UNITED STATES DEPARTMENT OF TRANSPORTATION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, DC 

Scott Meyer 

Complainant 

Docket No. 16-12-14 

v. 

City of Cincinnati, Ohio 

Respondent 

DIRECTOR'S DETERMINATION 

I. INTRODUCTION 

Complainant, Scott Meyer (Complainant/Mr. Meyer) states that he was directly and substantially 

affected by the closure of the Blue Ash Airport (Airport) because he is a pilot who rented 

aircraft, received aeronautical training and purchased aviation fuel from businesses on the 

Airport. [FAA Exhibit I, Item 2, page 2] 

The Respondent is the City of Cincinnati (Respondent/City) and was the sponsor of the Blue Ash 

Airport (ISZ) until its closure on August 29, 2012. 

The Complainant alleges that $6 million in funds received by the City of Cincinnati from the sale 

of the Blue Ash Airport was used for non-airport purposes in violation of Title 49 U.S.C. 

§ 47133, FAA's Revenue Use Policy (Policy and Procedures Concerning the Use of Airport 

Revenue) and Grant Assurance 25, Airport Revenues. 

The Complainant makes a number of allegations, identified below, and also states, " ... I have 

evidence that a substantial portion of the money received was used for illegal expenditures- that 

Cincinnati used the revenue from the sale of airport property for non-aviation related expenses 

in violation of the Statute and Policy. When private citizens and aviation-related organizations, 

including the FAA, began questioning Cincinnati about the location and use of the airport sale 

revenue, Cincinnati did not respond and instead initiated plans to rescind the Agreement with 

Blue Ash, close the airport, and enter into a new Conveyance Agreement so that Cincinnati 

could avoid the requirements of the Statute and use the money for other purposes than 

aviation .. .! believe that Cincinnati had already been using the money illegally and part of the 

reasoning behind the rescission and new Conveyance Agreement was to hide the fact that it had 

already knowingly misappropriated funds. " [FAA Exhibit 1, Item 2, pages 1-2] 

I 
The Complainant alleges that the Respondent violated "49 US. C. § 47133 and the regulations 

enacted thereunder, specifically 64 FR 76961

, the FAA's Policy and Procedures Concerning the 

Use of Airport Revenue. " The Complainant identifies 19 alleged violations. [FAA Exhibit I, 

Item 2, pages 2-5] 

The Complainant states "Based on the ... violations, I request a formal investigation into 

Cincinnati's use of the revenue received from the 2006 sale of Blue Ash Airport property". 

[FAA Exhibit 1, Item 2, page 5] 

The City denies the allegations in its Answer, and says it refunded the entire $6 million, and 

claims the action is moot. [FAA Exhibit 1, Item 3, pages 1, 3 and 5-6] In its Memorandum in 

Support of its Answer, the City contends, "The City engaged FAA in extensive discussions about 

the grant funding for reconfiguration of the Airport in the years immediately following the 2006 

Agreement ... In early 2010, the City again initiated informal discussions with FAA staff about 

obtaining grants for reconfiguring the Airport. During those discussions, the City made clear its 

desire to use the sales proceeds for the streetcar projects and other City projects, and also 

indicated that it was considering closing the Airport .... In the course of the 2010 discussions, 

FAA made clear its position that the proceeds from the 2006 Agreement were Airport revenue 

and were subject to revenue diversion rules, as stated in the letter from FAA to Cincinnati Mayor 

Mallory regarding the Airport. That position came as a surprise to Cincinnati because 

Cincinnati understood that the restrictions on the use of Airport revenue had expired in 2003 

when the conditions of the 1983 Grant expired, and that the City could use the proceeds from the 

2006 Agreement for non-Airport purposes .... [FAA Exhibit 1, Item 4, page 7] 

Upon learning of FAA 's revenue use concerns, the City administration voluntarily took measures 

to ensure that the City maintained the full balance of the Blue Ash proceeds in Fund 757 and 

would continue to maintain that balance pending resolution of the matter with FAA. " [FAA 

Exhibit 1, Item 4, page 8] 

The City also states, "The City and the FAA have worked cooperatively to resolve FAA's 

concerns that proceeds from the 2006 Agreement were subject to revenue diversion rules. To 

ensure that it did not violate any federal obligation, and that FAA 's concerns were folly 

addressed, Cincinnati did not spend those proceeds for any non-Airport purpose, and ensured 

that all of the proceeds were preserved pending a final resolution of FAA 's concerns. " [FAA 

Exhibit 1, Item 4, page 1] 

With respect to the allegations presented in this Complaint, under the specific circumstances at 

the Airport as discussed below and based on the evidence of record in this proceeding, the FAA 

finds the City of Cincinnati is not in violation of its Federal obligations at this time. The FAA's 

decision in this matter is based on applicable Federal law and FAA policy, review of the 

pleadings and supporting documentation submitted by the parties, reviewed by the FAA, which 

comprises the Administrative Record reflected in the attached FAA Exhibit 1. 

1 Federal RegisterNol. 64, No. 30/February 16, 1999. Policy and Procedures Concerning the Use of Airport 

Revenues. 

2 See FAA Exhibit I, Item 20 

2 
The basis for the Director's conclusion is set forth herein. 

II. Parties 

A. The Airport and its Federal Obligations 

Prior to its permanent closure by the City of Cincinnati on August 29,2012, the Blue Ash 

Airport operated on about 228 acres in Blue Ash, Ohio. The airport was owned and operated by 

Cincinnati. The Airport was established in 1921 by private aviators, and it remained a privatelyowned airport until around 1950 when Cincinnati purchased the Airport and renamed it "Blue 

Ash Airport." The Airport served general aviation and consisted of a single 3,500 runway. 

Cincinnati accepted its last AlP Grant for the Airport on September 27, 1983, for $320,992.00 to 

rehabilitate the runway, install apron lighting and expand the apron. 

B. Complainant 

Scott Meyer is a pilot who rented aircraft, received aeronautical training and purchased aviation 

fuel from businesses on the Airport prior to its closure. [FAA Exhibit 1, Item 2, page 2] 

III. Background & Procedural History 

Scott Myer filed a Complaint alleging that the City of Cincinnati violated Title 49 United States 

Code (USC) § 47133, Grant Assurance 25, Airport Revenues, and FAA's Policy and Procedures 

Concerning the Use of Airport Revenue. The complaint contains 19 allegations: 

1. $300,000 [of airport revenue J was paid toward the Mt. Auburn Place Condos Project. 

2. $11 million [of airport revenue] was earmarked for the construction of Cincinnati's 

streetcar system. 

3. On November 28,2007, Cincinnati passed Ordinance 416-2007 which ... directed that 

revenues received from rental or sale of any City property purchased for any purpose 

other than expressways, Blue Ash Airport, Park Board or Recreation Commission 

purposes, be deposited into Fund 757, Miscellaneous Permanent Improvement Fund, for 

the purpose of allowing the proceeds from the sale of the Blue Ash Airport property to be 

deposited into Fund 757." 

4. On October 22, 2008, Cincinnati passed Ordinance 354-2008 authorizing the transfer of 

$200,000 from the Miscellaneous Permanent Improvement Fund 757 to develop a lead 

remediation work plan at the Blue Ash Airport ... "As Cincinnati conveyed title to Blue 

Ash in June, 2007, the property requiring the lead remediation was no longer an airport. 

Since it was no longer an airport, Cincinnati could not spend revenue from the sale of the 

airport land on lead remediation on that property. " 

5. On January 26, 2011, "Cincinnati passed Ordinance 7-2011 authorizing the City 

Manager to accept and appropriate a grant for $1,087,500 from the Ohio's Clean Ohio 

Revitalization Fund (CORF) to provide resources to remediate lead contaminated soil at 

the Blue Ash Airport .... and authorizing the transfer and appropriation of $3 7 5, 000 for 

the purpose of providing the 25% local match funding requirements for the grant. " 

6. On August 1, 2012, "Cincinnati passed Ordinance 294-2012 authorizing the transfer of 

$170,000 from the Miscellaneous Permanent Improvement Fund 757 to provide 

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resources to complete the removal of contaminated soil and underground storage tanks 

from Blue Ash Airport Property to be transferred to the City of Blue Ash and for costs 

associated with final reporting to the City of Blue Ash. " 

7. "According to the Cincinnati 2011-2016 Capital Investment Program, Volume II, Exhibit 

2, page 13, in 2010, $250,000from the Blue Ash Airport Sale was placed in the General 

Capital Investment Program ... and it was commingled. " 

8-19 "According to the Searchable Expenditure Database provided on the City of 

Cincinnati's website, Cincinnati has spent over $2.8M from the Miscellaneous Permanent 

Improvement Fund from 2009-2012 .... it is also extremely likely that this money was spent on 

purposes other than for airport related expenses. " 

[FAA Exhibit 1, Item 2, pages 1-5] 

In its Memorandum in Support of its Answer, the Respondent (City) provided the following 

background: 

Initial Efforts to Sell the Airport 

The Respondent states that, "By the late 1990s, the City began to explore options to sell or close 

the Airport. Due to declining aviation demand at the Airport, the cost of maintaining the Airport 

exceeded its revenue and the City had to subsidize Airport costs from revenue generated at 

LunkenAirport. Accordingly, Cincinnati began to explore options for disposing of the Airport, 

including by transferring ownership of the Airport to Blue Ash. Cincinnati understood that the 

Airport was subject to the grant conditions of the 1983 Grant, which restricted Cincinnati's 

options with regard to the Airport, but that those restrictions would no longer apply after the 

obligations of the 1983 Grant expired in 2003. 

