 

incurred by the City to manage “off-site” storm water drainage from non-airport rights of way 

(the “Offsite Stormwater Management Fees”), and for the clean-up of a Willamette River 

Superfund site having no relationship to PDX (the “Superfund Remediation Fees”). 

14. The Offsite Stormwater Management Fees are intended for the City to recover the 

costs to treat storm water on or adjacent to roadways not on Airport property and otherwise not 

owned by a private party. PDX has its own stormwater treatment facility located within the 

airfield perimeter fence. The PDX system collects airfield storm water (including deicing 

 

1

A statement of my relevant education and experience is set forth in Appendix A hereto. 
7

materials during the deicing season) as well as run-off stormwater from Marine Drive (on the 

Columbia River Levee bordering the Airport on the north side) which is owned by the City. I 

have been informed by counsel for A4A that no portion of the City’s offsite stormwater 

management service is used by the Airport or its airline tenants. 

15. The Superfund Remediation Fee relates to the City’s involvement in the Portland 

Harbor Superfund Site. This involves the Willamette River, which has no connection to the 

Airport and is in a separate watershed from the Portland Harbor according the U.S. 

Environmental Protection Agency (the “EPA”) and the City of Portland. Documents produced 

by the EPA describing the pollution in the Superfund site detail the nature of the pollution and its 

sources and make no mention whatsoever of PDX, which is on the banks of the Columbia River 

in another, separate watershed, or any of its tenants. 

16. As stated above, Congress has over the past several decades enacted increasingly 

strict statutes governing the use of airport revenue and prohibiting its diversion to non-airport 

purposes. The regulatory scheme by which federally-funded airports and their revenue presently 

operate derives from the Airport and Airway Improvement Act of 1982 which is now codified in 

Title 49 of the United States Code. Excerpts of that statute and subsequent statutes bearing on 

Portland’s imposition of the Fees follow. 

17. 49 U.S.C. § 47133(a) states that “the revenues generated by an airport that is the 

subject of Federal assistance may not be expended for any purpose other than the capital or 

operating costs of – (1) the airport; (2) the local airport system; or (3) any other local facility 

that is owned or operated by the person or entity that owns or operates the airport that is directly 

and substantially related to the air transportation of passengers or property.” (Emphasis 

added) 
8

18. The Offsite Stormwater Management and Superfund Remediation Fees are not 

“operating costs” of the Airport and also are not “directly and substantially related to the air 

transportation of passengers or property.” The Airport’s stormwater is treated on and adjacent to 

the Airport in facilities paid for by the Airport and its airline tenants. The Airport pays directly 

for the operation of these facilities. 

19. The Airport’s stormwater does not go into the City’s stormwater system. Further, 

no review on my part of analysis by the EPA, the City’s Bureau of Environmental Services, or 

the Oregon Department of Environmental Quality nor any assertion of representatives of the City 

or the Port of Portland indicates that the Airport or the airlines serving it are responsible in any 

manner for the contamination in the Willamette River Superfund site. I am informed by counsel 

for A4A that representatives of the City of Portland and the Port of Portland do not dispute these 

facts. As such, neither the City’s costs of stormwater handling and treatment, Superfund site 

cleanup, Offsite Stormwater Management Fees, nor Superfund Remediation Fees are related to 

services the Airport receives or the air transportation of passengers or property in any manner or 

degree and, consequently, are not operating costs of the Airport. 

20. 49 U.S.C. § 47107(b)(1) states that “the Secretary of Transportation may approve 

a project grant application for an airport development project only if the Secretary receives 

written assurances, satisfactory to the Secretary, that . . . the revenues generated by a public 

airport will be expended for the capital or operating costs of – (A) the airport; (B) the local 

airport system; or (C) other local facilities owned or operated by the airport owner or operator 

and directly and substantially related to the air transportation of passengers or property.” 

(Emphasis added.) When the Port accepts federal grant funds from FAA, it must agree to certain 
9

assurances which become part of the final grant and a contractual obligation2 One of these, 

Grant Assurance 25, Airport Revenues, states: 

All revenues generated by the airport and any local taxes on aviation fuel 

established after December 30, 1987, will be expended by it for the capital or 

operating costs of the airport; the local airport system; or other local facilities 

which are owned or operated by the owner or operator of the airport and which 

are directly and substantially related to the actual air transportation of passengers 

or property. 

Some grant assurances remain in effect for only twenty years. However, Grant Assurance 25 

lasts as long as the airport receiving the grant continues to be used as an airport. Further, every 

time an airport such as PDX receives an FAA grant, the airport’s counsel is required to give an 

opinion that the grant assurances constitute a legal and binding obligation of the airport sponsor 

(here, the Port). Violation of grant assurances may result in the airport being ineligible to receive 

future airport grants, being cut-off from continued funding on current grants, and recoupment by 

the federal government of monies paid to the airport, along with additional penalties. 

21. 49 U.S.C. § 47107(k), titled “Policies and Procedures to Ensure Enforcement 

Against Illegal Diversion of Airport Revenue,” directed the Secretary of Transportation to 

“establish policies and procedures that will assure the prompt and effective enforcement” of 

grant assurances relating to the prohibition against diversion of airport revenue. Section 

47107(k)(1). Congress specified that the policies and procedures against diversion of airport 

revenue “shall prohibit, at a minimum . . . (A) Direct payments or indirect payments, other than 

payments reflecting the value of services and facilities provided to the airport.” 49 U.S.C. § 

47107(k)(2)(A) (emphasis added). 

 

2

The federal airport Grant assurances may be downloaded at 

http://www/faa/gov/airports/aip/grant_assurances/media/airport-sponsor-assurances-aip.pdf
10

22. The Offsite Stormwater Management and Superfund Remediation Fees do not 

reflect “the value of services and facilities provided to” PDX. Representatives of the City and 

the Port do not even assert that facilities are provided to PDX or that the services of any City 

facilities or non-airport Port facilities related to stormwater management or Superfund cleanup 

are provided to PDX. 

23. Congress also made clear that the policies and procedures against diversion of 

airport revenue also must prohibit “use of airport revenues for general economic development, 

marketing, and promotional activities unrelated to airports or airport systems.” 49 U.S.C. 

§ 47107(k)(2)(B) (emphasis added). Therefore, the fact that the fees may promote the general 

economic development of a city in which an airport is located, or marketing and promotional 

activities, is insufficient to justify the imposition of the fees for activities “unrelated to airports or 

airport systems.” 

24. A specific example of the prohibition against use of airport revenues for general 

economic development is the inability of a federally funded airport to participate generally in a 

city-wide promotional campaign sponsored by the local chamber of commerce. It is quite typical 

for a commercial service airport to be a chamber of commerce member, as airports are economic 

drivers in most communities they serve. Nonetheless, paying for promotional activities which 

market the city as a whole without direct relation to the airport are prohibited as revenue 

diversion, and the FAA has routinely reaffirmed this principle. 

The FAA Revenue Use Policy 

25. Pursuant to 49 U.S.C. § 47107(k), the FAA in 1999 issued its “Policy and 

Procedures Concerning the Use of Airport Revenue” 64 Fed. Reg. 7696 (Feb. 16, 1999) 

(“Revenue Use Policy”). Tracking the federal statutes against airport revenue diversion, the 
11

Revenue Use Policy defines “revenue diversion” as “the use of airport revenue for purposes 

other than the capital or operating costs of the airport, the local airport system, or other local 

facilities owned or operated by the airport owner or operator and directly and substantially 

related to the air transportation of passengers or property . . . .” Revenue Use Policy, 

Section VI(A), 64 Fed. Reg. at 7720 (emphasis added). 

26. A clear analogy to the Fees imposed by the City in this instance is the longrunning dispute between the FAA and Los Angeles International Airport (“LAX”) over law 

enforcement costs unrelated to LAX. Beginning in the 1990s and continuing at least through 

2014, LAX has made payments to the City of Los Angeles for payroll and other costs of police 

officers on and around the airport. Millions of dollars of such payments have repeatedly been 

found to be illegal by the FAA and the Inspector General of the U.S. Department of 

Transportation because they have determined that 1) the officers never performed duty on the 

airport, 2) they were not authorized in the first place, 3) there was no documentation to justify 

the actual costs, 4) the city’s allocation formula was not reasonable and/or 5) FAA oversight was 

inadequate to discover the illegal payments. 

27. Some have argued that it was a benefit to LAX to have a well-policed community 

around the airport and in the City of Los Angeles as a whole, but the FAA and DOT have 

consistently ruled that, whatever the merits of good policing generally, costs of police who do 

not provide service on the airport are not an operating cost of LAX and are not directly and 

substantially related to air transportation of passengers or property. 

28. The very same result obtains with regard to the Fees being imposed on PDX. 

Whatever the merits of stormwater management in the City of Portland and the cleanup of the 

Willamette River, no goods or services are being provided to PDX, and the Fees are not directly 
12

and substantially related to aviation. 

29. Furthermore, regarding the documentation which has been provided to me and 

which I have been able to discover, and contrary to the assertions contained in the Port's Answer 

in these proceedings, it is not apparent that the Fees imposed on PDX are based on actual costs 

incurred by the City. Rather, the City’s documentation is couched in terms of “forecast[s]”, 

“estimate[s]”, “budget request[s]”, and “revenue requirement[s].” Thus, the actual cost basis of 

the Fees, if any, is neither apparent nor transparent, and it is presently impossible for me to 

conclude whether or to what extent the actual costs of stormwater management and/or Superfund 

cleanup were utilized in formulating the Fees being imposed on PDX. 

30. The requirement of linkage between fees and airport-generated costs has been the 

policy of the FAA at least since In the Matter of Revenue Diversion by the City of Los Angeles at 

Los Angeles International, Ontario, Van Nuys, and Palmdale Airport, FAA Docket 16-01-96 

(1996).The record here is clear that that PDX receives no goods or services related to the Fees. 

31. Under the Revenue Use Policy, prohibited uses of airport revenue include but are 

not limited to: “Direct or indirect payments that exceed the fair and reasonable value of those 

services and facilities provided to the airport.” Section VI(B)(1), 64 Fed. Reg. at 7720 

(emphasis added). This language sets forth FAA’s policy, consistent with the revenue diversion 

statutes, that an airport and its airline tenants cannot be charged amounts that “exceed the fair 

and reasonable value of [the] services and facilities provided to airport.” 

32. FAA’s policy is clearly violated with regard to the Fees. PDX receives no 

services or facilities in exchange for payment of the Fees, so it goes without saying that payment 

of any amount exceeds the value received. 
13

33. Consistent with 49 U.S.C. § 47107(k), the Revenue Use Policy prohibits 

“Marketing and promotional activities unrelated to airports or airport systems.” Section 

VI(B)(4), 64 Fed. Reg. at 7720 (emphasis added).The fact that an expense may provide a general 

benefit to the community as a whole does not justify the expense being included within the 

airport rates and charges. This principle is further demonstrated by FAA’s statement in the 

Revenue Use Policy that “[e]xpenditure of airport funds for support of community activities, 

participation on community events, or support of community-purposes uses of airport property” 

is only permitted “if such expenditures are directly and substantially related to the 

operation of the airport.” Section V(A)(8), 64 Fed. Reg. 7718 (emphasis added). In other 

words, the fact that the City of Portland as a whole may benefit from the offsite stormwater 

management or Superfund remediation is irrelevant if such expenditures are not “directly and 

substantially related to the operation of” PDX. 

34. The Revenue Use Policy also prohibits “Impact fees assessed by any 

governmental body that exceed the value of services or facilities provided to the airport.” 

Section VI(B)(10), 64 Fed. Reg. at 7720 (emphasis added). This language reiterates the FAA 

position that charges imposed on the airport and its airline tenants may not exceed the value of 

services or facilities provided to the airport.

35. Under the Revenue Use Policy, “Airport revenue may be used for the capital or 

operating costs of those portions of an airport ground access project that can be considered an 

airport capital project, or that part of a local facility that is owned or operated by the airport 

owner or operator and directly and substantially related to the air transportation of 

passengers or property, including use by airport visitors and employees.” Section V(A)(9). 64 

Fed. Reg. 7718-19 (emphasis added). This language reflects the fact that in order for a project to 
14

be funded with airport revenues the project must be “directly and substantially related to the air 

transportation of passengers or property.” See also id. at 7719 (“FAA has approved the use of 

airport revenue for the actual costs incurred for structures and equipment associated with an 

airport terminal building station and a rail connector between the airport station and the nearest 

mass transit rail line, where the structures and equipment were (1) located entirely on airport 

property, and (2) designed and intended exclusively for the use of airport passengers”) 

(emphasis added). 

36. An example of a rail connector project at an airport is San Francisco’s BART spur 

which serves San Francisco International Airport (“SFO”). The BART station on SFO and the 

spur from the mainline were constructed with airport revenue only because they serve the airport 

and only the airport. The same is true for airport connector roadways. Only that portion of the 

roadway which is on airport property or within right-of-way owned by the airport and which 

serves only the airport can be legally funded with airport revenue. 

37. On May 3, 2016, FAA proposed to modify its policy regarding use of FAAapproved passenger facility charges (“PFCs”) for airport rail projects to permit use of PFCgenerated funds for some rail-related expenses located on airport property even if the rail line 

does not terminate at the airport and is thereby not exclusively dedicated to the airport.3

 

Although FAA administers the PFC program separately from the federal grant program (the 

Airport Improvement Program, or “AIP”), the agency’s discussion in soliciting comments 

regarding possible changes to the PFC rules are still very relevant in connection with the 

agency’s consideration of the lawfulness of the Fees at issue in this proceeding. 

 

3

Passenger Facility Charge (PFC) Program: Eligibility of Ground Access Projects Meeting

Certain Criteria, 81 Fed. Reg. 26,611. 
15

38. To begin with, even the proposed new PFC-rail policy – pursuant to which “onairport rail access projects are no longer treated identically to access roads”4

 – would still require 

an actual connection between the airport and the “on-airport rail access line.” By contrast, the 

Fees are for stormwater and environmental remediation services and facilities entirely 

unconnected to the Airport. 

39. In its Notice and Request for Comments regarding its PFC policy, FAA discusses 

the origin of the exclusivity provision in airport road projects, nothing that “[g]iven the open and 

variable nature of road systems, it is critical for the FAA to apply strict eligibility criteria that tie 

the funding of the on-airport project to the exclusive use of the airport.”5

 Without use of “strict 

eligibility criteria” for a roadway project, “users of the infrastructure could benefit from 

federally-approved funds designed to improve access to the national air transportation system 

without ever intending to visit, or actually visiting, the airport.”6

 

40. Similarly here, without FAA applying “strict eligibility criteria” for the Offsite 

Stormwater Management and Superfund Remediation Fees, users of offsite stormwater 

management and Superfund remediation services throughout the City of Portland could benefit 

from federally-approved funds designed to improve access to the national air transportation 

system, without even visiting PDX. 

41. FAA’s Notice and Request for Comments stemmed from an application by the 

Washington Metropolitan Airports Authority regarding rail service to Dulles International 

Airport. In considering whether to permit PFCs to be used to construct rail facilities on airport 

 

4

Id. at 26,612. 

5

Id. 

6

Id.; see also id. (“Without a very strict exclusive use requirement, users of access roads could 

take advantage of that infrastructure, and make a choice to never pass through the airport itself”). 
16

property but which do not exclusively serve the airport, FAA recites its historical position on the 

matter, including by direct implication the prohibition against using airport revenue for such nonairport-dedicated projects. In the opening page of the Notice, FAA states: 

The 2004 Notice [of Policy Regarding Eligibility of Ground Access 

Transportation Projects for Funding Under the Passenger Facility Charge 

Program] restated the agency’s longstanding policy requirement from the 

A[irport] I[mprovement] P[rogram] Handbook, FAA Order 5100.38, that to be 

AIP and/or PFC eligible, an airport ground access transportation project must 

meet the following conditions: (1) The road or facility may only extend to the 

nearest public highway or facility of sufficient capacity to accommodate airport 

traffic; (2) the access road or facility must be located on the airport or within a 

right-of-way acquired by the public agency; and (3) the access road or facility 

must exclusively serve airport traffic.7

42. FAA added that “During the 12 years that have ensued since publication of the 

2004 Notice, the FAA has consistently applied these criteria. The concept of ‘exclusive use’ has 

been the subject of particular interest because of the underlying principle that the 

stakeholders who pay excise taxes on airline passenger tickets or passenger facility charges 

should not have to pay the costs of facilities, except to the extent necessary to meet the 

needs of airport patrons and employees.”

8

43. Second, remembering that funding for major airport projects typically requires a 

combination of grant (AIP) proceeds, PFCs, debt, and airport revenue, the FAA’s historical 

restriction against using PFCs off-airport or for purposes not exclusively serving the airport 

directly tracks the Revenue Use Policy. This is easy to understand from a practical perspective. 

Depending on the size of the airport and type of project, AIP grants will fund 75% to 95% of a 

project with the airport sponsor funding the difference, called a “local match,” through other 

revenue sources. If the bulk of the funding (the AIP grants) cannot be spent off-airport, then 

 

7

Id. at 26,611. 

8

Id. (emphasis added). 
17

logic would dictate the local share should be restricted in the same way. These complimentary 

restrictions also make legal sense because the bundle of federal grant assurances required for 

acceptance of federal grants include restrictions on both the use of federal AIP funds as well as 

the use of airport revenue. 

44. It is instructive, therefore, that within the past few weeks the FAA has publicly 

reiterated the same fundamental policy – a requirement that funds be used for airport purposes – 

which A4A and its member airlines seek to have FAA follow in the current proceedings. FAA’s 

statements are included in the required regulatory/policy process which is recognized as 

authoritative and binding on federally-obligated airport owners and operators like the Port. 

July 30, 2015 Letter from FAA Official Randy Fiertz 

45. In an undated letter generated by FAA in late July 2015 that was emailed to A4A 

on July 30, 2015, Randy Fiertz, the then-Director of the FAA Office of Airport Compliance and 

Management Analysis, stated: 

Based on our review of available information, and reference to Generally 

Accepted Accounting Principles and Office of Management and Budget Circular 

A-87, we believe that the City of Portland’s storm water management charge is 

an operating cost of the airport, because it arises as a legal obligation 

incident to the airport’s possessory interest in land necessary for the 

provision of aeronautical services. It further appears that the stormwater 

management charge is allocated to all ratepayers within the jurisdiction, 

including the Port of Portland, based upon a transparent, uniform, and nondiscriminatory rate-setting methodology. In the absence of any indication that 

the airport has been disproportionately targeted by the city, a non-sponsor of the 

airport, or that the airport has otherwise been overcharged for these services 

(e.g., double billed), we are not prepared to find that the charge exceeds the 

value of services provided to the airport.9

 

Mr. Fiertz also stated that he was “not prepared to say . . . that the airport’s payment of the 

 

9

Letter, at 1. 
18

Superfund fee violates the grant assurances or the Revenue Use Policy.”10 

46. In my official capacity as FAA Associate Administrator for Airports, I selected 

Mr. Fiertz for the position of Director of the Office of Airport Compliance and Management 

Analysis. Nevertheless, Mr. Fiertz’s conclusion in the July 30 letter runs directly contrary to the 

statutes, regulations, and policies against airport revenue diversion referenced above. Mr. 

Fiertz’s letter also contradicts every Director’s Determination and Final Decision and Order 

which the FAA has published pursuant to Title 14 Code of Federal Regulations Part 16, Rules of 

Practice for Federally-Assisted Airport Enforcement Proceedings, on the subject of revenue 

diversion since the beginning of the Part 16 program. Any attempt to change FAA policy in 

regard to revenue diversion was beyond Mr. Fiertz’ former authority as Director of Compliance 

and Management Analysis. 

 CONCLUSIONS 

47. The Offsite Stormwater Management and Superfund Remediation Fees violate the 

Revenue Use Policy because they are not “operating costs” of PDX. In order to qualify as an 

“operating cost” of PDX, the Fees would need to be in exchange for services or facilities 

provided by the City to the Airport. However, the Fees relate solely to services being provided 

to municipal projects external to the Airport. Unlawful revenue diversion occurs when revenue 

generated at the airport is spent outside the airport on non-airport facilities or services. That is 

precisely what is occurring with regard to imposition of the Fees at PDX. 

48. In his July 30, 2015 letter, Mr. Fiertz stated his opinion that the Offsite 

Stormwater Management Fee “is an operating cost of the airport, because it arises as a legal 

obligation incident to the airport’s possessory interest in land necessary for the provision of 

 

10Id. at 2 n. 1. 
19

aeronautical services.” (Emphasis added) This statement is only the opinion of Mr. Fiertz, and 

lacks reasoning and merit. It cannot be the case that a charge imposed on the Airport qualifies as 

an “operating cost” of the Airport simply because the governmental entity imposing the charge 

claims that the Port has a legal obligation to pay it. The Fees constitute unlawful revenue 

diversion because they are not being imposed in connection with the provision of any service or 

facility at or to the Airport which is directly and substantially related to air transportation. Mr. 

Fiertz’s statement ignores this obvious fact. 

49. Mr. Fiertz’s opinion opens the door to many forms of unlawful revenue diversion. 

For example, based on Mr. Fiertz’ opinion, the City could demand as a “legal obligation” that the 

airport pay a fee to construct a new football stadium or convention center or to hire additional 

police officers to keep the streets of the city crime free. But neither would relate to an “operating 

cost” of the airport. Yet under the Fiertz letter, the fee would be an “operating cost” of the 

airport and therefore could be charged to airlines and paid to the City without running afoul of 

the revenue diversion laws. 

50. In its Answer, the Port contends that the Offsite Stormwater Management and 

Superfund Remediation Fees “are operating costs within FAA’s Revenue Use Policy” because 

they are “utility fees.” Port Answer, at 28. However, merely because a charge imposed on the 

Airport is labeled a “utility fee” does not transform it into an operating cost of the Airport. The 

Offsite Stormwater Management and Superfund Remediation Fees may be a type of “utility fee” 

imposed by the City. However, they are not “utility fees” with regard to the Airport because no 

utility services are being provided to the Airport in exchange for the Fees. 

51. The Port Answer ignores this fact. The Answer offers many definitions, concepts 

about allocation methodology, and discusses the ability of a municipality to impose utility fees. 
20

Over and over again, however, the Port ignores the simple fact that PDX receives no services or 

facilities in exchange for the Fees. 

52. The Port states that the Revenue Use Policy explains that “[e]xpenditures that are 

directly and substantially related to the operation of the airport qualify inherently as operating 

costs of the airport.” Port Answer at 28 (citing 64 Fed. Reg. at 7705). However, the Fees are not 

directly or substantially related to the operation of PDX. Rather, they are directly and 

substantially related to the management of offsite stormwater in areas of the City not within the 

Airport, and to the cleanup of a river (the Willamette) having no connection to the Airport. 

53. The Port claims that in “addition to the Revenue Use Policy, FAA’s Airport 

Compliance Manual . . . is further support that utility costs are Airport operating expenses for 

which airport sponsors may utilize airport revenues.” Port Answer, at 29 (citing FAA Order 

5190.6B, at 15-4). This is not correct in this instance because, as noted above, simply labeling a 

charge as a utility fee does not make it so where, as here, the so-called utility is not delivered to 

or received by the airport. FAA Order 5190.6B § 15.9(a) (at page 15-4) states that “Sponsors 

may use their airport revenue for the capital or operating costs of the airport, the local airport 

system, or other local facilities owned or operated by the airport owner or operator and directly 

and substantially related to the air transportation of passengers or property.” Thus, Order 

5190.6B is consistent with federal statutory prohibitions against diversion of airport revenue in 

49 U.S.C. § 47133(a) and § 47107(b) and the Revenue Use Policy. 

54. Section 15.9(a) of Order 5190.6B adds that appropriate airport costs include 

“reimbursements to a state or local agency for the costs of services actually received and 

documented” by the airport. (Emphasis added) Here, PDX did not “actually receive” either 

stormwater or Superfund cleanup services from the City. 
21

55. There can be no exemption from the prohibition against unlawful revenue 

diversion for municipal utility charges where, as here, the Fees are not related to actual services 

or facilities provided to the Airport. The document “Legal Research Digest 2, Theory and Law 

of Airport Revenue Diversion” from the “Airport Cooperative Research Program” (May 2008) 

(“ACRP Document”) (Exhibit 7 to the Complaint) states: 

The fiscal problems facing local governments more generally (including, for 

example, the needs of urban roads, water, sewage, parks, schools, hospitals, and 

other infrastructure, and fire and police protection) coupled with a declining tax 

base have forced many to search for new sources of revenue. Redirecting revenue 

from airports to fund non-airport municipal needs appears attractive to some local 

political leaders. Yet Congress has stepped in to promulgate laws to 

circumscribe the ability of federally funded airports to divert airport revenue 

“downtown.” Conflicts over locally owned and operated airports and federal 

funding and regulation are by no means unique to revenue-diversion issues, but 

they manifest themselves here as well. Id. at 3 (Emphasis added). 

The ACRP Document also states that “the purchase or operation of road maintenance equipment 

and services or police and fire services not directly in support of the airport are deemed 

impermissible.” Id. at 25. 

56. The fact that the community as a whole may benefit from off-site stormwater 

treatment and environmental remediation cannot justify inclusion of such expenses in costs 

allocated to the Airport and its airline tenants, as illustrated by the approach taken by FAA and 

DOT to law enforcement costs. FAA and DOT undertake significant efforts to ensure that the 

general costs of law enforcement are not allocated to airports. An example is the “Audit Report 

– FAA Oversight is Inadequate To Ensure Proper Use of Los Angeles International Airport 

Revenue for Police Services and Maximization of Resources,” AV-2014-035, Office of Inspector 

General, U.S. Department of Transportation (April 8, 2014) (“2014 LAX Audit Report”).11 

 

11Exhibit 11 to Complaint. 
22

57. The Report states that the Inspector General “identified about $7.87 million in 

unsupported charges without adequate documentation for services provided by the Los Angeles 

Police Department (LAPD) . . . .”12 The LAX 2014 Audit Report adds: “Without adequate 

documentation or support, it is unclear if these charges were used for the capital or operating 

costs of” LAX.13 The Report further states: “In 2012, LAWA and FAA stated [that] a recordkeeping system to track LAPD non-airport work time would be implemented to address 

allegations of unlawful revenue diversion. . . . However, because the City [of Los Angeles] has 

yet to fully implement such a record-keeping system, LAWA may be incorrectly spending 

additional revenue on LAPD non-airport work.”14 

58. The same concerns apply equally to the Portland Fees. It would make no sense 

for federal authorities to ensure, on the one hand, that an airport pays only for law enforcement 

services it receives but then, on the other hand, allow an airport to be allocated a portion of and 

pay the costs of utility-type services it does not receive and which have no actual relationship to 

the airport. 

59. The Port asserts that it is “essentially impossible for anyone within Portland’s 

boundaries to reach PDX without traveling on city streets.” Port Answer, at 32-33. Even if true 

this statement is irrelevant. The fact that there are expenses involved with maintaining City 

streets located outside of the Airport does not mean that the Airport can be charged with the 

costs of keeping water off the streets. And once again, the Port ignores that admitted fact that 

 

12Id. at 2. 

13Id. 

14Id. 
23

those expenses are not directly and substantially related to air transportation. If the roadway in 

question was dedicated to accessing the Airport, then the costs might be included within the 

Airport cost base. Otherwise, the allocation of the roadway maintenance costs to the Airport 

constitutes revenue diversion under the Revenue Use Policy. 

60. It is vital that FAA enforce the prohibitions against revenue diversion. The 

unlawful revenue diversion at PDX is typical of efforts by local governments to look to airports 

and airlines to fund municipal financial requirements. For example, in October 2015, a Chicago 

city alderman proposed to impose a surcharge on air transportation to “leverage the value” of 

O’Hare and Midway Airports to bankroll the hiring of at least 100 additional police officers to 

combat crime in the City of Chicago.15 The resolution introduced to the Chicago City Council 

called on airlines at O’Hare and Midway to “voluntarily” impose a $1 surcharge on the 100 

million passengers who flow through O’Hare and Midway each year.16 

61. With regard to the laws against revenue diversion from U.S airports, the alderman 

argued that if the U.S. Senate can make an exception by directing $9.2 billion in airport revenue 

to the federal highway trust fund as the DRIVE Act requires, then Chicago should be free to use 

airport revenue to “save lives.”17 The alderman also sought to levy a “security fee” on airport 

concession contracts.18 

 

15See “Alderman seeks $1 surcharge on air travelers to fund police hiring,” Chicago Sun Times 

(Oct. 14, 2015) – available at http://chicago.suntimes.com/chicagopolitics/7/71/1023944/alderman-proposes-1-surcharge-airline-passengers-bankroll-police-hiring

16Id. 

17Id. 

18Id.

1 

APPENDIX A 

(EDUCATIONAL BACKGROUND AND EXPERIENCE) 

1. I graduated from the United States Military Academy with a Bachelor of Science 

degree in 1973. Thereafter, I served as an Infantry rifle platoon leader, weapons platoon leader, 

and heavy mortar platoon leader in the 82d Airborne Division before being selected as one of 25 

Army officers worldwide to attend law school on full scholarship, pay, and allowances, 

graduating from The University of Texas School of Law in 1979 with a Doctor of Jurisprudence 

degree. After transferring from the Infantry to the Judge Advocate General's Corps, I attended 

the year-long Judge Advocate Officers' Advanced Course and graduated with the equivalent of a 

Master of Laws degree (LL.M) from The Judge Advocate General’s School of the U. S. Army. 

2. My aviation and airport law career began in private practice as an associate, then 

shareholder in the law firm of Stokes, Bartholomew, Evans & Petree, P.A. (now Adams & 

Reese, LLP) where I was general counsel of the Metropolitan Nashville Airport Authority for 

some 18 years during which time the Authority owned or managed as many as four airports. 

During this time I also represented other airports, air carrier airlines, concessionaires, and fixed 

base operators. I simultaneously served in executive management of the Authority and was at 

various times the Director of Properties and Executive Assistant to the President on the 

Authority's staff. As such, I was responsible for the performance all departments at the 

Authority on a transitional basis while helping manage the construction of a new 44-gate 

terminal; negotiate all the airline and concession agreements required to operate it; and issue the 

airport revenue bonds to finance it. 

3. I was also directly involved, from both a legal and management perspective, in 

the construction of two air carrier runways and a major extension of a third, including all related 
2 

land acquisition and condemnation, zoning, obstruction evaluation, relocation assistance, and 

utility relocation. I successfully defended all state and federal litigation brought against the 

airport related to these projects. Many of the cases were dismissed before trial. The Federal 

Aviation Administration environmental responsibilities and streamlining now codified in Vision 

100 - Century of Aviation Reauthorization Act (Public Law 108-176, Vision 100) were first 

developed under my direction when the FAA was persuaded to be directly responsible for the 

production of the environmental impact statement for Runway 2R/20L at Nashville International 

Airport. 

4. The project also led to my drafting of the nation's first Airport Improvement 

Program (“AIP”) Letter of Intent to provide the long-term financing for allowable costs. During 

the same period, I co-authored the Airport Noise Reduction Reimbursement Act of 1989 (Public 

Law 101-71), permitting the FAA for the first time to issue AIP grants to reimburse airport 

sponsors who advance funded FAR Part 150 noise mitigation projects. It was also my 

responsibility to review all of the Authority’s federal grants, providing an independent 

certification to the FAA that the Authority was in compliance with applicable grant assurances 

and defending any assurance compliance issues which arose. 

5. I played a leading role in the establishment of Nashville’s first international air 

service; likewise, I was intimately involved in the management of the Authority’s Passenger 

Facility Charge financing program and, upon the passage of the Wendell H. Ford Aviation 

Investment and Reform Act for the 21st Century (“AIR-21”) (Public Law 106-181), in the 

formulation of the Airport Authority’s initial competition plan mandated by AIR-21. In light of 

the foregoing, I am very familiar with all of the FAA Airport Sponsor Grant Assurances and 

specifically with Grant Assurances 22. Economic Nondiscrimination, 23. Exclusive Rights, and 
3 

39. Competitive Access, each of which is part of every AIP grant agreement. Title 49 U. S. 

Code § 41707 et. seq. imposes upon each AIP grant recipient numerous obligations to insure that 

AIP trust fund proceeds are utilized in specified ways for public purposes. 

6. In January 2007, President George W. Bush appointed me Associate 

Administrator for Airports at the FAA, and I served in that capacity through January 2009. As 

such, I was responsible for the entire system of airports in the United States, including among 

many other things administering the AIP trust fund and awarding approximately $10 billion in 

grants from the trust fund, accompanied by the required grant assurances which form a contract 

between the federal government and each grant recipient, usually the airport owner and operator. 

7. Additionally, I was the final agency decision-maker on all complaints filed with 

the FAA pursuant to Title 14 Code of Federal Regulations Part 16, most of which involved 

allegations of grant assurance violations. My decisions were directly appealable to a federal 

circuit court of appeals, and several were. All of my decisions which were appealed were 

upheld, except for one which was remanded for additional fact-finding and then dropped by the 

appellant. By way of context, I was told by my staff that I set a record (nine Final Decisions in 

one fiscal year) in ruling on Part 16 complaints. 

8. My other responsibilities as Associate Administrator for Airports included the 

safety, standards, planning, financing, certification, and compliance of airports throughout the 

United States, including oversight of the AIR-21 competition plan program system wide. I 

reported directly to the FAA Administrator and the U. S. Secretary of Transportation and 

routinely briefed and testified before the U. S. Congress, its professional staff, state and local 

elected officials, aviation industry groups, and other Cabinet departments on a wide variety of 

aviation policy matters. I also commissioned three air carrier runways in one day at Washington 
4 

Dulles, Chicago O’Hare, and Seattle Tacoma (a national first) in November 2008; implemented 

Safety Management Systems for U.S. airports and for the FAA Airports Organization; produced 

the Future Airport Capacity Task 2 (FACT2), outlining capacity needs in the national airspace 

system; and reinvigorated the agency’s 14 CFR Part 139 safety certification inspection program 

and grant assurance compliance program. 

9. For example, I made the decisions, directed development of the legal strategy, and 

lead the effort to challenge a municipal ordinance by the City of Santa Monica, California, which 

would have banned all Category C and D aircraft (primarily corporate jets) from the Santa 

Monica Airport, a principal general aviation reliever airport for Los Angeles International 

Airport, in order to insure that the airport remains open to all users in accordance with federal 

law. 

10. I have been a Certified Member of the American Association of Airport 

Executives since 1993. I have been a member of the Airports Council International-North 

America's Legal Affairs Committee for 30 years, was Vice Chairman and then Chairman of the 

Committee in 1997-1999, and served as a member of the Committee’s Steering Group for 

several years. I am also a member of the Aircraft Owners’ and Pilots’ Association and am a 

licensed private pilot. 
EXHIBIT 2 

DECLARATION OF NORWOOD (“WOODY”) JACKSON, JR. 
2 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

AIR TRANSPORT ASSOCIATION OF 

AMERICA, INC. d/b/a AIRLINES FOR 

AMERICA, ALASKA AIRLINES, INC., 

AMERICAN AIRLINES, INC., ATLAS AIR, 

INC., FEDERAL EXPRESS AIRLINES, 

HAWAIIAN AIRLINES, INC., HORIZON AIR, 

JETBLUE AIRWAYS INC., SOUTHWEST 

AIRLINES CO., UNITED AIR LINES, INC., 

UNITED PARCEL SERVICE CO., and AIR 

CANADA, 

 Complainants, 

v. 

