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 ofthe Blue Ash Airport (Airport) because he is a pilot who rented aircraft, received aeronautical training and purchased aviation fuel from businesses onthe Airport. [FAA Exhibit I, Item 2, page 2] The Respondent is the City ofCincinnati (Respondent/City) and was the sponsor ofthe Blue Ash Airport (ISZ) until its closure on August 29, 2012. The Complainant alleges that $6 million in funds received by the City ofCincinnati from the sale ofthe Blue Ash Airport was used for non-airport purposes in violation ofTitle 49 U.S.C. § 47133, FAA's Revenue Use Policy (Policy andProcedures Concerning the Use of Airport Revenue) and Grant Assurance 25, AirportRevenues. The Complainant makes a number ofallegations, identified below, and also states, "

...I have evidence that a substantialportion of the money receivedwas used for illegal expenditures- that Cincinnati used the revenuefrom the sale of airportproperty for non-aviation related expenses in violation of the Statute andPolicy. Whenprivate citizens andaviation-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 Agreementso that Cincinnati could avoid the requirements of the Statute and use the money for otherpurposes than aviation

.. .!believe that Cincinnati had already been using the money illegally and part of the reasoning behindthe rescission and new Conveyance Agreement was to hide thefact that ithad already knowingly misappropriated funds. " [FAA Exhibit 1, Item 2, pages 1-2]

IThe Complainant alleges that the Respondent violated "49 US. C. § 47133 and the regulations enacted thereunder, specifically 64 FR 76961

, the FAA's Policy andProcedures Concerning the Use of AirportRevenue. " 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 2006sale of BlueAshAirportproperty". [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 ofits Answer, the City contends, "The City engagedFAA 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 salesproceeds for the streetcarprojects and other Cityprojects, andalso indicated that itwas considering closing the Airport

....In the course of the 2010 discussions, FAA made clear itsposition that theproceeds from the 2006Agreementwere Airport revenue andwere subject to revenue diversion rules, as stated in the letter from FAA to Cincinnati Mayor Mallory regarding the Airport. Thatposition came as a surprise to Cincinnati because Cincinnati understood that the restrictions on the use of Airport revenue hadexpired in 2003 when the conditions of the 1983 Grant expired, and that the City could use theproceeds from the 2006Agreement for non-Airportpurposes.... [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 thefull balance of the BlueAshproceeds in Fund 757 and would continue to maintain that balancepending 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 thatproceeds from the 2006Agreement were subject to revenue diversion rules. To ensure that it didnot violate any federal obligation, and thatFAA 's concerns were folly addressed, Cincinnati did not spend thoseproceeds for any non-Airportpurpose, and ensured that all of theproceeds werepreserved pending a final resolution of FAA 's concerns. " [FAA Exhibit 1, Item 4, page 1] With respect to the allegations presented inthis Complaint, under the specific circumstances at the Airport as discussed below and based on the evidence ofrecord in this proceeding, the FAA finds the City ofCincinnati is not in violation ofits Federal obligations at this time. The FAA's decision in this matter is based on applicable Federal law and FAA policy, review ofthe pleadings and supporting documentation submitted by the parties, reviewed by the FAA, which comprises the Administrative Record reflected inthe attached FAA Exhibit 1.

1 Federal RegisterNol. 64, No. 30/February 16, 1999. Policy andProcedures Concerning the Use of Airport Revenues. 2 See FAA Exhibit I, Item 20 2The 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 ofCincinnati 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 byprivate 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 ofa 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 ofCincinnati violated Title 49 United States Code (USC) § 47133, Grant Assurance 25, AirportRevenues, and FAA's Policy andProcedures Concerning the Use of AirportRevenue. The complaint contains 19 allegations: 1. $300,000 [ofairport revenue

## Jwas paid toward the Mt. Auburn Place Condos Project. 2. $11 million [ofairport revenue] was earmarked for the construction ofCincinnati's streetcar system. 3. OnNovember 28,2007, Cincinnati passed Ordinance 416-2007 which

...directed that revenues received from rental or sale of any Citypropertypurchased for anypurpose other than expressways, Blue AshAirport, ParkBoardor Recreation Commission purposes, be deposited into Fund 757, Miscellaneous Permanent Improvement Fund,for thepurpose of allowing theproceeds from the sale of the BlueAshAirportproperty 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, theproperty requiring the lead remediation was no longer an airport. Since itwas no longer an airport, Cincinnati could notspendrevenuefrom the sale of the airport landon lead remediation on that property. " 5. On January 26, 2011, "Cincinnatipassed Ordinance 7-2011 authorizing the City Manager to accept andappropriate a grant for $1,087,500 from the Ohio's Clean Ohio Revitalization Fund (CORF) toprovide resources to remediate lead contaminatedsoil at the Blue AshAirport

....andauthorizing the transfer andappropriation of $3 7 5, 000 for thepurpose of providing the 25% local match funding requirements for the grant. " 6. On August 1, 2012, "Cincinnatipassed Ordinance 294-2012 authorizing the transfer of $170,000 from the Miscellaneous PermanentImprovement Fund 757 toprovide 