As discussions with Blue Ash became more focused in 1999-2000, Cincinnati realized that its 

options for disposing of the Airport, and making use of the sales proceeds, were limited by the 

1983 Grant obligations. To address this problem, local officials worked with the regional 

Congressional delegation to secure legislation in 2000 that would have released Cincinnati from 

the obligations of the 1983 Grant provided Cincinnati sold the Airport to Blue Ash and Blue Ash 

committed to operate the Airport. Under that legislation, Cincinnati could have treated the 

proceeds of the sale as non-Airport revenue. Subsequently, however, the City of Blue Ash 

indicated that it did not want to acquire and operate the Airport as contemplated in the 2000 

legislation. " [FAA Exhibit 1, Item 4, page 4-5] 

The 2006 Purchase and Sale Agreement 

The Respondent states, "After the 1983 Grant expired, Cincinnati began again to consider 

options for disposing of the Airport, including selling all or part of the Airport to Blue Ash. 

Between 2004 and 2006, Cincinnati and Blue Ash discussed a number of potential uses of the 

Airport property, including several economic development projects, Airport closure, and other 

options. Ultimately, on or about November 8, 2006, Cincinnati and Blue Ash entered into the 

2006 Agreement, which provided for Cincinnati to sell to Blue Ash approximately 130 acres of 

the Airport (the 'Park Property ') .. .for a total price of$37.5 million ... The purchase price was to 

4 
be paid in annual installments in varying amounts as follows: (a) $1 million per year for 10 

years starting at closing of the agreement; (b) $1.25 million for 10 years beginning in 2017; and 

(c) $1.5millionfor 10 years beginning in 2027. The 2006 Agreement provided that Cincinnati 

would retain ownership of the remaining 100 acres, including the Airport's runway and would, 

subject to receiving adequate funding from the FAA, reconfigure the Airport to operate on the 

remaining 100 acres or, alternatively, close the Airport. [FAA Exhibit 1, Item 4, page 5-6] 

Rescission of the 2006 Agreement 

In April, 2011, following months of informal discussions, FAA provided an informal 

memorandum summarizing it's position that the proceeds from the 2006 Agreement were Airport 

revenue subject to revenue diversion rules. That memorandum also suggested a solution to the 

City's problems, however. FAA staff indicated that the sales proceeds would not be considered 

Airport revenue if Cincinnati and Blue Ash were to take the following steps: (1) rescind the 2006 

Agreement, including returning the proceeds to Blue Ash, returning to Cincinnati title to the 

Park Property, and otherwise returning the parties to the status quo ante, and (2) restructure the 

transaction to sell the Airport to Blue Ash as provided in the 2000 Legislation. After that, any 

proceeds from any prospective sale of the former-Airport property would not be Airport revenue. 

When it became clear that Blue Ash was not willing to acquire and operate the Airport, the City 

and FAA staff continued to discuss possible solutions in order to address FAA's revenue 

diversion concerns and allow the City to use the proceeds from the 2006 Agreement for nonAirport purposes. After Cincinnati decided to close the Airport permanently, the City and FAA 

staff discussed, among other options, the concept that if Cincinnati and Blue Ash were to rescind 

the 2006 Agreement before the Airport closed, the proceeds from the 2006 Agreement would be 

returned to Blue Ash and therefore no longer be Airport revenue. If the City were to enter into 

an entirely new transaction after the Airport closed, any future proceeds from the sale of the 

former Blue Ash Airport property would not be considered to the Airport revenue subject to 

revenue diversion rules. [FAA Exhibit 1, Item 4, page 9] 

The City's handling of the Proceeds from the 2006 Agreement 

Under Ohio law, the City was required to place payments received from the sale of real property 

into the account that was used to purchase that property or, in the absence of such an account, 

into a 'special account' for permanent improvements. In 2007, when the City began to receive 

proceeds from the 2006 Agreement, it was discovered that the account used to acquire the 

Airport in the early 1950s had been closed at some point in the intervening years. City Council 

enacted Ordinance No. 416-2007 on November 28, 2007, directing that the proceeds from the 

2006 Agreement be deposited into part of Fund 757 (Miscellaneous Permanent Improvement 

Fund) (Fund 757). Fund 757 was managed consistently with City policy for handling similar 

payments. The City has no other 'special fund' for 2006 Agreement proceeds that would have 

complied with the Ohio law requirements for holding revenue from the sale of permanent 

improvements. Contrary to Complainant's assertion in Paragraph 7 of the Complaint, the City's 

Lunken Airport Fund 104 (mistakenly referred to by Complainant as the "General Aviation 

5 
Fund") does not qualifY as a special account for holding revenues from permanent 

improvements. [FAA Exhibit 1, Item 5, pages 6-7] 

Fund 757 serves as the account for permanent improvement revenues, expenditures, and 

transfers unrelated to the Blue Ash Airport. Generally speaking, Fund 757 revenue and 

expenditures relate to the disposition (e.g., sale and lease) of City real estate and other 

permanent improvements as defined under Ohio Revised Code. [FAA Exhibit 1, Item 4, pages 6-

7] 

In the Reply to the Answer, the Complainant continues to argue that, " ... at no point has the 

Respondent demonstrated that the reconfiguration of the airport would not have been 

'operationally and economically feasible ' ... that the 'costs to reconfigure the Blue Ash Airport 

prove[ d] to be prohibitive' ... that 'adequate financing assistance [was] not available. ' Nothing 

in the 2006 Agreement allows the Respondent to close the Airport simply because it wishes to use 

the revenue received from the sale for purposes other than aviation-related expenses. " [FAA 

Exhibit 1, Item 5, page 2] 

The Complainant goes on to state that the "Respondent did not even place the Airport 

revenue in a restricted fund when it first began to receive the payments. The money 

went into the coming led (sp) Miscellaneous Permanent Improvement Fund, Fund 757 .... 

Additionally, the Complainant makes the argument that if the money was deposited into a nonaviation account, the City was still engaging in revenue diversion- even if no money was spent 

from the proceeds of the sale. The Complainant contends that "an Airport owner, who for a 

period of years, illegally diverts restricted airport monies and, after getting caught, pays the 

money back, cannot be allowed to walk away with no consequence for its action." 

The Complainant argues, "The moment the first payment was made, the money became Airport 

revenue. Returning the money does not change its character when received " [FAA Exhibit 1, 

Item 5, pages 5-6] 

In its Rebuttal, the City notes that "Mr. Meyer's Reply serves to underscore that there is no 

substance to his Complaint ... Mr. Meyer does not dispute that the 2006 contract was rescinded, 

and the property returned to Cincinnati on August 28, 2012. He does not dispute that all of that 

money was returned to Blue Ash on August 28, 2012. He does not dispute that the Airport was 

thereafter closed. He does not dispute that the City worked with FAA to resolve the agency's 

concerns about the potential for revenue diversion. He provides no new facts to rebut the City's 

evidence that the money received from Blue Ash was not (emphasis theirs) spent for non-airport 

purposes, but was preserved in a special City account until refunded to Blue Ash. At bottom, 

because the funds were refunded to Blue Ash pursuant to the Rescission Agreement, there are no 

fonds to be restored to the Airport and any concerns about the use of the funds prior to 

rescission are moot. " 

The City goes on to state, "Unable to present any facts that support his Complaint, Mr. Meyer 

focuses on speculation that he thinks that Cincinnati intended to divert airport revenue, that he 

personally 'cannot be certain' that funds were not spent for non-airport purposes, and that he 

believes that the City handled the funds in a way that could have led to revenue diversion. Such 

speculation is facially insufficient to meet Mr. Meyer's burden of proving an actual violation. 

6 
Moreover, fear of 'potential diversion' and 'intent to divert' are not violations of the revenue use 

laws. " [FAA Exhibit 1, Item 6, page 1] 

On March 9, 2012, Milton Dohoney, Jr., City Manager for the City of Cincinnati sent a letter to 

Christa Fornarotto, Associate Administrator for Airports stating that the permanent closure of the 

Blue Ash Airport would take place no earlier than June 8, 2012. [FAA Exhibit 1, Item 18A] 

On April 9, 2012, Christa Fornarotto replied to Mr. Dohoney and stated, "The Federal Aviation 

Administration (FAA) recognizes that the city, as airport owner, has the right to close the airport 

subject to Federal requirements. The FAA also acknowledges that the city is no longer 

contractually obligated to continue operating this airport. The useful life of the federally funded 

improvements extinguished in 2003. However, the city's disposition of the $37.5 million for the 

sale of I30 acres of airport property to the city of Blue Ash must be addressed As discussed 

before, this money accrued to the airport, is considered airport revenue, and is still subject to 

revenue use obligations. We want to remind you that the city must provide the FAA a plan for the 

disposition of the $37.5 million in airport revenue." [FAA Exhibit 1, Item 18B] 

On July 30, 2012, Mr. Dohoney sent a letter to Christa Fornarotto and stated, "The City of 

Cincinnati advised you on March 9, 20I2 of its intent to close permanently Cincinnati-Blue Ash 

Airport (ISZ). At that time, the City had not set a date certain for closure and advised you that 

ISZ would close no earlier than June 8, 20 I2. The City has now determined that it will close ISZ 

on August 29, 20I2." [FAA Exhibit 1, Item 13] 

The City also stated, "In late July 20I2, Blue Ash and Cincinnati agreed to rescind the 2006 

Agreement and take all steps necessary to unwind the 2006 transaction and return the parties to 

the status quo ante. The rescission and related agreements were approved by Cincinnati and 

Blue Ash, on, respectively, August I, 2012 and August 9, 20I2. Pursuant to that agreement, the 

parties would rescind and unwind the 2006 Agreement prior to the closure of the Airport on 

August 29, 20I2. On July 30, 20I2, Cincinnati sent the FAA formal notice pursuant to ... 49 

US. C. § 463I9 and, to the extent applicable, I4 C.P.R. §I 57. 5(b) (2), of its intention to 

permanently close the Airport on August 29, 20I2." 

