EXHIBIT 1

Trc115/

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DECLARATiON

by the

SANTA MONICA AIRPORT ASSOCIATION

and

NOTIFiCATION OF GRIEVANCES

relating to

1984 AIRPORT AGREEMENT

and the

Santa Monica Municipal Airport (SMa)

GRANT AGREEMENTS

,
EXHIBIT "A"
III. HISTORY OF AIRPORT DEVELOPMENT AND PLANNING

This chapter summarizes the significant events shaping the controversy over SMO. Many of the present legal obligations and planning

issues are rooted in events that occurred many years ago. The information presented here is primarily drawn from official records of the City of

Santa Monica, supplemented by information obtained from the United States Government, the Douglas Museum, and individuals familiar with

Airport issues.

A. EARLY HISTORY

1. Creation of the Airport

The Santa Monica Airport is the oldest continuously operating airport in Los Angeles County. It was established in 1919, when the City

leased a portion of a barley field for aviation use. At that time, the aviation industry was in its infancy. The first users of the field were primarily

pilots who learned to fly during World War L Many of the private pilots who used the field were associated with the motion picture industry,

including "stunt flyers."

In 1921 the United States Army established "Clover Field" at SMO. Military training was encouraged because of the perceived necessity

of keeping the country in a state of combat readiness after the war.

The Douglas Aircraft Company moved to Santa Monica in 1922 and established a factory on Wilshire Boulevard where it built military

aircraft. In 1924, aircraft manufactured by Douglas were flown on the first "round the world flight." This event attracted some 50,000 spectators to

Clover Field, bringing public attention to the aviation industry and to the airport. In addition to building military aircraft, the Douglas Company

developed the "DC" series of civilian airplanes. The DC·3 was the first successful mass-produced practical air carrier; it presented a significant

technological advance, and was successfully used for both military and commercial applications.

2. The Park Bond Election

In 1926, the voters of the City approved a bond issue for acquisition of the original 170 acre Clover Field site. The intent was to use the

northern portion of the site for an aircraft factory and flying field, and the southern portion for a golf course. The bonds were retired in 1%5.

After the property was acquired, the Douglas Company moved its factory to the northern portion of the field, the Army established a base

in the northeast corner, and the golf course was laid out over the southern portion. The City accepted a grant deed for the property and adopted an

ordinance regulating the "Use and Parking of Aircraft in Clover Field."

In 1927, the California Legislature passed an act authorizing cities to build and maintain airports. They specifically provided that

airports could be built on existing park lands.

3. Expansion of the Airport

In 1938, with the impending war in Europe, Douglas intensified its manufacturing efforts for the military. Douglas and the Army, citing

safety considerations, requested that the City improve and expand the run\vay and other facilities at Clover Field. A plan was designed that

involved expansion east and west of the original field.

The Eastward expansion involved the re-routing of Centinel a Avenue to Bundy Avenue, the leveling of the hill adjacent to the runway at

Cennnele. and the lengthening and paving of the existing runJf~Y. This was commenced, after approval by the City of Los Angeles in 1940. The

westward expansion was accomplished during World War IJ1)y condemnation of existing residential zoned areas '"yest of the original airfield.

4. World War II

As the United States entry into the World War became imminent, the Federal Government leased the entire airfield from the City. The

current runway was constructed and improved with air traffic control facilities and hangars. The Douglas Company expanded, and began an all-out

manufacturing effort, removing the golf course in the process. At its peak, the Douglas Company employed 44,000 people. As a result of its intense

manufacturing activity, Douglas was largely responsible for a significant increase in the demand for housing in the area. The residential tracts to

the north, east and west of the Airport, which had been sparsely occupied throughout the early history of the field, were subdivided for residential

construction during and immediately after the war. . .

B. Post-War Planning

1. Return of City Control

After the end of \Vorld War II, the Army completed the westward runway expansion and returned the Airport to City control by executing

of an "Instrument of Transfer." Among other things, the Instrument of Transfer contains a covenent by the City that no part of the airport will be sold

or used for other than airport purposes without the consent of the Federal Government.

In the late 1940's and early 1950's, SMO became a base for significant general aviation activity. It should be noted that prior to World

War II. private use of aircraft was not prevalent, general aviation, as it is known today, was still in its formative stages in the post-war period. In

the late 1950's, Douglas shifted its manufacturing emphasis from propellor to jet aircraft. As SMO could not accommodate large jets on its 5000 foot

runway, the center of Douglas' aircraft manufacturing shifted to Long Beach. However, research and development of missile production continued at

the Douglas Santa Monica facility.