PORT OF PORTLAND, OREGON, 

 Respondent. 

FAA Docket No. 16-16-04 

DECLARATION OF NORWOOD J. JACKSON, JR.

I, Norwood J. (“Woody”) Jackson, Jr., hereby declare and state as follows, under penalty 

of perjury: 

1. I am a certified public accountant with 40 years of knowledge of, and experience 

with, generally accepted accounting principles (“GAAP”), and regulations, requirements, 

policies, and practices relating to federally funded projects and contracts, and the accounting 

regulations and related documents concerning allocation of costs referenced by the U.S. Federal 

Aviation Administration (“FAA”) in its “Policy and Procedures Concerning the Use of Airport 

Revenue” 64 Fed. Reg. 7696 (Feb. 16, 1999) (“Revenue Use Policy”). 
3 

2. I have been retained as an expert by the Air Transport Association of America, 

Inc., d/b/a Airlines for America (“A4A”), and its member airlines, with regard to the abovereferenced FAA proceeding under 14 C.F.R. Part 16 relating to fees imposed by the City of 

Portland, Oregon (“City”) at Portland International Airport (“PDX” or “Airport”) for offsite 

stormwater management (the “Offsite Stormwater Management Fees”) and environmental 

cleanup and remediation of the Willamette River (the “Superfund Remediation Fees”) 

(collectively, the “Fees”). This Declaration is being submitted in connection with the A4A 

reply being filed May 25, 2016. 

3. The Port asserts that imposition of the Fees on the Airport and its airline tenants 

does not constitute unlawful diversion of airport revenue despite the undisputed fact that the 

Fees are used to fund City projects and services located external to the Airport that are 

unrelated to the operation or capital development of PDX. The Port contends the Fees are not 

being unlawfully diverted from the Airport because they constitute “operating costs” of PDX. 

See Answer of Port of Portland (“Port Answer”), at 23-27. This assertion is wrong. It is my 

opinion, which I hold to a reasonable degree of professional certainty, that the Offsite 

Stormwater Management Fees and the Superfund Remediation Fees are not allocable to the 

Airport based on the criteria described in 2 C.F.R. Part 225 (formerly OMB Circular A-87), and 

cannot properly be deemed to be PDX operating costs that may be funded with Airport 

revenues. 

4. The Offsite Stormwater Management and Superfund Remediation Fees are not 

an allowable use of Airport revenues because they are not imposed in exchange for the 

provision of any services or facilities by the City to the Airport. The expenses incurred by the 

City for the management of offsite stormwater located outside the Airport, and the investigation 
4 

and remediation of a Superfund site not involving the Airport, do not represent services to the 

Airport for purposes of allocating costs under the controlling principles, policies, law and 

guidance materials. 

 EDUCATION AND EXPERIENCE 

5. I am a certified public accountant and currently serve as a Vice President of 

Federal Financial Management at AOC Solution, a position I have held since 2005. In 1971, I 

received a Bachelors’ of Science degree (Cum Laude) from Barton College in Wilson, North 

Carolina. From 1971 to 1991 I was employed by the Commonwealth of Virginia Auditor of 

Public Accounts, the legislative audit agency for the Commonwealth, and serviced as the 

Deputy Auditor of Public Accounts from 1985 to 1991. During this period I was responsible for 

the audit of State and local government entities including colleges and universities. From 1991 

to 1999 I served as the Deputy Controller at the U.S. Office of Management and Budget 

(“OMB”), Office of Federal Financial Management. I was a partner at the accounting firm 

KPMG LLP from 1999 to 2004. A copy of my C.V. is attached as Exhibit A hereto. 

6. I am a member of the American Institute of Certified Public Accountants 

(“AICPA”); a member of the Association of Government Accountants (“AGA”); a former 

member of the Federal Accounting Standards Advisory Board (following a ten year term); a 

former member if the AICPA Auditing Standards Board (following a four year term); and a 

former member of the U.S. Controller General’s Advisory Council on Government Auditing 

Standards (after an 8-year term). 

 BACKGROUND STATEMENT 

7. PDX is located within the Portland city limits just south of the Columbia River 

in Multnomah County, Oregon. 
5 

8. I have been informed by counsel for A4A that: 

a. PDX has its own stormwater treatment facility located within the airfield 

perimeter fence. The PDX system collects airfield stormwater (including deicing materials 

during the deicing season) as well as run-off stormwater from Marine Drive (on the Columbia 

River Levee bordering the Airport on the north side) which is owned by the City; and 

b. PDX lies within the Multnomah County, Oregon Drainage District (the 

“Drainage District”). Landside drainage at PDX is all contained within the Drainage District’s 

catchment area (roughly defined by the levee which encircles the airport, separating it from the 

Columbia River). PDX pays the Drainage District fees for this “on-site” service. No Airport 

stormwater runs into City-controlled stormwater infrastructure. All water from PDX goes to 

the Columbia Slough, controlled by the Drainage District or is discharged through the Port’s 

own stormwater treatment system to the Columbia River. 

The Offsite Stormwater Management and Superfund Remediation Fees 

9. On September 9, 2012, the City adopted Ordinance 185610 (the “Ordinance”), 

which imposes a new methodology for charging for storm water management services. Under 

the methodology, the Port – as the owner and operator of PDX – must pay a portion of the costs 

incurred by the City to manage “off-site” storm water drainage from non-airport rights of way 

(the “Offsite Stormwater Management Fees”), and for the clean-up of a Willamette River 

Superfund site having no relationship to PDX (the “Superfund Remediation Fees”). 

10. The Offsite Stormwater Management Fees are intended for the City to recover the 

costs to treat storm water on roadways located external to the Airport and not owned by a private 

party. 
6 

11. The Superfund Remediation Fee relates to the City’s involvement in the Portland 

Harbor Superfund Site. This involves the Willamette River, which has no connection to the 

Airport. (PDX is near the Columbia River.) I am informed by counsel for A4A that neither the 

Port nor the City is claiming that Airport operations caused any of the pollution in the Willamette 

River that is the subject of the Superfund cleanup that pertains to the Superfund Remediation 

Fees. 

The Revenue Use Policy References to OMB Circular A-87 and GAAP 

12. Section V(A)(1) of the Revenue Use Policy states that airport revenue may be 

used for the “capital or operating costs of the airport, the local airport system, or other local 

facilities owned or operated by the airport owner or operator and directly and substantially 

related to the air transportation of passengers or property.” 64 Fed. Reg. 7718. “Such costs may 

include reimbursements to a state or local agency for the costs of services actually received and 

documented, subject to the terms of this policy statement. Operating costs for an airport may be 

both direct and indirect and may include all of the expenses and costs that are recognized under 

the generally accepted accounting principles and practices that apply to airport enterprise 

funds of state and local government entities.” Id. (emphasis added). 

13. With regard to “Allocation of Indirect Costs,” the Revenue Use Policy states that 

“the allocation must result in an allocation to the airport only of those costs that would 

otherwise be allowable under 49 U.S.C. § 47107(b).” Section V(B)(1), 64 Fed. Reg. at 7719 

(emphasis added). The Revenue Use Policy adds that the “costs must be allocated under a cost 

allocation plan that meets the following requirements: (a) The cost is allocated under a cost 

allocation plan that is consistent with Attachment A to OMB Circular A-87, except that the 

phrase ‘airport revenue’ should be substituted for the phrase ‘grant award,’ wherever the latter 
7 

phrase occurs in Attachment A.” Section V(B)(2)(a), 64 Fed. Reg. at 7719. In addition, “the 

allocation method [may] not result in a disproportionate allocation of general government costs 

to the airport in consideration of the benefits received by the airport.” Section V(B)(2)(b), 64 

Fed. Reg. at 7719 (emphasis added). 

14. “The Final Policy specifies that the cost allocation plans must be consistent with 

Attachment A of OMB Circular A-87. Attachment A to A-87 sets forth general principles for 

developing cost allocation plans.” The Policy makes clear that it “continues to specify that the 

costs allocated must themselves be eligible for expenditure of airport revenue under 

section 47107(b).” 64 Fed. Reg. at 7706 (emphasis added). “Attachment A to OMB Circular 

A-87 provides principles for cost allocation methodologies. The cost items that may be 

charged to airport revenue are determined by the requirements of section 47107(b).” Id. 

(emphasis added). “Therefore,” according to the Revenue Use Policy, airport “sponsors, and 

the FAA, cannot rely solely on compliance with OMB Circular A-87 to assure that the 

costs items charged to the airport in a Federally approved cost allocation plan are 

consistent with section 47107(b).” Id. (emphasis added). 

15. In December 2013, OMB replaced OMB Circular A-87 with 2 C.F.R. 200.225.1 

As a result, what previously was Attachment A to A-87 is now Appendix A to 2 C.F.R. 200.225. 

In addition, what was Attachment B to A-87 is now Appendix B to 2 C.F.R. 200.225. 

 

1

See “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for 

Federal Awards,” OMB, 78 Fed. Reg. 78,590 (Dec. 26, 2013) (Final Guidance) (OMB “is 

streamlining the Federal government’s guidance on Administrative Requirements, Cost 

Principles, and Audit Requirements for Federal awards. . . . This final guidance supersedes and 

streamlines requirements from OMB Circulars A-21, A-87, A-110, and A-122 (which have 

been placed in OMB guidances)”); 2 C.F.R. 225.45(b) (“This part supersedes OMB Circular A87”). 
8 

16. 2 C.F.R. Part 225, titled “Cost Principles for State, Local, and Indian Tribal 

Governments (OMB Circular A-87),” “establishes principles and standards for determining 

costs for Federal awards carried out through grants, cost reimbursement contracts, and other 

agreements with State and local governments and federally-recognized Indian tribal 

governments (governmental units).” 

17. Section (C)(1)(g) of Appendix A to 2 C.F.R. 200.225 states to “be allowable 

under Federal awards,” “[e]xcept as otherwise provided for in 2 CFR part 225,” costs must “be 

determined in accordance with generally accepted accounting principles” (“GAAP”). 

18. For purposes of 2 C.F.R. Part 200, “GAAP has the meaning specified in 

accounting standards issued by the Government Accounting Standards Board (GASB) and the 

Financial Accounting Standards Board (FASB).” 2 C.F.R. 200.49. 

19. Section 25 in Appendix B to 2 C.F.R. 200.225 states: 

Unless prohibited by law, the cost of utilities, insurance, security, janitorial 

services, elevator service, upkeep of grounds, necessary maintenance, normal 

repairs and alterations, and the like are allowable to the extent that they: keep 

property (including Federal property, unless otherwise provided for) in an 

efficient operating condition, do not add to the permanent value of property or 

appreciably prolong its intended life, and are not otherwise included in rental or 

other charges for space. Costs which add to the permanent value of property or 

appreciably prolong its intended life shall be treated as capital expenditures . . . . 

(Emphasis added) 

So clearly the “cost of utilities” may only be allocated to the airport “to the extent” that the 

utilities in question “keep [the airport] property . . . in an efficient operating condition.” 
9 

July 30, 2015 Letter from FAA Official Randy Fiertz 

20. In an undated letter generated by FAA in late July 2015 that was emailed to A4A 

on July 30, 2015, Randy Fiertz, the then-Director of the FAA Office of Airport Compliance and 

Management Analysis, stated: 

Based on our review of available information, and reference to Generally 

Accepted Accounting Principles and Office of Management and Budget Circular 

A-87, we believe that the City of Portland’s storm water management charge is an 

operating cost of the airport, because it arises as a legal obligation incident to 

the airport’s possessory interest in land necessary for the provision of 

aeronautical services. It further appears that the stormwater management charge 

is allocated to all ratepayers within the jurisdiction, including the Port of Portland, 

based upon a transparent, uniform, and non-discriminatory rate-setting 

methodology. In the absence of any indication that the airport has been 

disproportionately targeted by the city, a non-sponsor of the airport, or that the 

airport has otherwise been overcharged for these services (e.g., double billed), we 

are not prepared to find that the charge exceeds the value of services provided to 

the airport. (Letter, at 1) (emphasis added) 

Mr. Fiertz also stated that he was “not prepared to say . . . that the airport’s payment of the 

Superfund fee violates the grant assurances or the Revenue Use Policy.” Id. at 2 n. 1. 

CONCLUSIONS 

21. Under well-established accounting principles, the Offsite Stormwater 

Management and Remediation Fees are not allocable to the Airport because they are not 

associated with any service or facility that is actually provided to the Airport. Rather, the costs 

relate entirely to services performed outside of the Airport property for the benefit of the 

City, which is a separate legal entity from the Port. 

22. As a general proposition, an airport is subject to utility bills like other entities, 

provided however that the utility bills are for services or facilities provided to the airport. So, if 

a municipality provides water and electricity to an airport it can bill the airport a reasonable and 

otherwise appropriate charge based on the amount of water and electricity used by the airport. 
10 

It similarly follows that if the City performed stormwater management services on the Airport, 

or even with regard to water originating at or generated by the Airport, the City could charge a 

reasonable fee for such services. But that is not the situation with regard to the Offsite 

Stormwater Management and Superfund Remediation Fees. These charges are being imposed 

at the Airport despite the fact that the City provides no services or facilities at the Airport. The 

City does not manage or dispose of the storm water generated at the Airport. Further, there is 

no evidence that the Airport caused any of the environmental problems being addressed by the 

Superfund Remediation Fee. 

23. The Port asserts that the Fees are “recognized operating costs under the [OMB] 

Circular A-87” and “Generally Accepted Accounting Principles.” Port Answer, at 23-27. 

When Mr. Fiertz issued his July 30, 2015 letter, and the Port filed its Answer, OMB Circular A87 had been replaced by 2 C.F.R. 200.225. For purposes of this Declaration, I shall assume that 

Mr. Fiertz and the Port intended to refer to section 200.225 rather than the superseded OMB 

Circular A-87. In any event, neither 2 C.F.R. 200.225 nor its predecessor OMB Circular A-87 

defines allowable “operating costs.” Rather, both regulatory documents include “Selected 

Items of Cost” that are allowable if they meet the allocability and reasonableness criteria. 

These are, essentially, a list of cost categories. OMB did not presume in Circular A-87, nor 

does it now presume, that the referenced costs are allowable by virtue of inclusion on the list of 

“Selected Items of Cost.” 

24. The Port maintains that the Fees are Airport “operating costs” under OMB 

Circular A-87 [now, 200 C.F.R. 200.225] and GAAP as “utility charges.” Port Answer, at 22-

25. However, the fact that the Fees are for utility-type services is irrelevant given the fact that 

the “utilities” are not being provided at or to the Airport. Again, as discussed in paragraph 23 
11 

above, inclusion on the list of “Selected Items of Cost” does not in and of itself make the cost 

allowable. The overriding criteria of allocability and reasonableness must be met first. In the 

case of the Airport, the cost of the services in question are not allocable since the Airport 

receives no services from the City in exchange for the Fees. 

25. The Port contends that section 25 of “Attachment B to OMB Circular A-87,” 

which I will assume was intended to be a reference to section 25 of Appendix B to 2 C.F.R. 

200.225, “speaks directly to ‘the cost of utilities’ and finds such costs permissible in the 

circumstances here.” Port Answer, at 24. Again, it is irrelevant that the Fees relate to 

“utilities” where, as here, the alleged utilities are not being provided to or at the Airport. Since 

the Airport receives no services, the costs of the Fees are not allowable since they do not meet 

OMB’s criteria for cost allocation. 

26. Although section 25 of Appendix B to 2 C.F.R. (quoted in full above) refers to 

the “cost of utilities,” it provides that such costs are “allowable to the extent that they” keep the 

subject property “in an efficient operating condition.” However, the Offsite Stormwater 

Management and Superfund Remediation Fees do not keep the Airport “in an efficient 

operating condition.” The Fees have no connection to the Airport. The Fees may be for 

services that help to keep roads outside the Airport in “an efficient operating condition,” and 

help compensate the City for the environmental cleanup of a river (the Willamette) not 

connected to the Airport. But the charges do not keep PDX in an “efficient operating 

condition.” 

27. The fact that 2 C.F.R. 200.225 and other regulations, standards and policies 

allow for the allocation of some indirect costs is not relevant to the Fees because in order for 

indirect costs to be allocated they must be related to operating (or capital) costs of the airport. 
12 

For example, if a city owns and operates an airport, the city may be able to allocate a portion of 

its overhead expenses to the airport, given that some level of city government management will 

relate to operation of the airport. However, that is not the case with PDX and the Fees, because 

the City of Portland does not own or operate the Airport. The City does not have overhead or 

other indirect expenses that it can allocate to the Airport. As stated above, “the costs allocated 

must themselves be eligible for expenditure of airport revenue under section [49 U.S.C. §] 

47107(b).” 64 Fed. Reg. at 7706 (emphasis added). See also id. (“The cost items that may be 

charged to airport revenue are determined by the requirements of section 47107(b)” 

(emphasis added); id. (neither the airport operator nor FAA can “rely solely on compliance 

with OMB Circular A-87 to assure that the costs items charged to the airport in a 

Federally approved cost allocation plan are consistent with section 47107(b)”). Because 

the costs associated with the Fee are incurred for the benefit of the City and not the Airport, 

they are not allocable to the Airport. 

28. The Port also asserts that “all ratepayers in the City” – “including the Airport” – 

benefit from the removal of stormwater from the City’s public rights-of-way . . . .” Port 

Answer, at 25 (emphasis added). For cost accounting purposes this is an irrelevant statement. 

There could be any number of facilities and services provided external to the Airport which 

may provide some sort of indirect “benefit” to the Airport. The potential list is infinite. It 

includes, without limitation, a thriving economy, reasonable taxes, a professional and trained 

police, fire and rescue and ambulance force throughout the City, street lighting, public parks 

and attractions, a modern public transit system and various other municipal amenities. But 

none of these services and facilities would be deemed to keep the Airport in an “efficient 

operating condition;” nor do the Offsite Stormwater Fees or the Superfund Remediation Fees. 
13 

29. The Port also contends that “[s]upport for the treatment of utility costs under 

GAAP is found in the Federal Accounting Standard Advisory Board Handbook of Federal 

Accounting Standards and Other Pronouncements (June 30, 2015) (the ‘FASAB Handbook’).” 

Port Answer, at 25-27. The Port’s reliance on the FASAB Handbook is erroneous. Statement 

of Federal Financial Accounting Concepts (SFFAC) 5 in the FASAB Handbook states that 

“[g]enerally accepted accounting principles recognize the importance of reporting transactions 

and events in accordance with their substance.” Id. at 39 (emphasis added). In considering 

whether the Fees constitute “operating costs” of the Airport, one must not ignore the 

“substance” of the transaction – which is that the Fees reflect expenses incurred for projects 

external to the Airport for the benefit of the City and not the Airport. 

I declare under penalty of perjury under the laws of the District of Columbia that the 

foregoing is true and correct. 

Executed this 24 day of May, 2016, at 8:15 PM. 

____________________ 

Norwood J. Jackson, Jr. 
EXHIBIT 2A 
NORWOOD JACKSON | CPA | AOC SOLUTIONS, INC. 

Key Qualifications 

Mr. Jackson has over 40 years of extensive experience in providing public and government accounting, auditing, 

and advisory services. He is a retired Partner from KPMG LLP (2004). In addition to his work at KPMG, Mr. 

Jackson served as the Deputy Controller of the Office of Federal Financial Management at the Office of 

Management and Budget (OMB) from 1991 through 1999. Prior to joining the Federal Government, Mr. Jackson 

was Deputy Auditor of Public Accounts for the Commonwealth of Virginia. In 1999, he completed an 8-year term 

on the US Comptroller General’s Advisory Council on Government Auditing Standards, a 4-year term on the 

Auditing Standards Board of the American Institute of Certified Public Accountants, and a 6-year term on the 

Federal Accounting Standards Advisory Board (FASAB). Recently he completed an additional 5 year term on the 

FASAB. 

Professional Experience 

AOC Solutions, Inc., VP Financial Management ......................................................................... 2005 to Present 

Norwood Jackson LLC, CEO ............................................................................................................. 2004 to 2005 

KPMG LLP, Partner ........................................................................................................................... 1999 to 2004 

U.S. Office of Management and Budget, 

Office of Federal Financial Management .......................................................................................... 1991 to 1999 

Commonwealth of Virginia, Auditor of Public Accounts ................................................................ 1972 to 1991 

Relevant Experience 

Transportation Security Administration (TSA), Office of Financial Management (OFM). Mr. Jackson has been 

in charge of multiple engagements at TSA, all of which were with the OFM. The engagements ranged from 

performing extensive analysis to resolve complex budget issues to remediating difficult-to-resolve property, plant, 

and equipment problems involving both equipment and internal use software. Most recently, Mr. Jackson has served 

as subject matter expert on accounting and auditing matters to assist the OFM in resolving complex accounting and 

financial management issues. His efforts as a subject matter expert range from assisting TSA in resolving issues 

with accounting for large scale software applications, e.g., Secure Flight; accounting for other direct costs 

associated with Transportation Security Equipment; and accounting for passenger fee revenues.

Federal Aviation Administration (FAA), Financial Operations Division. Mr. Jackson has directed numerous 

financial management improvement and review initiatives under the Financial Operations Division at the FAA. 

Related to the DOT IPERA work, Mr. Jackson supported the DOT work at the FAA by conducting the field work 

and providing the results to the DOT contractor. In addition, Mr. Jackson recently managed the FAA’s efforts to 

review the OIG’s ARRA audit resulting in significant reductions in OIG’s payment propriety findings. Mr. Jackson 

worked for the CFO and FAA financial management leadership on all financial planning, corrective actions, and 

strategic planning. He completed a comprehensive project to resolve long-standing problems with FAA’s 

construction in progress accounting account and related and asset capitalization accounting processes, which 

resulted in a clean audit opinion from KPMG LLP, FAA’s independent auditor. He successfully developed and 

executed audit remediation plans for various asset and liability accounts and related revenue and expense accounts, 

and designed and executed test plans for determining the accuracy of property plant and equipment accounts. In the 

area of property, plant and equipment, he completed a capitalization threshold study and developed asset 

capitalization policies within the framework of generally accepted accounting principles to streamline FAA 

property operations. In addition, he directed a comprehensive review of reimbursable agreements and developed 

policies and procedures to ensure FAA’s compliance with OMB reimbursable agreement requirements. Finally, Mr. 

Jackson reviewed and developed revisions to FAA’s cost accounting (burdening) systems, which the FAA uses to 

allocate overhead to property, plant, and equipment and to projects covered by reimbursable agreements. 

Department of Transportation, Office of the Chief Financial Officer. Mr. Jackson assisted the Office of the CFO 

in analyzing Undelivered Orders associated with grant programs. This engagement was in response to the auditor’s 

preliminary conclusions that the UDO’s were overstated significantly. Mr. Jackson’s efforts brought the issue to a 

successful conclusion.
NORWOOD JACKSON | CPA | AOC SOLUTIONS, INC. 

Department of Defense, Office of the Under Secretary of Defense, Comptroller (OUSD (C)). Mr Jackson was the 

KPMG LLP Audit Partner in Charge of KPMG’s component of the Department of Defense’s enterprise architecture 

project. IBM was the contractor and KPMG was the principal subcontractor. 

Department of Defense (DoD), Office of the Under Secretary of Defense Acquisition, Technology and Logistics 

(OUSD (AT&L)), Property and Equipment (P&E) Policy Office. As the KPMG LLP Audit Partner in Charge, Mr. 

Jackson assisted DoD from 2000 to 2004 in the development of its internal control assessment program for weapons 

required by OMB Circular A-123. He was charged with implementing the accounting standard on military weapons 

systems, including developing various policies and procedures for accounting for the “full cost” of these systems. 

He also led an effort to develop a methodology for valuing Inventory and Operating Materials and Supplies 

(OM&S). 

U.S. Department of Agriculture (USDA), U.S. Forest Service. Mr. Jackson served as the KPMG Audit Partner in 

Charge of the financial statement audit of the U.S. Forest Service. He was responsible for all aspects of the audit, 

including the personal property line item. He developed statistical-based sampling methods for conducting existence 

and completeness reviews and assisted the Forest Service with alternative review procedures for conducting 

inventories and valuing equipment and property that was deployed throughout the country. He also assisted with the 

reviews of all corrective action plans for remediating material weaknesses on the property line.

U.S. Department of Defense (DoD), Department of the Navy. Mr. Jackson assisted the Department of the Navy 

with its efforts to eliminate deficiencies in their General Property, Plant, and Equipment (GPP&E) accounting and 

procurement processes. He oversaw the implementation process of the Defense Property Accountability System 

(DPAS), and developed policies and procedures for personal property accountability and accounting. 

Department of Defense (DoD), Office of the Under Secretary of Defense Acquisition, Technology and Logistics 

(OUSD (AT&L)), Property and Equipment (P&E) Policy Office. Mr. Jackson worked with the Deputy Director to 

develop a risk-based property management program that included metrics and standards for inventory accuracy, 

property accountability, and capital asset reporting. This work was later incorporated into the American Society for 

Testing and Materials (ASTM) Standards for property. This initiative utilized a risk-based performance planning 

methodology to develop performance metrics and accountability standards to evaluate property accountability and 

assess management processes. This effort included developing financial and non-financial performance metrics, 

establishing risk-based standards for property accountability, and developing a risk assessment tool to monitor 

metrics. 

San Francisco International Airport. In 2015 Mr. Jackson completed an engagement to review SFO’s internal 

controls over the use of Federal grant fund.

Education 

B.S., Accounting, Cum Laude, Barton College 

Professional Affiliations 

• Member, American Institute of Certified Public Accountants 

• Member, Virginia Society of Certified Public Accountants 

• Former member, U.S. Comptroller General’s Advisory Council on Government Auditing Standards, Federal 

Accounting Standards Advisory Board, AICPA Auditing Standards Board 

Professional Certifications and Awards 

• Certified Public Accountant — Commonwealth of Virginia and District of Columbia 

• Award winner, 1998 Outstanding CPA in Government Award, American Institute of Certified Public 

Accountants 

• Presidential Rank Award, Distinguished Service Executive, 1998 
EXHIBIT 3 

DECLARATION OF JOAN N. STERN, ESQ. 
1 

UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

AIR TRANSPORT ASSOCIATION OF 

AMERICA, INC. d/b/a AIRLINES FOR 

AMERICA, ALASKA AIRLINES, INC., 

AMERICAN AIRLINES, INC., ATLAS AIR, 

INC., FEDERAL EXPRESS AIRLINES, 

HAWAIIAN AIRLINES, INC., HORIZON AIR, 

JETBLUE AIRWAYS INC., SOUTHWEST 

AIRLINES CO., UNITED AIR LINES, INC., 

UNITED PARCEL SERVICE CO., and AIR 

CANADA, 

 Complainants, 

v. 

PORT OF PORTLAND, OREGON, 

 Respondent. 

FAA Docket No. 16-16-04 

DECLARATION OF JOAN N. STERN 

I, Joan N. Stern, hereby declare and state as follows, under penalty of perjury: 

1. I am a public finance attorney and an equity member of the law firm Eckert 

Seamans Cherin & Mellott, LLC. I am based in our firm’s Philadelphia, Pennsylvania office, 

and have 39 years of experience in the area of municipal bond issuance, general government 

finance, transportation finance, project finance and tax and revenue anticipation financings. I 

serve clients in a full range of public finance matters, including acting as bond counsel, 

underwriter’s counsel, issuer’s counsel, and trustee’s counsel for all types of bond issues, taxexempt and taxable; drafting debt and finance legislation for a variety of financing programs for 
2 

governmental and corporate clients; derivative transactions; and regulatory enforcement 

proceedings. Chambers USA has named me as one of America’s leading banking and finance 

lawyers based on my extensive experience with “bond transactions and related tax and 

corporate issues.” A copy of my C.V. is attached as Exhibit A hereto. 

2. My experience includes acting as bond counsel, and drafting the legislation and 

bond indenture creating a multi-modal transportation authority in New Jersey, consisting of a 

toll road, airport, and a group of public parking facilities, and as bond counsel for the 

authority’s initial financing, provided for the acquisition of all of the transportation assets, 

including the toll road and airport. I have also served as bond counsel and special finance 

counsel for a large metropolitan airport. 

3. I am a member of the National Association of Bond Lawyers, Securities Law 

and Disclosure Committee. I have a Bachelor of Arts degree from the University of 

Pennsylvania and a J.D. from Temple University Beasley School of Law. 

4. I have been retained as an expert by the Air Transport Association of America, 

Inc., d/b/a Airlines for America (“A4A”), and its member airlines, with regard to the Federal 

Aviation Administration (“FAA”) proceeding under 14 C.F.R. Part 16 relating to Offsite 

Stormwater Management and Superfund Remediation Fees (“Fees”) imposed by the City of 

Portland, Oregon at Portland International Airport (“PDX” or “Airport”). This Declaration is 

being submitted in connection with the A4A reply to the Port of Portland (“Port”) April 15, 

2015 Answer (“Port Answer”) being filed on May 25, 2016. Specifically, I have been asked to 

evaluate and respond to statements in the Port Answer regarding language in Port of Portland 
3 

Bond Ordinance No. 155 (the “Bond Ordinance”).1

5. I disagree with the Port’s assertion that “under the terms of the Bond Ordinance” 

the Offsite Stormwater Management and Superfund Remediation Fees “are properly 

categorized as operating expenses of the Airport.” Port Answer, at 28. It is my opinion, which 

I hold to a reasonable degree of professional certainty, that neither the Bond Ordinance nor 

custom and practice in the municipal bond industry supports treating the Offsite Stormwater 

Management and Superfund Remediation Fees as Airport operating costs or expenses. 

6. The fact that section 13.1(g) of the Bond Ordinance includes “costs of utility 

services” in the definition of “Costs of Operation and Maintenance” is irrelevant with regard to 

the Offsite Stormwater Management and Superfund Remediation Fees. In order for utility 

charges to constitute “operating costs” or “operating expenses” of the Airport, the utility 

services must be actually provided to the Airport. That is not the case here, and the Fees are not 

being imposed in exchange for any services actually provided to the Airport. For this reason, 

the Fees are not “operating costs” or “operating expenses,” whether characterized as costs of 

“utilities” or something other cost under the Bond Ordinance.

 BACKGROUND 

7. PDX is located within the Portland city limits just south of the Columbia River 

in Multnomah County, Oregon. I have been informed by counsel for A4A that:

a. PDX has its own stormwater treatment facility located within the airfield 

perimeter fence. The PDX system collects airfield stormwater (including deicing materials 

during the deicing season) as well as run-off stormwater from Marine Drive (on the Columbia 

 

1

The Port’s Answer attaches some excerpts from the Bond Ordinance. For the sake of being 

complete, I attach a full copy of the Bond Ordinance as Exhibit B hereto. 
4 

River Levee bordering the Airport on the north side) which is owned by the City; and 

b. PDX lies within the Multnomah County, Oregon Drainage District (the 

“Drainage District”). Landside drainage at PDX is all contained within the Drainage District’s 

catchment area (roughly defined by the levee which encircles the airport, separating it from the 

Columbia River). PDX pays the Drainage District fees for this “on-site” service. No Airport 

stormwater runs into City-controlled stormwater infrastructure. All water from PDX goes to 

the Columbia Slough, controlled by the Drainage District or is discharged through the Port’s 

own stormwater treatment system to the Columbia River. 

The Offsite Stormwater Management and Superfund Remediation Fees 

8. On September 9, 2012, the City adopted Ordinance 185610 (the “Ordinance”), 

which imposes a new methodology for charging for storm water management services. Under 

the methodology, the Port – as the owner and operator of PDX – must pay a portion of the costs 

incurred by the City to manage “off-site” storm water drainage from non-airport rights of way 

(the “Offsite Stormwater Management Fees”), and for the clean-up of a Willamette River 

Superfund site having no relationship to PDX (the “Superfund Remediation Fees”). 

9. The Offsite Stormwater Management Fees are intended for the City to recover the 

costs to treat storm water on roadways located external to the Airport and not owned by a private 

party. PDX has its own stormwater treatment facility located within the airfield perimeter fence. 

The PDX system collects airfield storm water (including deicing materials during the deicing 

season) as well as run-off stormwater from Marine Drive (on the Columbia River Levee 

bordering the Airport on the north side), which is owned by the City. I have been informed by 

counsel for A4A that no portion of the City’s offsite storm water management service is used or 

received by the Airport or any of the Airline Complainants. 
5 

10. The Superfund Remediation Fee relates to the City’s involvement in the Portland 

Harbor Superfund Site. This involves the Willamette River, which has no connection to the 

Airport. (PDX is near the Columbia River.) I am informed by counsel for A4A that neither the 

Port nor the City is claiming that Airport operations caused any of the pollution in the Willamette 

River that is the subject of the Superfund cleanup that pertains to the Superfund Remediation 

Fees. 

The Bond Ordinance 

11. The Bond Ordinance states that it was enacted November 10, 1971, and 

amended and restated in 1993, 1994 and 1999.2 The Bond Ordinance provides certain 

covenants as to the revenues derived from PDX “AND THE USE AND APPLICATION OF 

SUCH REVENUES.” Bond Ordinance, Title, at 1.3 Section 2(c) of the Bond Ordinance 

defines “Airport” to mean Portland International Airport. Section 2(m) states that “Costs of 

Operation and Maintenance” shall have “the meaning given to such term in Section 13 hereof.” 

12. Section 13 of the Bond Ordinance is titled “The Airport Revenue Fund; 

Application of Revenues.” It states that “the Port shall create and establish a special trust fund 

of the Port, to be known and designated as ‘The Port of Portland Airport Revenue Fund’ (herein 

defined and referred to as the ‘Airport Fund’) and to be held and administered by the Port 

hereunder so long as any of the Bonds are outstanding.” Section 13 adds that “the moneys 

deposited, or to be deposited, in the Airport Fund shall not be commingled with any other 

moneys of the Port; shall be used and applied only in the manner and for the purposes 

hereinafter provided in this section; and shall be withdrawn from said Fund for said purposes 

 

2

Bond Ordinance, Exhibit B hereto, cover page. 

3

Bond Ordinance, Title, at 1. 
6 

only if in accordance with such procedure as is provided by law.”

13. Section 13.1 of the Bond Ordinance states that the “Revenues in the Airport 

Fund shall be . . . first used and applied by the Port to the payment of the Costs of Operation 

and Maintenance of the Airport.” Section 13.1 defines the term “Costs of Operation and 

Maintenance” of the Airport to mean: “the reasonable and necessary current expenses of the 

Port included as a Cost of Operation and Maintenance in the annual Airport budget required by 

Section 15 hereof for operating, maintaining and repairing the Airport.” (Emphasis added) 

The bold language makes clear that in order to be a “Cost of Operation and Maintenance” the 

expense must be for the express purpose of “operating, maintaining and repairing the Airport.” 

14. Subsection 13.1(g) of the Bond Ordinance includes “costs of utility services” 

within the definition of “Costs of Operation and Maintenance.” However, reading Section 13.1 

as a whole, and in the only possible reasonable manner, it is clear that in order to be included 

within the “Costs of Operation and Maintenance” of the Airport, the “costs of the utility 

services” must be incurred for utility services received in connection with “operating, 

maintaining and repairing the Airport.” 