The City goes on to explain, "On the afternoon of August 28, 2012, Cincinnati and Blue Ash 

executed the Rescission Agreement and related documents, including the transfer of title to the 

Park Property back to Cincinnati. Also on August 28, 20I2, pursuant to the Rescission 

Agreement, Cincinnati returned the $6 million it had received under the 2006 Agreement to Blue 

Ash by wire transfer from Fund 757." [FAA Exhibit 1, Item 4, page 10] 

On July 30,2012, the FAA received written notice from the City advising that on August 29, 

2012, it was permanently closing Cincinnati Blue Ash Airport (ISZ). The FAA published the 

City's notice of permanent closure of the Airport in accordance with Title 49 U .S.C. 46319Cb) in 

the Federal Register on September 11,2012. [FAA Exhibit 1, Items 13-14] 

A. Procedural History 

7 
On August 22,2012, Scott Meyer filed a Part 16 Complaint alleging that the Respondent City of 

Cincinnati violated Title 49 U.S.C. § 47133 by diverting funds received from the sale of the Blue 

Ash Airport to non- aviation related ex_r.:nses. [FAA Exhibit, Item 1] This Complaint was 

dismissed under Docket No. 16-12-10. [See Item lB] The Complaint was amended on 

September 27, 2012. [FAA Exhibit, Item 2] 

On September 11, 2012, the FAA issued a Notice of permanent closure of the 

Cincinnati-Blue Ash Airport for publication in the Federal Register. [FAA Exhibit 1, Iteml4] 

On October 4, 2012, the FAA issued the Notice of Docketing. [FAA Exhibit 1, Item 7] 

On October 22, 2012, the City of Cincinnati filed a Motion for Extension of Time to file its 

Answer. [FAA Exhibit 1, Item 8] 

On December 13,2012, the City of Cincinnati filed its Answer and Memorandum in Support of 

the Answer. [FAA Exhibit 1, Item 3 and 4] 

On January 23, 2013 Complainant Scott Meyer filed a Reply to the City of Cincinnati, Ohio's 

Answer to Complaint. [FAA Exhibit 1, Item 5] 

On February 19, 2013, the City of Cincinnati filed a Rebuttal to the Complainant's Reply. [FAA 

Exhibit 1, Item 6] 

On December 17, 2013, the FAA requested additional information regarding the disposition of 

funds from the sale of the airport from the City of Cincinnati. [FAA Exhibit 1, Item 15] 

On January 16, 2014, the City of Cincinnati responded to FAA's request for additional 

information. [FAA Exhibit 1, Item 19] 

On February 26,2014, FAA filed a Notice of Extension of Time until May 30,2014. [FAA 

Exhibit 1, Item 20] 

On May 29,2014, FAA filed a Notice of Extension of Time until July 31, 2014. [FAA Exhibit 1, 

Item 21] 

On July 30,2014, FAA filed a Notice of Extension of Time until September 15,2014. [FAA 

Exhibit 1, Item 22] 

IV. ISSUES 

3 As referenced in FAA's Dismissal Letter, FAA under separate cover will follow up with the City regarding its post closure 

accounting report. 

8 
Issue 1 -Whether the City of Cincinnati violated Title 49 U.S.C. §§ 47107(b) and 47133, 

Restriction on Use of Revenues and Grant Assurance 25, Airport Revenues, by using funds 

from the sale of the Blue Ash Airport for non-aviation purposes. 

Issue 2- Whether the City of Cincinnati should be assessed an interest penalty for revenue 

diversion in violation of Title 49 U.S.C. §§ 47107(b) and 47133. 

V. APPLICABLE LAW AND POLICY 

I. Grant Assurance 25, Airport Revenues 

Grant Assurance 25, Airport Revenues, implements provisions of Title 49 U.S.C., § 47107(b) 

and§ 47133, et seq., and requires, in pertinent part, that the sponsor of a federally obligated 

airport assure: 

a. 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; or for noise mitigation purposes 

on or off the airport. [ ... ] 

b. As part of the annual audit required under the Single Audit Act of 1984, the 

sponsor will direct that the audit will review, and the resulting audit report 

will provide an opinion concerning, the use of airport revenue and taxes in 

paragraph (a), and indicating whether funds paid or transferred to the 

owner or operator are paid or transferred in a manner consistent with Title 

49, United States Code and any other applicable provision of law, 

including any regulation promulgated by the Secretary or Administrator. 

c. Any civil penalties or other sanctions will be imposed for violation of this 

assurance in accordance with the provisions of Section § 47107 of Title 49, 

United States Code. [Assurance 25] 

FAA's Policy and Procedures Concerning the Use of Airport Revenues (64 Fed. Reg. 

7696, February 16, 1999) (Revenue Use Policy) provides, among other things, the FAA's policy 

on the use of airport revenue. It provides, in relevant part, that: 

1. All fees, charges, rents, or other payments received by or accruing to the 

sponsor for any one of the following reasons are considered to be airport 

revenue: 

b. Revenue from sponsor activities on the airport. Airport revenue generally 

9 
includes all revenue received by the sponsor for activities conducted by the 

sponsor itself as airport owner and operator, including revenue received: 

i. From any activity conducted by the sponsor on airport property 

acquired with federal assistance; 

ii. From any aeronautical activity conducted by the sponsor which is 

directly connected to a sponsor's ownership of an airport subject to 

49 US. C.§§ 47107(b) or 47133; or 

iii. From any nonaeronautical activity conducted by the sponsor on 

airport property not acquired with federal assistance, but only to 

the extent of the fair rental value of the airport property. The fair 

rental value will be based on the fair market value. 

[Revenue Use Policy at Section II.B.l.b., 64 Fed. Reg. 7696, 7716 (Feb. 16, 1999)] 

2. The FAA Airport Compliance Program 

The FAA discharges its responsibility for ensuring that airport sponsors comply with their 

Federal obligations through its Airport Compliance Program. Sponsor obligations are the basis 

for the FAA's airport compliance effort. The airport owner accepts these obligations when 

receiving Federal grant funds or when accepting the transfer of Federal property for airport 

purposes. The FAA incorporates these obligations in grant agreements and instruments of 

conveyance to protect the public's interest in civil aviation and to ensure compliance with 

Federal laws. 

The FAA designed the Airport Compliance Program to ensure the availability of a national 

system of safe and properly maintained public-use airports which airport sponsors operate in a 

manner consistent with their Federal obligations and the public's interest in civil aviation. The 

Airport Compliance Program does not control or direct the operation of airports. Rather, it 

monitors the administration of valuable rights, which airport sponsors pledge to the people of the 

United States in exchange for monetary grants and donations of Federal property, to ensure that 

airport sponsors serve the public interest. 

Order 5190.6B, FAA Airport Compliance Manual (September 30, 2009) sets forth policies and 

procedures for the FAA Airport Compliance Program. The Order is not regulatory and is not 

controlling with regard to airport sponsor conduct; rather, it establishes the policies and 

procedures for FAA personnel to follow in carrying out the FAA's responsibilities for ensuring 

airport compliance. It provides basic guidance for FAA personnel in interpreting and 

administering the various continuing commitments airport owners make to the United States as a 

condition for the grant of Federal funds or the conveyance of Federal property for airport 

purposes. The Order, inter alia, analyzes the various obligations set forth in the standard airport 

sponsor assurances, addresses the application of the assurances in the operation of public-use 

airports, and facilitates interpretation of the assurances by FAA personnel. 

The FAA Compliance program is designed to achieve voluntary compliance with Federal 

obligations accepted by owners and/or operators of public-use airports developed with FAA 

administered assistance. Therefore, in addressing allegations of noncompliance, the FAA will 

10 
make a determination as to whether an airport sponsor is currently in compliance with the 

applicable Federal obligations. Consequently, "the FAA will consider the successfUl action by 

the airport to cure any alleged or potential past violation of applicable federal obligations to be 

grounds for dismissal of such allegations. " [See Wilson Air Center v. Memphis and Shelby 

County Airport Authority, FAA Docket No. 16-99-10, (August 30, 2001) (Final Decision and 

Order), page 5 (Wilson FAD).] 

3. Statutes, Sponsor Assurances, and Relevant Policies 

As a condition precedent to providing airport development assistance under the 

Airport and Airway Improvement Act of 1982 (AAIA), codified at title 49 U.S.C., § 47101, et 

seq., the Secretary of Transportation receives certain assurances from the airport sponsor. 

