**____________________________________ )** 

**Sun Valley Aviation ,**  **Inc. )**  **) Complainant**  **) )**  **FAA Docket No. 16 -** **10 -** **02 v.**  **) )**  **Valley International Airport, )**  **City of Harlingen, TX )**  **) Respondent**  **)** 

### ) **FAA Investigative Action Meeting**  **Notes The following notes summarize discussions during the FAA Investigative Action Meeting, held**  **February 16, 2012. In attendance at this meeting were representatives from the FAA, the Complainant, and the Respondent.**  The F AA used the timeline herein generally to direct the discussion. The timeline was created based on documentation submitted to the Administrative Record comprising FAA Exhibit 1 of the Director’s Determination as of the date of the Meeting. Any objections by either party to the timeline assembled have been noted. These meeting notes also include certain comments and opinions expressed by the parties discussed during the meeting. This document has been added to the Administrative Record as FAA Exhibit 1, Item 22, Exhibit A. Welcome, overview, and introductions. Complainant stated case. Respondent stated case. FAA reviewed documentation submitted to the Record using timeline: Nov - 2007 - SVA expressed formal interest - agreed by Moran and C. Kornegay. Jan 2008 – SVA was told no to Gulf lease but given option behind or next to Gulf. Airport came back and offered to build new facilities. SVA also offered constructing a new facility. FAA asked - Why was SVA denied opportunity to negotiate on Gulf lease – M . Vela had said let’s go forward and get bonds to build new facilities. Mr. Browning recommend ed an RFP.FAA asked - did Respondent understand FAA Chambers’ guidance changed when no other

interested parties caveat changed. FAA asked - Had VIA ever con structed facilities using bonds? Browning – yes, revenue bonds used to finance terminal bui ldings and Gulf FBO facilities built in 1988/1989

- built with city bonds. Similar to proposal made by Respondent to SVA. FAA asked – Respodnent, please explain lease process. M. Brownning stated there are serveal steps and depends on whether or not airport funds need to be used. 1) Lease application/form submitted by proponent. Browning confirmed application his is not included in the min stds. 2) Airport Board makes deci sions if more info is needed, or may approve if not 3) More info may include drawings, specifications for construction, etc – Complainant was asked to do this, and did so 4) Return to Airport Board with proposed lease agreemenet – approved or denied at that time - by then already has gone through counsel and airport staff 5) If airport will provide facilities or any funding is needed to make the lease happen, the City Commission make approve a budget item allowing the airport to spend the money. Leasing is only th ing the airport board can do – the Board may not spend airport funds that have not been allocated and approved for specific projects by the City Commission. FAA asked – How long did Marine Air Wing Lease take? Browoning said quick – about 30 days since no funding was needed FAA asked – when can the airport budget be amended? Browning said at anytime. Usual cycle to submit FY in Aug, midterm amendments in March or April,, but can amend anytime. FAA asked – how long does it take for City Commission to amend budget per Airport request? Browning said usually about a month. With no funds, 30 days; with funds more like 60 so Airport Board can approve and send on to City Commission to approve budget amendment. FAA asked – Does the City Commission approve the air port to spend money from the airport budget? Browning said yes that is correct. Feb 18, 2008 – Gulf leases signed although lease did not expire until March 31, 2008 . Respondent – signed circa March 1 April 2008 – SVA and VIA began negotiations – when the certificate of obligations idea was presented Lease application filed --- following ensued May 2008 – VIA Board approved going forward with negotiations – mtg min 5/19/08 Summer 2008 – SVA submitted all required documentation requested by Board (June 30)Sept 2008 – Board established 3 - member committee to review and provide recommendations on the

proposal by SVA Nov 2008 – Board passed a motion supporting SVA project and recommended City finance new building with Certs of Obligations. Found out needed su per majority – although part of charter Mar 9, 2009 – Special City mtg – SVA presented, got 3-2 vote but 4-5 required. Mar 12, 2009 – SVA met with Browning and McC ullough to do a land lease and have SVA build its own facilities Apr 2009 – Airport Board appointed a committee to negotiate with SVA on new proposal – explain what transpired from March 9 – April 27 Apr 21, 2009 – Browning emailed Kornegay to get a meeting date Apr 27, 2009 – Pat Kornegay letter to Airport Board with grievances April 28,2009 – Browning meets with McC u llough and Hall to discuss Kornegay letter. According to the Special Prosecutor’s report (Item 7, Exhibit C12) on pages 8 and 9, the decision is made at that time to “suspend negotiat ions until resolution of the matter,” Additio nally, the SPR stated that “since the letter of April 27 lacked the formalities u nder Section 6.02 of the Ordina nce it did not initiate action by the City Attorney.” FAA asked - Letter was against Solis; Mr. Ledesma was not until May 13 . Parties agreed. FAA asked - The airport did not contact FAA about what it should do? - Moran says correct . On May 4, 2009 – Pat Kornegay called Browning to discuss lease negotiations to continue to try to get a date (Item 7, C12 on page 9) On May 8, 2009- After consultin g with Ledesma, Browning told Kornegay “lease negotiations could not resume until the letter of April 27 was withdrawn in writing.” (Item 7, C12 on page 9) May 15, 2009 – Pat Kornegay filed formal complaints Different dates – May 13 and 15 – affirmed by parties. Aug 25, 2009 – Special prosecutor’s report clears Solis and Ledesma, but one sentence at the end of the report leads to City Council launching Kornegay ethics investigation FAA asked why Sullivan? Moran stated district attorney of Cameron County d id it because City attorney said no. FAA asked – Airport board did not continue to negotiate because of an “on going investigat ion?” Respondent agreed.Sept – Nov 2009 – City Council meetings discussing initiating ethics investigation, although subject of