 CONCLUSIONS 

15. There is no merit to the Port’s assertion that the Offsite Stormwater Management 

and Superfund Remediation Fees constitute “operating costs” or “operating expenses” of the 

Airport pursuant to the Bond Ordinance. The Port asserts that the “Bond Ordinance” defines 

the term “costs of operation and maintenance” as “the reasonable and necessary current 

expenses of the Port included as a cost of operation and maintenance in the annual Airport 

Budget,” and that under the Bond Ordinance, the “Cost of Operation and Maintenance” 

includes the “costs of utility services.” Port Answer, at 28 (citing Bond Ordinance, §§ 13.1, 
7 

13.1(g)). Although that may be a correct statement of what the Bond Ordinance states, it does 

not establish that the Fees are, in fact, PDX operating expenses and begs the question whether 

the Offsite Stormwater Management and Superfund Remediation Fees are imposed in 

connection with actual services provided to the Airport for the operation, maintenance or repair 

of PDX. Here, the Airport does not receive actual services in exchange for the Fees, and, as 

stated above, they are not “operating costs” or “operating expenses” permissible under the Bond 

Ordinance as “costs of utility services.” 

16. To the extent that the Fees are considered to be “costs of utility services,” the 

“utility services” are being provided to the City of Portland – and not to the Airport. The 

inclusion of “costs of utility services” in section 13.1(g) of the Bond Ordinance in the 

enumeration of “Costs of Operation and Maintenance necessarily implies that the utility 

services in question have been provided to the Airport. 

17. Airport bond ordinances are carefully drafted to be precise in their meaning. 

Here, the drafters of the Bond Ordinance unmistakably intended to limit the scope of relevant 

“utility services” to utility services that have been provided “for operating, maintaining and 

repairing the Airport.” The Offsite Stormwater Management and Superfund Remediation 

Fees are not based on any services relating to the operation, maintenance or repair of PDX.

18. The Port asserts that it “is unlikely that the Port could have successfully 

marketed its bonds if investors did not regard ‘the costs of utility services’ as proper airport 

operating expenses.” Port Answer, at 28. However, the only “costs of utility services” that 

may be treated as Airport operating costs under the Bond Ordinance are utility services actually 

provided to the Airport. That is not the case with the Fees. 

19. The custom and practice in the United States airport bond industry is to use 
8 

revenues of the airport pledged to debt service on airport bonds to pay costs and expenses 

actually incurred by the airport as operating expenses, not costs and expenses relating to 

services that are not provided to the airport. I am not aware of any instance in which an airport 

bond ordinance or indenture authorizes an airport to use airport revenues to pay for “utilities” 

or other expenses for services not actually provided to the airport and which are unrelated to the 

operation, maintenance or repair of the airport.

20. I further note that Section 13.1(m) of the Bond Ordinance provides as the final 

enumerated category of Costs of Operation and Maintenance “all other costs and expenses of 

operating, maintaining and repairing the Airport arising in the routine and normal course of 

business (emphasis added).” The use of this phrase in this clause means that all Costs of 

Operation and Maintenance arise in the routine and normal course of business of the Airport. 

The Fees by their nature do not fit within this definition.

21. The Port Answer (page 27) refers to a Transportation Research Board policy 

paper and quotes language stating that the “bond indenture defines what may or may not be 

included in the definition and computation of airport revenues and expenses.” This is correct. 

However, for the reasons set forth above, the Bond Ordinance does not include the Offsite 

Stormwater Management and Superfund Remediation Fees within its definition of Airport 

operating costs or expenses. 

22. The Port Answer also refers to the PDX 2015-2016 budget, which is attached as 

Exhibit 5 to the Port Answer. Pages 72 and 104 of the Airport budget in Exhibit 5 (cited in the 

Port Answer, at 28) do not specifically reference either the Offsite Stormwater Management 

Fee or the Superfund Remediation Fee. However, even if the amounts of the Fees are included 

in the Airport budget under the general category of “utilities,”, they still would not be 

EXHIBIT 3A 
Joan N. Stern

MEMBER

OVERVIEW

Joan N. Stern has established herself as one of the country’s top

public finance attorneys. She concentrates her practice in the areas

of general government and education, transportation and utilities,

tax and revenue anticipation financing, health care and housing

finance, refinancing and working capital finance, project finance,

and derivatives transactions. Joan serves clients in the full range of

public finance matters, including serving as bond counsel,

underwriter’s counsel, issuer’s counsel, and trustee’s counsel for all

types of bond issues, tax-exempt and taxable; drafting debt and

finance legislation for a variety of financing programs for

governmental and corporate clients; derivative transactions; and

enforcement matters involving the SEC and the IRS.

Chambers USA has named Joan one of America’s leading banking

and finance lawyers, noting that she has “phenomenal

understanding of bond transactions and related tax and corporate

issues.” Clients say that her “experience and command of the legal

requirements of debt issuance are extraordinary” and she “is

refreshingly direct and gets the job done.” Chambers sources also

note that she is “extremely knowledgeable, well-versed in the law

and easy to work with.”

REPRESENTATIVE MATTERS

Principal drafter of the statute creating the financial oversight

authority for the City of Philadelphia and has served as

special counsel to the city in connection with that legislation

and the bond issues of that authority.

As bond counsel, drafted the legislation and bond indenture

creating a multi-modal transportation authority in New

Jersey, consisting of a toll road, airport, and a group of public

parking facilities, and as bond counsel for the authority’s

initial financing, provided for the acquisition of all of the

transportation assets, including the toll road and airport.

As bond counsel to the School District of Philadelphia,

drafted deficit funding legislation for the school district and

served as lead bond counsel for deficit funding bonds,

multiple series of bonds for capital improvements and

PHILADELPHIA,

PENNSYLVANIA

Two Liberty Place

22nd Floor

50 S 16th St.

Philadelphia, PA 19102

P: 215.851.8442

F: 215.851.8383

jstern@eckertseamans.com

PRACTICE AREAS:

Public Finance

Municipal Law & Governance

STATE ADMISSIONS:

Pennsylvania

EDUCATION:

J.D., Temple University Beasley

School of Law

B.A., University of Pennsylvania
refunding bond issues for the district.

Served as lead bond counsel for two of the largest pension

funding bond issues undertaken; one for a state and the

other for a major city. For both issues, drafted the authorizing

legislation as well as creating the governing instruments for

the bonds.

PROFESSIONAL AFFILIATIONS

Pennsylvania Association of Bond Lawyers

National Association of Bond Lawyers, Securities Law and

Disclosure Committee

American Bar Foundation, Life Fellow

COMMUNITY INVOLVEMENT

Public Employees Retirement Commission of Pennsylvania,

Member

Police Athletic League, Board Member

Urban Tree Connection, Board Member

Jewish Federation of Greater Philadelphia, Board Member

Royal Academy America, Board Member

The Franklin Institute, Board Member

Moore College of Art and Design Board of Trustees, Vice

Chair

School District of Philadelphia Task Force on Regulatory

Reform, Member

School District of Philadelphia Task Force on Alternative

Finance Strategies, Former Chair

City of Philadelphia Tax Policy and Budget Advisory

Committee, Former Member

Philadelphia Charter Commission, Former Consulting Counsel

AWARDS AND RECOGNITION

Selected for inclusion in Chambers USA: America’s Leading

Lawyers for Business for Banking and Finance

Selected for inclusion in The Best Lawyers in America

Named Best Lawyers’ 2013 “Lawyer of the Year for Public

Finance Law” in Philadelphia

Lifetime Achievement Award (2014), The Legal Intelligencer

Leading Women’s Award, Ladies First – The Mid-Atlantic

Women’s Public Finance Forum

Listed in Who’s Who in the World, Who’s Who in America,

Who’s Who of American Women, and Who’s Who in

American Law

Selected for inclusion in Pennsylvania Super Lawyers
NEWS AND INSIGHTS

Media Coverage:

“Stern, Stein, Tuteur, Haddad and Benzing — The Legal’s Top

Lateral Hires of 2014,” The Legal Intelligencer, February 24,

2015.
EXHIBIT 3B 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 

THE PORT OF PORTLAND

(OREGON) 

_________ 

ORDINANCE NO. 155 

(ENACTED NOVEMBER 10, 1971, AS

AMENDED AND RESTATED PURSUANT TO

ORDINANCE NO. 368-B WHICH WAS ENACTED OCTOBER 13, 1993, 

ORDINANCE NO. 375-B WHICH WAS ENACTED AUGUST 10, 1994

AND ORDINANCE NO. 393-B WHICH WAS ENACTED FEBRUARY 10, 1999) 

AUTHORIZING

PORTLAND INTERNATIONAL AIRPORT REVENUE BONDS 
TABLE OF CONTENTS 

Page 

DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 i 

SECTION 1. Findings and Determinations ........................................................................... 1 

SECTION 2. Definitions and Computations ......................................................................... 1 

SECTION 3. Authorization of Bonds and Notes; Payment Thereof; Pledges and 

Assignments to such Payment; Series Ordinances .......................................... 6 

SECTION 4. Authorization of First Series of Bonds and of Additional Bonds 

Hereunder......................................................................................................... 8 

SECTION 5. Refunding Bonds ........................................................................................... 10 

SECTION 6. Payment of Principal, Interest and Premium of Bonds; Cancellation of 

Matured Coupons; Cancellation and Destruction of Bonds and 

Coupons ......................................................................................................... 11 

SECTION 7. Redemption of Bonds .................................................................................... 11 

SECTION 8. Registration, Transfer, Exchange and Ownership of Bonds.......................... 13 

SECTION 9. Execution of Bonds........................................................................................ 15 

SECTION 10. Forms of Bonds, Coupons and Registration and Assignment 

Provisions....................................................................................................... 16 

SECTION 11. Mutilated, Lost, Stolen or Destroyed Bonds or Coupons .............................. 25 

SECTION 12. Airport Construction Fund............................................................................. 26 

SECTION 13. The Airport Revenue Fund; Application of Revenues .................................. 28 

SECTION 14. The Bond Fund; Appointment of Trustee to Administer the Same................. 1 

SECTION 15. Annual Airport Budget .................................................................................. 37 

SECTION 16. Covenant as to Rates, Rentals, Fees and Charges.......................................... 38 

SECTION 17. Additional Covenants of The Port of Portland; Insurance Proceeds and 

Condemnation Awards................................................................................... 39 

SECTION 18. Concerning the Trustee and the Paying Agents............................................. 52 

SECTION 19. List of Bondholders........................................................................................ 56 

SECTION 20. Amendment of This Ordinance...................................................................... 56 

SECTION 21. Certain Bonds Deemed Not Outstanding Hereunder..................................... 59 

SECTION 22. Ordinance to Constitute a Contract with Bondholders; Enforcement of 

Same............................................................................................................... 59 

SECTION 23. Events of Default ........................................................................................... 59 

SECTION 24. Notice to Bondholders and Others Upon Occurrence of an Event of 

Default............................................................................................................ 60 

SECTION 25. Acceleration ................................................................................................... 61 
TABLE OF CONTENTS (cont’d) 

Page 

DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 ii 

SECTION 26. Remedies Upon Occurrence of Event of Default; Powers of Trustee 

and Bondholders; Waivers of Event of Default; Termination of 

Proceedings.................................................................................................... 61 

SECTION 27. Consents, etc., of Bondholders ...................................................................... 62 

SECTION 28. Special Obligation Bonds and Net Rent Leases ............................................ 63 

SECTION 29. Discharge of Liens and Pledges; Bonds No Longer Outstanding 

Hereunder....................................................................................................... 66 

SECTION 30. No Personal Liability ..................................................................................... 67 

SECTION 31. Limitation of Rights....................................................................................... 68 

SECTION 32. Laws Governing; Severability ....................................................................... 68 

SECTION 33. Notices ........................................................................................................... 68 

SECTION 34. Effect of Sundays and Legal Holidays........................................................... 68 

SECTION 35. Section Headings; Table of Contents............................................................. 68 

SECTION 36. Publication of Summary and Effectiveness of this Ordinance ...................... 68 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 

ORDINANCE No. 155 

(Amended and Restated Pursuant to Ordinance No. 368-B, Ordinance No. 375-B and Ordinance 

No. 393-B)

AN ORDINANCE AUTHORIZING THE ISSUANCE OF REVENUE 

BONDS OF THE PORT OF PORTLAND TO PAY THE COSTS OF 

ACQUIRING AND CONSTRUCTING AIRPORT AND OTHER PORT 

IMPROVEMENTS; PRESCRIBING THE LIMITATIONS ON AND 

CONDITIONS OF ISSUANCE AND THE FORM OF SUCH BONDS; 

PROVIDING FOR THE DETAILS OF SUCH BONDS; COVENANTING 

AS TO THE REVENUES DERIVED FROM THE PORTLAND 

INTER-NATIONAL AIRPORT AND THE USE AND APPLICATION OF 

SUCH REVENUES; PLEDGING SUCH REVENUES TO THE PAYMENT 

OF THE PRINCIPAL AND INTEREST ON SUCH BONDS AND 

LIMITING SUCH PAYMENT SOLELY TO SAID REVENUES; AND 

MAKING OTHER COVENANTS AND AGREEMENTS IN 

CONNECTION WITH THE FOREGOING. 

BE IT ENACTED BY THE PORT OF PORTLAND: 

SECTION 1. Findings and Determinations. The Board of 

Commissioners of The Port of Portland hereby finds and determines as set forth in this section. 

Under applicable laws of the State of Oregon the object, purposes and occupation of The Port of 

Portland (hereinafter referred to and defined as the “Port”) are to promote the maritime, shipping, 

aviation, commercial and industrial interests of the Port in the manner as the Port is by law 

specifically authorized and empowered. Under such laws, for the purpose of carrying into effect 

all or any of the powers granted to the Port, the Port may from time to time issue and sell 

revenue bonds without the necessity of the voters of the Port authorizing the same, which 

revenue bonds shall not in any manner or to any extent be a general obligation of the Port nor a 

charge upon the tax revenues of the Port nor a charge upon any other revenues or property of the 

Port not specifically pledged thereto. For many years the Port has owned and operated an airport 

located adjacent to the Columbia River in Multnomah County within the boundaries of the Port 

and now known and designated as the “Portland International Airport”. To promote the aviation, 

shipping, maritime, commercial and industrial interests of the Port and for the convenience of the 

public and the convenience of the air transport, shipping, maritime, commercial and industrial 

development of the Port, it is necessary, advisable and desirable that certain additions, 

expansions and improvements be made to said airport and to other Port facilities, including in 

such additions, expansions and improvements the development and reclamation of land 

necessary therefor, additional terminals and buildings and other facilities and aids incident to the 

development, protection and operation of the air transport facilities and other facilities of the 

Port. It is also necessary, advisable and desirable that the Port issue its revenue bonds to provide 

the moneys to pay the costs of such additions, expansions and improvements, and to limit the 

charge of such bonds and the payment of the principal and interest thereof as set forth herein. 

SECTION 2. Definitions and Computations. Unless the context shall 

indicate some other meaning, the terms defined in this section shall, for all purposes of this 

Ordinance and of any ordinance, resolution, certificate or other instrument supplemental hereto 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 2 

and of any opinion or instrument or document herein or therein mentioned, have the meanings 

herein specified, with the following definitions to be equally applicable to both the singular and 

plural forms of any of the terms herein defined and vice versa. The term: 

(a) “Accountant” means the individual accountant or firm of accountants 

appointed pursuant to paragraph J of Section 17 hereof. 

(b) “Additional Bonds” means any additional Bonds authorized and issued 

pursuant to Section 4 hereof at any time outstanding. 

(c) “Airport” means each and all of the following as defined from time to time 

in master plans filed with the Federal Aviation Administration: (1) the presently existing 

airport owned or operated by the Port known as the “Portland International Airport” and 

(2) the Portland International Airport as enlarged, expanded, changed and improved, 

pursuant to the Airport Capital Improvement Program, as amended from time to time. 

Without limiting the generality of the foregoing, the term “Airport” shall include (i) any 

and all of the following pertaining to the Portland International Airport: lands or water 

areas, rights or interests in land, rights-of-way, approaches, contract rights, air navigation 

facilities, terminal buildings, hangars and other buildings and facilities, runways, 

taxiways, paved areas, access roads, parking lots and structures, furnishings, equipment 

and apparatus, and all other property (real, personal, mixed or otherwise), now or 

hereafter constructed or acquired, of or belonging or pertaining to said Airport; (ii) each 

and every and all and singular, the properties and facilities belonging to or pertaining to 

Portland International Airport and constructed or acquired from the proceeds of Bonds or 

from the proceeds of any other bonds, notes or other evidences of indebtedness payable, 

or the principal or interest or both of which is reimbursable, from the Airport Fund or 

from a fund maintained therefrom, or constructed or acquired from moneys in the Airport 

Fund or from moneys in any other fund maintained therefrom, and (iii) all other 

additions, expansions and improvements of or belonging or pertaining to the Portland 

International Airport, hereafter acquired or constructed howsoever financed. The term 

“Airport” shall not, however, include: (A) properties sold, leased or otherwise disposed 

of or transferred pursuant to the provisions of paragraph M of Section 17 thereof; 

(B) properties subject to a Net Rent Lease, defined in Section 28 hereof, except to the 

extent provided in said Section 28; and (C) General Aviation Airports. 

(d) “Airport Consultant” shall mean the individual consultant or firm of 

consultants appointed pursuant to paragraph K of Section 17 hereof. 

(e) “Airport Fund” means the special fund of the Port created in Section 13 

hereof and designated in that section as “The Port of Portland Airport Revenue Fund”. 

(f) “Airport Capital Improvement Program” prior to June 30, 1986, means the 

capital requirements program scheduled for the Airport for the period from July 1, 1971 

through June 30, 1986, as amended from time to time, as provided in the schedule 

attached as Exhibit 2, as amended from time to time, to the Certificated Airlines 

Operating Agreements, dated as of November 1, 1971, by and between the Port and 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 3 

certain certificated air carriers and, after June 30, 1986, means any capital requirements 

which the Port in its discretion deems necessary for the Airport. 

(g) “Airport Construction Fund” means the separate special fund created and 

established by Section 12 hereof, and designated in that section as “The Port of Portland 

Airport Construction Fund”. 

(h) “Bond” or “Bonds” means any Bond, some of the Bonds or all of the 

Bonds at any time outstanding under and pursuant to this Ordinance, including the first 

series of Bonds and Additional Bonds issued pursuant to Section 4 hereof at any time 

outstanding and Refunding Bonds issued pursuant to Section 5 hereof at any time 

outstanding and bond anticipation notes issued pursuant to Section 3 hereof at any time 

outstanding but shall not include any Special Obligation Bonds defined in Section 28 

hereof. 

(i) “Bondholder” or “holder of Bond” means any person who shall be the 

bearer of any Bond not then registered, or the registered owner or his duly authorized 

attorney-in-fact, representative or assigns, of any Bond which at the time shall be 

registered other than to bearer. 

(j) “Bond Fund” means the special trust fund of the Port created pursuant to 

Section 14 hereof, to be designated as provided in that section as “The Port of Portland 

Airport Revenue Bond Fund”. 

(k) “Commercial Airport” means any airport, a major portion of the revenues 

derived from which are realized (i) from the operations of certificated air carriers 

engaged in the public utility business of transporting passengers or freight, or both, by 

air, whether such operations be on a scheduled or non-scheduled basis, and (ii) from the 

supplying by the owner or operator of such airport of goods and services to the 

customers, patrons and passengers of such carriers. 

(l) “Costs of Construction” shall have the meaning given to such term in 

Section 12 hereof. 

(m) “Costs of Operation and Maintenance” shall have the meaning given to 

such term in Section 13 hereof. 

(n) “Debt Service Requirement” means with respect to all the Bonds or a 

series of the Bonds or any particular amount of such Bonds, as the case may be, the total 

as of any particular date of computation and for any particular Fiscal Year, of the 

amounts required pursuant to the provisions of Section 14 hereof to be paid during such 

Fiscal Year into the Bond Fund to provide for the payment of interest on such Bonds, to 

provide for the payment at maturity of any such Bonds issued in serial form and to 

provide for the retirement of any such Bonds issued in term form. 

(o) “Fiscal Year” means the fiscal year for the Port as established from time to 

time by the Port, being on the date of effectiveness of this Ordinance the period from 

July 1 in any year to and including the following June 30. 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 4 

(p) “General Aviation Airport” means an airport known in the air transport 

industry as a “general aviation airport”, being an airport, the major portion of the 

revenues derived from which is not realized from the operations of aircraft operated by 

certificated air carriers (except possibly air taxi or air tour operations) and from the 

supplying of goods and services to the people utilizing such aircraft, but is realized from 

the activities of private, nonpublic aircraft, flying schools, the supplying of goods and 

services to the foregoing and similar operations not normally part of a public utility 

business (except possibly air tour or air taxi operations). 

(q) “Investment Securities” means any investments which are legal for the 

Port under the laws of the State of Oregon, provided that such investments are those 

typically permitted for the investment of debt service and reserve funds of revenue bonds 

which have credit ratings similar to the credit ratings then in effect for the Senior Lien 

Bonds. [This paragraph amended pursuant to Section 1.3 of Ordinance No. 393-B]

(r) “Net Revenues” means for any past period the aggregate of the Revenues 

actually paid into the Airport Fund during such past period, and for any future period the 

aggregate of the Revenues estimated to be paid into the Airport Fund during such future 

period, minus for any such past period the aggregate of the Costs of Operation and 

Maintenance of the Airport actually paid or accrued during such past period, or minus for 

any such future period the aggregate of the Costs of Operation and Maintenance of the 

Airport estimated to be paid or accrued during such future period, as the case may be. 

(s) “Ordinance” means this Ordinance, as the same may be amended and 

supplemented from time to time, and, unless the context shall clearly indicate otherwise, 

shall include all Supplemental Ordinances. “Series Ordinance” means an ordinance or 

resolution adopted hereunder providing for the issuance of a series of Bonds hereunder. 

(t) “Outstanding” when used with respect to any Bond shall have the 

construction given to such word in Section 29 hereof, i.e., a Bond shall not be 

outstanding hereunder if such Bond is at the time not deemed to be outstanding hereunder 

by reason of the operation and effect of said Section 29. 

(u) “Paying Agent” means the Trustee as to any Bond of whatever series and 

whatever form, coupon or registered, and, as to Bonds in coupon form of a particular 

series, the additional Paying Agents, if any, for such Bonds of such series appointed in 

the Series Ordinance providing for the issuance of Bonds of such series. 

(v) “Port” means The Port of Portland, or any public body or agency which 

shall hereafter succeed to the powers, duties and functions of the Port. 

(w) “Revenues” means and includes all income, receipts and moneys derived 

by the Port from its ownership or operation and management of the Airport or the 

furnishing and supplying of the services, facilities and commodities thereof, and without 

limiting the generality of the foregoing, shall include (1) all income, receipts and moneys 

derived from the rates, rentals, fees and charges fixed, imposed and collected by the Port 

for the use and services of the Airport, or otherwise derived from or arising through the 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 5 

ownership, operation and management of the Airport by the Port, or derived from the 

rental by the Port of all or part of the Airport or from the sale or rental by the Port of any 

commodities or goods in connection with the Airport; (ii) earnings on and the income 

from the investment of moneys held under this Ordinance, to the extent such earnings or 

income are deposited in the Airport Fund or the Bond Fund, but not including any such 

earnings or income credited to the Airport Construction Fund; and (iii) to the extent 

provided in Section 28 hereof), income derived by the Port from a Net Rent Lease 

(defined in Section 28 hereof); provided that (1) the term “Revenues” shall not include 

(a) moneys received as proceeds from the sale of Bonds or as grants or gifts, the use of 

which is limited by the grantor or donor to the construction of capital improvements, 

except to the extent that any such moneys shall be received as payments for the use of the 

Airport, or (b) passenger facility charges or similar charges that are imposed under 

authority of federal law and are limited by federal law to expenditure on specific projects 

or activities and/or on debt service and financing costs related to specific projects or 

activities and (2) in no event shall the term “Revenues” include tax revenues or taxderived revenues. [This paragraph amended pursuant to Section 1.3 of Ordinance 

No. 393-B]

(x) “Supplemental Ordinance” means any ordinance or resolution amending 

or supplementing this Ordinance as originally enacted, adopted under and pursuant to 

Section 20 hereof, and shall include Series Ordinances. 

(y) “Term Bond Principal Account Installment” means the principal amount 

of term bonds subject to mandatory redemption on an annual or a semi-annual date, as 

provided by Series Ordinance. 

(z) “Trustee” means the corporation appointed pursuant to Sections 14 and 18 

hereof to hold and administer the Bond Fund and any successor to such corporation as 

Trustee hereunder. 

Whenever in this Ordinance any governmental unit, including the Port, or any officer, 

director or department of a governmental unit, including the Port, is defined or referred to, such 

definition or reference shall be deemed to include the governmental unit or officer, board, 

agency, commission, body or department succeeding to or in whom or which is vested, the 

functions, rights, powers, duties and obligations of such governmental unit, officer, director or 

department, as the case may be, encompassed by this Ordinance. 

Unless the context shall clearly indicate otherwise, in this Ordinance words importing 

persons include firms, partnerships, associations, corporations (public and private), public bodies 

and natural persons, and also include executors, administrators, trustees, receivers or other 

representatives. 

Unless the context shall clearly indicate otherwise, in this Ordinance (not including in 

such term wherever used in this paragraph any Supplemental Ordinance): (i) references to 

sections and other subdivisions, whether by number or letter or otherwise, are to the respective or 

corresponding sections and subdivisions of this Ordinance, as such sections or subdivisions may 

be amended from time to time; (ii) the terms “herein”, “hereunder”, “hereby”, “hereto”, “hereof’, 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 6 

and any similar terms, refer to this Ordinance and to this Ordinance as a whole and not to any 

particular section or subdivision hereof; and (iii) the term “heretofore” means before the time of 

effectiveness of this Ordinance and the term “hereafter” means after the time of effectiveness of 

this Ordinance. 

Unless the facts shall then be otherwise, all computations required for the purposes of this 

Ordinance shall be made on the assumption that: (i) the principal of and interest on all Bonds 

shall be paid as and when the same become due; and (ii) all Bonds required by the Series 

Ordinance providing for their issuance to be redeemed from moneys credited to the Term Bond 

Principal Account created pursuant to Section 14 hereof in the Bond Fund shall be redeemed on 

the respective Term Bond Principal Account Installment dates therefor in the amounts and in the 

years as required by said Section 14 or by such Series Ordinance. 

SECTION 3. Authorization of Bonds and Notes; Payment Thereof; 

Pledges and Assignments to such Payment; Series Ordinances. For the purpose 

of carrying into effect certain of the powers granted to the Port pertaining to aviation, air 

transport and other enterprises, there is hereby established and created under this Ordinance an 

issue of revenue bonds (herein defined and referred to as the “Bonds”) of the Port, to be known 

and designated as “Portland International Airport Revenue Bonds.” The Bonds may be issued 

hereunder in series from time to time as hereinafter provided in this section and in Sections 4 

and 5 hereof. The Bonds are hereby authorized to be issued in an amount providing net proceeds 

not exceeding the Costs of Construction of the additions, expansions and improvements to the 

Airport as set forth in the Airport Capital Improvement Program, as amended from time to time, 

plus Bonds of the first series in an amount providing net proceeds not exceeding $21,000,000, 

which $21,000,000 may be used by the Port for any lawful purpose, including but not limited to 

the Costs of Construction of such additions, extensions and improvements to the Airport. On or 

before the day of the delivery and payment for the first Bonds issued hereunder the Port shall, 

from funds lawfully available to it, other than Bond proceeds, deposit $5,500,000 into the 

Airport Construction Fund. Subject to the aforementioned limitation and to the provisions of 

Sections 4 and 5 hereof, the aggregate principal amount of Bonds which may be issued 

hereunder and secured hereby and be outstanding at any time is not limited as to amount, except 

as may otherwise hereafter be provided by law. The Bonds, including principal thereof and 

interest and premium, if any, thereon, shall be payable solely from and be secured solely by the 

Revenues, which Revenues shall be and hereby are pledged and charged to the Bonds and the 

punctual payment of the principal thereof and interest and premium, if any, thereon and to the 

security thereof, in accordance with the provisions of this Ordinance. The Bonds shall be 

equally and ratably secured hereunder without priority by reason of series, number, date of 

adoption of the Series Ordinance providing for the issuance thereof, date of Bonds, date of sale, 

date of execution, date of issuance, date of delivery, or otherwise, and without regard to which 

section hereof the Bonds are issued hereunder, by a co-equal lien on the Revenues, which lien 

and the Bonds shall constitute a prior and superior lien and charge on the Revenues, subject to 

the provisions of this Ordinance, over and ahead of any claims (whether in tort, contract or 

otherwise and irrespective of whether the parties possessing such claims have notice of the 

foregoing pledges, liens or charges), encumbrances or obligations of any nature arising or 

incurred after the delivery of and payment for the first Bonds issued hereunder, and over and 

ahead of all other indebtedness payable from or secured by the Revenues which may hereafter be 

created or incurred. There shall be and hereby are, also pledged and assigned to the payment of 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 7 

the principal of and interest and premium, if any, on the Bonds (i) all rights of the Port under any 

construction contracts entered into by it or assigned to it with respect to the Airport and such 

other facilities as are constructed with the proceeds of the Bonds and under any other contracts 

entered into by it or assigned to it for any work upon the Airport or such other facilities as are 

constructed with the proceeds of the Bonds or to the benefit of which the Port may be entitled to 

with respect to the Airport or such other facilities, together with all rights of the Port under any 

surety or performance bonds covering the performance of any such contracts, except for 

contracts relating to Section 28 special facilities; and, (ii) until used and applied in accordance 

with the provisions hereof, all moneys held hereunder by the Port, the Trustee or any Paying 

Agent and the securities in which such moneys may from time to time be’ invested. The 

foregoing pledges and assignments shall be valid and binding from the time of the delivery of 

and payment for the first Bonds issued hereunder, and the moneys representing the Revenues 

shall thereupon be immediately subject to such pledge upon receipt thereof by the Port or the 

Trustee or a Paying Agent without any physical delivery or further act. The Bonds shall not in 

any manner or to any extent be a general obligation of the Port nor a charge upon the tax 

revenues of the Port, nor a charge upon any other revenues or property of the Port not 

specifically pledged thereto by this Ordinance. 

The covenants and agreements herein set forth to be performed by the Port shall be for 

the equal and proportionate benefit, security and protection of all holders of the Bonds and 

interest coupons without preference, priority or distinction as to payment or security or otherwise 

(except as to maturity, Term Bonds Principal Account Installments or other funds or accounts, 

which may be established for the Bonds of any series authorized hereunder) of any of the Bonds 

or interest coupons over any of the others for any reason or cause whatsoever, except as 

expressly provided therein or herein or in the Bonds, and all Bonds shall rank pari passu and 

shall be secured equally and ratably without discrimination or preference whatsoever. 

Except as herein otherwise provided the issuance of the Bonds may be authorized in one 

or more series by a Series Ordinance or Series Ordinances of the Port adopted subsequent hereto. 

Each Series Ordinance providing for the issuance of a series of Bonds shall, in addition to the 

title “Portland International Airport Revenue Bonds”, designate such Bonds by an appropriate 

series designation and shall also specify: (a) the authorized principal amount of such series of 

Bonds; (b) the purposes for which Bonds of such series are being issued; (c) the date, maturity 

date or dates and the first interest payment date of the Bonds of said series, which maturity date 

or dates shall occur on July 1 or semi-annually January 1 and July 1, and which first interest 

payment date shall be on or prior to one year from the date of such Bonds and shall occur on a 

January 1 or July 1, with interest being payable on said Bonds semi-annually each January 1 and 

July 1 after such first interest payment date; (d) the interest rate or rates or the manner of 

determining such rates; (e) the denominations and manner of numbering the Bonds of such 

series; (f) whether such Bonds will be issued in coupon form or fully registered form or both and 

the privileges, if any, of convertibility from one form to another; (g) the redemption price or 

prices, if any, to be paid upon the redemption of the Bonds of such series, the period or periods, 

if any, during which such prices shall be payable and the terms and conditions, if any of such 

redemption; (h) if any of the Bonds of said series are issued in the form customarily known as 

“term bonds”, the amount and due dates of each Term Bond Principal Account Installment for 

the Bonds of such series, which due date shall be either a July 1 or both January 1 and July 1, the 

date or dates and redemption price or prices upon which the said Bonds may be redeemed from 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 8 

such installments, which redemption dates shall be either a July 1 or both July 1 and January 1, 

and the manner and procedure of applying such Term Bond Principal Account Installments to the 

redemption of such Bonds: (i) if the coupon Bonds of such series are to be payable at any place 

or places in addition to the office of the Trustee, the additional place or places of such payment; 

(j) the provisions for the sale or other disposition of the Bonds of such series and the use, 

application, and investment, if any, of the proceeds of such sale or other disposition, which use, 

application and investment shall not be inconsistent or in conflict with the provisions hereof, 

(k) any other provisions which may be required to be inserted therein by other provisions of this 

Ordinance, such as by Section 12 hereof, and (l) any other provisions not inconsistent or in 

conflict with the provisions of this Ordinance deemed necessary or advisable by the Port. The 

Series Ordinance providing for the issuance of the Bonds of the first series may authorize the 

sale of Bonds of the first series of Bonds in installments and may authorize that the matters set 

forth in the foregoing clauses (c) through (l) with respect to installments other than the first 

installment may be specified by a Supplemental Ordinance adopted with respect to each such 

installment. 

No holder of a Bond shall be required to see that the moneys derived from such Bond are 

applied to the purpose or purposes for which the Bond is issued. The validity of the Bonds shall 

neither be dependent upon nor affected by the validity or regularity of any proceedings or 

contracts relating to the acquisition, purchase, construction, reconstruction, restoration, addition, 

expansion, improvement, betterment, extension, renewal or replacement of the Airport or other 

facilities of the Port, nor the use and application of the proceeds of the Bonds. 

At any time and from time to time after the issuance of Bonds have been authorized 

hereunder, the Port may borrow money for the purposes for which such Bonds are to be issued in 

anticipation of the receipt of the proceeds of the sale of such Bonds and within the authorized 

maximum amount of such Bonds, and shall issue bond anticipation notes for all moneys so 

borrowed. 

SECTION 4. Authorization of First Series of Bonds and of Additional Bonds 

Hereunder. For the purpose of paying the Costs of Construction of additions, expansions and 

improvements to the Airport, as set forth in the Airport Capital Improvement Program, as 

amended from time to time, and to the extent authorized under Section 3 hereof and for the 

purpose of financing other Port facilities, there is hereby authorized to be issued, and shall be 

issued hereunder, the first series of Bonds in the aggregate principal amount of $50,000,000, 

which Bonds shall be issued on such terms and in such installments as may be set forth in the 

Series Ordinance and any Supplemental Ordinance providing for the issuance of such Bonds, to 

be adopted hereafter pursuant to and in accordance with the provisions of Section 3 hereof. 

From the proceeds of the sale of such $50,000,000 first series of Bonds, there shall be 

deposited by the Port into its general fund $21,000,000 which may be used by the Port for any 

lawful purpose, including but without limitation the Costs of Construction of additions, 

expansions and improvements to the Airport. That portion of the proceeds of the sale of the first 

series of Bonds not so deposited into the general fund of the Port shall be deposited by the Port 

in accordance with the last paragraph of this Section 4. On or before the day of the delivery of 

and payment for the first Bonds issued hereunder the Port shall, from funds lawfully available to 

it, other than Bond proceeds, deposit $5,500,000 into the Airport Construction Fund. If the 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 9 

$50,000,000 first series of Bonds are sold in two installments of $25,000,000 each, there shall be 

deposited by the Port into its general fund $13,250,000 from the proceeds of sale of the first 

installment and $7,750,000 from the sale of the second installment. 