The AAIA, 49 U.S.C., § 47101, et seq., sets forth assurances to which an airport sponsor 

receiving Federal financial assistance must agree as a condition precedent to receipt of such 

assistance. These sponsorship requirements are included in every airport improvement program 

(AlP) grant agreement. Upon acceptance of an AlP grant by an airport sponsor, the assurances 

become a binding obligation between the airport sponsor and the Federal Government. 

One grant assurance is relevant to the Complainant's Complaint: Grant Assurance 25, Airport 

Revenues. 

4. The Complaint and Appeal Process 

1. Right to File the Formal Complaint 

Pursuant to 14 CFR 16.23, "a person directly and substantially affected by any alleged 

noncompliance may file a complaint" with the FAA. [14 CFR 16.23(a)] The complainant shall 

provide a concise but complete statement ofthe facts relied upon to substantiate each allegation. 

The complaint shall also describe how the complainant was directly and substantially affected by 

the things done or omitted by the respondents. [14 CFR 16.23(b) (3, 4).] 

If, based on the pleadings, there appears to be a reasonable basis for further investigation, the 

FAA will investigate the subject matter ofthe complaint. "In rendering its initial determination, 

the FAA may rely entirely on the complaint and the responsive pleadings provided [ ... ]. Each 

party shall file documents that it considers sufficient to present all relevant facts and arguments 

necessary for the FAA to determine whether the sponsor is in compliance." [14 CFR, Part 16, 

§16.29.] 

"The proponent of a motion, request, or order has the burden of proof. A party who has asserted 

an affirmative defense has the burden of proving the affirmative defense." [14 CFR 16.229(b)-

( c)] This standard burden of proof is consistent with the Administrative Procedure Act (AP A) 

and Federal case law. The AP A provision states, "[e]xcept as otherwise provided by statute, the 

proponent of a rule or order has the burden of proof" 5 U.S.C., §556( d). See also, Director, 

Office of Worker's Compensation Programs, Department of Labor v. Greenwich Collieries, 512 

US 267,272 (1994); Air Canada eta!. v. Department of Transportation, 148 F3d 1142, 1155-56 

(DC Cir, 1998). Title 14 CFR § 16.229(b) is consistent with 14 CFR § 16.23, which requires the 

11 
complainant to submit all documents then available to support his or her complaint. Similarly, 

14 CFR § l6.29(b)(l) states that "[ejach party shall file documents that it considers sufficient to 

present all relevant facts and argument necessary for the FAA to determine whether the sponsor 

is in compliance. " 

2. Right to Appeal the Director's Determination 

A party to this decision adversely affected by the Director's Determination may file an appeal 

with the Associate Administrator within 3 0 days after the date of service of the initial 

determination. If no appeal is filed within the time period specified, the Director's 

Determination becomes the final decision and order of the FAA without further action. A 

Director's Determination that becomes final because there is no administrative appeal is not 

judicially reviewable. [14 CFR §16.33.] 

14 CFR Part 16 requires all relevant facts to be presented in the complaint documents. [14 CFR 

§ 16.23(b)(3).] New allegations or issues should not be presented on appeal. Review by the 

Associate Administrator is limited to an examination of the Director's Determination and the 

administrative record upon which such determination was based. Under Part 16, a complainant 

is required to provide with the complaint and reply all supporting documentation upon which it 

relied to substantiate its claims. Failure to raise all issues and allegations in the original 

complaint documents may be cause for such issues and allegations to be deemed waived and not 

reviewable upon appeal. This is consistent with the Supreme Court's recognition that courts may 

require administrative issue exhaustion as a general rule because it is usually appropriate under 

an [administrative] agency's practice for contestants in an adversarial proceeding before it to 

develop fully all issues there. The Court concluded that where parties are expected to develop 

the issues in an adversarial administrative proceeding, the rationale for requiring issue 

exhaustion is at its greatest. [See Sims v. Apfel, 530 US 103, 108-110 (2000) citing Hormel v. 

Helvering, 312 US 552 (1941) and US v. LA Tucker Truck Lines, 344 US 33, (1952).] 

3. FAA's Responsibility with Regard to an Appeal 

Pursuant to 14 CFR §16.33, the Associate Administrator will issue a final decision on appeal 

from the Director's Determination, without a hearing, where the complaint is dismissed after 

investigation. 

In such cases, "it is the Associate Administrator's responsibility to determine whether (a) the 

findings of fact made by the Director are supported by a preponderance of reliable, probative, 

and substantial evidence, and (b) each conclusion of law is made in accordance with applicable 

law, precedent, and public policy. " [Ricks v Millington Municipal Aimort, FAA Docket No. 

16-98-19, (December 30, 1999) (Final Decision and Order) page 9, see also 14 CFR §16.227.] 

12 
VI. ANALYSIS AND DISCUSSION 

Standing 

Before addressing Complainant's allegations, we must first address the issue of whether Complainant 

has standing to file a complaint with the FAA under the Rules of Practice for Federally-Assisted 

Airport Enforcement Proceedings (14 CFR Part 16). 

Complainant alleges he can file a 14 CFR Part 16 complaint because he is a pilot who rented 

aircraft, received aeronautical training and purchased aviation fuel from businesses on the 

Airport. [FAA Exhibit I, Item 2, page 2] 

Respondent asserts Complainant lacks standing to file a 14 CFR Part 16 complaint because the 

Airport is closed. [FAA Exhibit 1, Item 4, pages 16] 

14 Code of Federal Regulations §16.23(a) set forth the standard for standing to file a Part 16 

complaint regarding revenue diversion: 

A person doing business with an airport and paying fees or rentals to the airport shall be 

considered directly and substantially affected by the alleged revenue diversion as defined in 

49 United States Code (USC)§ 47107(b). 

In its Memorandum in Support of the Answer, the City argues, "Mr. Meyer lacks standing 

because the airport is closed ... arguing, "[E]ven where a complainant has standing at the outset 

of a case, circumstances can change and deprive a complainant of standing, 25(a)(c) compelling 

dismissal. " Respondent relies on Venice Jet Center v. City of Venice, FAA Docket No. 16-09-05 

(September I, 20 12), page 17-20, which noted that complainant lost standing after Complainant 

sold airport-related asset during the pendency of the case. [FAA Exhibit I, Item 4, page 16] 

Additionally, the City contends, "The closure of the Airport deprives Mr. Meyer of standing. 

First, Mr. Meyer cannot be affected by any alleged revenue diversion because the Airport is now 

closed and he is not now, and cannot in the future be, an Airport user. Although the second 

sentence of Section 16.23(a) allows for a somewhat lower threshold of standing for allegations 

of revenue diversion, Mr. Meyer no longer meets that standard either. Because the Airport no 

longer exists, Mr. Meyer is not "a person doing business" with the Airport, nor does he pay 

"fees or rentals to the Airport." Accordingly, Mr. Meyer does not, and cannot, establish 

standing pursuant to 14. C. FR. §16.23(a), and the Complaint must be dismissed pursuant to 14 

C. FR. § 16.25(a) (c)." [FAA Exhibit I, Item 4, page 17] 

The Respondent also argues " ... here, where the Airport has been closed and removed from the 

NPIAS and all revenues alleged to have been illegally diverted returned to Blue Ash, there are 

no separate grounds for FAA to investigate the allegations. " [FAA Exhibit I, Item 4, page 17, 

footnote 3] 

The Complainant asserts in his reply that he "disagrees with the assertion that the Complainant 

now lacks standing since Respondent closed the Airport in order to free the revenue from 

restriction. Although the Complainant is no longer a user of the Airport, it does not change the 

13 
fact that the Complainant was a user of the Airport during its operation when the revenue 

diversion occurred. The fact that the Airport is now closed does not change Respondent's past 

illegal acts." [FAA Exhibit I, Item 5, paragraph 3] 

To have standing, a person must be directly and substantially affected by the alleged noncompliance, however, a person doing business with an airport and paying fees shall be 

considered directly and substantially affected by alleged revenue diversion as defmed in 49 

U.S.C. § 47107(b). [14 CFR § 16.23(a)] This special applicability provision operates for cases 

where revenue diversion is alleged. It is necessary because revenue diversion principally affects 

the United States as the grantor of the federal airport funds allegedly diverted. [61 Fed. Reg. 

53998 (October 16, 1996.)] 

The Director disagrees with the Respondent's reliance on the Venice case- since in that case it 

was the complainant's own actions that resulted in the loss of standing. Here it is the City's own 

actions - the closing of the airport - which per the Respondent results in the Complainant's loss 

of standing. The Record establishes that the Complainant was an aeronautical user of the Airport 

during the period that he alleges revenue was unlawfully diverted from the airport; this was prior 

to the closing of the Airport. The Director agrees with the Complainant that any funds found to 

be diverted during the interim period would have been properly due to the airport sponsor's 

account, and after closing any existing airport revenue would have been required to be properly 

transferred to the City's other airport account (Lunken Field Airport). The special standing 

requirements for airport revenue diversion establish the Complainant's standing, and therefore, 

the Complainant has standing in this Part 16 proceeding. 