2. The Luckman Plan

In the late 1950's, the City retained the architectural firm of Pereira-Luckman Associates to develop a master plan for SMO. The "PereiraLuckman Plan", completed in 1958, envisioned Santa Monica as the hub of the aerospace and electronics industry in Southern California. It was based

on SMO's "destiny" to be the leading general aviation airport in the nation, because of its location and projected volume of operations. An airport

designed to accommodate substantial corporate jet traffic was planned, featuring development of a terminal. office complex, hotels and restaurants,

and new aviation facilities.

In 1962, after commissioning the engineering firm of Henry Babcock to perform a financial and technical analysis of the Luckman Plan, the

City Council approved Phase [of the project. This Plan stands as the currently approved Master Plan for SMO on file with the Federal Aviation

Administration (City Map #2556-A).
The Douglas Controversy

The Luckman Plan avoided the issue if whether Douglas would continue to occupy its facilities north of the Airport. In 1962, Douglas

proposed condemnation of approximately 140 acres of residential property to the north and west of the airport. In order to construct its corporate

headquarters and expand parking facilities. A citizen outcry erupted in Sunset Park. The citizens proposed that the City close the Airport rather

than allow condemnation of residences.

In response to the citizens proposal, the City Attorney wrote an opinion that, because of the Instrument of Transfer and other contracts

between the City and the United States the City could not unilaterally close the Airport. The City Council offered to allow Douglas to build on both

sides of the Airport. Douglas rejected the proposal, and ten years later, the Santa Monica factory was closed.

The Airport, however, remained. During the early and mid 1960's SMO rivaled Van Nuys Airport as the busiest general aviation airport

in the nation, reaching a peak of 374,000 operations in 1966. Noise from aircraft using SMO, tolerated previously because of the important role

Douglas played in the local economy, grew both in volume and as a source of community annoyance.

In 1964, the City entered into a lease with the [anss Development Corporation for construction of the office building/terminal proposed by

the Luckman Plan. In the mid-1960's, the City entered into several leases with fixed base operators (FBO) for parcels on the airport property, most

of which expired in 1979. The City also entered into several grant agreements with the United States for construction of the Air Traffic Control

Tower and several runway improvements and navigational aids. The grant agreement for tower construction (expiring in 1988), the lease for the

tower (renewable by the United States until 2015). and FBO lease with Cloverleaf Aviation (expiring in 1996) all contain language indicating that

SMO must be operated as a public use airport.

C. Lej;al Controversies

1. The Noise Controversy and the let Suit

In 1966, Western Commander, an FBO at the Airport, began sales and service of the Jet Commander, an extremely nojsy airplane, emitting a

high-pitched piercing whine that annoyed citizens living near the airport. The City imposed some regulations intended to limit jet operations; it

did not, however, ban jets as citizens had requested. In late 1966, 232 homeowners filed suit against the City for damages resulting from jet noise,

(Nestle v City of Santa Monjca.) .

N.e.s..tl.e:ultimately reached the State Supreme Court, and established the precedent that an airport operator could, in certain circumstances,

be held liable for damage caused by airport noise. The precise issue of whether noise from SMO was sufficiently severe to warrant liability was

never established, After hearing testimony from noise experts, appraisers, City officials, and residents, the trial court found that noise from planes

using the airport was not so severe that it diminished the value of the plaintiffs' properties, and entered judgment for the City on the condemnation

claim. This finding was based on the operation of the airport in November, 1966 -- total annual operations of 356,000 and 5·6 turbojet operations per

day. The Court of Appeal affirmed the decision of the trial court.

In 1972, the California Supreme Court affirmed the judgment of the trial court on the condemnation claim. However, it reversed the trial

court's ruling that the City was immune from liability for nuisance, and remanded the case for a trial on these issues. In the original trial, court found

that noise from the airport was not a nuisance. The question of whether this finding precluded trial of the nuisance issue on remand was never

resolved, as the case was settled and dismissed after the City adopted an ordinance banning all jet aircraft. While the settlement papers do not

reflect this, there is no doubt that the jet ban was the motivating cause behind the settlement.

2. RecognitioD of the Noise Probl~

In the late 1960's, noise became a recognized form of industrial pollution, and governments at all levels began to address the problem. The

County of Los Angeles retained the Northrop Corporation to measure noise at all public airports in the County. Based on this analysis SMO was

designated as having a "noise problem:" this designation was deleted after the Cit)' adopted a ban un jet aircraft. The State of California adopted

airport noise standards which required all airports to reduce noise below a "Community Noise Exposure Level" (CNEL) of 75 decibels (dB) by 1970, 70

dBby 1980.and 6S dB by 1985.