Subsequent to the issuance of the first series of Bonds hereunder, the Port for the purpose 

of paying Costs of Construction of the Airport as set forth in the Airport Capital Improvement 

Program, as amended from time to time, may issue hereunder at one time or from time to time an 

additional series or additional series of the Bonds (herein defined and referred to as “Additional 

Bonds”) by means of a Series Ordinance or Series Ordinances, adopted pursuant to and in 

accordance with the provisions of Section 3 hereof, but only upon compliance with the following 

conditions: 

(1) There shall have been delivered to the Port a certificate of the Trustee that 

no default exists in the payment of the principal of or interest and premium (if any) on 

any Bond and all mandatory term bond redemptions (if any) required to have been made 

shall have been made. 

(2) The Net Revenues, as certified by the Accountant and adjusted by the 

Airport Consultant as hereinafter in this section provided, for any twelve (12) consecutive 

months of the eighteen (18) months immediately preceding the date of the series of 

Bonds proposed to be issued shall have equaled not less than one hundred per cent of the 

maximum Debt Service Requirement for any future Fiscal Year on all Bonds to be 

outstanding upon the issuance of such Additional Bonds and including such Additional 

Bonds; and 

(3) The Net Revenues estimated by the Airport Consultant to be derived 

during each of the five Fiscal Years following the date estimated by the Port that a 

substantial portion of the project or projects, the Costs of Construction of which are to be 

financed by the issuance of such Additional Bonds, are placed in continuous service or in 

commercial operation shall be equal to not less than one hundred thirty per cent of the 

maximum Debt Service Requirement for any future Fiscal Year on all Bonds to be 

outstanding upon the issuance of such Additional Bonds and including such Additional 

Bonds. 

(4) There shall have been delivered to the Trustee a certificate of the Airport 

Consultant that the additions, expansions and improvements to be financed with the 

proceeds of the sale of the Bonds to be sold are additions, expansions and improvements 

contemplated by the Airport Capital Improvement Program, as amended from time to 

time. 

In the event that prior to the delivery of and payment for the series of Additional Bonds 

proposed to be issued the Port has imposed increases in its schedule of rates, rentals, fees and 

charges for the use and service of the Airport and the facilities and commodities furnished 

thereby and the certificated air carriers utilizing the services and facilities of the Airport on a 

scheduled basis have agreed or consented to such increases in writing (whether by contract, 

lease, amendment to lease or otherwise), or as to any, such increases not so agreed to, such 

increases have been in effect and have been paid for at least three months prior to the date of 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 10 

delivery of and payment for such Additional Bonds, (i) if such increases were not in effect 

throughout the entire twelve months’ period referred to in subparagraph (2) above in this section, 

the Airport Consultant shall revise the certificate of the Accountant referred to in that 

subparagraph so as to reflect the results as though such increases had been in effect and had been 

paid throughout such entire twelve months’ period, and (ii) the Airport Consultant in making his 

estimates for the purposes of subparagraph (3) above may adjust his estimates to reflect such 

increases. 

Except as otherwise provided above in this Section 4, the proceeds of the sale of any 

series of Bonds issued pursuant to this section, including the interest accrued thereon to the date 

of delivery of and payment therefor, shall be paid to the Port, which shall (i) deposit an amount 

of such proceeds equal to such accrued interest with the Trustee for deposit in the Bond Fund for 

credit to the Interest Account therein; (ii) deposit in the Major Maintenance Reserve Account, 

the Capital Improvement Account, the Debt Service Reserve Account and the Construction 

Interest Reserve Account such amounts, if any, as shall be specified in the Series Ordinance 

providing for the issuance of such series of Bonds, provided that the maximum amount of such 

proceeds which may be so deposited shall not exceed the amounts required or permitted to be on 

deposit in such accounts as provided herein; and (iii) deposit the remainder of such proceeds in 

the Airport Construction Fund created by Section 12 hereof. 

SECTION 5. Refunding Bonds. The Port may at any time and from time to time issue 

one or more series of Bonds (herein defined and referred to as “Refunding Bonds”) hereunder by 

means of a Series Ordinance or Ordinances adopted pursuant to and in accordance with the 

provisions of Section 3 hereof, (a) for the purpose of refunding at or prior to their maturity any of 

the then outstanding Bonds for the payment of which sufficient funds are not available, and any 

Refunding Bonds issued for such purpose shall mature, or be redeemable from Term Bond 

Principal Account Installments which shall commence, later than the latest stated maturity date 

of any Bond then outstanding which shall remain outstanding after the completion of such 

refunding, and (b) for the purpose of refunding Bonds at any time, provided that the aggregate 

Debt Service Requirement in any Fiscal Year after the delivery of such Refunding Bonds shall 

not be greater in any Fiscal Year after such delivery in which any of the Bonds not refunded shall 

remain outstanding than would have been the aggregate Debt Service Requirement of the Bonds 

for such Fiscal Year were such Refunding Bonds not to be issued and (c) for the purpose of 

refunding at or prior to their maturity all of the Bonds then outstanding. For the purposes of this 

paragraph, the interval between the date of delivery of such Refunding Bonds and the next 

ensuing July 1 shall constitute a Fiscal Year. 

Bonds of any one or more series may be refunded by the same series of Refunding 

Bonds, which Bonds to be refunded shall be specified in the Series Ordinance authorizing the 

Refunding Bonds, and the principal amount of such Refunding Bonds may include amounts 

necessary to pay the principal of the Bonds to be refunded, interest thereon to the date of 

redemption thereof and any premium payable thereon upon such redemption. The proceeds of 

the Refunding Bonds shall be paid over to the Trustee, to be applied in such manner, consistent 

with the provisions of Section 29 hereof, as is provided in the Series Ordinance authorizing such 

Refunding Bonds, so that upon the delivery of such Refunding Bonds the Bonds to be refunded 

thereby shall no longer be deemed to be outstanding hereunder in accordance with the provisions 

of said Section 29. 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 11 

SECTION 6. Payment of Principal, Interest and Premium of Bonds; Cancellation 

of Matured Coupons; Cancellation and Destruction of Bonds and Coupons. The Bonds 

shall be payable as to interest, principal and premium, if any, in any coin or currency of the 

United States of America which at the time of payment thereof is legal tender for public and 

private debts. Unless or except as is otherwise provided in the Series Ordinance authorizing their 

issuance, (i) coupon Bonds shall bear interest from the date of such Bonds, which interest prior 

to the maturity of such Bonds shall be payable only upon the presentation and surrender of the 

respective coupons therefor as the same severally become due; (ii) a fully registered Bond shall 

bear interest from the interest payment date next preceding the date thereof, unless such date is 

an interest payment date, in which event it shall bear interest from its date, or unless the date 

thereof is prior to the first interest payment date for the series of Bonds of which such fully 

registered Bond is one, in which event it shall bear interest from the date of the coupon Bonds of 

the series of Bonds of which it is one; provided that, all fully registered Bonds shall be dated as 

of such date so that no gain or loss of interest shall result upon the issuance, transfer, exchange or 

conversion thereof; and (iii) interest on fully registered Bonds shall be paid by the Trustee by 

check or draft mailed to the registered owner at his address as it appears on the books of registry 

kept pursuant to Section 8 hereof. 

Prior to the delivery of any coupon Bonds, all coupons thereon then matured shall be 

detached and cancelled by the Port or by the Trustee. 

All Bonds and interest coupons upon the payment thereof shall, as directed by the Port, 

either be cancelled by the Paying Agents and such cancelled Bonds and coupons and a certificate 

evidencing such cancellation transmitted to the Port or be destroyed by the Paying Agents and a 

certificate evidencing such destruction transmitted to the Port. If any Bond or coupon is 

cancelled or destroyed by a Paying Agent other than the Trustee, a copy of the certificate of such 

Paying Agent evidencing such cancellation or destruction shall also be delivered to the Trustee. 

SECTION 7. Redemption of Bonds. In the event any of the Bonds shall be subject to 

redemption prior to the stated maturity thereof, the terms and provisions of such prior 

redemption shall be set forth in the Series Ordinance providing for the issuance of such Bonds. 

Unless or except as is otherwise provided in the Series Ordinance providing for the issuance of 

such Bonds: 

(1) Notice of redemption of Bonds shall state: the designation, date and 

maturities of the Bonds called for redemption; the redemption premium, if any, payable 

upon such redemption; the date of redemption; if less than all the Bonds then outstanding 

of the series of Bonds of which the Bonds called for redemption are a part are called for 

redemption, the numbers of the Bonds called for redemption, which in the case of a fully 

registered Bond shall be the actual number of such Bond and not the number or numbers 

of the coupon Bonds reserved in accordance with Section 8 hereof upon the issuance of 

such fully registered Bond; that the interest on the Bonds, or on the principal amount 

thereof to be redeemed, in such notice designated for redemption shall cease to accrue 

and be payable from and after such redemption date; and that on said redemption date 

there will become due and payable on each said Bond the principal amount thereof to be 

redeemed, the then applicable redemption premium, if any, and the interest accrued on 

such principal amount to the redemption date. 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 12 

(2) Each notice of redemption mailed to the holder of a fully registered Bond 

to be redeemed shall, if less than the entire principal sum thereof is to be redeemed, also 

state the principal amount thereof to be redeemed and that such fully registered Bond 

must be surrendered in exchange for the payment of the principal amount thereof to be 

redeemed and the issuance of a new Bond or Bonds equalling in principal amount that 

portion of the principal sum not to be redeemed of the Bond to be surrendered. 

(3) Notice of redemption of Bonds shall be given by publication (except as 

provided below), at least thirty (30) days before the redemption date, of one notice of the 

intended redemption in one issue of a newspaper of general circulation in Multnomah 

County, Oregon, and of one such notice in one issue of The Daily Bond Buyer, a 

newspaper specializing in financial matters published in the City and State of New York, 

or in lieu of such publication in The Daily Bond Buyer, in some other newspaper of 

general circulation specializing in financial matters published in the City and State of 

New York. 

(4) If any Bond called for redemption is fully registered, or is registered as to 

principal only, notice of the redemption thereof shall be mailed not less than forty (40) 

days prior to the redemption date, by registered mail, to each registered owner of such 

Bond at his address as it appears on the registration books or at such address that he may 

have filed with the Trustee for that purpose, and notice of redemption by publication need 

not be given to the holder of any fully registered Bond, or of any Bond registered as to 

principal only, if notice shall have been so mailed as aforesaid to the registered owner 

thereof, provided that, if notice thereof is given by publication as aforesaid, then neither 

failure to mail such notice to the registered owner of any Bond which is registered as to 

principal only, nor any defect in any notice so mailed, shall affect the sufficiency of the 

proceedings for the redemption of any such Bond. 

(5) The Port, at any time it shall call Bonds for redemption, shall mail to the 

Trustee at least fifty-five days prior to the redemption date a copy of the notice of 

redemption of the Bonds so called, or such shorter time as shall be acceptable to the 

Trustee. 

(6) The Trustee shall give notice of all redemption of Bonds in the name and 

on behalf of the Port, and shall promptly notify the respective Paying Agents for the 

Bonds of the series of Bonds called for redemption as to any redemptions of the Bonds of 

such series and as to the numbers of the Bonds called for redemption. 

(7) For the purpose of selection and redemption of Bonds the Trustee shall 

assign a separate number for each portion of the principal sum of each fully registered 

Bond that is equal to the denomination of the coupon Bond or Bonds in lieu of or 

exchange for which such fully registered Bond was issued, which separate numbers shall 

be chosen from the numbers of those coupon Bonds reserved in accordance with 

Section 8 hereof upon the issuance of such fully registered Bond. 

(8) Whenever provision is made for the selection by lot of Bonds to be 

redeemed, the Trustee shall select, in any manner which it deems fair, the particular 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 13 

Bonds to be redeemed from among the Bonds then subject to redemption and selection by 

lot for such redemption. 

(9) In the event that part only of the principal sum of a fully registered Bond 

shall be called for redemption or prepaid, payment of the amount to be redeemed or 

prepaid shall be made only upon surrender of such Bond to the Trustee. Upon surrender 

of such fully registered Bond, the Port shall execute, and the Trustee shall deliver, or 

cause to be delivered, to the registered owner thereof, at the expense of the Port, a new 

duly executed Bond or Bonds of authorized principal sums equal in aggregate principal 

amount to, and of the same series, maturity and interest rate as, the unredeemed portion 

of the fully registered Bond surrendered, which new Bond or Bonds may, at the option of 

the registered owner, be either (i) a coupon Bond or Bonds with all unmatured coupons 

appertaining thereto and bearing the serial number or numbers of those coupon Bonds not 

selected for redemption which were endorsed upon the fully registered Bond surrendered; 

or (ii) a fully registered Bond or Bonds without coupons having endorsed thereon the 

number or numbers of those coupon Bonds not selected for redemption which were 

endorsed upon the fully registered Bond surrendered. 

If a Bond is subject by its terms to prior redemption and has been duly called for 

redemption and notice of the redemption thereof has been duly given as aforesaid and moneys 

for the payment of the principal amount thereof to be redeemed, the applicable redemption 

premium, if any, which is payable upon such redemption and the interest to accrue on such 

principal amount to the redemption date, are held for the purpose of such payment by the Trustee 

or any other Paying Agent for the series of Bonds of which such Bond is one, then on the 

redemption date designated in such notice, such Bond (or the principal amount thereof to be 

redeemed) so called for redemption shall become due and payable at the principal amount to be 

redeemed and the applicable redemption premium, if any, thereon; interest on said Bond (or the 

principal amount thereof to be redeemed) so called for redemption shall cease to accrue; and the 

coupons for interest thereon maturing subsequent to the redemption date shall be void. All 

unpaid interest installments represented by coupons which shall have matured on or prior to the 

date of redemption designated in such notice shall continue to be payable to the bearers thereof 

severally and respectively upon the presentation and surrender of such coupons. 

All Bonds surrendered or redeemed pursuant to the provisions of this section and those 

coupon Bonds bearing serial numbers selected for redemption which are then held in reserve 

pursuant to Section 8 hereof as a result of the issuance in lieu thereof or in exchange or 

substitution therefor of fully registered Bonds which have been redeemed in whole or in part, and 

the appurtenant coupons, if any, shall be cancelled. 

SECTION 8. Registration, Transfer, Exchange and Ownership of Bonds. The 

Trustee will keep or cause to be kept at its principal office sufficient books for the registration 

and transfer of the Bonds, which books shall at all times be open to inspection by the Port, and 

upon presentation thereat for such purpose the Trustee shall, under such reasonable regulations 

as it may prescribe, register or transfer or cause to be registered or transferred, on said register, 

Bonds as hereinafter set forth. 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 14 

All coupon Bonds shall be transferable by delivery, unless registered as to principal in the 

manner herein provided. Unless or except as is otherwise provided in the Series Ordinance 

authorizing the issuance of such Bond, the holder of any Bond in coupon form may have the 

ownership of the principal thereof registered on the books required to be kept pursuant to the 

provisions of this section and such registration shall be noted on the Bond. After such 

registration no transfer of such Bond shall be effective against the Port, the Trustee or any 

Paying Agent hereunder, unless made on said books at the request of the registered owner or by 

his duly authorized attorney and similarly noted on the Bond; but such Bond may be discharged 

from registration by being in like manner registered to bearer, such registration to be noted on 

said books and said Bond, and thereupon transferability by delivery shall be restored; and such 

Bond may again and from time to time be registered or transferred to bearer, as before. Such 

registration, however, shall not affect the negotiability of the coupons appertaining to such Bond, 

and every such coupon shall continue to be negotiable and transferable merely by delivery and 

shall remain payable to bearer. All transfers, registrations, and discharges from registration of 

coupon Bonds pursuant to this section shall be made under such reasonable regulations as the 

Trustee may prescribe and, unless or except as is otherwise provided in the Series Ordinance 

authorizing the issuance of such Bonds, the Trustee shall require that any taxes or other 

governmental charges required to be paid with respect to such transfer, registration or discharge 

shall be paid by the Bondholder requesting such transfer, registration or discharge from 

registration, as a condition precedent to the exercise of such privilege. 

Unless or except as is otherwise provided in the Series Ordinance authorizing the 

issuance of such Bond, any fully registered Bond without coupons may, in accordance with its 

terms, be transferred upon the books to be kept pursuant to the provisions of this section by the 

person in whose name it is registered, in person or by his duly authorized attorney, upon 

surrender of such fully registered Bond, accompanied by delivery of a written instrument of 

transfer duly executed and in form satisfactory to the Trustee. Whenever any fully registered 

Bond without coupons shall be surrendered for transfer, the Port shall execute, and the Trustee 

shall deliver or cause to be delivered, a new duly executed fully registered Bond or Bonds 

without coupons, of the same series, interest rate and maturity and for a like aggregate principal 

sum, which new Bond or Bonds shall have endorsed thereon the same coupon Bond serial 

number or numbers reserved pursuant to this section upon the issuance of the fully registered 

Bond being surrendered. Unless or except as is otherwise provided in the Series Ordinance 

authorizing the issuance of such Bond, the Trustee may charge a sum not exceeding the actual 

cost thereof for each new Bond delivered upon any such transfer and shall require the payment 

by the Bondholder requesting such transfer of any tax or other governmental charges required to 

be paid with respect to such transfer. All fully registered Bonds surrendered pursuant to this 

section shall be cancelled. No transfers of fully registered Bonds shall be required to be made 

during the fifteen (15) days next preceding an interest payment date. 

Unless or except as is otherwise provided in the Series Ordinance authorizing their 

issuance, Bonds in coupon form may be exchanged at the principal office of the Trustee for a 

like aggregate principal amount of fully registered Bonds in authorized principal sums of the 

same series, interest rate and maturity, and fully registered Bonds without coupons may be 

exchanged at the principal office of the Trustee for a like aggregate principal amount of coupon 

Bonds of the same series, interest rate and maturity (or for a like aggregate principal amount of 

fully registered Bonds in other authorized principal sums of the same series, interest rate and 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 15 

maturity), and the Port shall execute, and the Trustee shall deliver, the fully registered Bond or 

Bonds to be delivered upon such exchange. All coupon Bonds surrendered for exchange and 

delivered in exchange shall have attached thereto all unmatured coupons appertaining thereto. 

Unless or except as is otherwise provided in the Series Ordinance authorizing the issuance of 

such Bonds, the Trustee may charge a sum not exceeding the actual cost thereof for each new 

Bond delivered upon any exchange (except in the case of an exchange of temporary Bonds for 

definitive Bonds, the first exchange of a Bond in coupon form for a fully registered Bond, the 

first exchange of any fully registered Bond and such other free exchanges of Bonds as may be 

provided in the Series Ordinance authorizing their issuance, all of which exchanges shall be at 

the expense of the Port). The Trustee shall require the payment by the Bondholder requesting 

such exchange of any tax or other governmental charges required to be paid with respect to such 

exchange. No such exchange shall be required to be made during the fifteen (15) days next 

preceding an interest payment date All fully registered Bonds surrendered pursuant to this 

section shall be cancelled. 

Whenever there shall be issued under this Ordinance a fully registered Bond without 

coupons in lieu of or in exchange or substitution for the issuance of a coupon Bond hereunder, 

there shall be reserved an aggregate principal amount of coupon Bonds of the same series, 

interest rate and maturity, equal in principal amount to the principal sum of such registered 

Bond, and in such case the serial number or numbers of the coupon Bond or Bonds so reserved, 

together with an appropriate statement of the reservation, shall be endorsed on such registered 

Bond. 

The Port, the Trustee, any Paying Agent hereunder and any other person may deem and 

treat the bearer of any Bond which shall not at the time be registered or shall at the time be 

registered to bearer, whether or not such Bond shall be overdue, the bearer of any coupon, 

whether or not the Bond to which such coupon appertains shall at the time be registered as to 

principal and whether or not such coupon shall be overdue, and the person in whose name any 

Bond shall at the time be registered on the books of registry kept pursuant to this section, as the 

absolute owner of such Bond or coupon for all purposes whatsoever, including payment thereof, 

and neither the Port nor the Trustee nor any Paying Agent hereunder shall be affected by any 

notice to the contrary. The payment to bearer of any coupon, the payment to bearer of the 

principal of any Bond which at the time shall not be registered or at the time shall be registered 

to bearer, the payment of or on account of principal to or upon the order of the person in whose 

name a Bond shall at the time be registered on said books of registry and the payment of interest 

to or upon the order of any person in whose name any fully registered Bond shall at the time be 

registered on said books of registry, shall be valid and effectual fully to satisfy and discharge all 

liability of the Port, the Trustee and any Paying Agent, upon such coupon or upon such Bond to 

the extent of the sum or sums so paid. 

SECTION 9. Execution of Bonds. Unless or except as is otherwise directed in the 

Series Ordinance providing for their issuance, the Bonds, whether in coupon form or fully 

registered form, shall be signed by the President and Secretary or an Assistant Secretary of the 

Port, either of whose signatures thereon may be a printed, engraved or lithographed facsimile of 

his manual signature so long as the other signature thereon is a manual signature, and shall bear 

the printed, engraved or lithographed facsimile seal of the Port, and the coupons attached to said 

Bonds shall bear the printed, engraved or lithographed facsimile signatures of the President and 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 16 

the Secretary or an Assistant Secretary of the Port. Any Bond bearing thereon the facsimile 

signature of the President or the Secretary or an Assistant Secretary of the Port, as the case may 

be, holding office at the time of the reproduction of his facsimile signature upon such Bond and 

any coupon bearing thereon the facsimile signatures of the President and the Secretary or 

Assistant Secretary of the Port, as the case may be, holding office at the time of the reproduction 

of their facsimile signatures upon such coupons, shall be valid and binding in accordance with 

the terms of this Ordinance and may be issued and delivered by the Port even though the person 

holding such office was not in office on the date of such Bond or not in office on the date of 

delivery thereof. 

SECTION 10. Forms of Bonds, Coupons and Registration and Assignment 

Provisions. Unless or except as may otherwise be directed in the Series Ordinance providing for 

their issuance, Bonds in coupon form, the interest coupons pertaining thereto and the provisions 

(if any) for registration thereof, and Bonds in fully registered form, the form of endorsement 

thereon and the form of assignment pertaining thereto, shall be substantially in the respective 

following forms, with necessary or appropriate variations, omissions and insertions as are 

incidental to their series, numbers, denominations, maturities, interest rate or rates, paying 

agencies, redemption provisions and other details thereof and their form or as otherwise 

permitted or required by law or by this Ordinance or such Series Ordinance: 

(Form of Coupon Bond) 

UNITED STATES OF AMERICA 

STATE OF OREGON 

THE PORT OF PORTLAND 

PORTLAND INTERNATIONAL AIRPORT REVENUE BOND 

SERIES 

No. $___________ 

KNOW ALL MEN BY THESE PRESENTS: that THE PORT OF PORTLAND, a 

municipal corporation of the State of Oregon, for value received hereby promises to pay to 

bearer, or if this Bond shall then be registered as to principal in accordance with the provisions 

for such registration endorsed hereon, to the then registered owner hereof, but solely out of the 

revenues hereinafter specified and not otherwise, the principal sum of ___________ 

THOUSAND DOLLARS ($___________) on the first day of ___________ (subject to the right 

of prior redemption hereinafter mentioned), upon presentation and surrender of this Bond, and to 

pay interest on said principal sum, but solely out of said revenues hereinafter specified and not 

otherwise, from the date hereof until the payment of said principal sum, at the rate of ___ per 

centum (___%) per annum, payable on ___________, ____, and semi-annually thereafter on the 

first days of ___________ and ___________ in each year, but only, in the case of interest due on 

or before the maturity hereof, upon the presentation and surrender of the respective interest 

coupons therefor hereto attached as the same severally become due. Both principal of and 

interest on this Bond are payable at the principal office of ___________, in the City of 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 17 

___________, or, at the option of the holder of this Bond and said coupons, at the principal 

office of ___________, in the City of ___________, ___________, as Paying Agents of The Port 

of Portland, in such coin or currency of the United States of America which on the date of such 

payment is legal tender for public and private debts. 

This Bond is one of an authorized series of Bonds of like designation herewith, 

aggregating ___________ Dollars ($___________) in principal amount. This Bond and the 

Bonds of the series of which it is one are issued under the authority of and pursuant to and in full 

compliance with the Constitution and laws of the State of Oregon, including particularly ORS 

778.005 to ORS 778.260, as amended, and Ordinance No. ___ (hereinafter called the “Bond 

Ordinance”) duly enacted by The Port of Portland under said Constitution and statutes on 

___________, 19__, and Ordinance No. ___ (hereinafter called the “Series Ordinance”) duly 

enacted by The Port of Portland under said Constitution and statutes and the Bond Ordinance on 

___________, ____. 

This Bond and the series of Bonds of which this Bond is one constitute part of a duly 

authorized issue of Bonds (herein called the “Bonds”) issued, or to be issued, by The Port of 

Portland under the Bond Ordinance for the purpose of carrying into effect powers granted to The 

Port of Portland pertaining to aviation, air transport and other enterprises. Said issue of Bonds is 

unlimited as to principal amount except as provided in the Bond Ordinance and constitutes or 

may constitute one or more series in various principal amounts and of varying denominations, 

dates, maturities, interest rates and other provisions as provided in the Bond Ordinance. All 

Bonds issued under the Bond Ordinance are and will be equally secured by the liens, pledges, 

charges, assignments and covenants made therein, except as otherwise expressly provided or 

permitted in the Bond Ordinance. Reference is hereby made to the Bond Ordinance and the 

aforesaid Series Ordinance, copies of which are on file in the office of The Port of Portland and 

the principal office of the Trustee hereinafter mentioned and to all of the provisions of which any 

holder of this Bond by his acceptance hereof thereby assents, for definitions of terms; a 

description of and the nature and extent of the security for the Bonds issued or to be issued under 

the Bond Ordinance, including this Bond; the revenues and other moneys pledged to the payment 

of the interest on and principal of the Bonds; the nature and extent and manner of enforcement of 

the pledge; the terms and conditions upon which this Bond and the series of which it is one are 

issued and upon which other Bonds may heretofore have been issued or may hereafter be issued 

under the Bond Ordinance payable as to principal, interest and premium on a parity with this 

Bond out of the aforesaid revenues and other moneys and equally and ratably secured herewith; 

the conditions upon which the Bond Ordinance and the aforesaid Series Ordinance may be 

amended or supplemented with or without the consent of the holders of the Bonds; the rights and 

remedies of the holder hereof with respect hereto; the rights, duties and obligations of The Port 

of Portland and the hereinafter-mentioned Trustee thereunder; the terms and provisions upon 

which the liens, pledges, charges, assignments, and covenants of The Port of Portland made 

therein may be discharged at or prior to the maturity or redemption of this Bond, and this Bond 

will thereafter no longer be secured by the Bond Ordinance or be deemed to be outstanding 

thereunder, if moneys or certain specified securities shall have been deposited with said Trustee 

or any Paying Agent for this Bond sufficient and held in trust solely for the payment hereof, and 

for the other terms and provisions thereof. 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 18 

This Bond and the series of Bonds of which it is one and the issue of Bonds of which 

such series is a part and the interest and premium, if any, thereon are payable solely out of and 

secured solely by the revenues of The Port of Portland pledged to the payment thereof by the 

Bond Ordinance, which revenues so pledged consist of the income, receipts and other moneys 

derived by The Port of Portland from its ownership or operation of Portland International 

Airport, specified in the Bond Ordinance. In and by the Bond Ordinance (i) a special trust fund 

of The Port of Portland designated “The Port of Portland Airport Revenue Bond Fund” has been 

created with ___________, a corporation duly authorized to exercise corporate trust powers 

having its principal place of business in the City of ___________, ___________, and said 

corporation has been appointed as trustee (herein referred to as the “Trustee”) to hold and 

administer the same, and (ii) The Port of Portland is obligated to set aside and pay into said 

special trust fund the aforesaid revenues pledged to the payment hereof in amounts sufficient to 

pay the principal of and interest on this Bond and the Bonds of the series of which it is one and 

the Bonds of the issue of which such series is a part as and when the same severally become due. 

This Bond and the Bonds of the series of which it is one and the Bonds of the issue of which 

such series is a part shall not in any manner or to any extent be a general obligation of The Port 

of Portland nor a charge upon the tax revenues of said Port nor a charge upon any other revenues 

or property of said Port not specifically pledged thereto in and by the Bond Ordinance. 

The Bonds of the series of Bonds of which this Bond is one maturing ___________, 

____, and thereafter are subject to redemption at the option of The Port of Portland prior to their 

stated maturities. 

[The applicable redemption terms shall be inserted here.] 

at the principal amount thereof, the interest accrued thereon to the redemption date and the 

respective premium if any (expressed as a percentage of the principal amount to be redeemed) 

set opposite the respective periods in the table below if such redemption occurs during such 

periods: 

Period During Which Redeemed Redemption Premium

(Both Dates Inclusive) (Percentage)

 

[The applicable redemption premiums shall be inserted here.] 

In the event this Bond shall be subject to prior redemption as aforesaid and is called for 

redemption, notice of such redemption stating the designation, date and maturity of this Bond, 

the premium (if any) payable upon such redemption, the date of redemption, and if less than all 

the Bonds then outstanding of the series of Bonds of which this Bond is one are called for 

redemption, the number of this Bond, shall be given by publication, at least thirty (30) days 

before the redemption date, of one notice of the intended redemption in one issue of a newspaper 

of general circulation in Multnomah County, Oregon, and of one such notice in one issue of The 

Daily Bond Buyer, a newspaper specializing in financial matters published in the City and State 

of New York, or in lieu of such publication in The Daily Bond Buyer, in one issue of some other 

newspaper of general circulation specializing in financial matters published in the City and State 

of New York; provided that if this Bond at the time shall be registered as to principal in 

accordance with the provisions for such registration endorsed hereon, notice of the redemption 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 19 

hereof may be given by the mailing at least forty (40) days before the redemption date by 

registered mail of a copy of such notice to the registered owner hereof at his address as it appears 

upon the books of registry or at such other address which he may have filed with the Trustee for 

such purpose, in which event notice of the redemption hereof need not be given by publication; 

and provided further, if notice of the redemption hereof shall be given by publication as 

aforesaid, then neither the failure to mail any notice nor any defect therein shall affect the 

validity of any proceeding for the redemption of this Bond. If this Bond shall be called for 

redemption and notice of such redemption duly given as aforesaid, and if on or before the 

redemption date there shall be deposited with the Trustee or the Paying Agents for this Bond 

sufficient funds to pay this Bond and accrued interest to the date of redemption and any premium 

payable upon such redemption, this Bond shall become due and payable upon such redemption 

date, interest shall cease to accrue and become payable thereon from and after the redemption 

date and the coupons for interest appertaining hereto maturing subsequent to the redemption date 

shall be void. 

The Bonds of the series of which this Bond is one are issuable as coupon Bonds 

registrable as to principal only, in the denomination of $___________, and as fully registered 

Bonds without coupons in the denominations of $___________ or any multiple thereof. Subject 

to the limitations and upon payment of the charges, if any, provided in the Bond Ordinance and 

the Series Ordinance, coupon Bonds bearing all unmatured coupons may be exchanged for a like 

aggregate principal amount of registered Bonds without coupons of authorized principal sums 

and of the same series, interest rate and maturity, and registered Bonds without coupons may be 

exchanged for a like aggregate principal amount of coupon Bonds of the same series, interest rate 

and maturity bearing all unmatured coupons or for a like aggregate principal amount of 

registered Bonds without coupons of other authorized principal sums and of the same series, 

interest rate and maturity. 

This Bond may be registered as to principal only in accordance with the provisions for 

registration endorsed on the back hereof, but such registration shall not affect the negotiability of 

the coupons attached hereto, which shall continue to be payable to bearer and transferable by 

delivery only. 

It is hereby certified, recited and declared that all acts, conditions and things required by 

the Constitution and laws of Oregon and the Bond Ordinance and the Series Ordinance to have 

happened, to exist and to have been performed precedent to and in the issuance of this Bond and 

the series of which it is a part, do exist, have happened and have been performed in regular and 

due time, form and manner as required by said Constitution laws and Ordinances; that this Bond 

and the series of which it is a part do not exceed any constitutional or statutory limitation of 

indebtedness; and that provision has been made for the payment of the principal of and interest 

on this Bond and the series of which it is a part as provided in the Bond Ordinance. 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 20 

IN WITNESS WHEREOF, The Port of Portland has caused this Bond to be signed by its 

President and Secretary or Assistant Secretary (one of whose signatures hereon may be a printed, 

engraved or lithographed facsimile signature) and to bear a printed, engraved or lithographed 

facsimile of its seal, the coupons attached hereto to bear the printed, engraved or lithographed 

facsimile signatures of said President and Secretary or Assistant Secretary and this Bond to be 

dated as of the ___________ day of ___________, ____. 

 THE PORT OF PORTLAND 

 

 

Secretary or Assistant Secretary 

of The Port of Portland 

 President of The Port of Portland 

 

(Form of Coupon) 

No. $___________ 

On the ___________ day of ___________, ____, unless the Bond hereinafter mentioned 

shall be subject to prior redemption and shall have theretofore been duly called for previous 

redemption and payment of the redemption price duly made or provided for, The Port of 

Portland, Oregon, will pay to the bearer upon surrender hereof, but solely out of the revenues 

specified in said Bond and not otherwise, at the principal office of ___________ or, at the option 

of the holder hereof, at the principal office of___________, the sum shown hereon, in any coin 

or currency of the United States of America which at the time of payment hereof is legal tender 

for public and private debts, being interest then due on its Airport Revenue Bond, Series ____, 

dated and numbered 

 

Secretary or Assistant Secretary 

of The Port of Portland 

 President of The Port of Portland 

 

(Provisions for Registration of Coupon Bonds) 

This Bond may be registered as to principal only in the name of the holder on the books 

of registry to be kept for that purpose at the principal office of the within-named Trustee, as 

Registrar, such registration to be noted in the registration blank below. After such registration no 

transfer hereof shall be effective against The Port of Portland, the Registrar, any of the Paying 

Agents for said Bond or the within-named Trustee unless made on said books by the registered 

holder in person or by his duly authorized attorney, such transfer to be evidenced by a written 

instrument of transfer in form satisfactory to the Registrar, and the new registration noted by the 

Registrar hereon; but such registration may be made to bearer, and thereupon this Bond shall be 

discharged from registration, and transferability by delivery shall be restored, after which this 

Bond from time to time again may be registered or may be made transferable by delivery as 

before. The registration of this Bond as to principal only shall not affect the negotiability of the 

coupons hereto attached, which always shall continue to be payable to bearer and to be 

transferable by delivery only. 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 21 

(Notice: No writing on this Bond except by the Registrar) 

Date of 

Registration In Whose Name Registered

Signature of 

Registrar

 

____________ ____________________________ ______________ 

____________ ____________________________ ______________ 

____________ ____________________________ ______________ 

____________ ____________________________ ______________ 

(Form of Fully Registered Bond) 

UNITED STATES OF AMERICA 

STATE OF OREGON 

THE PORT OF PORTLAND 

PORTLAND INTERNATIONAL AIRPORT REVENUE BOND 

SERIES 

No. $___________ 

KNOW ALL MEN BY THESE PRESENTS: that THE PORT OF PORTLAND, a 

municipal corporation of the State of Oregon, for value received hereby promises to pay to 

___________, or registered assigns, but solely out of the revenues hereinafter specified and not 

otherwise, the principal sum of ___________ Dollars ($___________) on the first day of 

___________ (subject to the right of prior redemption hereinafter mentioned), upon presentation 

and surrender of this Bond, and to pay interest on said principal sum, but solely out of said 

revenues hereinafter specified and not otherwise, from the interest payment date next preceding 

the date hereof (unless the date hereof is prior to ___________, ____, in which event from 

___________, ____, or unless the date hereof is ___________, ____, or a January 1 or July 1 

thereafter, in which event from the date hereof) until the payment of such principal sum in full, at 

the rate of ___ per centum (___%) per annum, such interest being payable on the first days of 

January and July in each year commencing with ___________, ____, by check or draft mailed to 

the registered owner hereof at his address as it appears on the books of registry kept pursuant to 

the Bond Ordinance hereinafter mentioned. Both principal of and interest on this Bond are 

payable at the principal office of ___________ in the City of ___________, the Trustee 

hereinafter mentioned, as Paying Agent of The Port of Portland, in such coin or currency of the 

United States of America which on the date of such payment is legal tender for public and 

private debts. 