Moreover, the FAA may investigate an allegation of revenue diversion regardless of whether the 

reporting complainant has standing. [Rudy J Clarke v. City of Alamogordo, N.M., FAA Docket 

# 16-05-19 (Sept. 20,2006 (Director's Determination) at 12, see also Jim Martyn v. Port of 

Anacortes. FAA Docket 16-02-03, DD (April 14, 2003) "in light of their well-substantiated 

claim of revenue diversion. For such claims there is a presumption of standing ... regardless of 

whether there is a substantive showing of detrimental effect.] This is consistent with the Revenue 

Use Policy, 64 Fed. Reg. at 7722, which provides that "to detect whether airport revenue has 

been diverted from an airport, the FAA will depend primarily upon four sources of information: 

1. Armual report on revenue use submitted by the sponsor under the provisions of 49 U.S.C. § 

47107(a)(19), as amended. 2. Single audit reports submitted, pursuant to 49 U.S.C. § 47107(m), 

with annual single audits conducted under 31 U.S.C. §§ 7501-7505. 3. Investigation following a 

third party complaint filed under 14 CFR Part 16, FAA Rules of Practice for Federally Assisted 

Airport Enforcement Proceedings, and 4. DOT Office oflnspector General audits. 

Accordingly, the Director finds that the Complainant has standing to file a complaint under Part 

16, and the FAA will investigate the Complainant's allegation of unlawful revenue diversion. 

Issue 1 -Whether the City of Cincinnati violated 49 U.S.C. §§ 47107(b) and 47133, 

Restriction on Use of Revenues and Grant Assurance 25, Airport Revenues, by using funds 

from the sale of the Blue Ash Airport for non-aviation purposes. 

14 
The Complainants alleges "Cincinnati used the revenue from the sale of airport property for 

non-aviation related expenses in violation of the Statute and Policy. [FAA Exhibit 1, Item 2, 

pages 1-2] The City admits that it closed the airport, but that no funds were diverted, and that all 

funds from the original sale agreement were repaid to the City of Blue Ash. The City states, "The 

City and FAA staff have [sic] worked cooperatively to resolve FAA 's concerns that proceeds 

from the 2006 Agreement were subject to revenue diversion rules. To ensure that it did not 

violate any federal obligation, and that FAA 's concerns were folly addressed, Cincinnati did not 

spend those proceeds for any non-Airport purpose, and ensured that all of the proceeds were 

preserved pending a final resolution of FAA's concerns." [FAA Exhibit 1, Item 4, page 1] 

Title 49 U.S.C. § 47133 (a) states in part," ... 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." 

Grant Assurance 25(a), Airport Revenues states in part, "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 ofthe airport and which are directly and 

substantially related to the actual air transportation of passengers or property; or for noise 

mitigation purposes on or offthe airport. 

The Complainant makes a number of allegations, identified below, that assert that the 

Respondent has violated both 47133(a) and Grant Assurance 25. [FAA Exhibit 1, Item 2, pages 

1-2] 

Allegations: 

The Complainant has identified nineteen (19) alleged violations detailed below which the 

Director grouped together for a more comprehensive analysis. These allegations include misuse 

of airport revenue for a condominium project, a streetcar system, environmental remediation and 

miscellaneous expenditures. 

Complainant's Allegations 

1. $300,000 [of airport revenue] was paid toward the Mt. Auburn Place Condos Project. 

2. $11 million [of airport revenue] was earmarked for the construction of Cincinnati's 

streetcar system. 

3. On November 28, 2007, Cincinnati passed Ordinance 416-2007 which .. . directed that 

revenues received from rental or sale of any City property purchased for any purpose 

other than expressways, Blue Ash Airport, Park Board or Recreation Commission 

purposes, be deposited into Fund 757, Miscellaneous Permanent Improvement Fund, for 

the purpose of allowing the proceeds from the sale of the Blue Ash Airport property to be 

deposited into Fund 757." 

4. On October 22, 2008, Cincinnati passed Ordinance 354-2008 authorizing the transfer of 

$200,000 from the Miscellaneous Permanent Improvement Fund 757 to develop a lead 

15 
remediation work plan at the Blue Ash Airport ... "As Cincinnati conveyed title to Blue 

Ash in June, 2007, the property requiring the lead remediation was no longer an airport. 

Since it was no longer an airport, Cincinnati could not spend revenue from the sale of the 

airport land on lead remediation on that property. " 

5. On January 26, 2011, Cincinnati passed Ordinance 7-2011 authorizing the City Manager 

to accept and appropriate a grant for $1,087,500from the Ohio's Clean Ohio 

Revitalization Fund (CORF) to provide resources to remediate lead contaminated soil at 

the Blue Ash Airport .... and authorizing the transfer and appropriation of $3 7 5, 000 for 

the purpose of providing the 25% local matchfonding requirements for the grant." 

6. On August 1, 2012, Cincinnati passed Ordinance 294-2012 authorizing the transfor of 

$170,000 from the Miscellaneous Permanent Improvement Fund 757 to provide 

resources to complete the removal of contaminated soil and underground storage tanks 

from Blue Ash Airport Property to be transferred to the City of Blue Ash and for costs 

associated with final reporting to the City of Blue Ash. 

7. "According to the Cincinnati 2011-2016 Capital Investment Program, Volume II, Exhibit 

2, page 12, in 2010, $250,000 from the Blue Ash Airport Sale was placed in the General 

Capital Investment Program. " 

8. (8-19) "According to the Searchable Expenditure Database provided on the City of 

Cincinnati's website, Cincinnati has spent over $2.8M from the Miscellaneous 

Permanent Improvement Fund from 2009-2012 .... it is extremely likely that this money 

was spend on purposes other than for airport related expenses. "[FAA Exhibit 1, Item 2, 

pages 1-5] 

As can be determined from a review ofthese allegations, the Complainant believes that certain 

expenses that were paid from the City's "Fund 757" were improper and constitute illegal revenue 

diversion of monies that belonged to the [former] Airport. The allegations of improper 

expenditures range from contributions to a condominium project, development of a streetcar 

system, lead and other remediation work at the former Airport, and general allegations of more 

than $2.8 million in improper expenditures from the Miscellaneous Permanent Improvement 

Fund (Fund 757). 

The Respondent denies these allegations and states, "In its Answer ... , the City demonstrated that 

it did not spend any of the proceeds from the 2006 Purchase and Sale Agreement for non-airport 

purposes. Specifically, through detailed financial records showing the running balance of City 

Fund 757, Miscellaneous Permanent Improvement Account (Fund 757), the City account into 

which the 2006 Agreement proceeds were deposited, the City showed that: 

• The City did not spend any of the proceeds from the 2006 Agreement for any purpose. 

The full amount of the payments received from the City of Blue Ash between November 

2006 and August 2012- totaling $6 million- was held by the City from the time the first 

payment was made through August 28, 2012, when the $6 million was returned to Blue 

Ash in connection with the rescission of the 2006 Agreement. 4 

4 In the City's Response to FAA's Request for Additional Information, evidence showing $6 million returned to the 

City of Blue Ash was provided. [FAA Exhibit I, Item 19, exhibit 4] 

16 
• At all times, Fund 757 had an unencumbered balance greater than the payments received 

from Blue Ash, taking into account all other authorized or appropriated withdrawals or 

transfers from Fund 757. 

• The City Council did not make any appropriation of the proceeds from the 2006 

Agreement, and therefore did not direct that any of those proceeds be spent for any 

purpose, including any non-airport purpose. 

Accordingly, the City believes the record demonstrates overwhelmingly that the allegations of 

the Complainant lack merit and the Complaint should be dismissed. "[FAA Exhibit I, Items 6 

and I9] 

The City has denied that any monies from the $6M received from the City of Blue Ash were 

spent improperly and state that all times the full $6M was available and unspent. The City 

argues that in many cases, the Complainant identified line items in a proposed budget that were 

not funded at all. 

The Complainant's specific allegations and the City's response to the allegations are below. 

Because of the similarity in the Complainant's allegations - improper expenditures from City 

Fund 757- the Director will provide a comprehensive analysis at the end of this section rather 

than addressing each allegation separately. 

In furtherance of the Director's investigation, the Director requested the Respondent to answer 

certain budgetary related questions, and to submit (1) Copy of City of Cincinnati wire transfer 

confirmation or check copy ($6 million) for City of Cincinnati; (2) Copy of Blue Ash wire 

transfer confirmation or check copy ($6 million); (3) Copy of City of Cincinnati disbursements 

journal showing payments ($6 million); and ( 4) Copy of City of Blue Ash receipts journal 

showing receipt ($6 million). In addition the Director requested the Respondent to provide 

financial records (e.g. general and specialized journals, ledgers, supporting worksheets, 

supporting analysis, vouchers, financial statements and corresponding footnotes) that support the 

Respondent's contention that the City did not spend any of the proceeds from the 2006 Purchase 

and Sale Agreement on non-Airport purposes. [FAA Exhibit 1, Item 17] The Respondent 

submitted its response on January 16, 2014. [FAA Exhibit 1, Item 19] 

The Complainant's allegation # 1: 

" ... per the 2009/20I 0 Approved Biennial Budget of Cincinnati, Budget Policy Item I4, pages III2, $300,000 was paid toward the Mt. Auburn Place Condos Project, the funds being repaid in 

2009 from the Blue Ash Airport Fund [and the] payment is clearly a violation of the Statute in 

that proceeds from the sale of airport property was being used to pay for condominiums 

unrelated to the airport. " [FAA Exhibit FAA Exhibit 1, Item 2, page 2] 

In its Answer, the City states, "Mr. Meyer's [sic] argues that because the 2009/20I2 Biennial 

Budget authorized the payment of $300,000 from the "Blue Ash Airport Fund, " that payment 

must have been made with funds from the 2006 Agreement or other Airport funds. This is 

incorrect. The Biennial Budget is a planning document that does not authorize the expenditure 

of fonds from any account .... As explained above, once FAA stated its position that the 2006 

17 
Agreement proceeds were Airport revenue, the City took steps to preserve those funds pending 

resolution of the issue. Consistent with the City's policy to preserve the 2006 Agreement 

proceeds, a review of City records shows that there was no follow-up City Council action 

authorizing the payment of $3 00, 000 for the Mt. Auburn Place Condos Project from the 'Blue 

Ash Airport Fund' In fact, the $300,000 payment was made from Fund 758 (Income Tax 

Permanent Improvement Fund), which did not contain any of the proceeds from the 2006 

Agreement or any other Airport revenue. Accordingly, there is no merit to Violation I. " [FAA 

Exhibit 1, Item 4, page 22] 

The Complainant's allegation #2: 

According to the 2009/2010 Approved Biennial Budget of Cincinnati, Budget Policy Item 

!4, pages 11-12, $11 million was earmarked for the construction of Cincinnati's streetcar 

system. The streetcar system will be debt financed for approximately 10 years and proceeds 

from the sale of Blue Ash Airport property will be used to pay the debt service for 10 years. 