3. The Airport Neighbors' Forum and Noise Regulations

In 1974, an Airport Neighbor's Forum consisting of representatives of neighborhood and aviation interest was e"stablished. The forum

developed several proposals for mitigating airport noise that were subsequently adopted as City regulations. Notable among these proposals was a

flight pattern requiring a straight departure to the west, prohibiting turns before Lincoln Boulevard.

In 1975, the City adopted a Noise Element of its General Plan which included noise contours prepared by the consulting firm of Bolt,

Beranek & Newman.

Between 1973 and 1977, the City Council adopted several ordinances intended 10 reduce airport noise. They included:

A total ban on jet aircraft

A Single Event Noise Exposure Level (SENEL) limit of 100 dB.

A curfew on departures between 11 :00 p.m. and 7:00 a.m.

A ban on helicopter pattern flights.

A prohibition on "touch and go" pattern flights on nights, weekends, and holidays.

4. The First Federal Court Challenge

In 1977, the Santa Monica Airport Association, representing local aviation interest, filed suit in federal court to invalidate these noise

regulations on grounds that they were preempted by federal laws regulating aviation and interfered with interstate commerce. Trial commenced in

1979; voluminous evidence on aircraft noise, effects of regulations on air traffic and commerce, and related matters was presented. In August. 1979, the

trial Court rendered judgment, as follows:

a. The City, as proprietor of the Airport. is liable tor damage caused by noise. In order to protect against this damage and to protect

its environment, the City may enact reasonable regulations intended to abate aircraft noise.

b. The jet ban was invalid because it irrationally discriminated between aircraft on the basis of engine type and not noise level.

That is, jets such as the Cessna Citation were excluded from SMO although they made less noise than propellor aircraft that were allowed to use

SMO.

c. The 100 SENEL limit, the curfew, the ban on helicopter patterns, and the touch and go restrictions were upheld as reasonable

laws which did not interfere with federal control of the airspace and did not directly burden interstate commerce.

d. The court did not find it necessary to resolve conflicting testimony as to the precise noise problem at SMO and numerous other

similar matters,
e , The court expressly declined to rule on what would happen if the City reduced its SENEL limit so as to exclude all jets as well as

all propel lor ajrcraft making comparable noise.

5. The SecQnd Federal CQllrt Challenge

Af t errhe judgement, Dr. Karl Kryter, author of the leading text, The Effect of Nojse on Mao (1970), and witness for the City, prepared a

technical repo.(,showing forecast noise and fleet reductions from various possible SEr<EL limits. In November, 1979, the City Council adopted an

ordinance 10 "VVer1ng the SENEL limit from 100 to 85 dB. A Negative Declaration of environmental impact was approved, over the objections of

aviation rnt e r-es who claimed that some of the technical data were faulty and that impacts on regional and national aviation systems had not been

studied.

National aviation interest brought a second suit in federal court challenging the 85 dB limit on grounds that it was a disguised jet ban, that

it interfered vvih interstate commerce, and that no Environmental Impact Report (EIR) had been prepared as required by California law. Judge Hill,

who had presicled over the 1977Santa Monica Airport Association case, granted a preliminary injuction against the ordinance before it ever became

effective. The injuction was based on the judge's initial conclusion that the ordinance was an attempt to evade his ruling invalidation the jet ban and

that it probablydirectlyburdened interstate commerce. He declined to rule on the EIR claim, holding that the question should be decided by the

state courts.

D. j\ecent Planning Studies

1. The ECQnomic Research Associates Stud)'

AbOll.t1970, it became apparent that the Douglas Company was leaving Santa Monica. The economic consulting firm of Economic Research

Associates prepared a report for the City showing that the value of the Airport property for office and retail development far exceeded its value as

an airport. The Airport Commission and the Recreation and Parks Commission evaluated proposals for development of park ao~ revenue-generating

development on the Douglas site. A renewed controversy over closure of the Airport developed, resulting in an opinion of the State Attorney General

that the Airport could not be closed because of various legal obligations. . .

2. The Williams-Kuebelbeck Stud), and the AUQ)'Q Group RepQrt

Most of the FBO leases expired in 1979. The City Council contracted with the William-Kuebelbeck economic firm to evaluate the revenue

impact of several development scenarios for the airport property. The Williams-Kuebelbeck report, produced in 1980, contained similar conclusions

to the 1970 Economic Research Association report. While revenue potential from aviation uses was substantial, it was far less that the potential

revenue from mixed commercial uses. The City Council notified airport tenants on month-to-month leases that their tenancies would be terminated in

one year. In 1982 the Arroyo Group was retained to study alternative physical layout plans for the Airport property. The product at this study was a

comprehensive assessment of various land use alternatives. .