This Bond is one of an authorized series of Bonds of like designation herewith, 

aggregating ___________ Dollars ($___________) in principal amount. This Bond and the 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 22 

Bonds of the series of Bonds of which it is one are issued under the authority of and pursuant to 

and in full compliance with the Constitution and laws of the State of Oregon, including 

particularly ORS 778.005 to ORS 778.260, as amended, and Ordinance No. ___ (hereinafter 

called the “Bond Ordinance”) duly enacted by The Port of Portland under said Constitution and 

statutes on ___________, 19__ and Ordinance No. ___ (hereinafter called the “Series 

Ordinance”) duly enacted by The Port of Portland under said Constitution and statutes and the 

Bond Ordinance on ___________, ___. 

This Bond and the series of Bonds of which this Bond is one constitute part of a duly 

authorized issue of Bonds (herein called the “Bonds”) issued, or to be issued, by The Port of 

Portland under the Bond Ordinance for the purpose of carrying into effect powers granted to The 

Port of Portland pertaining to aviation, air transport and other enterprises. Said issue of Bonds is 

unlimited as to principal amount except as provided in the Bond Ordinance and constitutes or 

may constitute one or more series in various principal amounts and of varying denominations, 

dates, maturities, interest rates and other provisions as provided in the Bond Ordinance. All 

Bonds issued and to be issued under the Bond Ordinance are and will be equally secured by the 

liens, pledges, charges, assignments and covenants made therein, except as otherwise expressly 

provided or permitted in the Bond Ordinance. Reference is hereby made to the Bond Ordinance 

and the aforesaid Series Ordinance, copies of which are on file in the office of The Port of 

Portland and the principal office of the Trustee hereinafter mentioned and to all of the provisions 

of which any holder of this Bond by his acceptance hereof thereby assents, for definitions of 

terms; a description of and the nature and extent of the security for the Bonds issued or to be 

issued under the Bond Ordinance, including this Bond; the revenues and other moneys pledged 

to the payment of the interest on and principal of the Bonds; the nature and extent and manner of 

enforcement of the pledge; the terms and conditions upon which this Bond and the series of 

which it is one are issued and upon which other Bonds may heretofore have been issued or may 

hereafter be issued under the Bond Ordinance payable as to principal, interest and premium on a 

parity with this Bond out of the aforesaid revenues and other moneys and equally and ratably 

secured herewith; the conditions upon which the Bond Ordinance and the aforesaid Series 

Ordinance may be amended or supplemented with or without the consent of the holders of the 

Bonds; the rights and remedies of the holder hereof with respect hereto; the rights, duties and 

obligations of The Port of Portland and the hereinafter-mentioned Trustee thereunder; the terms 

and provisions upon which the liens, pledges, charges, assignments and covenants of The Port of 

Portland made therein may be discharged at or prior to the maturity or redemption of this Bond, 

and this Bond will thereafter no longer be secured by the Bond Ordinance or be deemed to be 

outstanding thereunder, if moneys or certain specified securities shall have been deposited with 

said Trustee therefor sufficient and held in trust solely for the payment hereof, and for the other 

terms and provisions thereof. 

This Bond and the series of Bonds of which it is one and the issue of Bonds of which 

such series is a part and the interest and premium, if any, thereon are payable solely out of and 

secured solely by the revenues of The Port of Portland pledged to the payment thereof by the 

Bond Ordinance, which revenues so pledged consist of the income, receipts and other moneys 

derived by The Port of Portland from its ownership or operation of Portland International 

Airport, specified in the Bond Ordinance. In and by the Bond Ordinance (i) a special trust fund 

of The Port of Portland designated “The Port of Portland Airport Revenue Bond Fund” has been 

created with ___________ a corporation duly authorized to exercise corporate trust powers 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 23 

having its principal place of business in the City of ___________, ___________, and said 

corporation has been appointed as trustee (herein referred to as the “Trustee”) to hold and 

administer the same and (ii) The Port of Portland is obligated to set aside and pay into said 

special trust fund the aforesaid revenues pledged to the payment hereof in amounts sufficient to 

pay the principal of and interest on this Bond and the Bonds of the series of which it is one and 

the Bonds of the issue of which such series is a part as and when the same severally become due. 

This Bond and the Bonds of the series of which it is one and the Bonds of the issue of which 

such series is a part shall not in any manner or to any extent be a general obligation of The Port 

of Portland nor a charge upon the tax revenues of said Port nor a charge upon any other revenues 

or property of said Port not specifically pledged thereto in and by the Bond Ordinance. 

The Bonds of the series of Bonds of which this Bond is one maturing ___________, 

____, and thereafter are subject to redemption at the option of The Port of Portland prior to their 

stated maturities, 

[The applicable redemption terms shall be inserted here.] 

at the principal amount thereof, the interest accrued thereon to the redemption date and the 

respective premium (expressed as a percentage of the principal amount to be redeemed) set 

opposite the respective periods in the table below if such redemption occurs during such period: 

Period During Which Redeemed Redemption Premium

(Both Dates Inclusive) (Percentage)

 

[The applicable redemption premiums shall be inserted here.] 

In the event this Bond shall be subject to prior redemption as aforesaid and is called for 

redemption, notice of such redemption shall be mailed, at least once not less than forty (40) days 

prior to the date fixed for the redemption thereof, to the registered holder of this Bond at his 

address as shown on the books of registry. If this Bond be of a denomination in excess of 

$___________, portions of the principal sum hereof in installments of $___________ or any 

multiple thereof may be redeemed, and if less than all of the principal sum hereof is to be 

redeemed, in such case upon the surrender of this Bond to the Trustee there shall be issued to the 

registered owner hereof, without charge therefor, for the then unredeemed balance of the 

principal sum hereof, at the option of the owner either coupon Bonds or registered Bonds of like 

series, maturity and interest rate in any of the authorized denominations provided by the Bond 

Ordinance and the Series Ordinance. If this Bond (or any portion of the principal sum hereof) 

shall be called for redemption and notice of such redemption duly given as aforesaid, and if on or 

before the redemption date there shall be deposited with the Trustee sufficient funds to pay the 

principal amount hereof to be redeemed and accrued interest on such principal amount to the 

date of redemption and any premium payable upon such redemption, this Bond (or the portion of 

the principal sum hereof to be redeemed) shall become due and payable upon such redemption 

date and interest shall cease to accrue and become payable from and after the redemption date on 

the principal amount hereof to be redeemed. 

The Bonds of the series of Bonds of which this Bond is one are issuable as coupon Bonds 

registrable as to principal only, in the denomination of $___________, and as fully registered 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 24 

Bonds without coupons in the denominations of $___________ or any multiple thereof. Subject 

to the limitations and upon payment of the charges, if any, provided in the Bond Ordinance and 

the Series Ordinance, coupon Bonds bearing all unmatured coupons may be exchanged for a like 

aggregate principal amount of registered Bonds without coupons of authorized principal sums 

and of the same series, interest rate and maturity, and registered Bonds without coupons may be 

exchanged for a like aggregate principal amount of coupon Bonds of the same series, interest rate 

and maturity bearing all unmatured coupons or for a like aggregate principal amount of 

registered Bonds without coupons of other authorized principal sums and of the same series, 

interest rate and maturity. 

This Bond is transferable by the registered owner hereof, in person or by his attorney 

duly authorized in writing, at the principal office of the Trustee, but only in the manner, subject 

to the limitations and upon payment of the charges, if any, provided in the Bond Ordinance and 

the Series Ordinance and upon the surrender hereof for cancellation. Upon such transfer a new 

registered Bond or Bonds without coupons, of authorized denominations and of the same 

aggregate principal amount, series, interest rate and maturity as the Bond surrendered, will be 

issued to the transferee in exchange therefor. 

It is hereby certified, recited and declared that all acts, conditions and things required by 

the Constitution and laws of Oregon and the Bond Ordinance and the Series Ordinance to have 

happened, to exist and to have been performed precedent to and in the issuance of this Bond and 

the series of which it is a part, do exist, have happened and have been performed in regular and 

due time, form and manner as required by said Constitution, laws and Ordinances; that this Bond 

and the series of which it is a part do not exceed any constitutional or statutory limitation of 

indebtedness; and that provision has been made for the payment of the principal of and interest 

on this Bond and the series of which it is a part as provided in the Bond Ordinance. 

IN WITNESS WHEREOF, THE PORT OF PORTLAND has caused this Bond to be 

signed by its President and Secretary or Assistant Secretary (one of whose signatures hereon may 

be a printed, engraved or lithographed facsimile of his signature) and to bear a printed, engraved 

or lithographed facsimile of its seal and this Bond to be dated ___________, ____. 

 THE PORT OF PORTLAND 

 

 

Secretary or Assistant Secretary 

of The Port of Portland 

 President of The Port of Portland 

 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 25 

(Form of Endorsement on Fully Registered Bonds) 

NOTICE: No writing below except by the Registrar. 

This registered Bond is issued in lieu of or in exchange or substitution for coupon 

Bond(s) of this series, interest rate and maturity, numbered ___________, in the denomination of 

$___________ each, aggregating the face value hereof and not contemporaneously outstanding; 

and coupon Bond(s) of the same series, interest rate and maturity aggregating the face value 

hereof and bearing the above serial number(s) has (have) been reserved and will be issued in 

exchange for and upon surrender of this registered Bond and upon payment of charges, all as 

provided in the within-mentioned Bond Ordinance and Series Ordinance. 

(Form of Assignment of Fully Registered Bonds) 

For value received ___________ hereby sells, assigns and transfers unto ___________ 

the within-mentioned Bond and hereby irrevocably constitutes and appoints ___________ 

attorney-in-fact, to transfer the same on the books of registry with full power of substitution in 

the premises. 

 __________________________ 

 

Dated:______________________ __________________________ 

 Signature Guaranteed* 

NOTE: The signature to this Assignment must correspond with the name as written on the 

face of the within Bond in every particular, without alteration or enlargement or 

any change whatsoever. 

* Generally guaranteed by a bank, trust company or brokerage firm. 

SECTION 11. Mutilated, Lost, Stolen or Destroyed Bonds or Coupons. In the event 

any Bond (or coupon) is mutilated, lost, stolen or destroyed, the Port may execute and deliver a 

new Bond (or coupon) of like series, date, tenor, maturity and denomination as the Bond 

mutilated, lost, stolen or destroyed, which new Bond shall have attached thereto coupons 

corresponding in all respects to those (if any) on the Bond mutilated, lost, stolen or destroyed; 

provided that, in all cases there shall be first furnished to the Port and the Trustee indemnity and 

evidence of ownership of such Bond and coupons (or coupon) satisfactory to them and in the 

case of any mutilated Bond (or coupon), such mutilated Bond (or coupon) together with all 

coupons (if any) appertaining to such Bond shall first be surrendered to the Port or the Trustee, 

and in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the Port and 

the Trustee evidence of such loss, theft or destruction satisfactory to them. In the event any such 

mutilated, lost, stolen or destroyed Bond (or coupon) shall have matured, or would have matured 

within sixty days, or has been called for redemption and the redemption date has arrived or will 

arrive within sixty days, instead of issuing a substitute Bond (or coupon) the Port, upon being 

furnished with indemnity and evidence of mutilation, loss, theft or destruction, as aforesaid, may 

pay the same without surrender thereof. The Port may charge the holder or owner of such Bond 

(or coupon) with its reasonable fees and expenses in this connection. Any Bond (or coupon) 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 26 

issued under the provisions of this section shall be equally and proportionately entitled in 

accordance with its terms to the security and benefits of this Ordinance with the Bonds (and 

coupons) then outstanding of the series of Bonds of which such mutilated, lost, stolen or 

destroyed Bond was one. All mutilated Bonds and coupons surrendered pursuant to this section 

shall be cancelled. 

SECTION 12. Airport Construction Fund. The Port shall maintain one or more funds 

or accounts into which the Port shall deposit the proceeds of obligations to which the Net 

Revenues are pledged, and grants-in-aid from the Federal Government if and to the extent 

required by paragraph H of Section 17 hereof. These funds and accounts shall be referred to 

collectively as the “Construction Fund.” The Construction Fund may contain a subaccount 

known as the Airport Construction Interest Reserve Account. Unless otherwise provided by 

ordinance of the Port, money in the Construction Fund shall be used for Costs of Construction, 

and shall be invested, to the extent reasonable and practicable, in Investment Securities. 

For the purpose of this Ordinance: (i) the word “construction” or “Construction” shall 

include the acquisition, construction, reconstruction, purchase, establishment, development, 

expansion, adding to or improving; (ii) the word “acquisition” shall include the remodeling or 

renovation of buildings and facilities acquired; and (iii) the term “Costs of Construction” shall 

include any and all of the following pertaining to the construction of additions, expansions and 

improvements at the Airport as set forth in the Airport Capital Improvement Program, as 

amended from time to time: 

(a) the cost of acquiring by purchase or the exercise of the power of eminent 

domain of any building or facility and the site thereof; 

(b) the cost, if and as determined by the Port, of the payment to the Port of the 

lesser of the depreciated value of any building or facility and the site thereof, or the cost 

to the Port of such building or facility and the site thereof, owned by the Port and not then 

constituting part of the Airport, if such building or facility and the site thereof are 

thereafter to be used solely for purposes of the Airport and to constitute part of the 

Airport; 

(c) costs of acquiring by purchase or the exercise of the power of eminent 

domain such land rights, rights of way, leases, easements or other interest in land or other 

properties (real, personal or mixed) as may be deemed necessary or convenient by the 

Port for the construction or operation of the Airport, including costs of options and partial 

payments, escrow deposits, preliminary and final awards or judgments and settlements or 

compromises, with respect to the foregoing; costs of reclaiming land; costs of dredging or 

filling incurred in the creation of land; and site preparation, including the costs of 

demolishing, removing or relocating any building or facility and the costs of any lands to 

which such building or facility may be removed or relocated; 

(d) costs of acquiring by purchase or the exercise of the power of eminent 

domain any rights, interests or franchises deemed necessary or convenient by the Port for 

the construction or operation of the Airport; 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 27 

(e) costs of labor, services, material, supplies, machinery, equipment and 

apparatus, including payments to contractors, independent contractors, agents, 

employees, builders and materialmen in connection therewith, and of restoration of 

property damaged or destroyed in connection with construction work; 

(f) costs of installation of utility services or connections thereto or relocation 

thereof; 

(g) costs and expenses of all preliminary work necessary or incidental to 

construction; 

(h) costs and expenses of planning, engineering and other studies, 

architectural drawings, surveys, tests and specifications, whether preliminary or 

otherwise; and costs of other engineering and architectural services; 

(i) costs of supervision and inspection; 

(j) costs of builders risk insurance, liability insurance on operations in 

connection with said construction, or other insurance on the buildings and facilities being 

constructed, or a reasonably allocated share thereof; 

(k) costs of indemnity and fidelity bonds and expenses of administration 

properly chargeable to such construction; 

(l) costs of expenses of financing, including Trustee’s acceptance fees; 

financial advisors fees; blue sky and legal investment survey expenses; Trustee’s and 

Paying Agent’s fees and expenses during such period, if any, as shall be determined by 

the Port, but not to exceed the actual period of construction and for such period thereafter 

as the Port may determine; and costs and expenses incurred in issuing and selling the 

Bonds, including but not limited to printing, engraving and advertising; and other similar 

costs; 

(m) costs of the initial furnishings of any building or structure; 

(n) costs of publication, advertising, filing and recording, including the 

publication of a summary of this Ordinance and a summary of each Series Ordinance and 

any Supplemental Ordinance pertaining to the issuance of Bonds; 

(o) taxes and assessments; 

(p) expenses incurred in enforcing any remedy against a contractor or 

subcontractor in respect of any default; 

(q) costs of estimates of costs and economic feasibility reports whether 

preliminary or otherwise; fees, costs and expenses of appraising, printing, advice, 

accounting and fiscal services, airport consultants and attorneys (including bond 

counsel); 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 28 

(r) the payment and discharge of the principal of and interest and premium, if 

any, on any term or temporary construction financing or loans, including the 

reimbursement to the Port of moneys advanced from its tax revenues, or any other funds 

not held hereunder, for such construction; 

(s) if and to the extent determined by the Port, interest on the Bonds issued to 

finance the construction of any project during the actual period of construction and for 

such period thereafter as the Port may determine; and 

(t) any and all other costs and expenses necessary or desirable and pertaining 

or incident to construction pertaining to the implementation of the Airport Capital 

Improvement Program, as amended from time to time, as estimated or otherwise 

ascertained by the Port. 

[Portions of this Section 12 were amended pursuant to Section 2 of Ordinance No. 368-B]. 

SECTION 13. The Airport Revenue Fund; Application of Revenues. On or before 

the date of delivery of and payments for the first Bonds issued hereunder, the Port shall create 

and establish a special trust fund of the Port, to be known and designated as “The Port of 

Portland Airport Revenue Fund” (herein defined and referred to as the “Airport Fund”) and to be 

held and administered by the Port hereunder so long as any of the Bonds are outstanding. The 

moneys deposited, or to be deposited, in the Airport Fund shall not be commingled with any 

other moneys of the Port; shall be used and applied only in the manner and for the purposes 

hereinafter provided in this section; and shall be withdrawn from said Fund for said purposes 

only if in accordance with such procedure as is provided by law. 

So long as any Subordinate Lien Bonds (as defined in Port Ordinance No. 323, as 

amended and supplemented) are Outstanding, all the Revenues shall be collected by or for the 

account of the Port and shall be set aside as collected and, except as is specifically provided 

otherwise herein, shall be deposited in the Airport Fund. There shall also be deposited in the 

Airport Fund the moneys required to be deposited therein by Section 12; paragraphs M and N of 

Section 17; and Sections 28 and 29 hereof. The moneys in the Airport Fund shall be used and 

applied at the following times, in the following amounts, for the following purposes and in the 

following order of priority: 

1. Operation and Maintenance. The Revenues credited to the Airport Fund shall be 

first used and applied by the Port to the payment of the Costs of Operation and Maintenance of 

the Airport. 

For the purposes of this Ordinance, the term “Costs of Operation and Maintenance” shall 

mean the reasonable and necessary current expenses of the Port included as a Cost of Operation 

and Maintenance in the annual Airport budget required by Section 15 hereof for operating, 

maintaining and repairing the Airport. Without limiting the generality of the foregoing, the term 

“Costs of Operation and Maintenance” shall include the following items: 
DOCSPNW1:57365.3 

42936-5 BJ1/BJ1 29 

(a) costs and expenses of general administration of the Port which are 

reasonably and properly allocable to the Airport; 

(b) costs of collecting the Revenues and from making any refunds therefrom 

lawfully due others; 

(c) engineering, audit reports, legal and other overhead expenses directly 

related to the administration, operation, maintenance, and repair of the Airport; 

(d) costs of salaries, wages and other compensation of officers and employees 

and payments to pension, retirement, health and hospitalization funds and other 

insurance, including self-insurance for the foregoing; 

(e) costs of routine repairs, replacements, renewals and alterations occurring 

in the usual course of business; 

(f) taxes, assessments and other governmental charges, or payments in lieu 

thereof, imposed on the Airport or any part thereof or on the operation thereof or on the 

income therefrom or on any privilege in connection with the ownership or operation of 

the Airport or otherwise imposed on the Airport or the operation thereof or income 

therefrom; 

(g) costs of utility services; 

(h) costs of material and supplies used in the ordinary course of business, 

including ordinary and current rentals of equipment or other property; 

(i) contractual services and professional services, including but not limited to, 

legal, engineering, architectural, planning, financial and airport consultants; 

(j) costs of fidelity bonds, or a properly allocable share of the premium of any 

blanket bond, pertaining to the Airport or the Revenues or any other moneys held 

hereunder or required hereby to be held or deposited hereunder; 

(k) costs of carrying out the provisions of this Ordinance, including Trustee’s 

and Paying Agents’ fees and expenses; costs of insurance required hereby, or such other 

insurance as may be deemed necessary by the Port for the proper protection of the 

Airport or the Revenues, or a properly allocable share of any premium of any blanket 

policy pertaining to the Airport or the Revenues; fees and expenses of the Accountant and 

the Airport Consultant; legal fees and expenses; and costs of recording, mailing and 

publication; 

(l) costs of lease payments due under capital leases for items customarily 

used in the operation or maintenance of airport facilities or equipment; and; 

(m) all other costs and expenses of operating, maintaining and repairing the 

Airport arising in the routine and normal course of business; 
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42936-5 BJ1/BJ1 30 

PROVIDED, HOWEVER, that the term “Costs of Operation and Maintenance” shall not 

include: (1) any allowance for depreciation or any amounts for capital replacements, 

renewals, repairs and maintenance not recurring annually (or at shorter intervals) or 

reserves therefor; (2) costs of extensions, enlargements, betterments and improvements or 

reserves therefor, other than cost of preliminary planning; (3) reserves for operation, 

maintenance and repairs occurring in the normal course of business; (4) payment 

(including redemption) of bonds or other evidences of indebtedness or interest and 

premium thereof or reserves therefor; and (5) any operation and maintenance expenses 

pertaining to Special Facilities (defined in Section 28 hereof) or expenses incurred by any 

lessee under a Net Rent Lease (defined in said Section 28). 

2. General. There is hereby created and established a separate special account in the 

Airport Fund to be known and designated as the “General Account.” On the first business day of 

each month commencing with the month which follows the month in which the first Bonds 

issued hereunder are delivered and paid for and in each month thereafter, the Port after paying 

the Costs of Operation and Maintenance required by subparagraph 1 of this section, shall credit 

the balance of the Revenues then held in the Airport Fund (and not then credited to any account 

therein) to the General Account. The moneys credited to the General Account may be used and 

applied by the Port first, to the SLB Fund as provided in Sections 6 and 7 of Port Ordinance 

No. 323, as amended, and then, without regard to priority and as determined by and in the 

discretion of the Port, only to the following: (1) in the event the moneys credited to the Airport 

Construction Fund are insufficient therefor, to complete payment of the Costs of Construction of 

properties included or to be included in the Airport; (2) to complete the payment of the costs of 

major maintenance, repairs, renewals and replacements to the properties constituting the Airport; 

(3) in the event the proceeds of insurance are insufficient therefor, to pay the costs of 

reconstruction, replacement or restoration of properties destroyed or damaged; (4) to pay the 

principal of and interest and premium, if any, on any subordinate or junior lien evidences of 

indebtedness issued for the Airport as permitted by paragraph L of Section 17 hereof (other than 

Subordinate Lien Bonds authorized by Port Ordinance No. 323, as amended); (5) (a) to 

reimburse the Port for advances made, after the delivery of and payment for the first Bonds 

issued hereunder, by the Port for the principal of and interest and premium, if any, on general 

obligation bonds of the Port issued, after the delivery of and payment for the first Bonds issued 

hereunder, for the Airport; or (b) to reimburse any fund of the Port not held hereunder for 

advances made by the Port, after the delivery of and payment for the first Bonds issued 

hereunder, from such fund to any fund held hereunder; or (c) to reimburse the Port for moneys 

expended, after the delivery of and payment for the first Bonds issued hereunder, by it for the 

Airport from sources other than the Airport or the Revenues derived therefrom, and other than 

the proceeds of general obligation bonds or moneys advanced from any fund not held hereunder 

for which reimbursement may be made pursuant to clauses (a) and (b) of this item (5), provided 

that any amounts paid to the Port pursuant to this item (5) may be applied by the Port to any 

lawful purposes of the Port; (6) to pay the Costs of Construction of additions, expansions, 

improvements and betterments to the Airport, including the acquisition of land in anticipation of 

additions, expansions, improvements and betterments pursuant to the Airport Capital 

Improvement Program, as amended from time to time; (7) to any other lawful use or purpose 

pertaining to the Airport or the aviation or air transport interests of the Port, including without 

limitation General Aviation Airports; and (8) to any other lawful use or purpose necessary to 
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42936-5 BJ1/BJ1 31 

carry out this Ordinance, including the making of required payments or credits for the Costs of 

Operation and Maintenance of the Airport and to any fund or account held hereunder. 

Notwithstanding the foregoing provisions of this section, in the event that on the first 

business day of any month the moneys in the Airport Fund are insufficient to make in full the 

foregoing credits and payments as required by and in accordance with the provisions of 

subparagraphs 1 through 5 above in this section, all such moneys and the Revenues thereafter 

derived shall be applied, paid and credited in accordance with said provisions to the satisfaction 

in full of a credit or payment having a higher priority before being applied, paid or credited to a 

credit or payment having a lower priority, including by the making up of any deficiencies in the 

amounts required to satisfy a credit or payment having a higher priority before being applied, 

paid or credited to an item having a lower priority. Without limiting the generality of the 

provisions of the preceding sentence, 

A. In the event that on the first business day of any month the moneys 

in the Airport Fund and not then credited to an account therein are insufficient to 

make the credits and payments required by subparagraphs 1 through 4 above of 

this section, the amount of the insufficiences shall be made up as follows and in 

the following order of priority: (i) if such moneys are insufficient to make the 

payments of the Costs of Operation and Maintenance required by subparagraph 1 

above of this section, the amount of such insufficiency shall be made up, first, 

from any moneys then credited to the General Account; second, from any moneys 

then credited to the Capital Improvement Account; and third, from any moneys 

then credited to the Major Maintenance Reserve Account; (ii) if such moneys are 

insufficient to make the payments of the Costs of Operation and Maintenance and 

also to make the payments to the Trustee required by paragraph 2 above of this 

section, the amount of such insufficiency in the payment to the Trustee shall be 

made up, first, from the moneys then credited to the General Account; second, 

from any moneys then credited to the Capital Improvement Account; and third, 

from the moneys then credited to the Major Maintenance Reserve Account; (iii) if 

such moneys are insufficient to make the credits and payments having a higher 

priority and also to make the credit to the Major Maintenance Reserve Account 

required by subparagraph 3 above of this section, the amount of such 

insufficiency in the credit to the Major Maintenance Reserve Account shall be 

made up, first from any moneys then credited to the General Account, and second, 

from the moneys then credited to the Capital Improvement Account; and (iv) if 

such moneys are insufficient to make the credits and payments having a higher 

priority and also to make the credit to the Capital Improvement Account required 

by subparagraph 4 above of this section, the amount of such insufficiency in the 

credit to the Capital Improvement Account shall be made up from any moneys 

then credited to the General Account; and 

B. If in any month the moneys then on credit to any account are 

insufficient to make the payments to be made therefrom or the moneys on deposit 

in the Bond Fund are insufficient to make the payment to be made therefrom or 

are less than the amount then required to be on deposit therein, such 

insufficiencies shall be made up in the following order of priorities: (i) if the 
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42936-5 BJ1/BJ1 32 

moneys are insufficient to make the payments for the Costs of Operation and 

Maintenance, the amount of the insufficiency shall be made up, first, from the 

moneys then credited to the General Account; second, from the moneys then 

credited to the Capital Improvement Account; third, from any moneys then 

credited to the Major Maintenance Reserve Account; and fourth, from any 

moneys then in the Airport Fund and not yet credited to an account therein; (ii) if 

the moneys on deposit in the Bond Fund are insufficient to make the payments to 

be made therefrom or are less than the amount then required to be on deposit 

therein on credit to the Debt Service Reserve Account therein, the amount of such 

insufficiency shall be made up first, from the moneys then credited to the General 

Account; second, from moneys then credited to the Capital Improvement 

Account; third, from the moneys then credited to the Major Maintenance Reserve 

Account; and fourth, from any moneys then in the Airport Fund and not then 

credited to an account therein; and (iii) if the moneys on credit to the Major 

Maintenance Reserve Account are insufficient to make the payments to be made 

therefrom or are less than the amount then required to be on credit thereto, the 

amount of such insufficiency shall be made up, first, from the moneys credited to 

the General Account; second, from the moneys then credited to the Capital 

Improvement Account; and third, from any moneys then in the Airport Fund and 

not then credited to an account therein; and (iv) if the moneys on credit to the 

Capital Improvement Account are insufficient to make the payments to be made 

therefrom or are less than the amount then required to be on credit thereto, the 

amount of such insufficiency shall be made up, first, from the moneys credited to 

the General Account; and second, from any moneys then in the Airport Fund and 

not then credited to an account therein; 

Moneys in the Airport Fund shall be invested and reinvested by the Port in 

Investment Securities to the extent reasonable and practicable so as to mature in the 

amounts and at the times as determined by the Port so that the respective payments and 

credits to be made from the Airport Fund may be made when due. All investments and 

reinvestments shall be paid from the account from which the investment was made, and 

the Port shall be authorized to sell any investment when necessary to make the payments 

to be made from such account. All earnings on and income from investments of moneys 

in the Airport Fund (regardless of the account from which the investment was made) shall 

be deposited in the Airport Fund, for use and application as are all other moneys 

deposited in that fund. Unless invested as above provided, all moneys in the Airport 

Fund shall be secured in the manner provided by law for the securing of public funds. 

[Portions of this Section 13 were amended pursuant to Sections 5 and 8 of Ordinance 

No. 368-B and Section 1.3 of Ordinance No. 393-B. Pursuant to Section 10 of Ordinance 

No. 368-B, “all references to the Prior Lien Bond Fund, Major Maintenance Account and 

Capital Improvement Account...shall be considered to have no further effect...”.] 

SECTION 14. (1) The Bond Fund; Appointment of Trustee to Administer the 

Same. There is hereby created and established a special trust fund of the Port to be known and 

designated as “The Port of Portland Airport Revenue Bond Fund” (herein defined and referred to 

as the “Bond Fund”). The Port, in the Series Ordinance providing for the issuance of the first 
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42936-5 BJ1/BJ1 33 

series of Bonds hereunder, shall appoint as trustee (herein defined and referred to as the 

“Trustee”) hereunder a corporation meeting the qualifications prescribed by Section 18 hereof to 

hold and administer the Bond Fund, and the Trustee shall hold and administer the same. The 

Port is hereby obligated to, and shall, set aside and pay into said Bond Fund the Revenues 

pledged hereunder to the extent necessary to provide for the punctual payment of the principal of 

and interest and premium, if any, on the Bonds as and when the same become due, whether such 

due date be by reason of stated maturity or by redemption or by declaration as hereinafter 

provided, or otherwise. The moneys in the Bond Fund shall be used solely for the payment of 

principal and interest and premium, if any, due upon the Bonds. Until so used and applied, the 

moneys in the Bond Fund and the securities in which such moneys may from time to time be 

invested shall be held in trust hereunder for the equal and ratable benefit and security of the 

holders of all the Bonds and shall be subject to the liens and pledges created by Section 3 hereof. 

The Trustee shall serve as the registrar, transfer agent and principal Paying Agent hereunder, and 

shall make whatever arrangements with the additional Paying Agents that may be necessary so 

that the Bonds and coupons payable at the office of such Paying Agents which are presented to 

such Paying Agents may be paid as and when the same become due. Whenever all Bonds and 

expenses therefor have been paid so that no charge remains upon the Bond Fund, the Port may, 

by ordinance, transfer any balance remaining in the Bond Fund to its general fund, discharge the 

Trustee, and dissolve the Bond Fund. 

Supplemental to the foregoing provisions of this section, there shall be deposited in the 

Bond Fund: (i) the moneys required by Section 12 and paragraphs H and M of Section 17 hereof 

to be paid into the Bond Fund; (ii) any amounts held hereunder which, at the option and in the 

discretion of the Port, may be applied to the purchase or redemption of Bonds, to the extent the 

Port has determined that such moneys shall be applied to such purposes and such application is 

permitted by the provisions hereof; and (iii) the Revenues, in the following amounts and at the 

following times: 

(2) Interest Account. The Trustee shall create and establish a separate account in the 

Bond Fund to be known as the “Interest Account.” In order to provide for the payment of the 

interest on the Bonds, commencing with the month which follows the month in which any Bonds 

of the first series or installment of Bonds issued hereunder are delivered and paid for, and in each 

month thereafter so long as any of the Bonds of said series are outstanding, there shall be paid 

over from the Revenues and deposited in the Bond Fund and credited to the Interest Account 

therein an amount, less such amount that is equal to the interest, if any, that is paid from the 

Airport Construction Interest Reserve Account, such that, if the same amount were so credited to 

this account in each succeeding month thereafter prior to the next date upon which an installment 

of interest falls due on the Bonds of such series or installment, the aggregate of such amounts on 

credit to this account will on each such next interest payment date be equal to the installment of 

interest falling due on the Bonds of said series or installment on such interest payment date. In 

the event of the issuance of Additional Bonds hereunder or the sale of a second installment of the 

first series of Bonds, in like and similar fashion with respect to the Bonds of each such series, or 

installment commencing with the month which follows the month in which such series or 

installment of Bonds are delivered and paid for, and in each month thereafter so long as any of 

the Bonds of such series or installment are outstanding, there shall be paid over from the 

Revenues and deposited in the Bond Fund and credited to the Interest Account therein an 

additional amount, less such amount that is equal to the interest, if any, that is paid from the 
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42936-5 BJ1/BJ1 34 

Construction Interest Reserve Account, such that, if the same amount were so credited to this 

account in each succeeding month thereafter prior to the next date upon which an installment of 

interest falls due on the Bonds of such series or installment, the aggregate of such additional 

amounts on credit to this account will on each such next interest payment date be equal to the 

installment of interest falling due on the Bonds of such series or installment on such interest 

payment date, so as to provide for the payment of the interest on each such series or installment 

of the Bonds. In making the credits to the Interest Account in the Bond Fund required by this 

subparagraph, consideration shall be given to and allowance made for accrued interest received 

upon the sale of a series or installment of Bonds deposited in the Bond Fund, for credits to this 

account from moneys credited to a Construction Interest Reserve Account, and for moneys 

credited to this account from the investment of moneys held in the Bond Fund. 