FAA Exhibit 1, Item 2, page 2] 

The Complainant states that, "A Motion was ... made by Charlie Winburn, Cincinnati City 

Council, on October 6, 2010 asking, 'Should the $11 Mfrom the Blue Ash Airport capital 

revenues originally set aside for the streetcar be redirected as promised to fimd future economic 

development with a view toward neighborhood revitalization and job creation. ' This Motion 

appears to confirm the statement in the 200912010 Budget that $11M from the sale was 

earmarked for the streetcar. I can find no further action on these Motions; however, the fact that 

they were made leads one to conclude that if Cincinnati believed it could spend the airport 

revenue on items such as condo refurbishment and streetcars, then it possibly was spending this 

money on other items at the same time." [FAA Exhibit I, Item 2, page 3] 

In its Memorandum in Support of its Answer, the City states, " ... Mr. Meyer relies on a 

statement of intent in the 2009/2010 Approved Biennial Budget contemplating the use of certain 

2006 Agreement proceeds for the streetcar project. By separate ordinance, City Council 

identified the 2006 Agreement proceeds as one possible source of funds to secure bonds that 

would help finance the streetcar project. The bonds were issued on December 12, 2012, after 

rescission and closure of the Airport. No proceeds from the 2006 Agreement were pledged or 

otherwise expended to the streetcar project before December, 2012. Hence, none of the 2006 

Agreement proceeds were used in any way for the streetcar project. " [FAA Exhibit 1, Item 4, 

pages 22-23] 

In the Respondent's response to FAA's request for additional information, the Respondent also 

notes, "Of course, there is no specific documentation to show that the funds were not spent. To 

show that the funds were always in Fund 757, therefore, the City provided excerpts from the 

Journal for Fund 757 showing that the unencumbered balance of Fund 757, taking into account 

all appropriations and authorized expenses, exceeded the amount received from Blue Ash at any 

time between November 2006 and August 2012. The City also provided the sworn testimony 

from the Finance Department official responsible for managing the proceeds from the 2006 

Agreement and the Assistant City Manager showing that the proceeds from the 2006 Agreement 

had been preserved in Fund 757." [FAA Exhibit 1, Item 19, page 3] 

18 
The Complainant argues repeatedly that "By the Respondent's own admission, it did not 

quarantine the money to prevent accidental expenditures, but instead comingled the money in the 

'Miscellaneous Permanent Improvement Fund', Fund 757, and began spending the money on 

other expenses. Respondent may have backfilled the Fund once finding out that the money was 

restricted, but that does not discount the fact that the City spent the aviation-related revenue for 

non-aviation purposes. "[FAA Exhibit 1, Item 5 (bulleted point 5)] 

The Complainant's allegation #3: 

On November 28, 2007, Cincinnati passed Ordinance 416-2007 which " ... directed that 

revenues received from rental or sale of any City property purchased for any purpose 

other than expressways, Blue Ash Airport, Park Board or Recreation Commission 

purposes, be deposited into Fund 757, Miscellaneous Permanent Improvement Fund, for 

the purpose of allowing the proceeds from the sale of the Blue Ash Airport property to be 

deposited into Fund 757. Thus, Cincinnati now allows money from the sale of the Blue 

Ash Airport property to be deposited into this Miscellaneous Fund. As a result, the 

revenue from the airport sale now cannot be separately accounted for and could be going 

to pay for non-aviation related expenses. " 

In its Answer, the City states, " ... Mr. Meyer alleges broadly that the City's use of the Fund 757 

to hold the 2006 Agreement proceeds constituted revenue diversion because the account was not 

limited to Airport funds and there was a possibility that Airport revenue could be spent for nonAirport purposes. He fUrther argues that the City could have used the General Aviation Fund 

104 account, arguing that the choice not to use that account evidences intent to divert revenue. 

These allegations are baseless. 

First, as a matter of policy, FAA will not normally concern itself with internal accounting or 

management procedures. 

Second, the City's Lunken Airport Fund 104 (mistakenly referred to as the "General Aviation 

Fund ... in the Complaint) does not qualify as a special account for holding revenue from 

permanent improvements and could not have been used as the account for deposit of the 2006 

Agreement proceeds. The City was required under Ohio law to use Fund 757 to hold the 

proceeds from the 2006 Agreement because the proceeds were from the sale of real estate. The 

City was prohibited from placing those funds in the Lunken Airport Fund as Mr. Meyer's 

suggests it should have ... the City can demonstrate that none of the proceeds from the 2006 

Agreement were spent for non-Airport purposes. " [FAA Exhibit 1, Item 4, page 23-24] 

The Complainant's allegations 4, 5, 6: 

4. On October 22, 2008, "Cincinnati passed Ordinance 354-2008 authorizing the transfer 

of$200,000from the Miscellaneous Permanent Improvement Fund 757 to develop a lead 

remediation work plan at the Blue Ash Airport ... As Cincinnati conveyed title to Blue Ash 

in June, 2007, the property requiring the lead remediation was no longer an airport. 

19 
Since it was no longer an airport, Cincinnati could not spend revenue from the sale of the 

airport land on lead remediation on that property. 

5. On January 26, 2011, Cincinnati passed Ordinance 7-2011 authorizing the City Manager 

to accept and appropriate a grant for $1,087,500 from the Ohio's Clean Ohio 

Revitalization Fund (CORF) to provide resources to remediate lead contaminated soil at 

the Blue Ash Airport .... and authorizing the transfer and appropriation of $3 7 5, 000 for 

the purpose of providing the 25% local match funding requirements for the grant. 

6. On August 1, 2012, Cincinnati passed Ordinance 294-2012 authorizing the transfer of 

$170,000 from the Miscellaneous Permanent Improvement Fund 757 to provide 

resources to complete the removal of contaminated soil and underground storage tanks 

from Blue Ash Airport Property to be transferred to the City of Blue Ash and for costs 

associated with final reporting to the City of Blue Ash. " 

In its Answer to alleged violations 4, 5 and 6, the City states, " ... Mr. Meyer identifies three 

payments authorized to be made from Fund 757 for the remediation of the portion of the former 

Blue Ash Airport that was to be sold to Blue Ash pursuant to the 2006 Agreement. He argues 

that those payments were illegal revenue diversion because they were for the remediation of 

what was Mr. Meyer characterizes as non-Airport property. Again, the facts fail to support 

those allegations. 

First, the ordinances cited by Mr. Meyer authorize payment from the 'unappropriated surplus of 

Fund 757. The ordinances do not require the payments to be made with the 2006 Agreement 

proceeds and provide discretion to City staff on how to make those payments from the 

unappropriated balance of Fund 757 ... Second, as the account records of Fund 757 make clear, 

there were sufficient funds in Fund 757 to pay for each of the three payments ... without having to 

use the 2006 Agreement proceeds ... Simply stated, City staff exercised their discretion in a 

manner to assure that payments from Fund 757 were not made with the proceeds from the 2006 

Agreement. Accordingly, there is no merit to Mr. Meyer's contentions ... that the City illegally 

diverted Airport revenue to pay for mediation on the former Blue Ash Airport property. " [FAA 

Exhibit 1, Item 4, page 24-25] 

The Complainant additionally argues, "In response to the statement ... of the Respondent's 

Answer that Ordinance 354-2008 authorized the payment of$200,000 for lead remediation 

'from the unappropriated surplus of Fund 757,' Complainant agrees that the Ordinance quote is 

accurate, however, this does not mean that the money did not come from the Airport proceeds. 