investigation never named in meetings. FAA asked – At what point did Complainant learn it was Mr. Kornegay being investigated? Unsure – defer to Record . FAA asked – Was SVA not ified ( Mr. Crane ) by Mr. McCullough that P Kornegay was s ubject of investigation? NO by P Kornegay and Crane and Scaief. Moran noted that in early 2010 P Kornegay stepped aside. Private investigation by independent attorney in Brownsville ensued per Record. Mar 23, 2010 – Cameron County district attorney requested Attorney Pro Tem to investigate Pat Kornegay. Assigned Tom Sullivan. FAA asked – Was this based on report stating Kornegay allegations raised issues. COURT ORDER just discusses investigation of P Kornegay, Not until Indictment did SVA come out. Moran acknowle dged. Apr 2010 – Pat Kornegay resigned from SVA president, stays on as Director July 13, 2010 – Respondent asks SVA for documentation proving Kornegay no longer president; provided by SVA July 13, 2010 – Formal complaint at ADO...goes to Respondent for Answe r, due in 30 day. Respondent requested one week extension. Aug 20, 2010 – Respondent responds to FAA inquiry over informal complaint, seeks FAA guidance Sept 15, 2010 – Kornegay and SVA indicted... although SVA was not named as part of investigation Oct 22, 2010 – Kornegay and SVA cleared by Judge – quashed – Oct 25, 2010 – Moran notified Nicely re: Judge’s Order Respondent noted on Oct 26 Browning letter to SVA – let’s move forward based on pending application from 2009 and past negotiations – first overture since Apr 2009 (18 months) Nov 4, 2010- FAA Letter saying “now imperative” – Respondent noted on Nov 2, 2010 – meeting between SVA, McCollough, Browning and Scaief. No other property discussed but north GA ramp. Nov 8, 2010 – Respondent writes to SVA saying ready to negotiate again - Respondent notes met with with Complainant o n 11/2 Nov 16, 2010 – Airport Board approves budget amendment to allocate funds for north GA ramp Respondent and Complainant agree - $75K of $1.5M total project costRespondent added Airport Board also voted to approve the lease with SVA

Dec 15, 2010 – City voted against budget amendment sought by Airport Board to fund north GA ramp FAA asked - Without funding for north GA ramp, was the leasehold where SVA would construct new FBO not accessible? Both parties agreed. FAA asked – let’s discuss the lease – Can it be executed if not planned? E.g. if no space planned or identified, can the Airport Board execute a lease? Respondent said they needed a space. FAA added the following items to the Record under FAA Exhibit 1, Item 22: Exhibit A1 Nov 9, 2010: Email to Villa de la Rosa from Browning –

 Complainant s ubmitted this document, Respondent did not object. Identified airport funded projects and investments, highlighting those allegedly benefitting Gulf. Exhibit A2 City of Harlingen, Texas – City Administration, Airport Board: Functions of the

Board and Mem bership  FAA added this item after discussions from this meeting to identify role of Airport Board in the Record Exhibit B May 19, 2010: AIP Grant Application to, in part, Design North General Aviation

Apron Expansion  FAA added this and three sub exhibits to the Record to clarify allegations and discussions regarding improvement to the airfield and funding decisions made by the Respondent Exhibit B1 AIP Sponsor Certification – Selection of Consultants Exhibit B2 AIP Sponsor Certification – Project Plans and Specifications Exhibit B3 AIP Sponsor Certification – Drug- Free Workplace Exhibit C Jul 8, 2010 Grant Offers and July 13, 2010 Executed Grant Agreements between

FAA and the Respondent for South GA, East GA, engineering for North GA, et al  FAA added this exhibit to the Record to clarify allegations and discussions regarding improvement to the airfield and funding decisions made by the Respondent Exhibit D Dec 15, 2010 City Commission Meeting Minutes

 FAA added this exhibit to the Record per Com plainant, without objection by the Respondent. FAA Discussions – Reviewing July 2010 – the Respondent requested and received grants to do the engineering design for the north GA ramp when it also applied for and received funds for the grant match to construct the south and east general aviation ramps abutting the Gulf leasehold? – Respondent confirmed – per Ex CFAA asked – The construction grant match for the east and south ramps were included in the airport

budget and approved by City Commission? Respondent confirmed. FAA asked – The construction grant match for the north GA ramp was included in the airport budget and approved by City Commission? Respondent stated airport board included it but noted City Commission vetoed that line item. Complain ant provided Exhibit D, Dec 15 Meeting Minutes per above. FAA asked – what was the last time a budget amendment was submitted? Respondent noted a request for $50K for two mobile refuelers for Fed Ex

- funding for ground service equipment – took place ju st recently. FAA asked – is there an executable lease on the table? Respondent stated neither party has signed it – they do not have the north GA ramp funding nor do they have the funding fort the associated parking lot at this time . But once it is added to the budget, the lease can be executed. Complainant stated – Respondent received guidance from FAA – good faith niegeiations – did not hold up that end of the deal since no ramp is available. FAA asked – is new south ramp expansion available? Respondent said no – Building restriction line and other issues. FAA revisited 2008 lease executed with Gulf – asked Respondent about those spaces and moving Gulf into one. Respondent opted to review other options. Complainant stated lease on the table has no infrastructure – no cite to location. Since City Commission did not authorize funds to add infrastructure development of north GA ramp, no room at the airport for them. FAA asked – Respondent , where else can you put them? ALP brought out – pa rties reviewed options that would provide complainant suitable location – FAA advised no need to build building, location had to be offered that was suitable per precedent.