(3) Serial Bond Principal Account. The Trustee shall create and establish a separate 

account in the Bond Fund to be known as the “Serial Bond Principal Account.” In the event of 

the issuance of any of the Bonds of the first series or installment of Bonds hereunder maturing at 

times customarily known as maturing serially, in order to provide for the payment of such Bonds 

of such series or installment, commencing with the month which is twelve months prior to the 

first principal payment of any of such Bonds maturing serially and in each month thereafter so 

long as any of such Bonds so maturing are outstanding, there shall be credited to the Serial Bond 

Principal Account an amount such that, if the same amount were so credited to this account on 

the first business day of each succeeding month thereafter prior to the next date upon which the 

principal of any of said Bonds maturing serially becomes due and payable, the aggregate of the 

amounts on credit to this account will on each such next principal payment date be equal to the 

principal amount of said Bonds becoming due on such principal payment date. In like and 

similar fashion, in the event of the issuance of Additional Bonds hereunder or the sale of a 

second installment of the first series of Bonds maturing at times customarily known as maturing 

serially, for the purpose of paying the principal of such Bonds maturing serially and with respect 

to each series or installment of such Bonds so maturing, commencing with the month which is 

twelve months prior to the first principal payment date of such Bonds maturing serially and in 

each month thereafter so long as any of said Bonds so maturing are outstanding, there shall be 

credited to the Serial Bond Principal Account an amount (in addition to the amount required to 

be credited thereto by the first sentence of this subparagraph) such that if the same amount were 

so credited to this account on the first business day of each succeeding month thereafter prior to 

the next date upon which the principal of any of said Bonds maturing serially becomes due and 

payable, the aggregate of such increased amounts on credit to this account will on each such 

principal payment date be equal to the principal amount of all such Bonds so maturing becoming 

due on such principal payment date. In making the credits to the Serial Bond Principal Account 

required by this subparagraph, consideration shall be given to and allowance made for moneys 

credited to this account from the investment of moneys held in the Bond Fund. 

(4) Term Bond Principal Account. The Trustee shall create and establish a separate 

account in the Bond Fund, to be known as the “Term Bond Principal Account.” In the event of 

issuance of any Bonds hereunder in the form customarily known as “term bonds”, for the 

purpose of retiring such Bonds, with respect to each series or installment of such Bonds the 

Series Ordinance or Supplemental Ordinance providing for the issuance of such Bonds of such 

series or installment shall provide for monthly credits to the Term Bond Principal Account 

commencing with the month which in the case of semi-annual Term Bond Principal Account 
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42936-5 BJ1/BJ1 35 

Installment dates is six months prior to the date the first semi-annual Term Bond Principal 

Account Installment for such Bonds is due and in the case of annual Term Bond Principal 

Account Installment dates is twelve months prior to the date the first Term Bond Principal 

Account Installment for such Bonds is due, so that the retirement of any such Bonds issued in the 

form of term bonds will be provided for. In making the credits to this account, consideration 

shall be given to and allowance made for moneys credited to this account from the investment of 

moneys held in the Bond Fund. The respective amounts of moneys credited to the Term Bond 

Principal Account for the purpose of providing for the retirement of the term Bonds of a 

particular series or installment shall be applied by the Trustee, without further authorization or 

direction, to the redemption of such Bonds of such series or installment on each date on which a 

Term Bond Principal Account Installment for said Bonds is due in the respective principal 

amounts required to be credited to this account on such dates by the Series Ordinance or 

Supplemental Ordinance providing for the issuance of the Bonds of such series or installment, in 

the prospective principal amounts on credit to this account on such days for the Bonds of such 

series, so that the aggregate amount so applied in each calendar year will equal the respective 

principal amount required to be credited to this account on such Term Bond Principal Account 

Installment dates by the respective Series Ordinance or Supplemental Ordinance providing for 

their issuance. The Trustee shall give notice of all such redemptions, in the name and on behalf 

of the Port, in accordance with the provisions of Section 7 hereof. The Trustee may also, without 

further authorization or direction, apply the moneys credited to this account for the retirement of 

Bonds of a particular series issued in term form to the purchase of those Bonds, in which event 

the principal amount of said Bonds required to be re-deemed on the next respective ensuing 

Term Bond Principal Account Installment date shall be reduced by the principal amount of the 

Bonds so purchased; provided, however, that no Bonds shall be purchased during the interval 

between the date on which notice of redemption of said Bonds from Term Bond Principal 

Account Installments is given and the date of redemption set forth in such notice, unless the 

Bonds so purchased are Bonds called for redemption in such notice or are purchased from 

moneys other than those credited to this account; and provided further, that no purchases of 

Bonds shall be made if such purchase would require the sale at a loss of securities credited to the 

Term Bond Principal Account unless the difference between the actual purchase price (including 

accrued interest and any brokerage or other charge) paid for such Bonds and the then maximum 

purchase price (plus accrued interest) permitted to be paid therefor, is greater than the loss upon 

the sale of any such securities. Any purchase of Bonds pursuant to this paragraph may be made 

with or without tenders of Bonds and at either public or private sale, but in any event at a 

purchase price (including accrued interest and any brokerage or other charge) not to exceed the 

then applicable redemption price of such Bonds, plus accrued interest. All Bonds purchased or 

redeemed pursuant to this paragraph shall be cancelled and not reissued. 

The moneys on deposit in the Bond Fund on credit to the Interest Account, Serial Bond 

Principal Account and the Term Bond Principal Account therein shall be transferred by the 

Trustee without further authorization or direction of the Port to the respective Paying Agents for 

said Bonds and the coupons, if any, pertaining thereto, in such amounts and at such times as shall 

be necessary to pay the principal, premium, if any, and interest on said Bonds as the same 

become due and payable, whether upon their maturity or upon the redemption or the purchase 

thereof from the moneys credited to the Term Bond Principal Account. 
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42936-5 BJ1/BJ1 36 

(5) Debt Service Reserve Account. The Trustee shall create and establish a separate 

account in the Bond Fund, to be known as the “Debt Service Reserve Account”, the moneys on 

credit to which shall constitute a reserve for the payment of the principal and interest and 

premium, if any, on the Bonds. Subject to the remaining provisions of this paragraph with 

respect to the credits to be made to the Debt Service Reserve Account upon the issuance of the 

Bonds, the moneys on deposit in the Bond Fund for credit to the Debt Service Reserve Account 

therein shall always be maintained at an amount at least equal to the maximum Debt Service 

Requirement for any future Fiscal Year for all Bonds at the time outstanding, and if at any time 

the moneys in the Bond Fund on credit to the Debt Service Reserve Account therein are less than 

the maximum Debt Service Requirement, the amount of the deficiency shall be restored as 

provided in Section 13 hereof, and if at any time and for so long as the moneys on credit to such 

account are at least equal to said maximum Debt Service Requirement, no further credits shall be 

made to this account. In the event of the issuance of a series or installment of Bonds hereunder, 

unless upon the delivery of such Bonds there shall then already be on deposit in the Bond Fund 

on credit to the Debt Service Reserve Account therein an amount equal to the maximum Debt 

Service Requirement for any future Fiscal Year, for all Bonds to be outstanding upon the 

issuance of such Bonds (including the Bonds of such series or installment), there shall (1) be 

paid into the Bond Fund for credit to the Debt Service Reserve Account therein such amount, if 

any, of the proceeds of the sale of such series or installment of Bonds as the Port shall have 

specified in the respective Series Ordinance or Supplemental Ordinance providing for the 

issuance of such Bonds, so that there shall then be on deposit in the Bond Fund on credit to the 

Debt Service Reserve Account therein an amount equal to the maximum Debt Service 

Requirement for any future Fiscal Year for all Bonds to be outstanding upon the issuance of such 

Bonds (including the Bonds of such series or installment), or (2) if and to the extent there shall 

not be paid into the Bond Fund for credit to the Debt Service Reserve Account therein proceeds 

of the Bonds of such series or installment in an amount so that there shall then be on credit to the 

Debt Service Reserve Account therein an amount equal to the maximum Debt Service 

Requirement for any future Fiscal Year for all Bonds to be outstanding upon the issuance of the 

Bonds of such series or installment, then in each month, commencing with the month which 

follows the month in which the Bonds of such series or installment are delivered and paid for, 

there shall be paid from the Revenues into the Bond Fund for credit to this account an amount at 

least equal to 20% of the amounts required to be deposited into the Bond Fund under 

paragraphs (2), (3) and (4) of this Section 14 until there is on deposit in the Debt Service Reserve 

Account an amount equal to the maximum Debt Service Requirement for any future Fiscal Year 

for all Bonds at the time outstanding. The moneys in the Bond Fund on credit to the Debt 

Service Reserve Account therein shall be used and applied solely for the purpose of paying the 

principal of and interest and premium, if any, on the Bonds when due, whether at their maturity 

or upon the redemption or purchase thereof from moneys credited to the Term Bond Principal 

Account in the Bond Fund, and shall be so used and applied whenever there are insufficient 

moneys in the Bond Fund on credit to the Interest Account, Serial Bond Principal Account and 

Term Bond Principal Account therein for such purposes. 

(6) Investments. Moneys in the Bond Fund shall be invested and reinvested to the 

extent reasonable and practicable by the Trustee at the direction of the Port in Investment 

Securities; provided, that, the Investment Securities in which such moneys are invested shall also 

be securities in which the State of Oregon may by law invest. Such Investments shall mature 

(i) in the case of moneys credited to the Interest Account, the Serial Bond Principal Account and 
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42936-5 BJ1/BJ1 37 

the Term Bond Principal Account, in such amounts and at such times so that the principal of and 

interest and premium, if any, on the Bonds can be paid when due, whether at the maturity 

thereof, or upon the redemption or the purchase thereof from moneys credited to the Term Bond 

Principal Account, and (ii) in the case of moneys credited to the Debt Service Reserve Account, 

by no later than the earlier of eight years from the date of investment or the maturity date of all 

Bonds then outstanding. All earnings and income from the investment of moneys in the Bond 

Fund shall be credited, as realized and collected, to the Debt Service Reserve Account unless and 

until there is on credit to said account an amount equal to the maximum Debt Service 

Requirement for any future Fiscal Year on all Bonds then outstanding, in which event such 

earnings and income shall be credited to the Interest Account, or the Serial Bond Principal 

Account, or the Term Bond Principal Account, or any combination thereof, as the Port may 

determine. The Trustee shall notify the Port of the availability of any such earnings and income 

available for credit to the Interest Account, Serial Bond Principal Account and Term Bond 

Principal Account, so that the Port, when making the payments to the Trustee required by the 

second, third, fourth and fifth paragraphs of this section may give consideration to and make 

allowance for the amounts of such earnings and income so credited to said accounts. All 

securities in which moneys in the Bond Fund are invested shall constitute a part of the account 

from which the investment was made. The Trustee may sell any of the securities in which such 

moneys may be invested whenever required so that the payments from the Bond Fund may be 

made when due. 

Whenever the total of the moneys in the Bond Fund which are not required for the 

payment of principal and interest and premium, if any, which has theretofore become due 

(whether by maturity or upon redemption or by purchase or by declaration as hereinafter 

provided, or otherwise), but is unpaid, is sufficient to retire at maturity, or to redeem prior to 

maturity in accordance with their respective terms, all of the Bonds then outstanding, together 

with interest thereon to their maturity date or the date fixed pursuant to this paragraph by the 

Trustee for the redemption thereof, no further payments need to be made into the Bond Fund, 

and the Trustee, without further authorization or direction of the Port shall call all Bonds which 

may be redeemed by their terms, for redemption on the next succeeding redemption date for 

which the required redemption notice may practicably be given, and shall apply such total to 

such retirement or redemption. 

SECTION 15. Annual Airport Budget. The Port shall prepare and file with the 

Trustee, at the time and in the manner prescribed by law or by its own ordinances, by-laws, rules 

or regulations, an estimated budget for each Fiscal Year of Revenues and of Costs of Operation 

and Maintenance; costs of renewals, repairs and replacements; Debt Service Requirements; and 

other expenditures for such Fiscal Year. If the Port in its sole discretion deems any changes in 

its operating procedures or in its capital outlays, or any revisions in its schedule of rates, rentals, 

fees and charges, or any other changes, or any combination of the foregoing, as being necessary 

to produce the Revenues required for such budget and covenanted to be produced by said 

Section 16, it shall effect such changes in its operating procedures or in its capital outlays or such 

revisions in its schedule of rates, rentals, fees and charges, or such other changes, or any 

combination of the foregoing, which in its opinion and sole discretion are necessary to produce 

such Revenues. The Port shall prepare a summary of each such budget and at the time of filing 

same with the Trustee as aforesaid, shall mail a copy thereof to any holder of Bonds who shall 

file a written request therefor with the Port. 
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42936-5 BJ1/BJ1 38 

SECTION 16. Covenant as to Rates, Rentals, Fees and Charges. The Port shall 

impose and prescribe such schedule of rates, rentals, fees and other charges for the use and 

services of and the facilities and commodities furnished by the Airport, revise the same from 

time to time whenever necessary, and collect the income, receipts and other moneys derived 

therefrom, so that the Airport shall be and always remain self-sustaining and self-supporting; 

provided that, in any and all events such schedule of rates, rentals, fees and charges imposed and 

prescribed shall be such so as to produce (i) Revenues which will be sufficient to discharge all 

claims, obligations and indebtedness payable from or secured by the Revenues, including 

without limiting the generality of the foregoing, the carrying out of all provisions and covenants 

of this Ordinance, and (ii) Net Revenues in each Fiscal Year at least equal to one hundred thirty 

per cent of the Debt Service Requirement for such Fiscal Year on all Bonds then outstanding. 

The Port shall enact such ordinances and prescribe and enforce such rules and regulations, or 

impose such contractual obligations, for the payment of said rates, rentals, fees and charges, 

including, without limitation, the imposition of penalties for any defaults; to the end that the 

provisions of this paragraph shall be complied with. 

Within 120 days after the close of each Fiscal Year (the first such certificate to be filed 

with respect to the Fiscal Year in which the first Bonds are issued hereunder), the Port shall file 

with the Trustee and the Airport Consultant a signed copy of the annual report of the Accountant 

for the preceding Fiscal Year showing, among other things, for such year (a) Revenues and Net 

Revenues, and (b) the Debt Service Requirement of the Bonds. In the event that any such report 

so filed shows that the Revenue and Net Revenues for said preceding Fiscal Year did not equal at 

least the amounts covenanted to be produced by, and required for the purposes specified in, the 

preceding paragraphs of this section for said Fiscal Year, or that the Revenues were not sufficient 

to restore any deficiency in the amounts then required by Section 14 hereof to be credited to the 

Debt Service Reserve Account in the Bond Fund, and to pay or discharge all other claims, 

charges and liens whatsoever against the Revenues when due and payable, then the Port shall 

promptly thereafter cause the Airport Consultant to file with the Port and the Trustee a certificate 

stating, if deemed necessary by him, specific changes in operating procedures which may be 

made, or suggested revisions in the schedule of rates, rentals, fees and charges and 

recommendations respecting any increases thereto, or any other changes, or any combination of 

the foregoing, which will, in the aggregate, in his opinion, result in Revenues and Net Revenues 

estimated as sufficient to make up any existing deficiency and to produce the amounts 

covenanted to be produced by the preceding paragraphs of this section. The Port shall send a 

copy of each such certificate to the Trustee and to any holder of Bonds filing with the Port a 

request for the same. Thereafter, the Port, if in its sole discretion it then deems any changes in its 

operating procedures or any revisions in its schedule of rates, rentals, fees and charges, or any 

other changes, or any combination of the foregoing, as being necessary to produce the Revenues 

and Net Revenues required to make up any deficiency and produce the amounts covenanted to be 

produced by the preceding paragraphs of this section, shall as soon as possible effect such 

changes in its operating procedures or such revisions in such schedule of rates, rentals, fees and 

charges, or effect such other changes, or take any combination of the foregoing actions, which in 

its opinion and sole discretion are necessary for such purposes. 
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42936-5 BJ1/BJ1 39 

[Portions of this Section 16 were amended pursuant to Section 7 of Ordinance No. 368-B] 

SECTION 17. Additional Covenants of The Port of Portland; Insurance Proceeds 

and Condemnation Awards. The Port of Portland hereby covenants and agrees with the 

Trustee and the holders of the Bonds from time to time and at the time outstanding hereunder 

that so long as any of said Bonds are outstanding: 

A. To Pay Principal, Premium and Interest of Bonds. The Port will duly and 

punctually pay, or cause to be paid, but solely out of the Revenues pledged to such payment in 

Section 3 hereof, the principal of and the interest and premium, if any, on each and every Bond 

at the place, on the dates and in the manner provided herein and in said Bonds and in the coupons 

thereto appertaining according to the true intent and meaning hereof and thereof. 

B. Ownership of Land. The Port covenants (i) that it lawfully owns and is lawfully 

possessed of the Portland International Airport as presently existing, that it has good and 

indefeasible title and estate therein, subject to Permitted Encumbrances as defined hereinafter in 

this paragraph, and (ii) that it will continually defend the title to the Airport and every part 

thereof for the benefit of the holders and owners of the Bonds and the bearers of the coupons 

pertaining thereto against the claims and demands of all persons whomsoever. If any defect 

(other than said Permitted Encumbrances) shall be discovered in the title of the Port to the 

Airport, the Port shall promptly cure the same. For the purposes of this paragraph “Permitted 

Encumbrances” means, as of any particular time, (i) liens for ad valorem taxes, if any, not then 

delinquent; (ii) this Ordinance; (iii) utility, access and other easements and rights of way, 

restrictions and exceptions that will not interfere with or impair the operations being conducted 

at the Airport; (iv) mechanic’s, materialman’s, and other liens as and to the extent permitted by 

and referred to in paragraph O of this section; (v) the right, title and interest, if any, of the State 

of Oregon in and to any portion of the site of the Airport lying below the ordinary high water 

mark of any rivers adjacent to the Airport and the rights of the governmental bodies and the 

rights of the public for navigation and fishery below such ordinary high water marks; (vi) such 

reservations, restrictions and conditions imposed by the United States Government in the 

Instrument of Transfer, dated February 23, 1950, effective as of April 28, 1948, in which the Port 

received certain surplus property from the United States; (vii) any lease relating to the Airport in 

existence on the date the first Bonds issued hereunder are sold and delivered; and (viii) such 

minor defects, irregularities, encumbrances, easements, rights of way, and clouds on title as 

normally exist with respect to properties similar in character to the Airport and as do not, in the 

opinion of counsel (who may be of counsel to the Port) materially impair the use of the property 

affected thereby for the purpose for which it was acquired or is held by the Port. 

C. Filing and Recording of Ordinances; Instruments of Further Assurance. The Port 

will enact such Supplemental Ordinances, and do, execute, acknowledge and deliver, or cause to 

be done, executed, acknowledged, and delivered, such further acts, instruments and transfers, 

including, without limiting the generality of the foregoing, such filing, registration, recording, 

re-filing, re-registration or re-recording of this Ordinance and any Supplemental Ordinances, any 

financing statements and any other instruments, as may be necessary, or as the Trustee may 

reasonably require, for the better assuring, pledging, charging, assigning and confirming unto the 

holders of the Bonds and the Trustee the Revenues and other moneys pledged in Section 3 hereof 

to the payment of the principal of and interest and premium on the Bonds. 
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42936-5 BJ1/BJ1 40 

Promptly after any filing, registration or recording or any re-filing, re-registration or 

re-recording of this Ordinance and any Supplemental Ordinances or any filing, registration, 

recording, re-filing, re-registration or re-recording of any financing statements or other 

instruments of further assurance or of any supplement to the foregoing which is required by the 

preceding paragraph, the Port will deliver or cause to be delivered to the Trustee an opinion of 

counsel (who may be of counsel for the Port) to the effect that such filing, registration, recording, 

re-filing, re-registration or re-recording has been duly accomplished and setting forth the 

particulars thereof. 

Promptly after the enactment of this Ordinance, the Port shall furnish, or shall cause to be 

furnished, to the Trustee an opinion of counsel (who may be of counsel for the Port) either 

stating that in the opinion of such counsel this Ordinance has been properly recorded and filed so 

as to make effective the lien and pledges intended to be created hereby, and reciting the details of 

such action, or stating that in the opinion of such counsel no such action is necessary to make 

such lien and pledges effective. 

On or before the July 1 which next follows the delivery of the first Bonds hereunder and 

on or before each July 1 thereafter, so long as any of the Bonds shall be outstanding, the Port will 

deliver, or cause to be delivered, to the Trustee an opinion of counsel (who may be of counsel for 

the Port), addressed to the Trustee stating that no filing, registration or recording and no re-filing, 

re-registration or re-recording of any instrument (including this Ordinance, all Supplemental 

Ordinances, all financing statements and all other instruments of further assurance) is necessary 

during the annual period immediately succeeding the date of such opinion in order to maintain 

the liens, pledges and charges of this Ordinance, or if such filing, registration or recording or 

re-filing, re-registration or re-recording is necessary, setting forth the requirements with respect 

thereto, and the Port shall cause such requirements to be met and within thirty days thereafter 

shall deliver, or cause to be delivered, to the Trustee an opinion of counsel (who may be of 

counsel for the Port) showing that they have been met. 

D. To Complete Acquisitions and Constructions Promptly. The Port will proceed, in 

accordance with the Airport Capital Improvement Program, as amended from time to time, with 

all reasonable dispatch to complete the acquisition, purchase, construction, improvement, 

betterment, extension, addition, reconstruction, restoration, equipping and furnishing of any 

properties, the costs of which are to be paid from the proceeds of Bonds, from moneys in the 

Airport Fund, from any other moneys held hereunder or from the proceeds of general obligation 

bonds of the Port for the payment of principal or interest, or both, of which reimbursement is 

required to be made to the general fund of the Port from the Airport Fund or the Revenues 

deposited or to be deposited therein. 

E. To Keep Airport in Good Repair and to Make Improvements and Betterments 

Thereto. The Port will maintain, preserve, keep and operate, or cause to be maintained, 

preserved, kept and operated, the properties constituting the Airport (including all additions, 

improvements and betterments thereto and extensions thereof and every part and parcel thereof) 

in good and efficient repair, working order and operating condition in conformity with standards 

customarily followed in the aviation industry for airports of like size and character. The Port 

from moneys lawfully available therefor or made available therefor, will from time to time make 

all necessary and proper repairs, renewals, replacements and substitutions to said properties, and 
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42936-5 BJ1/BJ1 41 

construct additions and improvements thereto and extensions and betterments thereof which are 

economically sound, so that at all times the business carried on in connection therewith shall and 

can be properly and advantageously conducted in an efficient manner and at reasonable cost. 

F. To Operate and Maintain Airport. The Port shall operate and maintain the Airport 

as a revenue-producing enterprise and shall manage the same in the most efficient manner 

consistent with sound economy and public advantage, and consistent with the protection of the 

holders of the Bonds. 

G. Governmental Approval. The Port will perform any constructions, 

reconstructions and restorations of, improvements, betterments and extensions to, and equippings 

and furnishings of, and will operate and maintain the Portland International Airport at standards 

required in order that the same may be approved by the proper and competent Federal 

Government authority or authorities for the landing and taking off of aircraft operating in 

scheduled service, and as a terminal point of the Port for the receipt and dispatch of passengers, 

property and mail by aircraft. 

H. Compliance with Terms of Grants-in-aid; Application Thereof. The Port shall 

comply with the requirements of the Federal Government of grants-in-aid accepted by the Port. 

All such grants-in-aid shall be applied, if consistent with and not in conflict with the terms and 

provisions of the grant-in-aid, (1) to pay the Costs of Construction of properties included or to be 

included in the Airport, whether such construction has been completed but the Costs of 

Construction thereof not yet paid or such construction has not been commenced or completed, in 

which events the amount of such grant-in-aid to be applied to the payment of such Costs shall be 

credited to the Airport Construction Fund; (2) to reimburse any fund or account of the Port, 

whether or not held hereunder, to the extent Costs of Construction of properties included or to be 

included in the Airport and to which such grant-in-aid applies, were advanced from such fund or 

account, in which event the amount of such grant-in-aid to be applied to such reimbursement 

shall be deposited or credited to the proper fund or account; and (3) to redeem or purchase 

Bonds, such purchases to be made subject to the same conditions set forth in Section 14 hereof 

for the purchase of Bonds from moneys credited to the Term Bond Principal Account in the 

Bond Fund, in which event the amount of the grant-in-aid to be applied to such redemptions or 

purchases shall be deposited with the Trustee in the Bond Fund and applied by it at the discretion 

of the Port to the redemption or purchase of Bonds. 

I. To Employ Competent Personnel; Fidelity Bonds. The Port will at all times 

employ competent supervisory personnel for the operation and management of the properties 

constituting the Airport, and will establish and enforce reasonable rules, regulations and 

standards governing the employment of operating personnel at reasonable compensation, 

salaries, fees and charges, and all persons employed by the Port will be qualified for their 

respective positions; provided, however, that the provisions of this paragraph shall be subject to 

any civil service law or any other law of the State of Oregon applicable to the appointment or 

employment of personnel and employees of the Port or the salary, wages or compensation 

thereof. 

The Port shall obtain a fidelity bond for each commissioner, officer or employee of the 

Port handling or having custody of or having in his possession Revenues or other moneys, 
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42936-5 BJ1/BJ1 42 

including the proceeds of Bonds, held hereunder or required hereby to be deposited or held 

hereunder, in an amount of not less than $500,000 per person. 

J. Books and Accounts; Audits. The Port shall maintain and keep proper books, 

records and accounts for the Airport in accordance with generally accepted accounting principles 

applicable to enterprises such as the Airport. Such accounting shall show the amount of the 

Revenues, the amount of Net Revenues, and the amount of debt service payable from the Net 

Revenues.. Monthly reports of the financial operations of the Airport prepared by the Port for its 

own purposes shall be made available to the Trustee at its request, and shall be mailed to any 

holder of Bonds filing with the Port a request for the same. 

The Port shall cause the financial statements of the Airport to be audited by an 

independent certified public accountant or a firm of independent certified public accountants of 

recognized standing (herein defined and referred to as the “Accountant”), employed by the Port 

but who is in fact independent and not under the control of the Port, such period of appointment 

of employment to be from year to year. Such Accountant shall be selected with special reference 

to the Accountant’s general knowledge, skill and experience in auditing books and accounts. 

Such audit shall be made annually and shall be completed within one hundred twenty (120) days 

after the close of each Fiscal Year. Each such audit shall be conducted in accordance with 

generally accepted auditing standards applicable to enterprises such as the Airport. A copy of 

each such annual audit shall be filed with the Trustee and shall be open for public inspection, and 

shall be mailed to the Airport Consultant and any holder of Bonds filing with the Port a request 

for the same. 

Each audit report, in addition to whatever matters may be thought proper by the 

accountant to be included therein, shall include a statement as to whether the provisions of 

Section 16 hereof have been complied with during the audit period. 

[Portions of this Section 17.J were amended pursuant to Section 3 of Ordinance No. 368-B] 

K. Airport Consultant. The Port shall retain and appoint from time to time an airport 

consultant (herein defined and referred to as the “Airport Consultant”) who shall be an 

independent firm or corporation not in the regular employ or under the control of the Port and 

who shall have a widely known and favorable reputation for special skill, knowledge, and 

experience in methods of the development, operation and management of airports of the 

approximate size and character as the properties constituting the Airport. The Airport Consultant 

shall be available to advise the Port upon request, and make such investigations, certifications 

and determinations as may be necessary or required from time to time under the provisions of 

this Ordinance. 

[This Section 17.K was amended pursuant to Section 1.3 of Ordinance No. 393-B] 

L. No Superior Lien Bonds; Junior Lien Obligations Permitted. There is not 

outstanding at the time of the enactment of this Ordinance and the Port will not hereafter create 

or permit the creation of or issue any bonds, notes, warrants or other obligations or evidences of 

indebtedness or create any additional indebtedness: (1) which is or will be payable as to 

principal or interest, or both, from the Revenues prior to or on a parity with the payment 
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42936-5 BJ1/BJ1 43 

therefrom of the principal of or interest on the Bonds, or prior to or on a parity with the payments 

and credits from the Revenues to be made pursuant to the provisions of Section 13 hereof for the 

Costs of Operation and Maintenance, the Bond Fund, the Major Maintenance Reserve Account 

or the Capital Improvement Account, or which is or will be secured as to principal or interest, or 

both, by a lien and charge on the Revenues, superior or equal to the lien and charge of the Bonds 

and the interest thereon, or superior or equal to the lien and charge on the Revenues of the 

payments and credits therefrom to be made pursuant to the provisions of Section 13 hereof for 

the Costs of Operation and Maintenance, the Bond Fund, the Major Maintenance Reserve 

Account or the Capital Improvement Account; provided that the first series of Bonds and 

Additional Bonds and Refunding Bonds may be issued hereunder upon compliance with the 

provisions of Sections 3, 4 and 5 hereof. The Port shall not require any reimbursement to be 

made to its general fund from the Revenues for the payment from the general fund of the Port of 

the principal or interest, or both, of bonds, notes, warrants or other obligations or evidences of 

indebtedness issued for the Airport, prior to or on a parity with the payment from the Revenues 

of the principal of and interest on the Bonds, or prior to or on a parity with the payment and 

credits from the Revenues to be made pursuant to the provisions of Section 13 hereof for the 

Costs of Operation and Maintenance, the Bond Fund, the Major Maintenance Reserve Account 

and the Capital Improvement Account, nor shall the Port secure any such reimbursement by a 

lien and charge on the Revenues superior or equal to the lien and charge thereon of the Bonds 

and interest thereon, or superior or equal to the lien and charge on the Revenues of the payments 

and credits therefrom to be made pursuant to the provisions of Section 13 hereof for the Costs of 

Operation and Maintenance, the Bond Fund, the Major Maintenance Reserve Account and the 

Capital Improvement Account. 

Nothing in this Ordinance, and particularly nothing in the preceding paragraph, shall 

prevent the Port from authorizing and issuing bonds, notes, warrants, certificates or other 

obligations or evidences of indebtedness for the purposes hereafter in this subparagraph L set 

forth: (1) which as to principal or interest, or both, are payable from the Revenues after and 

subordinate to the payment from the Revenues of the principal of and interest on the Bonds and 

after and subordinate to the payments and credits from the Revenues to be made pursuant to the 

provisions of Section 13 hereof for the Costs of Operation and Maintenance, the Bond Fund, the 

Major Maintenance Reserve Account and the Capital Improvement Account, and which are 

secured as to principal or interest, or both, by a lien and charge on the Revenues junior and 

inferior to the lien and charge on the Revenues of the Bonds and interest thereon and junior and 

inferior to the lien and charge on the Revenues of the payments and credits therefrom to be made 

pursuant to the provisions of Section 13 hereof for the Costs of Operation and Maintenance, the 

Bond Fund, the Major Maintenance Reserve Account and the Capital Improvement Account; or 

(2) which as to principal or interest, or both, are payable from any other special fund to be 

maintained from the Revenues or from the Airport Fund, if the payments into such special fund 

from the Revenues or from the moneys in the Airport Fund, shall be made after and subordinate 

to the payment from the Revenues and the Airport Fund of the principal of and interest on the 

Bonds and after and subordinate to the payments and credits from the Revenues to be made 

pursuant to the provisions of Section 13 hereof for the Costs of Operation and Maintenance, the 

Bond Fund, the Major Maintenance Reserve Account and the Capital Improvement Account, and 

which payments into such other special fund are secured by a lien and charge on the Revenues 

and the Airport Fund, junior and inferior to the lien and charge thereon of the Bonds and interest 

thereon and junior and inferior to the lien and charge on the Revenues of the payments and 
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42936-5 BJ1/BJ1 44 

credits therefrom to be made pursuant to the provisions of Section 13 hereof for the Costs of 

Operation and Maintenance the Bond Fund, the Major Maintenance Reserve Account and the 

Capital Improvement Account. Nothing in this Ordinance, and particularly nothing in the 

preceding paragraph hereof, shall prevent the Port from requiring that reimbursement be made to 

the general fund of the Port from the Revenues for the payment from the general fund of the Port 

of the principal or interest, or both, of bonds, notes, warrants or other obligations or evidences of 

indebtedness hereafter issued for the Airport, after and subordinate to the payment from the 

Revenues of the principal of and interest on the Bonds and after and subordinate to the payments 

and credits from the Revenues to be made pursuant to the provisions of Section 13 hereof for the 

Costs of Operation and Maintenance, the Bond Fund, the Major Maintenance Reserve Account 

and the Capital Improvement Account, or from securing any such reimbursement by a lien and 

charge on the Revenues junior and inferior to the lien and charge thereon of the Bonds and the 

interest thereon and junior and inferior to the lien and charge on the Revenues of the payments 

and credits therefrom to be made pursuant to the provisions of Section 13 hereof for the Costs of 

Operation and Maintenance, the Bond Fund, the Major Maintenance Reserve Account and the 

Capital Improvement Account. 

Junior lien obligations authorized to be issued pursuant to this subparagraph L may be 

issued for and only for the following purposes: (1) to pay the Costs of Construction of additions, 

expansions and improvements at the Airport and (2) to pay the costs of the acquisition and 

construction of General Aviation Airports. Prior to the issuance of any junior lien obligations for 

the purpose of financing General Aviation Airports, the Airport Consultant shall certify that the 

General Aviation Airport to be acquired and constructed from the proceeds of the junior lien 

obligations will relieve congestion at the Airport and will obviate the need for capital 

expenditures at the Airport. Such certificate shall be delivered to the Port and filed with the 

Trustee. 

M. Not To Encumber or Dispose of Airport Properties; Condemnation. The Port 

shall not create or give, or cause to be created or given, or permit to be created or given, any 

mortgage, lien, pledge, charge or other encumbrance upon any real or personal property 

constituting the Airport or upon the Revenues and the money in the Airport Fund, other than the 

liens, pledges and charges specifically created herein or specifically permitted hereby. 

The Port shall not sell, lease or otherwise dispose of all, or substantially all, of the 

properties constituting the Airport without simultaneously with such sale, lease or other 

disposition depositing with the Trustee, pursuant to and in accordance with the provisions of 

Section 29 hereof, cash or Governmental Securities (as defined in Section 29) in an amount 

sufficient so that no Bonds are any longer deemed outstanding hereunder as provided by and in 

accordance with said Section 29. 

The Port may, however, execute leases, licenses, easements and other agreements of or 

pertaining to properties constituting the Airport in connection with the operation of the Airport 

and in the normal and customary course of business thereof, for aviation or non-aviation 

purposes, according to the schedule of rates, rentals, fees and charges of the Port, or according to 

commercially reasonable terms in light of the business of the Airport as a whole. All amounts 

due the Port under such agreements and which will be recognized as Revenues, either 

immediately or over time in accordance with generally accepted accounting principles, shall be 
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42936-5 BJ1/BJ1 45 

deposited in the Airport Revenue Fund on receipt and shall be held unexpended in that fund until 

they become part of the Revenues, and the properties affected by the agreements shall remain 

part of the Airport, but any such leasing shall not be inconsistent with the provisions of this 

Ordinance, and no lease shall be entered into by which the rights of the holder of any Bond 

might be impaired or diminished. The Port may also enter into Net Rent Leases pursuant to and 

in accordance with the provisions of Section 28 hereof. 

The Port also may from time to time sell, lease or otherwise dispose of any portion of the 

aviation properties and facilities and real and personal property comprising a part of the Airport 

which the Port has determined has become unserviceable, inadequate, obsolete, worn out or unfit 

to be used, or no longer required for use, in connection with the construction, operation or 

maintenance of the Airport or the maintenance of the Revenues or which has been replaced by 

other property of substantially equal revenue-producing capability, and any moneys received by 

the Port as the proceeds of any such sale, lease or any other disposition of said properties shall be 

deposited in the Airport Fund and be used for the purposes of making renewals and replacements 

or capital additions to the Airport, or if not used for said purposes, for any other lawful purpose 

of the Airport Fund. 