Fund 7 57 contained proceeds from the sale of the Airport comingled with other revenue. In 

2008, when this ordinance was enacted, Respondent claims not to have known that Airport 

revenue was restricted. Thus, to the Respondent, the Airport money could have also been 

considered 'unappropriated funds'.... Complainant also states that since the revenue was 

placed in a comingled account rather than a restricted airport account, the money was illegally 

diverted at that moment regardless of whether any money was actually spent. " [FAA Exhibit 1, 

Item 5, ~ 8] 

20 
In its Rebuttal, the City states, " ... Mr. Meyer's argument that the ordinances authorizing 

expenditures from Fund 757 do not prohibit the use of the Blue Ash proceeds does not 

demonstrate that the funds were in fact used for those purposes. The unrebutted evidence 

demonstrates, again, that the full amount of Blue Ash payments was available for Airport use at 

all times ... His argument rests on the illogical assumption that because Fund 757 contained both 

Blue Ash proceeds and other non-airport revenue, and because other funds deposited into Fund 

757 were used for non-airport purposes, Blue Ash proceeds must have been used for non-airport 

purposes. That is not just speculation; it is incorrect because it ignores the sworn evidence 

showing that the Blue Ash funds were not in fact spent for non-airport purposes. " [FAA Exhibit 

1, Item 6, page 6] 

The Complainant's allegation #7: 

7. "According to the Cincinnati 2011-2016 Capital Investment Program, Volume II, Exhibit 

2, page 12, in 2010, $250,000from the Blue Ash Airport Sale was placed in the General 

Capital Investment Program ... Therefore, it was comingled with other Cincinnati funds, 

which could be considered as revenue diversion under the Policy if an accounting cannot 

be made as to how those monies were spent. " 

In its Answer, the City states, " ... Mr. Meyer argues that because the 2011-2016 Capital 

Investment Program and the 2009/2012 Biennial Budget called for two transfers of$250, 000 

from the 'Blue Ash Airport Sale' to the City capital accounts, those transfers must have been 

made with funds from the 2006 Agreement or other Airport funds. This is yet another 

speculative allegation that is unsupported by the facts. 

First, as described above, the Capital Investment Program and the 2009/2010 Approved 

Biennial Budget upon which Mr. Meyer relies are forward looking planning documents that do 

not themselves authorize the transfer or expenditure of any money. 

Second, a review of the City records indicates that when the City Council authorized the two 

$25 0, 000 transfers, it did not specify the origin of the funds for transfer beyond identifying Fund 

757. Thus, City staff had discretion on which funds in Fund 757 to use to make those transfers. 

City staff exercised that discretion in a way to assure that the transfers were made with fonds 

other than the proceeds from the 2006 Agreement ... Because the two $250,000 transfers to the 

General Capital Fund were not made with proceeds from the 2006 Agreement, there is no merit 

to the contentions ... of the Complainant. " [FAA Exhibit 1, Item 4, pages 25-26] 

The Complainant's allegations #8-19: 

"According to the Searchable Expenditure Database provided on the City of Cincinnati's 

website, Cincinnati has spent over $2. 8M from the Miscellaneous Permanent Improvement Fund 

from 2009-2012 .... it is extremely likely that this money was spend on purposes other than for 

airport related expenses ... Since this money is coming from the fund that we know holds proceeds 

from the sale of the Blue Ash Airport, it is airport revenue money that Cincinnati is spending 

illegally on non-aviation related expenses. " 

21 
In its Answer, the City states, " ... Mr. Meyer asserts that he has searched the City's Searchable 

Expenditure Database and identified $2.8 million in payments from Fund 757 between 2009 and 

20I2. He alleges that some or all of those payments must have been made with the 2006 

Agreement proceeds because the 2006 Agreement proceeds were deposited into Fund 757. 

These allegations are entirely speculative and on their face fail to meet his burden of proving 

that Airport revenue was in fact spent for non-Airport purposes. In any event, a review of City 

records demonstrates that the allegations are in fact incorrect. 

First, Fund 757 is the account for numerous sources of City income, transfers and payments in 

addition to the 2006 Agreement proceeds. It is incorrect to assume, as Mr. Meyer appears to, 

that the only source of revenue in the account were the 2006 Agreement proceeds ... If one does 

not include the full $6 million received from Blue Ash, approximately $I8. 7 million was 

deposited in Fund 757. That is over five times the amount necessary to pay for the $2.8 million 

in expenses identified by Mr. Meyer. 

Second, as detailed above, the City managed Fund 757 in a way to preserve the 2006 Agreement 

proceeds pending resolution ofF AA 's revenue diversion concerns. In consultation with the 

FAA, the City administration voluntarily took measures to ensure that the City maintained the 

full balance of the proceeds from the 2006 Agreement in Fund 757 and would continue to 

maintain that balance pending resolution of the matter with FAA ... Mr. Meyer has failed to meet 

his burden of proving that any of the $2.8 million in expenditures was paid for with the 2006 

Agreement proceeds or any other Airport revenue. Accordingly, Violations 8-I9 must be 

dismissed " [FAA Exhibit 1, Item 4, pages 26-27] 

Additionally, the City argues, "Although it is not necessary for FAA to reach this issue in view of 

the substantial evidence demonstrating that Cincinnati (I) fully resolved FAA 's concerns 

regarding potential revenue diversion and (2) did not in fact spend any of the proceeds from the 

2006 Agreement for non-Airport purposes, an alternative ground for dismissing the Complaint is 

that any revenue use restrictions applicable to the Airport expired in 2003, approximately three 

years before the City received any proceeds from the 2006 Agreement. 

The City understands that FAA's 1999 Revenue Use Policy appears to take the position that 

restrictions on the use of airport revenue continue to apply even after an airport is no longer the 

subject of federal financial assistance. But under law cited by FAA itself in the Revenue Use 

Policy, "[e ]stablished Federal grant law prevents a statute from being construed to modifY 

unilaterally the terms of a preexisting grant agreement absent a clear showing of legislative 

intent to do so." (citing Bennett v. New Jersey, 470 US. 632 (I985)). In addition, the Revenue 

Use Policy acknowledges that "[t]he language of§ 47I33 and its legislative history lacks 

any ... express direction to modifY existing agreements." [FAA Exhibit 1, Item 4, pages 27-28] 

The City contends that, "Because Cincinnati's revenue use obligations with respect to the 

Airport expired in 2003 upon the expiration of its last federal grant for the Airport, the 2006 

Agreement proceeds received between 2007-2012 were not subject to restrictions on the use of 

Airport revenue." [FAA Exhibit 1, item 4, page 28] 

22 
The City goes on to state, "Copies of those documents and other relevant iriformation are 

attached to and described in the Affidavit of Reginald Zeno ... Together, those documents trace 

the August 28, 2012 payment of the $6 million from Cincinnati's Fund 757 to Blue Ash's 

designated escrow agent, via wire transfer, to the City of Blue Ash, through a check made 

payable to Blue Ash and endorsed by the Blue Ash Treasurer. " 

The City also states, "The FAA also requested "Copy of the City of Blue Ash receipts journal 

showing receipt ($6 million). Despite requests to Blue Ash, the City was not able to obtain that 

documentation. The City believes, however, that the Blue Ash wire receipt and the endorsed $6 

million check payable to Blue Ash ... are sufficient to show that Blue Ash received the $6 million. 

As a matter of law, pursuant to the Ohio Commercial Code, Blue Ash's possession of the check 

made it the 'holder' of the check with the right to negotiate or otherwise dispose of the money. 

5 

Finally, the FAA requested 'financial records that support the Respondent's contention that the 

City did not spend any of the proceeds from the 2006 Purchase and Sale Agreement on nonAirport purposes. ' As the City described in its Answer and supporting papers, the broadly 

worded and poorly supported allegations of the Complaint put the City in the difficult position of 

having to prove a negative (notwithstanding that Mr. Meyer bears the burden of proof). The fact 

is, the City did not spend any of the proceeds from the 2006 Agreement for any (emphasis from 

City) purpose and all the 2006 Agreement proceeds were held in Fund 757 until August 28, 

2012, when the City refUnded that money to Blue Ash as part of the rescission of the 2006 

Agreement. 

The City has now provided the FAA with complete documentation of the activity in Fund 757, 

and the activity regarding the proceeds from the 2006 Agreement, all of which conclusively 

demonstrates that none of those proceeds was spent for any purpose, including any non-Airport 

purpose. " [FAA Exhibit 1, Item 19, pages 2-4] 

Analysis 

The Complainant argues that certain line items in the City's budget indicate that monies were 

paid from the $6M and used for non-aviation purposes in violation of Grant Assurance 25, 

Airport Revenues or 49 U.S.C. §§ 47107(b) and 47133 (a). However, the Complainant has 

provided no proof that these expenditure ever occurred. The Complainant has speculated about 

what might have occurred or what the Respondent's intent may have been when developing its 

budget and other proposals. 

The Respondent has provided evidence that it did not spend any of the proceeds from the 2006 

Agreement for any purpose and the proceeds were held in Fund 757 until August 28, 2012, when 

the City refunded the money to Blue Ash as part of the rescission of the 2006 Agreement. This 

evidence has included the complete ledgers for Fund 757 from November 8, 2006, the date on 

which the 2006 Agreement was executed, through August 28, 2012, the date on which the 2006 

Agreement was rescinded. [FAA Exhibit 1, Item 19, page 4] 

5 The City cites Ohio Revised Code§ 1301.201 (B)(2l)(a). 

23 
Additionally, the Director reviewed the City of Cincinnati's Response to FAA's Request for 

Additional Information [FAA Exhibit 1, Item 19] and has determined that Fund 757, at all times 

from November 2008 through August of2012, carried a balance of more than $6 million. 