E. The Present CQntrQvers)'

In June, 19811 the City Council, adopted a Resoluti~declaring its intention to close the Airport when legally possible, to develop interim

aviation facilitieS on a portion of the property, to adopt a comprehensive noise abatement program, and to develop the residual property for uses

compatible with other community needs.

Two FBO's left SMO during this period. Wings West, which wanted to provide scheduled commuter service, moved to LAX. Briles Wing &

Helicopter was evicted in 1981 following several crashes involving its helicopters.

After adoption of the City Council policy resolution, the Santa Monica Airport Association (SMAA) filed a lawsuit in State coud and an

administrative complaint with the FAA. The claim alleges a concerted activity by the City to close SMO directly or indirectly, and has three

primary legal bases:

a. The City is impairing the utility of the airport which, under federal law and contracts, must be kept open for public use without

unjust discrimination and without interfering with interstate commerce.

b. The City is attempting to transfer land devoted to airport purposes by the Instrument of Transfer and. t.he 1926 Park Bond Election

by which the Airport was originally acquired.

c. No study of the environmental impacts of the City's actions has been performed.

In addition, individual FBO's have also sued the City claiming violations of various contractual development rights and unfair trade

practices. In 1982, the United States Department of Justice informed the City Attorney that it intended to tile suit against the City for violations of

federal law and contracts in the operation of the Airport. The City responded that it did not believe it was acting unlawfully, and requested an

opportunity to resolve the matter amicably.

F. Analysis Qf Cit)'·s Legal ObligatiQn tQ Maintain SMa.

According to the City Attorney it appears the City is obligated to continue operating the airport due to various binding commitments

contained in three documents:

o The 1926 Park Bond Election, by which the original land supporting Clover Field and the old Municipal Golf Course was

acquired.

The 1948 Instrument of Transfer, by which the United States returned control Qfthe Airport to the City after world War II.

The Grant Agreements with the United States and the leases to the United States executed after approval of the 1962 Airport

Master Plan.

While the irrevocable dedication of the airport property to park or airport uses under the 1926 Park Bond is Qpen to debate. there seems

little doubt that both the Instrument of Transfer and later contracts with the United States are specifically enforceable. There does not seem to be a

realistic possibility that a court would rule that the City possesses the present ability to close SMO; the question becomes the length and sCQpeQfthe

City's commitment to operate the airport.

The commitment to operate SMO, in terms of time and scope of services offered, are as follows:

IlMI: g;QpJ;;

1988 (last grant expires) Runway and Tower only

1996 (private lease expires) Recreational Airport

2015 (tower lease expires) Utility Airport

Transport Airport
Perpetuity (Instrument of

Transfer and Park Bond) Fully Developed Airport

It is the City Attorney's current position that a court would probably rule.:

I. The City must keep SMO open to the public until 2015.

2. The City may set reasonable noise goals, and meet them by designing an appropriate fleet mix, aviation base, and noise control

program.

3. If the aviation base provided is too small or the noise regulations to strict, the court is likely to rule that the implementation of

the Airport Plan impermissible burdens interstate commerce and require that a new plan be designed, or jeopardize residual land development by

enjoining transfer of residual land through a strict reading of the Instrument of Transfer or Park Election.

G. Current Planning Process

Following a series of negotiation meetings between the City Manager and the FAA in response to the FAA's notice of intent to file suit, the

City agreed to plan in good faith for the operation of SMO consistent with the City's legal obligation and environmental goals. The City Council

authorized consultant contracts for the preparation of an Airport Master Plan and a related Noise Study. The City and the national aviation

interest, with the consent of the FAA, agreed to dismiss the pending federal court action on the condition that specific airport layout

recommendations be presented to the City Council for approval no later than November 13, ]983.

This report is intended to satisfy the City'S obligation to prepare the required studies and recommendations.

From Don Brandsen: Chairman of the Legal and Political Action Committee.

This report is from the writing of the City Attorneys office. As a whole it spells out one of the

most truthful statements ever produced by this City about SMa. Except for some n~inor details

and a few political statements herein contained this document is submitted to the BOD of. SMAA

as the basis to spell out the history, conflicts, and settlements at SMa from 1919 to 1983.

The Chairman therefore moves that SMAA accepts this as a document of historical fact.