Subject to the provisions of the last paragraph of this part M, the Port, if and so long as 

any building or structure included in the Airport or any portion of any land included in the 

Airport is determined by it as not being necessary to the actual operations of the Airport, may use 

such building or structure or portion of land for any non-airport or non-aviation purposes of the 

Port, and without making any payments into the Airport Fund for such non-airport or 

non-aviation use from the revenues derived from taxes or from revenues derived from its 

non-airport activities. The Port shall maintain any such building or structure or portion of land 

while used for non-airport or non-aviation purposes. The costs of maintaining any building or 

structure or portion of land while used for non-airport or non-aviation purposes, the costs of 

operating such building or structure or portion of land for such purposes, and the costs of any 

improvements to such building or structure or improvements made on such portion of land for 

such purposes, shall be paid by the Port from moneys derived from taxes or revenues derived 

from activities of the Port other than from the operation of the Airport; provided that the Port 

may apply to any such non-airport or non-aviation use any moneys paid to it from the General 

Account in the Airport Fund in reimbursement pursuant to item (5) of that paragraph pertaining 

to the application of moneys credited to the General Account set forth in Section 13 hereof. 

No use for non-airport or non-aviation purposes of any building or structure or portion of 

land included in the Airport, as permitted by the preceding paragraph hereof, shall be made, and 

no conveyance, lease or transfer of any property, including rights or interests in property 

constituting part of the Airport as permitted by the next preceding paragraph hereof, as the case 

may be, shall be made, unless (a) the use for non-airport or non-aviation purposes of such 

building or structure or portion of land, or the use to be made of any property, or rights, or 

interests in property, so conveyed, leased or transferred is substantially non-competitive with the 

Airport; (b) the use for non-airport or non-aviation purposes of any such building or structure or 

portion of land, or the use of any property so conveyed, leased or transferred after such 

conveyance, lease or transfer, as the case may be, will not provide services, facilities, 

commodities or supplies which then may be adequately made available through the Airport as 

then existing; and (c) in the opinion of the Airport Consultant such use for non-airport or 
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42936-5 BJ1/BJ1 46 

non-aviation purposes of any such building, structure or portion of land, or such conveyance, 

lease or transfer, as the case may be, will not reduce the Revenues and Net Revenues below the 

amount covenanted by Section 16 hereof to be produced without any increase in the schedule of 

rates, rentals, fees and charges then in effect for the Airport, or if in the opinion of the Airport 

Consultant such use for non-airport or non-aviation purposes, or such conveyance, lease or 

transfer, as the case may be, would reduce the Revenues and Net Revenues below the amount 

covenanted by Section 16 hereof to be produced, unless due and adequate provision is made for 

the payment of the Bonds, including interest and premium (if any) thereon, or due and adequate 

provision is made for the payment into the Airport Fund in each year in which any of the Bonds 

remain outstanding of an amount equal to the difference between the Revenues and Net 

Revenues produced in each such year and the amount of Revenues and Net Revenues covenanted 

by Section 16 hereof to be produced in such year. 

In the event any Airport properties shall be taken by the exercise of the power of eminent 

domain, the amount of the award received by the Port as a result of such taking shall be held by 

the Port hereunder and either used for the acquisition or construction of revenue-producing 

properties to constitute part of the Airport or be applied to the redemption or purchase of Bonds, 

such purchases to be made subject to the same conditions that purchases of Bonds may be made 

pursuant to Section 14 hereof from moneys credited to the Term Bond Principal Account in the 

Bond Fund. 

[This paragraph was amended pursuant to sections 1 and 2 of Ordinance No. 375-B] 

N. Insurance. The Port will carry insurance with generally recognized responsible 

insurers with policies payable to the Port against risks, accidents or casualties at least to the 

extent that similar insurance is usually carried by airport operators operating properties similar to 

the Airport. The Port shall seek the advice and counsel not less than every three years of an 

independent insurance agent or consultant or consultants to advise and assist the Port with 

respect to the insurance program of the Airport, and the Port shall take into consideration the 

advice of such independent insurance agent or consultant or consultants in the placement of 

insurance and the establishment of any self-insurance fund or funds of the Port as hereinafter 

provided. 

Without limiting the generality of the provisions of the preceding paragraph, the Port 

shall obtain and maintain at least the following insurance: 

(a) Fire and Extended Coverage. Insurance subject to a reasonable deduction 

in an amount not less than ninety per cent of the cost of repair or replacement, if 

available, and otherwise to the full insurable value, of the structures and equipment of a 

type normally covered by fire and extended coverage insurance (or such lesser amount as 

would be required to meet the cost of paying or redeeming all Bonds from time to time 

outstanding) as determined by a recognized appraiser or insurer selected by the Port, 

against loss or damage by fire and lightning with uniform standard extended coverage 

endorsement limited only as may be provided in the standard form of extended coverage 

endorsement in use in Oregon at the time, and with standard vandalism and malicious 

mischief endorsement; provided that such insurance shall at all times be in such amount 

as will be sufficient to comply with any legal or contractual requirement which, if 
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42936-5 BJ1/BJ1 47 

breached, would result in the assumption by the Port of a portion of any loss or damage 

as a co-insurer. Loss or damage by flood and earthquake shall also be insured in a 

reasonable amount and these perils may be subject to a reasonable deductible, both as 

determined by the Port. If any building or facility is under construction or reconstruction, 

the Port’s obligation under this subparagraph as to such building or facility shall be met if 

the insurance required by this subparagraph with respect to such building or facility is 

carried by the contractor. 

(b) War Damage. If and when war damage insurance is obtainable from the 

United States Government, policies of war damage insurance shall be obtained by the 

Port on the properties constituting the Airport. The amount of such war damage 

insurance to be procured and maintained shall, at the option of the Port be the lesser of 

(i) the maximum coverage obtainable, or (ii) an amount equal to the principal amount of 

the Bonds from time to time outstanding and any premium payable upon their redemption 

from the proceeds of such insurance. 

(c) Loss of Use. Rental insurance, or use and occupancy insurance, or 

business interruption insurance, to cover loss, total or partial, of the use of the Airport as 

the result of any fire, explosion, vandalism, malicious mischief, other hazards normally 

covered by extended coverage endorsement, earthquake, tornado, hurricane and sprinkler 

leakage, in such amounts that, in case of a loss of the use of the Airport, or any part 

thereof, the proceeds of such insurance in the event of loss will be in an amount equal to 

not less than the anticipated Revenues for a period of twelve (12) months; provided that, 

(i) such insurance may exclude losses sustained by the Port during the first seven days of 

any total or partial interruption of use; (ii) consideration shall be given to the expected, as 

well as past or current, amount of the Revenues, and allowances may be made for any 

probable decrease in Costs of Operation and Maintenance or other expenses while use is 

interrupted; and (iii) if the amount of insurance required by the foregoing provisions of 

this subparagraph cannot be procured, at a reasonable cost, the Port will procure the 

maximum amount of such insurance obtainable at a reasonable cost. 

(d) Public Liability. Standard comprehensive liability insurance for 

protection of the Port and its commissioners, officers, and employees, insuring said 

parties against liability for damages because of bodily injury, death or damage to 

property, including loss of use thereof, occurring on or in any way related to the Airport 

or any part thereof or occasioned by reason of the operations of the Port upon, in and 

around the Airport, with insurance of $25,000,000 combined single limit, each 

occurrence, for bodily injury or death or damage to property (or such greater amount as 

may be determined by the Port). Such policies shall cover the entire Airport and any 

elevators or boilers therein, and any sidewalks, streets or other public ways adjoining the 

Airport. Workmen’s compensation insurance shall also be obtained at least to the extent 

required by law, or if not so required, to the extent deemed advisable by the Port. 

The foregoing provisions as to insurance required to be procured and maintained shall not 

limit or prohibit, or be construed as limiting or prohibiting, the Port from obtaining any other 

insurance with respect to the Airport or the use and occupancy thereof that it may wish to carry 

or to obtain any insurance in amounts greater than those set out above. 
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42936-5 BJ1/BJ1 48 

Any insurance carried by the Port pursuant hereto may be procured and maintained as 

part of or in conjunction with any other policy or policies carried by it. The Port may create and 

establish special funds for self-insurance against the risks set out in subparagraphs (a), (c) and (d) 

above and may make payments into such funds from moneys credited to the General Account in 

the Airport Fund. In the event the Port shall establish and maintain any such special funds, the 

amount of insurance carried pursuant to said subparagraphs may be reduced by the amounts in 

such funds applicable and allocated to the particular risk or risks referred to in said 

subparagraphs. 

Upon the delivery of the first Bonds hereunder the Port shall furnish to the Trustee 

certificates of the insurers showing the amount and type of the insurance then in effect that has 

been procured and maintained pursuant to the foregoing provisions and stating the date and term 

of any policy evidencing such insurance, and also a certificate of the Port setting forth the 

amounts of any self-insurance and the risks covered thereby and reciting that the amounts and 

types of such insurance and self-insurance comply with said provisions. Certificates evidencing 

any renewals of the aforesaid insurance, or evidencing that such insurance is no longer required 

hereby, shall be delivered to the Trustee not less than ten days prior to the expiration of any 

policy of insurance replaced or extended by the insurance represented by such certificate. All 

policies of insurance shall provide for not less than thirty (30) days’ notice to the Port and the 

Trustee before such policy may be canceled. 

All insurance required by subparagraphs (a), (b) and (c) above shall be taken out and 

maintained in the name of the Port. All policies evidencing such insurance shall provide for 

payment of the losses to the Port; provided, that, any builder’s risk insurance or other insurance 

carried by a contractor with respect to a building or facility being constructed by such contractor 

may provide for payment to the Port and such contractor as their respective interest may appear. 

The proceeds of all insurance shall be held by the Port under and subject to this 

Ordinance and applied as follows: (i) the proceeds of insurance carried pursuant to 

subparagraphs (a) and (b) above of this paragraph shall be applied to the repairing, replacing or 

reconstruction of the damaged or destroyed property as hereinafter provided; (ii) the proceeds of 

insurance carried pursuant to subparagraph (c) above of this paragraph shall be deposited in the 

Airport Fund; and (iii) the proceeds of insurance carried pursuant to subparagraph (d) above shall 

be applied toward extinguishing or satisfying or remedying of the liability, loss or damage with 

respect to which such proceeds may be paid. 

Immediately after any loss or damage to the Airport, the Port will promptly commence, 

and proceed to completion, with the repair, replacement or reconstruction of the damaged or 

destroyed property, and apply to the costs thereof the proceeds of the insurance carried pursuant 

to subparagraphs (a) and (b) above of this paragraph received with respect to such damage or 

destruction. If such proceeds are insufficient for such purpose, the amount of such insufficiency 

may be satisfied, first, from unencumbered moneys credited to the General Account in the 

Airport Fund and then from moneys credited to the Major Maintenance Reserve Account in the 

Airport Fund and then from moneys credited to the Capital Improvement Account in the Airport 

Fund. If the proceeds of such insurance are more than sufficient for such purpose, the excess 

amount thereof shall be paid into the following funds in the following order and amounts: 

(1) into the Bond Fund for credit to the Debt Service Reserve Account therein, unless and until 
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42936-5 BJ1/BJ1 49 

there is then on credit thereto an amount equal to the maximum Debt Service Requirement for 

any future Fiscal Year on all Bonds then outstanding; (2) to the Airport Fund for credit to the 

Major Maintenance Reserve Account unless and until there is then on credit thereto the full 

amount then required to be maintained therein; (3) to the Airport Fund for credit to the Capital 

Improvement Account unless and until there is then on credit thereto the full amount then 

required to be maintained therein; and (4) to the Airport Fund for credit to the General Account. 

O. Payment of Taxes and Claims by the Port. The Port shall from time to time, duly 

pay and discharge, or cause to be paid or discharged, any taxes, assessments or other 

governmental charges lawfully imposed upon the Airport or any part thereof or upon the 

Revenues, or any required payments in lieu thereof, as well as all lawful claims for labor, 

materials and supplies furnished or supplied to the Airport or any part thereof, when the same 

shall become due and payable, and keep the Airport and all parts thereof and the Revenues free 

from judgments, mechanics’ and materialmen’s liens, and free from all other liens, claims, 

demands or encumbrances of whatsoever prior nature or character provided that the Port may, in 

good faith, and upon notice thereof to the Trustee, contest, or permit or cause to be contested, by 

appropriate proceedings, duly prosecuted, the applicability or validity of any such tax, 

assessment or governmental charge or payment in lieu thereof, as well as any claim for labor, 

material or supplies for work completed or materials or supplies furnished and in such event may 

permit the items so contested to remain unpaid, unsatisfied and undischarged during the period 

of any such contest and appeal therefrom, even though such contest or proceeding may result in a 

judgment or lien against the Airport or any part thereof or the Revenues, if and so long as such 

contest or proceeding shall stay the execution or enforcement of any such tax, assessment, 

charge, claim, judgment or lien so that pending the determination of such contest or proceeding 

the Airport and all parts thereof and the Revenues are not affected thereby, and if and so long as 

such contest or proceeding does not impair the security or the payment of the Bonds. If any such 

execution or enforcement is so stayed and such stay shall thereafter expire, the Port shall 

forthwith pay or discharge, or cause to be paid and discharged, any such tax, assessment or 

governmental charge or payment in lieu thereof or claims for labor, material or supplies. Before, 

however, entering into any such contest or permitting any such contest, the Port shall furnish to 

the Trustee any reasonable assurance required by the Trustee indemnifying it and the holder of 

the Bonds against loss or liability by reason of any such contest. 

P. Prosecution and Defense of Suits. The Port will, and upon the request of the 

Trustee shall, promptly from time to time take such action as may be necessary and proper to 

remedy or cure any defect in or cloud upon the title to the Airport or any part thereof (except for 

Permitted Encumbrances as defined in paragraph B of this section), whether now existing or 

hereafter developing; shall prosecute and defend all such suits, actions and other proceedings as 

may be appropriate for such purposes, including the defense of its title to the Airport; and shall 

indemnify and save the Trustee and every Bondholder harmless from all loss, cost, damage and 

expense, including attorneys’ fees, which they or either of them may incur by reason of any such 

defect, cloud, suit, action or proceeding. 

The Port shall defend, or cause to be defended, against every suit, action or proceeding at 

any time brought against the Trustee or any Bondholder by a person other than the Port upon any 

claim arising out of the receipt, application or disbursement of any of the Revenues or any other 

moneys received, applied or disbursed under this Ordinance, or involving the Airport or the 
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42936-5 BJ1/BJ1 50 

rights of the Trustee or any Bondholder under this Ordinance and shall indemnify and save 

harmless the Trustee and all Bondholders against any and all liability claimed or asserted by any 

person whomsoever, arising out of such receipt, application or disbursement or the Airport; 

provided, however, that the Trustee or any Bondholder, at its or his election, may appear in and 

defend any suit, action or proceeding. Notwithstanding any contrary provision hereof, this 

covenant shall remain in full force and effect, even though the Bond is no longer outstanding 

hereunder and all indebtedness and obligations secured hereby may have been fully paid and 

satisfied and the lien, pledge and charge of this Ordinance may have been released and 

discharged. 

Q. Protection of Security. The Port shall not take any action in such manner or to 

such an extent as might prejudice the security or the payment of the Bonds according to the 

terms thereof. The Port will maintain, preserve and renew all the rights, powers, privileges and 

franchises now owned by it or hereafter acquired by it with respect to the Airport. The Port shall 

not enter into any contract or lease pertaining to the Airport, or take any other action, by which 

the rights, payment or security of the Bonds might be impaired or diminished. 

R. Competitive, Non-competitive and General Aviation Airports. The Port will 

neither construct nor, to the extent it is able to do so, permit to be constructed any Commercial 

Airport or General Aviation Airport, except as in Section 17L hereof permitted, or other facilities 

or structures to be operated by the Port or others separate from the Airport and competing for the 

Revenues otherwise available for the payment of the Bonds, but nothing herein contained shall 

be construed as impairing any police power which the Port now or hereafter may possess. 

Nothing in this part shall be construed as preventing or prohibiting the Port from 

acquiring, constructing or operating separate and apart from this Ordinance any Commercial 

Airport or General Aviation Airport which is substantially non-competitive with Portland 

International Airport. Prior to acquiring, constructing or operating separate and apart from this 

Ordinance any Commercial Airport or General Aviation Airport the Airport Consultant shall 

deliver to the Port and file with the Trustee a certificate (such certificate is not required for 

General Aviation Airports permitted pursuant to Section 17L hereof) which states that such 

Commercial Airport or General Aviation Airport is substantially non-competitive with Portland 

International Airport. 

For purposes of this Ordinance, the following facilities and structures (which are not part 

of a Commercial Airport or a General Aviation Airport described in this section) shall be 

considered “substantially non-competitive with the Airport,” and shall not be considered 

“competing for the Revenues otherwise available for the payment of Bonds:” 

(1) Facilities and structures which, at the time they are approved by the Port, are 

reasonably expected to be used for purposes which do not benefit directly and substantially from 

close proximity to aircraft, passengers or cargo while traveling through the Airport; and 

(2) Facilities and structures which, at the time they are approved by the Port, are 

reasonably expected to benefit directly and substantially from close proximity to aircraft, 

passengers or cargo while traveling through the Airport, if the Commission reasonably 
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42936-5 BJ1/BJ1 51 

determines that the construction and operation of the facilities or structures will not have a 

material, adverse effect on the Revenues. 

For purposes of subparagraph (2) of the preceding paragraph: 

(1) “material, adverse effect” means a reduction in the Revenues: 

(a) which would otherwise be projected for the Airport during any of the five 

full Fiscal Years following the projected completion of the proposed facility or 

structure; and, 

(b) which is directly attributable to the proposed facility or structure; and, 

(c) which is greater than or equal to five percent of the Net Revenues for the 

Fiscal Year immediately preceding a determination of the Commission, or which 

would reduce the Net Revenues below the level required by clause (ii) of the first 

sentence of the first paragraph of Section 16 of this Ordinance and Section 5.e. of 

Ordinance No. 323 as amended and restated by Ordinances No. 337A and 323A. 

(2) a determination of the Commission shall be conclusively presumed to be 

reasonable if it is made in reliance upon a projection of the Airport Consultant that the 

construction and operation of the proposed facilities or structures will not have a material, 

adverse effect on the Revenues. [A portion of paragraph R was amended pursuant to section 3 

of Ordinance No. 375 B]

S. Obeying Law; Performance of All Obligations and Covenants under This 

Ordinance, Performance of Leases and Contracts. The Port shall comply promptly, fully and 

faithfully with and abide by any statute, law, ordinance, order, rule or regulation, judgment, 

decree, direction or requirement now in force or hereafter enacted, adopted or entered by any 

competent governmental authority or agency applicable or with respect to or affecting the 

acquisition, construction or reconstruction of the Airport or any part or parcel thereof or 

applicable or with respect to or affecting the operation, manner of use or condition of the Airport 

or any part or parcel thereof or adjoining public ways; provided that the Port need not comply 

with any such statute, law, ordinance, rule, regulation, judgment, decree, direction or 

requirement if and so long as the Port in good faith shall be contesting or permitting or causing to 

be contested the applicability or validity thereof by appropriate proceedings diligently 

prosecuted, even though such contest may result in the imposition of a lien or charge against the 

Airport or the Revenues if (1) before commencing any such contest the Port shall notify the 

Trustee thereof and shall furnish to the Trustee any reasonable assurance required by the Trustee 

indemnifying it and the holders of the Bonds against loss or liability by reason of any such 

contest; (2) the Port shall effectively prevent foreclosure or enforcement of any such lien or 

charge; and (3) the foreclosure or enforcement of any such lien or charge shall be stayed, and if 

said stay thereafter expires, the Port shall forthwith discharge such lien or charge or cause the 

same to be discharged, so that pending such proceedings the Airport and the Revenues thereof 

shall not be affected thereby, and the security of the Bonds shall not be impaired. 

The Port shall comply with and perform, or cause to be complied with and performed, all 

acts, things, covenants, agreements, obligations, duties and provisions, express or implied, 
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42936-5 BJ1/BJ1 52 

required to be done or performed by or on its behalf under this Ordinance and Supplemental 

Ordinances and the Bonds and coupons, in accordance with the terms hereof and thereof. 

The Port shall perform all contractual obligations undertaken by it under leases or 

agreements with any person. 

T. Paying Agents. If a Series Ordinance providing for the issuance of a series of 

Bonds in coupon form appoints a Paying Agent for the Bonds of such series in a city other than 

that in which the principal office of the Trustee is located, the Port will at all times keep in those 

cities in which such Paying Agent or Paying Agents are located, an office or agency (which may 

be the office in each such respective city of such Paying Agent in such city appointed in such 

Series Ordinance) at which such series of Bonds in coupon form and attached coupons may be 

presented for payment. The Port will from time to time give written notice to the Trustee of the 

location of each such office or agency if the appointment thereof was made by the Port without 

the prior knowledge of the Trustee. 

U. Taking Any Further Action Required for the Purposes of This Ordinance. The 

Port shall, at any and all times, adopt, make, do, execute, acknowledge, deliver, register, file and 

record all such other and further ordinances, resolutions, acts, deeds, demands, conveyances, 

assignments, transfers, assurances and instruments and give such further notices and give such 

further acts, as may be reasonably necessary, proper or desirable for the better assuring, pledging 

and assigning the Revenues and other moneys pledged, assigned or charged hereunder or 

intended so to be, or which the Port may hereafter become bound to pledge, assign or charge, or 

for the carrying out more effectively the purposes and intent, and the facilitating of the 

performance, of this Ordinance. 

SECTION 18. Concerning the Trustee and the Paying Agents. 

A. Qualifications of Trustee; Resignation or Removal Thereof, Successor Trustee. 

From and after the delivery of the first Bonds hereunder, there shall at all times be a trustee 

hereunder (herein defined and referred to as the “Trustee”) to administer the Bond Fund created 

in Section 14 hereof, which Trustee shall at all times be a corporation organized and doing 

business under the laws of the United States or of any State of the United States, which (a) is 

authorized under such laws to exercise corporate trust powers, (b) is subject to supervision or 

examination by Federal or State authority, and (c) shall have at all times a combined capital and 

surplus of not less than fifty million dollars. If the Trustee publishes reports of condition at least 

annually, pursuant to law or the requirements of the aforesaid supervising or examining 

authority, then for the purposes of this paragraph the combined capital and surplus of the Trustee 

at any time shall be deemed to be its combined capital and surplus as set forth in its most recent 

report of conditions so published. 

The Trustee may at any time resign by giving not less than sixty (60) days’ written notice 

to the Port and by giving within ten (10) days after the giving of such notice to the Port notice to 

the Bondholders of such resignation by the publication of such notice at least once in the same 

newspaper or newspapers in which notice of redemption is to be published pursuant to Section 7 

hereof. 
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42936-5 BJ1/BJ1 53 

In case at any time any of the following shall occur: (1) the Trustee shall cease to be 

eligible in accordance with the provisions hereof and shall fail to resign after written request 

therefor by the Port or by any Bondholder who has been a bona fide holder of a Bond for at least 

six months; or (2) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt 

or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public 

officer shall take charge or control of the Trustee or of its property or affairs for the purpose of 

rehabilitation, conservation or liquidation, then, in any such case, the Port may remove the 

Trustee by an instrument in writing authorized by resolution of its Board of Commissioners or 

any such Bondholder may, on behalf of himself and all others similarly situated, petition any 

court of competent jurisdiction for the removal of the Trustee. Such court may thereupon, after 

such notice, if any, as it may deem proper and prescribe and as may be required by law, remove 

the Trustee. 

The holders of a majority in aggregate principal amount of all the Bonds at any time 

out-standing may at any time remove the Trustee by an instrument in writing signed by such 

Bondholders. 

In the event of the resignation, removal, disability or refusal to act of the Trustee, the Port 

by resolution of its Board of Commissioners shall forthwith appoint a successor Trustee. 

The resigning Trustee, if within fifty days after the publication of notice of its 

resignation, no successor Trustee shall have been appointed and shall have accepted such 

appointment, may petition any court of competent jurisdiction for the appointment of a successor 

Trustee, or any Bondholder who has been a bona fide holder of a Bond for at least six months 

may, on behalf of himself and others similarly situated, petition any such court for the 

appointment of a successor Trustee. Such court may thereupon, after such notice, if any, as it 

may deem proper and prescribe and as may be required by law, appoint a successor Trustee 

having the qualifications required hereby. 

Any successor Trustee appointed as provided in this section shall execute, acknowledge 

and deliver to the Port and to its predecessor Trustee an instrument accepting such appointment 

hereunder and thereupon the resignation or removal of the predecessor Trustee shall become 

effective and such successor Trustee, without any further act, deed or conveyance, shall become 

the Trustee for the holders of the Bonds and shall be vested with all the appointments, rights, 

powers, trusts, duties and obligations of its predecessor hereunder, with like effect as if originally 

named as Trustee herein; but, nevertheless, on the written request of the Port or the request of the 

successor Trustee, the Trustee ceasing to act shall execute and deliver an instrument transferring 

to such successor Trustee, upon the terms, provisions and conditions hereof, all the 

appointments, rights, powers and trusts of the Trustee so ceasing to act. Upon request of any 

such successor Trustee, the Port shall execute any and all instruments in writing necessary or 

desirable for more fully and certainly vesting in and confirming to such successor Trustee all 

such appointments, rights, powers and trusts. 

Upon acceptance of appointment by a successor Trustee as provided in this section, the 

Port shall publish notice of the succession of such Trustee to the trusts hereunder at least once in 

the same newspaper or newspapers in which notices of redemption are to be published under 

Section 7 hereof. If the Port fails to publish such notice within ten days after acceptance of 
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42936-5 BJ1/BJ1 54 

appointment by the successor Trustee, the successor Trustee shall cause such notice to be 

published at the expense of the Port. 

Any corporation into which the Trustee or any Paying Agent may be merged or with 

which it may be consolidated, or any corporation resulting from any merger or consolidation to 

which the Trustee or any Paying Agent shall be a party, or any corporation succeeding to the 

business of the Trustee or any Paying Agent shall be the successor of the Trustee or such Paying 

Agent hereunder without the execution or filing of any paper or any further act on the part of any 

of the parties hereto, anything herein to the contrary notwithstanding; provided that such 

successor Trustee or Paying Agent shall be eligible under the provisions hereof. 

B. Duties of Trustee. Prior to an Event of Default as defined in Section 23 hereof 

and after the curing or waiving of all such Events of Default, the Trustee (1) shall not be liable 

except for the performance of such duties and obligations as are specifically set out in this 

Ordinance; and (2) may conclusively rely, as to the truth of any statement and the correctness of 

the opinions expressed therein, in the absence of bad faith on the part of the Trustee, upon 

certificates or opinions furnished to it pursuant to this Ordinance, but the Trustee shall examine 

the evidence furnished to it to determine whether or not such evidence conforms to the 

requirements (if any) of this Ordinance. In case of an Event of Default as defined in Section 23 

hereof (which has not been cured or waived), the Trustee shall exercise such of the rights and 

powers vested in it by this Ordinance, and use the same degree of care and skill in their exercise, 

as a prudent man would exercise or use under the circumstances in the conduct of his own 

affairs. 

No provision of this Ordinance shall be construed to relieve the Trustee from liability for 

its own negligent action, its own negligent failure to act, or its own willful misconduct, except 

that the Trustee shall at all times: (1) be protected from liability for any error of judgment made 

in good faith by a responsible officer (as defined in the last sentence of Section 24 hereof) of the 

Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent 

facts; and (2) be protected with respect to any action taken or omitted to be taken by it in good 

faith in accordance with the direction of the holders of not less than a majority in principal 

amount of the Bonds then outstanding relating to the time, method and place of conducting any 

proceeding for any remedy available to the Trustee, or exercising any trust or power conferred 

upon the Trustee, under this Ordinance. 

The Trustee shall have the right, but shall not be required, to demand in respect of the 

execution and delivery of Bonds, the withdrawal of any cash, the release of any property, or any 

action whatsoever within the purview of this Ordinance, as a condition of any action by the 

Trustee and any showings, certificates, opinions, appraisals or other information, or corporate 

action or evidence thereof, in addition to that by the terms hereof required, deemed desirable for 

the purpose of establishing the right of the Port to the execution and delivery of any Bonds, the 

withdrawal of any cash, or the taking of any other action by the Trustee. 

C. No Liability of Trustee and Paying Agents for Recitals. The recitals of facts, 

covenants and agreements herein and in the Bonds contained shall be taken as statements, 

covenants and agreements of the Port, and neither the Trustee nor any Paying Agent assumes any 

responsibility for the correctness of the same, or makes any representations as to the validity or 
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42936-5 BJ1/BJ1 55 

sufficiency of this Ordinance or of the Bonds or coupons, or shall incur any responsibility in 

respect thereof, other than in connection with the duties or obligations herein or in the Bonds 

assigned to or imposed upon them, respectively. 

D. Right of Trustee and Paying Agents to Acquire Bonds. The Trustee and the 

Paying Agents and its and their officers and directors may acquire and hold, or become pledgees 

of, Bonds and coupons and otherwise deal with the Port in the manner and to the same extent and 

with like effect as though it or they were not the Trustee or Paying Agent, as the case may be, 

hereunder. 

E. Paying Agents to Hold Moneys in Trust. Each Paying Agent shall hold in trust 

for the benefit of the Bondholders or the Trustee all sums held by such Paying Agent for the 

payment of the principal of and interest on the Bonds. Anything in this paragraph to the contrary 

not-withstanding, the Port may, at any time, for the purpose of obtaining a satisfaction and 

discharge of this Ordinance, or for any other reason, cause to be paid to the Trustee all sums held 

in trust by any Paying Agent hereunder as required by this section, which sums shall be held by 

the Trustee upon the trusts herein contained, and such Paying Agent shall thereupon be released 

from all further liability with respect to such sums. 

F. Compensation and Expenses of Trustee and Paying Agents. The Trustee and the 

Paying Agents shall be entitled to reasonable compensation for all services rendered by them in 

the execution, exercise or performance of any of the powers and duties to be exercised or 

performed by them pursuant to the provisions of this Ordinance and for the reasonable expenses, 

charges and other disbursements incurred in connection with the exercise or performance of said 

powers and duties. The Port shall pay such compensation and expenses from the Revenues as a 

Cost of Operation and Maintenance. The Trustee shall have a first lien with right of prior 

payment to or on account of interest or principal of any Bond upon the Revenues and other 

moneys pledged or charged herein for any advances made by it and for its fees, costs and 

expenses incurred. 

G. Trust May be Vested in Separate or Co-Trustee. It is the purpose of this 

Ordinance that there shall be no violation of any law of any jurisdiction (including particularly 

the law of Oregon) denying or restricting the right of banking corporations or associations to 

transact business as trustee in such jurisdiction. It is recognized that in case of litigation under 

this Ordinance, and in particular in case of the enforcement on default, or in case the Trustee 

deems that by reason of any present or future law of any jurisdiction it may not exercise any of 

the powers, rights or remedies herein granted to the Trustee, as herein granted, or take any other 

action which may be desirable or necessary in connection therewith, it may be necessary that the 

Trustee appoint an additional individual or institution as a separate or co-trustee. In such 

instance the Trustee shall obtain and may rely upon an opinion of counsel as to the necessity of 

such appointment. The following provisions of this subsection G are adopted to these ends. 

In the event that the Trustee appoints an additional individual or institution as a 

separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action, 

immunity, estate, title, interest and lien expressed or intended by this Ordinance to be exercised 

by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in 

such separate or co-trustee but only to the extent necessary to enable such separate or co-trustee 
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42936-5 BJ1/BJ1 56 

to exercise such powers, rights and remedies, and every covenant and obligation necessary to the 

exercise thereof by such separate or co-trustee shall run to and be enforceable by either of them. 

Should any deed, conveyance or instrument in writing from the Port be required 

by the separate trustee or co-trustee so appointed by the Trustee for more fully and certainly 

vesting in and confirming to him or it such properties, rights, powers, trusts, duties and 

obligations and any and all such deeds, conveyances and instruments in writing shall, on request, 

be executed, acknowledged and delivered by the Port. In case any separate trustee or co-trustee, 

or a successor to either, shall die, become incapable of acting, resign or be removed, all the 

estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or 

co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the 

appointment of a new trustee or successor to such separate trustee or co-trustee. 

SECTION 19. List of Bondholders. Each Paying Agent (other than the Trustee) shall 

furnish to the Trustee semiannually in each year during the periods July 15 to July 31, inclusive, 

and January 15 to January 31, inclusive, commencing with the first of such periods which 

follows the first interest payment date for the first Bonds issued hereunder, and at such other 

times as the Trustee may request in writing, within thirty days after the receipt by the Paying 

Agent of such request, a list or lists in such form as the Trustee may reasonably require, of all 

information in the possession or control of any such Paying Agent (other than the Trustee) as to 

the names and addresses of the holders of Bonds obtained since the date as of which the next 

previous list, if any, was furnished. Any such list may be dated as of a date not more than fifteen 

days prior to the time such information is furnished or caused to be furnished and need not 

include information received after such date. The Trustee shall preserve, in as current a form as 

is reasonably practicable, all information as to the names and addresses of the holders of Bonds 

(i) contained in the most recent list furnished to it as provided in the foregoing provisions of this 

section, (ii) received by it in the capacity of Paying Agent (if so acting hereunder), and (iii) filed 

with it within two years preceding pursuant to the provisions of the next sentence of this section. 

Any holder of the bonds may file his name and address with the Trustee for inclusion upon such 

list. The Trustee may (1) destroy any list furnished to it as provided in the first sentence of this 

section upon receipt of a new list so furnished, (2) destroy any information received by it as a 

Paying Agent (if so acting) hereunder upon delivering to itself as the Trustee not earlier than 

forty-five days after an interest payment date of the Bonds, a list containing the names and 

addresses of the holders of Bonds obtained from such information since the delivery of the next 

previous list, if any, (3) destroy any list delivered to itself as Trustee which was compiled from 

information received by it as a Paying Agent (if so acting) hereunder upon receipt of a new list 

so delivered, and (4) destroy any information filed with it pursuant to the provisions of the next 

preceding sentence of this section, but not until two years after such information has been filed 

with it. At reasonable times and under reasonable regulations established by the Trustee, said list 

may be inspected and copied by the Port or by the holders or owners (or a designated 

representative thereof) of ten per cent or more in principal amount of Bonds then outstanding, 

such ownership and the authority of any such designated representative to be evidenced to the 

satisfaction of the Trustee. 

SECTION 20. Amendment of This Ordinance. The Port, from time to time and at any 

time and without the consent or concurrence of the holder of any Bond, may adopt a 

Supplemental Ordinance: (i) for the purpose of providing for the issuance of Bonds pursuant to 
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the provisions of Sections 3, 4 and 5 hereof, (ii) to make any changes or modifications hereof or 

amendments or additions hereto or deletions herefrom which may be required to permit this 

Ordinance to be qualified under the Trust Indenture Act of 1939 of the United States of America, 

as amended from time to time; and (iii) if the provisions of such Supplemental Ordinance shall 

not adversely affect the rights of the holders of the Bonds then outstanding, for any one or more 

of the following purposes: 

1. To make any changes or corrections in this Ordinance or any Supplemental 

Ordinance as to which it shall have been advised by its counsel that the same are verbal 

corrections or changes or are required for the purpose of curing or correcting any ambiguity or 

defective or inconsistent provision or omission or mistake or manifest error contained herein or 

in any such Supplemental Ordinance, or to insert such provisions clarifying matters or questions 

arising under this Ordinance as are necessary or desirable; 

2. To add additional covenants and agreements of the Port for the purpose of further 

securing the payment of the Bonds; 

3. To surrender any right, power or privilege reserved to or conferred upon the Port 

by the terms of this Ordinance or any Supplemental Ordinance; 

4. To confirm as further assurance any lien, pledge or charge, or the subjection to 

any lien, pledge or charge, created or to be created by the provision of this Ordinance or any 

Supplemental Ordinance; 

5. To grant to or confer upon the holders of the Bonds any additional rights, 

remedies, powers, authority or security that lawfully may be granted to or conferred upon them, 

or to grant to or confer upon the Trustee for the benefit of the holders of the Bonds any 

additional rights, duties, remedies, power or authority; 

6. To prescribe further limitations and restrictions upon the issuance of the Bonds 

and the incurring of indebtedness by the Port payable from the Revenues; and 

7. To modify in any other respect any of the provisions of this Ordinance, or any 

Supplemental Ordinances previously adopted; provided that such modifications shall have no 

adverse effect as to any Bond or Bonds which are then outstanding. 