Because the dollars from the proceeds of the sale of the Airport were not segregated (and there is 

no requirement that they be so), FAA is unable to determine how each dollar was allocated; 

however, at all times the Director notes that there was $6 million available. 

The FAA does not specifY the accounting methodologies to be incorporated by an airport or its 

sponsor. 49 U.S.C. § 47107(a)(14) simply requires the project accounts and records be kept 

using a standard system of accounting that the Secretary after consulting with appropriate public 

agencies, prescribes. The City explained that under Ohio law, the City was required to place 

payments received from the sale of real property into the account that was used to purchase that 

property or, in the absence of such an account, into a 'special account' for permanent 

improvements. In 2007, the City enacted an ordinance directing the sale proceeds to be 

deposited into the special account, Fund 757, which is consistent with federal requirements. In 

this case, the FAA is not concerned that the Respondent deposited funds from the sale of the 

Airport into Fund 757. More importantly, again, the $6 million remained consistently available 

and does not appear to have been allocated to other non-aviation related expenses 

The City of Cincinnati, after 2003 and the expiration of its last grant was not grant-obligated to 

continue to operate the Blue Ash Airport as a public use airport. Per the Grant Assurance 

requirements for Duration and Applicability, there shall be no limit on the duration of the assurances 

regarding Airport Revenue so long as the airport is used as an airport. Therefore, once the Blue Ash 

Airport was closed and no longer used as airport, the Airport was no longer subject to the Airport 

Revenue Grant Assurance. After the Airport was closed, and the former airport premises were 

sold, the sale proceeds were not subject to the revenue use requirements. 

Under the original plan for the sale of the Airport, funds paid by the City of Blue Ash for the 

original 130 acres were considered airport revenue and were required to be used for aviation 

purposes. However, the transaction was rescinded, and the sale of the former Airport premises 

was completed after the Airport was closed. The distinction between the two transactions is 

based on the City's sale of the airport property while the airport continued to operate as a public 

use airport. Funds from the sale of existing airport premises are considered airport revenue, in 

accordance with 49 U.S.C. §§ 47107(b) and 47133, because, as such, they were generated by a 

federally-obligated public airport and could only be expended for the capital and operating costs 

of the airport; the local airport system; or other local facilities owned or operated by an airport 

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

If the Airport had remained open, any funds received as a result of a sale of any portion of the 

airport premises would be considered airport revenues and would be required to be used for Blue 

Ash Airport purposes or within the local airport system. However, this was not the case; the 

Airport closed which caused the termination of its revenue use obligations prior to the sale of any 

airport property. Since the property was no longer airport property, the City then was not 

obligated to use the funds for Blue Ash airport purposes or within the local airport system. 

24 
In order for the FAA to find a sponsor in violation of its federal obligations under a Part 16 

proceeding, not only must the Complainant include sufficient factual evidence to support its 

allegations, but also establish by a preponderance of substantial and credible evidence that the 

sponsor has violated its federal obligations. First-person accounts of conversations and an 

abundance of argumentative opinion and criticism do not equate to substantial and credible 

evidence. In a formal Part 16 complaint, the complainant has the burden of proof to establish the 

complaint's allegations by a preponderance of substantial and reliable evidence. [See BMI 

Salvage Corporation & Blueside Services, Inc. v. Miami-Dade County, Florida, FAA Docket No. 

16-05-16, (July 25, 2006) (Director's Determination), page 12.] 

In this case, substantial and credible evidence is lacking in the allegations. Although the 

Complainant may believe that the City was in violation of Grant Assurance 25 and FAA's 

revenue use policy, the evidence provided is not sufficient to bear the burden of proof. The City 

has provided a credible explanation for its actions, has submitted clear documentation that 

showed that at all times the $6 million was available and was not spent for non-airport purposes. 

These allegations are therefore dismissed. The Director finds the allegations lack a fundamental 

basis for establishing a violation of Grant Assurance 25, Airport Revenues or 49 U.S.C. §§ 

47107(b) and 47133 (a). 

Issue 2 -Whether the City of Cincinnati should be assessed an interest penalty for revenue 

diversion in violation of 49 U.S.C. §§ 47107(b) and 47133. 

The Complainants states that the City of Cincinnati should be assessed an interest penalty on the 

$6 million for the time that it was in Fund 757. Arguing that ' ... from 2007, when the first 

payment was made, until 2012 when the Airport was closed, Respondent illegally diverted 

airport revenue as defined by federal law and policy. " 

[FAA Exhibit I, Item 5 ~ 5] 

The Complainant states that even though the $6 million was not necessarily spent for nonaviation purposes, it is still considered uulawful revenue diversion. The Complainant argues, 

" ... the Respondent is under a misconception that the money must have been spent on nonaviation related expenses to be considered diversion under the statute. In Air Transport 

Association of America and Aircraft Owners and Pilots Association v. City of Los Angeles, ... the 

FAA Director, Office of Airport Compliance and Field Operations, determined that the mere act 

of transferring aviation revenue from a restricted aviation fund to a general fund is diversion 

under 49 US. C. § 47133. In that case, the City of Los Angeles was required not only to return 

the money it had transferred from its aviation fund to its general fund, it was also assessed an 

interest penalty for the period of time that it remained in the general fund. " [FAA Exhibit 1, 

Item 5, ~5] 

In its Rebuttal, the Respondent states, "The only authority Mr. Meyer cites is Air Transport 

Assoc. of America v. City of Los Angeles, FAA Docket No. 13-95-05 (June 1, 2009, Final 

Agency Decision). Mr. Meyer apparently relies on the fact that the corrective action ordered in 

that case was the return of diverted airport revenue to the airport fund. But the issue in that case 

was whether funds received from the condemnation of temporary and construction easements on 

25 
airport property was airport revenue; the case did not address where the money was deposited. 

The money had been paid to the airport and placed in an airport-specific account. Subsequently, 

the City of Los Angeles took the position that the money was not airport revenue and transferred 

the money to the City's general fond. When the FAA determined the money was airport revenue, 

it ordered the money returned to the airport. Nowhere in the decision did FAA establish a rule 

that money is diverted any time it is place in a non-exclusive account. Indeed, in an exhaustive 

decision, FAA nowhere discussed the issue of comingling as constituting revenue diversion. " 

[FAA Exhibit 1, Item 6, page 7] 

Title 49 U.S.C. § 47017 (o) (1) states in part, " ... the Secretary, acting through the Administrator, 

shall charge a minimum annual rate of interest on the amount of any illegal diversion of 

revenues .... " Interest is also addressed in the Revenue Use Policy, 64 Fed. Reg. 7697, and states, 

"Section 47107(o) requires the Secretary to charge a minimum annual rate of interest on the 

amount of any illegal diversion of revenues. Interest is due from the date of the illegal 

diversion." 

The case referred to by the Complaint is very different to this instant complaint. In the 

'Investigation into the Transfers of Los Angeles International Airport Condemnation Proceeds' 

[Docket No. 13-95-05] the Director found that because the sponsor took the position that the 

funds were not airport revenue and treated the funds as available for any purpose, it was illegal 

revenue diversion. There was unlawful revenue diversion requiring repayment to the airport 

account with interest. That is not the case here. In this case, the Director is not persuaded that 

depositing the $6 million to Fund 757 amounted to illegal revenue diversion. Moreover, as 

stated above, the Director did not find revenue diversion in the nineteen (19) alleged violations 

identified by the Complainant, and discussed above under Issue 1. The FAA will only assess an 

interest penalty upon a finding that unlawful revenue diversion has occurred, and would calculate 

such amount from the date of the diversion. 

Just to be clear, the Revenue Use Policy does not require airport sponsors to deposit airport 

revenue in interest bearing accounts nor does the Policy prohibit airport sponsors from 

commingling funds. [Revenue Use Policy, 64 Fed. Reg. 7696] The City provided clear 

documentation of its accounting activities for Fund 757. The account documentation supports 

the Director's conclusion that the City's actions were consistent with its federal obligations, and 

substantiates that the City did not unlawfully divert airport revenue. 

VII. FINDINGS AND CONCLUSIONS 

Upon consideration of the submissions of the parties, and the entire record herein, and the 

applicable law and policy and for the reasons stated above, the Director, Airport Compliance and 

Management Analysis, finds and concludes: 

• The Respondent City of Cincinnati is currently not in violation of Grant Assurance 25, 

Airport Revenues, or 49 United States Code (USC) §47133, by depositing proceeds from 

the sale of the Blue Ash Airport into City Fund 757. This action did not constitute illegal 

revenue diversion because the funds remained intact and available until repaid to the City 

of Blue Ash- no transfer or withdrawals- no leakage. The Complainant has provided 

26 
no evidence to support allegations that the Respondent used the proceeds for any nonairport related purpose. 

ORDER 

Accordingly, it is ordered that: 

1. The complaint is dismissed; and 

2. All motions not expressly granted in this Determination are denied. 

27 
RIGHT OF APPEAL 

This Director's Determination is an initial Agency determination and does not constitute final 

Agency action and order subject to judicial review. [14 CFR 16.247(b)(2)] A party to this 

Complaint adversely affected by the Director's Determination may appeal the initial 

determination to the FAA Associate Administrator for Airports, pursuant to 14 CFR, 16.33(b) 

within thirty (30) days after service of the Director's Determination. 

~:u~drt:£1! andall F1ertz 

Director, Office of Airport Compliance 

and Management Analysis 

28