With the consent of the holders of not less than sixty-six and two-thirds per centum 

(662⁄3%) of the principal amount of the Bonds then outstanding, the Port, from time to time and at 

any time, may adopt a Supplemental Ordinance amending or supplementing the provisions of 

this Ordinance for the purposes of adding any provisions to, or changing in any manner or 

eliminating any of the provisions of, this Ordinance or of any Supplemental Ordinance, or 

modifying in any manner the rights of the holders of the Bonds and coupons then outstanding; 

provided, however, that without the specific consent of the holder of each such Bond which 

would be affected thereby, no such Supplemental Ordinance amending or supplementing the 

provisions hereof shall: (1) change the fixed maturity date for the payment of the principal of 

any Bond or the dates for the payment of interest thereon or the terms of the redemption thereof, 

or reduce the principal amount of any Bond or the rate of interest thereon or any premium 

payable upon the redemption or payment thereof; or (2) reduce the aforesaid percentage of 
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Bonds, the holders of which are required to consent to any such Supplemental Ordinance 

amending or supplementing the provisions hereof, or (3) give to any Bond or Bonds any 

preference over any other Bond or Bonds secured hereby; or (4) authorize the creation of any 

pledge of the Revenues or any lien thereon prior or superior or equal to the pledge and lien 

created herein for the payment and security of the Bonds; or (5) deprive any holder of the Bonds 

of the security afforded by this Ordinance. A modification or amendment of the provisions of 

Section 13 hereof with respect to the Airport Fund shall not be deemed a change in the terms of 

payment of the Bonds; provided, however, that no such modification or amendment shall, except 

upon the consent of the holders of all Bonds then outstanding affected thereby, reduce the 

amount or amounts required to be deposited from the Revenues into the Bond Fund for credit to 

the Interest Account, Serial Bond Principal Account, Term Bond Principal Account or Debt 

Service Reserve Account therein or the priority of the deposit of such amounts. (Nothing herein 

contained, however, shall be construed as making necessary the approval of the holders of the 

Bonds of the adoption of any Supplemental Ordinance authorized by the first paragraph of this 

section.) The proof of the giving of any consent required by this paragraph and of the holding of 

Bonds for the purpose of giving consents shall be made in accordance with the provisions of 

Section 27 hereof, and it shall not be necessary that the consents of the holders of the Bonds 

approve the particular form of wording of the proposed amendment or supplement or of the 

Supplemental Ordinance affecting such amendment or supplement, but it shall be sufficient if 

such consent approve the substance of the proposed amendment or supplement. After the 

holders of the required percentage of Bonds shall have filed their consents to the amending or 

supplementing hereof pursuant to this paragraph, the Port shall publish at least once a notice of 

such amending or supplementing hereof, in an issue of a newspaper of general circulation in 

Multnomah County, Oregon and in an issue of The Daily Bond Buyer, which is published in the 

City and State of New York, or in lieu of such publication in The Daily Bond Buyer, in one issue 

of some other newspaper of general circulation specializing in financial matters published in the 

City and State of New York, and shall mail a copy of such notice, postage prepaid (1) to each 

registered owner of Bonds then outstanding, at his address, if any, appearing upon the registry 

books, and (2) to all Bondholders whose names and addresses appear upon the list to be 

maintained pursuant to Section 19 hereof at such addresses, but failure to mail copies of said 

notice to any of said owners or holders shall not affect the validity of the Supplemental 

Ordinance effecting such amendments or supplements or the consents thereto. (Nothing herein 

contained, however, shall be construed as requiring the giving of notice of any amending or 

supplementing of this Ordinance authorized by the first paragraph of this section.) A record, 

consisting of the papers required by this paragraph, shall be proof of the matters therein stated 

until the contrary is proved. 

Bonds delivered after the effective date of any action taken as provided in this section 

may bear a notation as to such action, by endorsement or otherwise and in form approved by the 

Port. In that case, upon demand of the holder of any Bond outstanding at such effective date and 

the presentation of his Bond for the purpose at the office of the Trustee or other paying agent, 

transfer agent or registrar hereunder for such Bond and at such additional offices as the Port may 

select and designate for that purpose, a suitable notation shall be made on such Bond. If the Port 

shall so determine, new Bonds so modified as in the opinion of the Port to conform to the 

amendments or supplements so consented to by the Bondholders shall be prepared, executed and 

delivered, and upon demand of the holder of any Bond then outstanding shall be exchanged 
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42936-5 BJ1/BJ1 59 

without cost to such Bondholder, for Bonds then outstanding, upon surrender of such outstanding 

Bonds with all unmatured coupons appertaining thereto. 

Upon the adoption pursuant to this section and of applicable law of any Supplemental 

Ordinance amending or supplementing the provisions of this Ordinance (including any Series 

Ordinance authorizing the issuance of Bonds) and the delivery thereof to the Trustee, together 

with an opinion of counsel to the Port that such Supplemental Ordinance is in due form, has been 

duly adopted in accordance with the provisions hereof and applicable law and the provisions 

thereof are valid and binding upon the Port (upon which opinion the Trustee shall be fully 

protected in relying), or upon such later date after delivery of such Supplemental Ordinance and 

opinion to the Trustee as may be specified in such Supplemental Ordinance, this Ordinance and 

the Bonds shall be modified and amended in accordance with such Supplemental Ordinance, and 

the respective rights, limitations of rights, obligations, duties and immunities under this 

Ordinance of the Port, the Trustee and of the holders of the Bonds and coupons shall thereafter 

be determined, exercised and enforced hereunder subject in all respects to such modifications 

and amendments, and all of the terms and conditions of any such Supplemental Ordinance shall 

be a part of the terms and conditions of the Bonds and of this Ordinance for any and all purposes. 

SECTION 21. Certain Bonds Deemed Not Outstanding Hereunder. In determining 

whether the holders of the requisite aggregate principal amount of Bonds have consented to the 

amendment of this Ordinance as provided in Section 20 hereof or have concurred in any waiver 

of an Event of Default as defined in Section 23 hereof, or have concurred in any other direction 

or consent regarding this Ordinance, Bonds which are owned or controlled directly or indirectly 

by the Port shall be disregarded and deemed not to be outstanding for the purpose of any such 

determination, except that for the purpose of determining whether the Trustee shall be protected 

in relying on any such waiver, direction or consent, only Bonds which the Trustee knows are so 

owned shall be so disregarded. 

SECTION 22. Ordinance to Constitute a Contract with Bondholders; Enforcement 

of Same. So long as any of the Bonds are outstanding, each of the obligations, duties, 

limitations and restraints imposed upon the Port by this Ordinance shall be deemed to be a 

covenant between the Port and every holder of said Bonds, and this Ordinance and every 

provision and covenant hereof and the provisions of ORS 778.005 to 778.260 shall constitute a 

contract with every holder from time to time of said Bonds and the coupons pertaining thereto, 

and shall be enforceable by any owner or holder of a Bond or of any of the coupons of any of the 

Bonds, by mandamus or other appropriate action or proceeding at law or in equity in any court of 

competent jurisdiction, including, without limiting the generality of the foregoing, the bringing 

of a suit or suits to compel compliance with the provisions of this Ordinance in the event the Port 

fails to set aside and pay the Revenues into the Bond Fund as required by Section 14 hereof. 

SECTION 23. Events of Default. Each of the following is hereby defined as and 

declared to be and shall constitute an “Event of Default”: 

(a) If payment of the principal and premium (if any) of any Bond, whether at 

maturity or by proceedings for redemption (whether by voluntary redemption or a 

mandatory redemption) or by declaration as hereinafter provided in Section 25 hereof or 

otherwise, shall not be made when the same shall become due and payable; or 
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(b) If payment of any installment of interest on any Bond shall not be made 

when the same shall become due and payable; or 

(c) If the Port shall fail in the due and punctual performance of any of the 

covenants, conditions, agreements and provisions contained in the Bonds or in this 

Ordinance or in any Supplemental Ordinance on the part of the Port to be performed, and 

such failure shall continue for ninety (90) days after written notice specifying such failure 

and requiring the same to be remedied shall have been given to the Port by the Trustee or 

by the holders of not less than twenty per cent (20%) in principal amount of the Bonds 

then outstanding or any committee therefor; provided that if any such failure shall be 

such that it cannot be cured or corrected within such ninety-day period, it shall not 

constitute an Event of Default hereunder if curative or corrective action is instituted 

within said period and diligently pursued until the failure of performance is cured or 

corrected; or 

(d) If any proceedings shall be instituted with the consent or acquiescence of 

the Port for the purpose of effecting a composition between the Port and its creditors and 

if the claim of such creditors is in any circumstance payable from any of the Revenues or 

any other moneys pledged and charged herein or in any Supplemental Ordinance or for 

the purpose of adjusting the claims of such creditors, pursuant to any Federal or State 

statute now or hereafter enacted; or 

(e) If an order or decree shall be entered (i) with the consent or acquiescence 

of the Port, appointing a receiver or receivers of the Airport or any of the buildings and 

facilities thereof, or (ii) without the consent or acquiescence of the Port, appointing a 

receiver or receivers of the Airport or any of the buildings and facilities thereof and such 

order or decree having been entered, shall not be vacated or discharged or stayed on 

appeal within sixty (60) days after the entry thereof, or 

(f) If, under the provisions of any applicable bankruptcy laws or any other 

law for the relief or aid of debtors, (i) any court of competent jurisdiction shall assume 

custody or control of the Airport or any of the buildings and facilities thereof, and such 

custody or control shall not be terminated within ninety (90) days from the date of 

assumption or such custody or control; or (ii) any court of competent jurisdiction shall 

approve of any petition for the reorganization of the Airport or rearrangement or 

readjustment of the obligations of the Port hereunder. 

SECTION 24. Notice to Bondholders and Others Upon Occurrence of an Event of 

Default. The Trustee shall give by mail to all the registered holders of Bonds as their names and 

addresses appear upon the books of registry, to all Bondholders whose names and addresses 

appear upon the list to be maintained pursuant to Section 19 hereof at such addresses, written 

notice of the occurrence of any Event of Default within thirty days after the Trustee shall have 

knowledge that such Event of Default has occurred, unless the Event of Default shall have been 

cured before the giving of such notice; provided that, except in the case of default in the payment 

of the principal of or interest on any Bond, the Trustee shall be protected in withholding such 

notice if and so long as the board of directors, the executive committee or a trust committee of 

directors and/or responsible officers, of the Trustee in good faith determine that the withholding 
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42936-5 BJ1/BJ1 61 

of such notice is in the interests of the holders of the Bonds. For the purposes of this Ordinance, 

the term “responsible officer” when used with respect to the Trustee shall mean the chairman of 

the board of directors, the vice-chairman of the board of directors, the chairman of the executive 

committee, the vice-chairman of the executive committee, the president, any vice president, the 

cashier, the secretary, the treasurer, any trust officer, any assistant trust officer, any second or 

assistant vice president, any assistant cashier, any assistant secretary, any assistant treasurer, or 

any other officer or assistant officer of the Trustee customarily performing functions similar to 

those performed by the persons who at the time shall be such officers, respectively, or to whom 

any corporate trust matter is referred because of his knowledge of and familiarity with the 

particular subject. 

SECTION 25. Acceleration. Upon the occurrence of an Event of Default the Trustee 

may, and upon the written request of the holders of not less than a majority in aggregate principal 

amount of the Bonds then outstanding shall, by notice in writing delivered to the Port, ipso facto 

and without the necessity of demand or putting in default, declare the principal of all Bonds then 

outstanding and the interest accrued thereon immediately due and payable, and such principal 

and interest shall thereupon become and be immediately due and payable. 

SECTION 26. Remedies Upon Occurrence of Event of Default; Powers of Trustee 

and Bondholders; Waivers of Event of Default; Termination of Proceedings. 

A. Upon the occurrence of an Event of Default hereunder, the Trustee, (i) for and on 

behalf of the holders of the Bonds, shall have the same rights hereunder which are possessed by 

any holders of the Bonds; (ii) shall be authorized to proceed, in its own name and as Trustee of 

an express trust; (iii) may pursue any available remedy by action at law or suit in equity to 

enforce the payment of the principal of and interest on the Bonds; (iv) may file such proofs of 

claim and other papers or documents as may be necessary or advisable in order to have the 

claims of such Trustee and of the holders of the Bonds allowed in any judicial proceedings 

relative to the Port or the Bonds and (v) may, and upon the written request of the holders of 

twenty-five per cent (25%) in aggregate principal amount of the Bonds then outstanding shall, 

proceed to protect and enforce all rights of the Bondholders and the Trustee under this 

Ordinance, by such means or appropriate judicial proceedings as shall be suitable or deemed by 

it most effective in the premises, including any action at law or in equity or in bankruptcy or 

otherwise, whether for the specific enforcement of any covenant or agreement contained in this 

Ordinance or in aid of the exercise of any power granted in this Ordinance or to enforce any 

other legal or equitable right vested in the holders of the Bonds or the Trustee by this Ordinance. 

All rights of action (including the right to file proof of claims) under this Ordinance or under any 

of the Bonds or coupons may be enforced by the Trustee without the possession of any of the 

Bonds or coupons or the production thereof in any trial or other proceedings relating thereto and 

any such suit or proceeding instituted by the Trustee shall be brought in its name and as trustee 

of any express trust without the necessity of joining as plaintiffs or defendants any holders of the 

Bonds, and any recovery of judgment shall be for the equal benefit of the holders of the 

outstanding Bonds and coupons. 

B. The holders of not less than a majority in principal amount of the Bonds at the 

time outstanding shall be authorized and empowered (1) to direct the time, method, and place of 

conducting any proceeding for any remedy available to the Trustee or to the holders of the 
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42936-5 BJ1/BJ1 62 

Bonds, or exercising any trust or power conferred upon the Trustee hereunder; or (2) on behalf of 

the holders of the Bonds then outstanding, to consent to the waiver of any Event of Default or its 

consequences, and the Trustee shall waive any Event of Default and its consequences and 

rescind any declaration of maturity of principal upon the written request of the holders of such 

majority. No waiver or rescission shall extend to any subsequent or other default, or impair any 

right consequent thereon. 

C. Notwithstanding any other provision of the Ordinance the right of any holder of 

any Bond to receive payment of the principal of and interest on such Bond, on or after the 

respective due dates expressed in such Bond and the coupons pertaining thereto, or to institute 

suit for the enforcement of any such payment on or after such respective dates, shall not be 

impaired or affected without the consent of such holder. 

D. No remedy by the terms of this Ordinance conferred upon or reserved to the 

holders of the Bonds is intended to be exclusive of any other remedy, but each and every such 

remedy shall be cumulative and shall be in addition to any other remedy given hereunder to the 

Trustee or to the holders of the Bonds or now or hereafter existing at law or in equity or by 

statute. No delay or omission to exercise any right or power accruing upon any default or Event 

of Default shall impair any such right or power or shall be construed to be a waiver of any such 

default or Event of Default or acquiescence therein; and every such right and power may be 

exercised from time to time and as often as may be deemed expedient. No waiver of any default 

or Event of Default hereunder shall extend to or shall affect any subsequent default or Event of 

Default or shall impair any rights or remedies consequent thereon. 

E. In case the Trustee or the holders of the Bonds shall have proceeded to enforce 

any right under this Ordinance and such proceedings shall have been discontinued or abandoned 

for any reason, or shall have been determined adversely, then and in every such case the Port, the 

Trustee and the holders of the Bonds shall be restored to their former positions and rights, and all 

rights, remedies and powers of the Trustee shall continue as if no such proceedings had been 

taken. 

SECTION 27. Consents, etc., of Bondholders. Any consent, request, direction, 

approval, objection or other instrument required by this Ordinance to be signed and executed by 

the Bondholders may be in any number of concurrent writings of similar tenor and may be 

signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the 

execution of any such consent, request, direction, approval, objection or other instrument or of 

the writing appointing any such agent and, subject to the provisions of Section 8 hereof, of the 

ownership of Bonds, if made in the manner hereinafter in this section set forth shall be sufficient 

for any of the purposes of this Ordinance and shall be conclusive in favor of the Port and the 

Trustee with regard to any action taken under such request or other instrument. The fact and date 

of the execution by any person of any such writing may be proved by the certificate of any 

officer in any jurisdiction who by law has power to take acknowledgments within such 

jurisdiction that the person signing such writing acknowledged before him the execution thereof, 

or by the affidavit of any witness to such execution. The fact of the holding by any person of 

Bonds or coupons transferable by delivery and the amounts and numbers of such Bonds, and the 

date of the holding of same, may be proved by a certificate executed by any trust company, bank 

or banker, wherever situated, stating that at the date thereof the party named therein did exhibit 
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42936-5 BJ1/BJ1 63 

to an officer of such trust company or bank or to such banker, as the property of such party, the 

Bonds or coupons therein mentioned, if such certificate shall be deemed by the Port and the 

Trustee to be satisfactory. The Port and the Trustee may, in their respective discretions, require 

evidence that such Bonds have been deposited with a bank, banker or trust company, before 

taking any action based on such ownership. In lieu of the foregoing the Port and the Trustee may 

accept other proofs of the foregoing as either of them shall deem appropriate. The fact of 

ownership by any person of Bonds registered as to principal (except to bearer) or fully registered 

shall be proved by the registration books maintained pursuant hereto. For all purposes of this 

Ordinance and of the proceedings for the enforcement hereof, such persons shall be deemed to 

continue to be the holder of such Bonds until the Port and the Trustee shall have received notice 

in writing to the contrary. 

SECTION 28. Special Obligation Bonds and Net Rent Leases. Anything in this 

Ordinance to the contrary notwithstanding, the Port may enter into contracts, leases or other 

agreements pursuant to which the Port will agree to construct a hangar, overhaul, maintenance or 

repair building or shop, or other aviation or airport or air navigation facility, including hotels, 

garages and other buildings and facilities incident or related to the Airport, on land constituting 

part of the Airport or will agree to acquire or construct a hangar, overhaul, maintenance or repair 

building or shop, or other aviation or air navigation facility, including hotels, garages and other 

buildings and facilities incident or related to the Airport, on land not then constituting part of the 

Airport (which land if not then owned by the Port may be acquired for such purpose), or to 

acquire and remodel, renovate or rehabilitate a building, structure, or other facility (including the 

site thereof) for aviation or airport or air navigation purposes (all said hangars, building, shops, 

or other structures and facilities being referred to in this section as the “Special Facility”), and 

lease such Special Facility under the following conditions: 

1. No Special Facility will be constructed or acquired and leased for use or 

occupancy under this section: (a) if the Special Facility would provide services, facilities, 

commodities or supplies which then may be adequately made available through the Airport as 

then existing, and (b) if the use or occupancy of such Special Facility under the contract, lease or 

agreement therefor would result in a reduction of Revenues below the minimum amount of 

Revenues covenanted to be produced and maintained in accordance with Section 16 hereof, 

2. A Net Rent Lease (hereinafter defined in this section) shall be entered into 

between the Port, as lessor, and the user or occupier of such Special Facility, as lessee, pursuant 

to which the lessee shall agree to pay the Port in each year during the term thereof, (i) fixed 

rentals (referred to in this section as the “fixed rentals”) in periodic installments which will be 

sufficient to pay during such term as the same respectively matures the principal of and interest 

on all Special Obligation Bonds to be issued pursuant to this section to pay the cost of 

construction or acquisition of the Special Facility, (ii) such further rentals as shall be necessary 

or required to provide or maintain all reserves required for such Special Obligation Bonds and to 

pay all trustee’s, fiscal agent’ and paying agents’ fees and expenses in connection therewith, and 

(iii) unless a ground rental shall be provided for in accordance with and pursuant to the next 

sub-paragraph of this section, an additional rental payable in periodic installments and free and 

clear of all charges under said Net Rent Lease, in an amount equal to a properly allocable share 

of the administrative costs of the Port arising out of such Net Rent Lease and the issuance and 

servicing of such Special Obligation Bonds; 
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3. If the land on which the Special Facility is to be constructed constitutes a part of 

the Airport, the Net Rent Lease referred to in subparagraph 2 above of this section shall provide 

for payment to the Port of a ground rental for the ground upon which such Special Facility is or 

is to be located. Such ground rental shall when said Net Rent Lease is executed be in amounts 

not less than required according to the rates, rentals, fees, and charges of the Port then in effect, 

shall be free and clear of all charges under said Net Rent Lease and shall be in addition to the 

rentals required by subparagraph 2 above of this section; and shall constitute Revenues and be 

paid into the Airport Fund, to be used and applied as are other moneys deposited therein; and 

4. If located on land included in the Airport, the Net Rent Lease shall provide that all 

rentals payable thereunder pursuant to subparagraph 2 above of this section which are not 

required to pay the Special Obligation Bonds issued for the Special Facility leased thereby, 

including reserves for such Special Obligation Bonds, or required to pay trustee’s, fiscal agents’ 

and paying agents’ fees and expenses in connection therewith, or required to pay the aforesaid 

administrative costs of the Port, shall be paid to the Port for its own use and purposes. To the 

extent permitted by law, such excess amounts shall constitute Revenues and be paid into the 

Airport Fund, to be used and applied as are other moneys deposited therein. 

For the purposes of this section, the term “Net Rent Lease” shall mean a lease of property 

to be financed with Special Obligation Bonds, under and pursuant to which the lessee agrees to 

pay to the Port the rentals required by subparagraphs 2 and 3 above of this section, and to pay in 

addition all costs connected with the ownership, operation, maintenance, repair, renewals and 

rehabilitation of the leased property (including, without limitation, insurance, utilities, taxes or 

payments in lieu of taxes and assessments) under such conditions so that the amounts payable to 

the Port pursuant to said lease (exclusive of the additional rental payable pursuant to clause (iii) 

of said subparagraph 2 and of the ground rental, if any, payable pursuant to said subparagraph 3) 

shall be certainly paid free and clear of all charges and whether the leased property is capable of 

being occupied and used by the lessee or not. A Net Rent Lease shall not be cancelable until 

provision has been made for the payment of the Special Obligation Bonds secured by the Net 

Rent Lease. 

Anything in this Ordinance to the contrary notwithstanding, the Port may issue Special 

Obligation Bonds for the purpose of constructing a Special Facility on ground then constituting 

part of the Airport or on ground not then constituting part of the Airport (which ground may then 

be owned by the Port or acquired for that purpose), or to acquire and renovate and rehabilitate a 

Special Facility (including the acquisition of necessary land), for lease pursuant to the provisions 

of this section. Such Special Obligation Bonds (i) shall be payable solely from the rentals 

payable pursuant to subparagraph 2 above of this section by the lessee under the Net Rent Lease 

entered into with respect to the Special Facility to be financed from such Special Obligation 

Bonds; (ii) shall not be a charge or claim against or payable from the Revenues or any other 

moneys held hereunder; (iii) shall mature within the term of the Net Rent Lease entered into with 

respect to such Special Facility; and (iv) shall not be issued unless and until the following 

conditions have been met: 

(A) A certificate of the Airport Consultant has been filed with the Port and the 

Trustee certifying (i) that the construction or acquisition and leasing for use or occupation 

of such Special Facility would not result in a reduction of Revenues below the minimum 
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42936-5 BJ1/BJ1 65 

amount of Revenues covenanted to be produced and maintained in accordance with 

Section 16 hereof, (ii) that the Net Rent Lease referred to in subparagraphs 2, 3 and 4 

above of this section has been entered into; (iii) that the payments to be made by the 

lessee pursuant to the provisions of subparagraph 2 above of this section will be sufficient 

to pay the principal of and interest and premium (if any) on the Special Obligation Bonds 

as the same mature and to pay all trustee’s fiscal agents’ and paying agents’ fees and 

expenses in connection therewith; and 

(B) There shall have been filed with the Port and the Trustee an opinion of 

Counsel to the Port, that the Net Rent Lease entered into pursuant to this section for the 

Special Facility to be financed from such Special Obligation Bonds is valid and binding 

according to its terms and complies with the provisions of subparagraphs 2, 3 and 4 

above of this section. 

Outstanding bonds of an issue of Special Obligation Bonds may be refunded by an issue 

of refunding Special Obligation Bonds, provided that: 

(1) the refunding Special Obligation Bonds shall be secured by and payable 

solely from the rentals for that Special Facility for which the Special Obligation Bonds to 

be refunded were payable; 

(2) the refunding will not decrease the rental, if any, for the Special Facility 

payable pursuant to subparagraph 3 of the first paragraph of this section. 

(3) the Net Rent Lease for the Special Facility during the life of such 

refunding bonds shall comply with subparagraph 2, 3 and 4 of the first paragraph of this 

section; 

(4) the refunding Special Obligation Bonds shall mature within the useful life 

of the Special Facility (as estimated by the Airport Consultant) and within the term of the 

new or amended Net Rent Lease entered into with respect to such refunding; and 

(5) the certificate of the Airport Consultant and the opinion of Counsel 

required by the previous provisions of this section shall be filed with respect to such 

refunding Special Obligation Bonds. 

Special Obligation Bonds issued pursuant to the provisions of this section may also be 

refunded by Additional Bonds if (i) all such Special Obligation Bonds then outstanding and 

unpaid pertaining to the particular Special Facility are refunded at one time from such Additional 

Bonds or are then otherwise retired; (ii) the conditions contained in Section 4 of this Ordinance 

are complied with upon such refunding, and, for the purposes of any such refunding, such 

refunding shall be considered as though the Port were acquiring such Special Facility by the 

issuance of such Additional Bonds; and (iii) upon any such refunding all leases pertaining to the 

Special Facility shall be amended if and to the extent required to be in compliance with the 

provisions of the first paragraph of Section 16 hereof. 

So long as any Special Obligation Bonds issued for a Special Facility are outstanding and 

unpaid, or until the payment thereof shall have been duly and adequately provided for, such 
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42936-5 BJ1/BJ1 66 

Special Facility shall not be considered to be part of the Airport. If the Special Facility is located 

on land included in the Airport, upon the retirement of the indebtedness evidenced by such 

Special Obligation Bonds or evidenced by refunding Special Obligation Bonds, all rentals and 

other income thereafter received by the Port from the Special Facility for which such Special 

Obligation Bonds were issued shall, to the extent permitted by law, constitute Revenues and be 

paid into the Airport Fund, to be used and applied as are other moneys deposited therein, and if 

such rentals and other income shall then constitute Revenues, such Special Facility shall, unless 

contrary to law, then constitute part of the Airport; provided, however, that if any such Special 

Obligation Bonds are retired through the refunding thereof from the proceeds of Additional 

Bonds, such Special Facility in all events (subject to the provisions of paragraph M of Section 17 

hereof) shall thereafter constitute part of the Airport. 

[Portions of this Section 28 were amended pursuant to Section 4 of Ordinance No. 368-B] 

SECTION 29. Discharge of Liens and Pledges; Bonds No Longer Outstanding 

Hereunder. The obligations of the Port under this Ordinance, including all Supplemental 

Ordinances, and the liens, pledges, charges, trusts, assignments, covenants and agreements of the 

Port herein or therein made or provided for, shall be fully discharged and satisfied as to any 

Bond and such Bond shall no longer be deemed to be outstanding hereunder and thereunder, 

(i) when such Bond shall have been cancelled, or shall have been purchased 

by the Trustee from moneys in the Bond Fund held by it under this Ordinance, or 

(ii) as to any Bond not cancelled or so purchased, when payment of the 

principal of and the applicable redemption premium, if any, on such Bond, plus interest 

thereon to the due date thereof (whether such due date be by reason of maturity or upon 

redemption or prepayment or by declaration as provided in Section 25 of this Ordinance, 

or otherwise), either (a) shall have been made or caused to be made in accordance with 

the terms thereof, or (b) shall have been provided by irrevocably depositing with the 

Trustee or Paying Agent for such Bond, in trust and irrevocably appropriated and set 

aside exclusively for such payment, (1) moneys sufficient to make such payment or 

(2) Governmental Obligations (as defined hereinafter in this section) maturing as to 

principal and interest in such amount and at such times as will insure the availability of 

sufficient moneys to make such payment, and all necessary and proper fees, 

compensation and expenses of the Trustee and said Paying Agents pertaining to the Bond 

with respect to which such deposit is made shall have been paid or the payment thereof 

provided for to the satisfaction of the Trustee and said Paying Agents. 

At such time as a Bond shall be deemed to be no longer outstanding hereunder, as aforesaid, 

such Bond shall cease to draw interest from the due date thereof (whether such due date be by 

reason of maturity, or upon redemption or prepayment or by declaration as aforesaid, or 

otherwise) and, except for the purposes of any such payment from such moneys or Governmental 

Obligations, shall no longer be secured by or entitled to the benefits of this Ordinance, including 

all Supplemental Ordinances. 

Any such moneys so deposited with the Trustee or other Paying Agent as provided in this 

section may at the direction of the Port also be invested and reinvested in Governmental 
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Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from all 

Governmental Obligations in the hands of the Trustee and the Paying Agents pursuant to this 

section which is not required for the payment of the Bonds and interest and premium thereon 

with respect to which such moneys shall have been so deposited, shall be paid to the Port and 

deposited in the Airport Fund as and when realized and collected for use and application as are 

other moneys deposited in that fund. 

For the purposes of this section, the term “Governmental Obligations” shall mean any of 

the following which are non-callable and which at the time are legal investments for the moneys 

proposed to be invested therein: (i) direct general obligations of, or obligations the payment of 

the principal and interest of which are unconditionally guaranteed by, the United States of 

America; or (ii) Public Housing Bonds, Temporary Notes, or Preliminary Loan Notes, fully 

secured by contracts with the United States. 

If any Bond shall not be presented for payment when the principal thereof shall become 

due, whether at maturity or at the date fixed for the redemption thereof or upon declaration as 

provided in this Ordinance, or otherwise, or if any coupon shall not be presented for payment at 

the due date thereof, and if moneys or Governmental Obligations shall at such due date be held 

by the Trustee, or a Paying Agent therefor, in trust for that purpose and sufficient and available 

to pay the principal and the premium if any, of such Bond, together with all interest due thereon 

to the due date thereof or to the date fixed for redemption thereof, or to pay such coupon, as the 

case may be, all liability of the Port for such payment shall forthwith cease, determine and be 

completely discharged, and thereupon it shall be the duty of the Trustee, or such Paying Agent, 

to hold said moneys or Governmental Obligations, without liability to such Bondholder for 

interest thereon, in trust for the benefit of the holder of such Bond or of such coupon, as the case 

may be, who thereafter shall be restricted exclusively to said moneys or Governmental 

Obligations for any claim of whatever nature on his part on or with respect to said Bond or 

coupon, including any claim for the payment thereof. 

Notwithstanding any provision of any other section of this Ordinance which may be 

contrary to the provisions of this section, all moneys or Governmental Obligations set aside and 

held in trust pursuant to the provisions of this section for the payment of Bonds (including 

interest and premium thereon, if any) and coupons shall be applied to and used solely for the 

payment of the particular Bond (including interest and premium thereon, if any) and coupons 

with respect to which such moneys and Governmental Obligations have been so set aside in trust. 

Anything in Section 20 hereof to the contrary notwithstanding, if moneys or 

Governmental Obligations have been deposited or set aside with the Trustee, or a Paying Agent, 

pursuant to this section for the payment of Bonds and coupons and such Bonds shall be deemed 

to have been paid and be no longer outstanding hereunder as provided in this section, but such 

Bonds and coupons shall not have in fact been actually paid in full, no amendment to the 

provisions of this section shall be made without the consent of the holder of each Bond or 

coupon affected thereby. 

SECTION 30. No Personal Liability. No Commissioner of the Port and no officer, 

director or employee thereof shall be individually or personally liable for the payment of the 

principal of or interest or premium on the Bonds; but nothing herein contained shall relieve any 
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42936-5 BJ1/BJ1 68 

such Commissioner, officer, director or employee from the performance of any duty provided or 

required by law, including this Ordinance. 

SECTION 31. Limitation of Rights. With the exception of rights or benefits herein 

expressly conferred, nothing expressed or mentioned in or to be implied from this Ordinance or 

the Bonds is intended or shall be construed to give to any person other than the Port, the Trustee 

and the holders of the Bonds and coupons, any legal or equitable right, remedy or claim under or 

in respect to this Ordinance or any covenants, conditions and provisions herein contained; this 

Ordinance and all of the covenants, conditions and provisions hereof being intended to be and 

being for the sole and exclusive benefit of the Port, the Trustee and the holders of the Bonds and 

coupons as herein provided. 

SECTION 32. Laws Governing; Severability. This Ordinance shall be construed and 

enforced in accordance with the Constitution and laws of the State of Oregon. 

If any provision of this Ordinance shall be held or deemed to be or shall, in fact, be 

inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions 

or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions 

hereof or any constitution or statute or rule of public policy, or for any other reason, such 

circumstances shall not have the effect of rendering the provision in question inoperative or 

unenforceable in any other case or circumstance, or of rendering any other provision or 

provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever. 

The invalidity of any one or more phrases, sentences, clauses, paragraphs or sections in 

this Ordinance shall not affect the remaining portions of this Ordinance or any part thereof. 

SECTION 33. Notices. It shall be sufficient service of any notice, request, complaint, 

demand or other paper, if the same shall be duly mailed by registered or certified mail: (i) on the 

Port, if addressed to The Port of Portland, P.O. Box 3529, Portland, Oregon 97208, Attention: 

Executive Director, or to such address as the Port may from time to time file with the Trustee; 

and (ii) on the Trustee, if addressed to the Trustee at its principal office, Attention: President, or 

to such other address as the Trustee may from time to time file with the Port. 

SECTION 34. Effect of Sundays and Legal Holidays. Whenever this Ordinance or a 

Bond or coupon require any action to be taken on a Sunday or a legal holiday, such action shall 

be taken on the first business day occurring thereafter. Whenever in this Ordinance or a Bond or 

coupon the time within which any action is required to be taken or within which any right will 

lapse or expire shall terminate on a Sunday or legal holiday, such time shall continue to run until 

midnight on the next succeeding business day. 

SECTION 35. Section Headings; Table of Contents. The headings or titles of the 

several sections hereof, and any table of contents appended hereto or to copies hereof, shall be 

solely for convenience of reference and shall not affect the meaning, construction, interpretation 

or effect of this Ordinance. 

SECTION 36. Publication of Summary and Effectiveness of this Ordinance. A 

concise summary of this amended and restated Ordinance including the location within the Port 

where a complete copy of the amended and restated Ordinance may be obtained without charge, 
shall be published within five days after passage, once in a newspaper of general circulation 

within the Port; and shall, except where otherwise provided by law, become effective thirty (30) 

days after enacted. 

PASSED AND ENACTED by the Board of Commissioners of The Port of 

Portland at a meeting held on .qa4-,.-d, 8,2006 and signed by its President on the same date. 

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