### 3resources to complete the removal of contaminatedsoil and underground storage tanks from BlueAshAirportProperty to be transferred to the City of BlueAsh and for costs associatedwithfinal 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 BlueAshAirportSale wasplaced in the General Capital Investment Program

...and it was commingled. " 8-19 "According to the Searchable Expenditure Databaseprovidedon the City of Cincinnati's website, Cincinnati has spent over $2.8Mfrom the Miscellaneous Permanent Improvement Fund from 2009-2012

.... it is also extremely likely that this money was spent on purposes other thanfor airport related expenses. " [FAA Exhibit 1, Item 2, pages 1-5] In its Memorandum in Support ofits 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 theAirport exceeded its revenue and the City hadto subsidizeAirport costs from revenue generatedat 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 Airportwas subject to the grant conditions of the 1983 Grant, which restricted Cincinnati's options with regard to the Airport, but that those restrictions wouldno longer apply after the obligations of the 1983 Grant expired in 2003. As discussions with Blue Ash became morefocused in 1999-2000, Cincinnati realized that its options for disposing of the Airport, andmaking use of the salesproceeds, were limited by the 1983 Grant obligations. To address thisproblem, local officials workedwith the regional Congressional delegation to secure legislation in 2000 that wouldhave released Cincinnatifrom the obligations of the 1983 Grantprovided Cincinnati sold the Airport to BlueAsh andBlueAsh committed to operate the Airport. Under that legislation, Cincinnati couldhave treated the proceeds of the sale as non-Airport revenue. Subsequently, however, the City of BlueAsh indicated that it did not want to acquire andoperate 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 orpart of the Airport to Blue Ash. Between 2004 and2006, Cincinnati andBlueAsh discussed a number of potential uses of the Airportproperty, including several economic developmentprojects, Airport closure, and other options. Ultimately, on or about November 8, 2006, Cincinnati andBlueAsh entered into the 2006Agreement, whichprovided for Cincinnati to sell to BlueAsh approximately 130 acres of the Airport (the 'Park Property ')

...for a totalprice of$37.5 million

... Thepurchaseprice was to


### 4bepaid in annual installments in varying amounts as follows: (a) $1 millionperyear for 10 years starting at closing of the agreement; (b) $1.25 million for 10years beginning in 2017; and (c) $1.5millionfor 10years beginning in 2027. The 2006Agreement provided that Cincinnati wouldretain ownership of the remaining 100 acres, including the Airport's runway andwould, subject to receiving adequatefunding 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 ofthe 2006 Agreement In April, 2011,following months of informal discussions, FAAprovidedan informal memorandum summarizing it'sposition that theproceeds from the 2006AgreementwereAirport revenue subject to revenue diversion rules. That memorandum also suggested a solution to the City'sproblems, however. FAA staff indicated that the salesproceeds wouldnot be considered Airport revenue 

### if Cincinnati andBlue Ash were to take thefollowing steps: (1) rescind the 2006 Agreement, including returning theproceeds to BlueAsh, returning to Cincinnati title to the ParkProperty, andotherwise returning theparties to the status quo ante, and (2) restructure the transaction to sell the Airport to BlueAsh asprovided in the 2000 Legislation. After that, any proceeds from anyprospective sale of theformer-Airportproperty wouldnot be Airport revenue. When it became clear that Blue Ash was notwilling to acquire andoperate the Airport, the City andFAA staff continued to discusspossible solutions in order to address FAA's revenue diversion concerns and allow the City to use theproceeds from the 2006Agreement for nonAirport purposes. After Cincinnati decided to close the Airport permanently, the City andFAA staff discussed, among other options, the concept that 

### if Cincinnati andBlueAsh were to rescind the 2006Agreement before the Airport closed, theproceeds from the 2006Agreementwould 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 futureproceeds from the sale of the former BlueAshAirportproperty wouldnot be considered to the Airport revenue subject to revenue diversion rules. [FAA Exhibit 1, Item 4, page 9]

The City's handling ofthe Proceeds from the 2006 Agreement Under Ohio law, the City was required toplacepayments received from the sale of realproperty into the account that was used topurchase thatproperty or, in the absence of such an account, into a 'special account' forpermanent improvements. In 2007, when the City began to receive proceeds from the 2006Agreement, it was discovered that the account usedto acquire the Airport in the early 1950s hadbeen closedatsomepoint in the interveningyears. City Council enacted Ordinance No. 416-2007 on November 28, 2007, directing that theproceeds from the 2006Agreement be deposited intopart of Fund 757 (Miscellaneous Permanent Improvement Fund) (Fund 757). Fund 757 was managed consistently with Citypolicy for handling similar payments. The City has no other 'special fund' for 2006Agreement proceeds that wouldhave compliedwith 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 LunkenAirportFund 104 (mistakenly referred to by Complainant as the "GeneralAviation

5Fund") does not qualifY as a special account for holding revenues frompermanent improvements. [FAA Exhibit 1, Item 5, pages 6-7] Fund 757 serves as the account forpermanent improvement revenues, expenditures, and transfers unrelatedto the BlueAshAirport. 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 nopoint has the Respondent demonstrated that the reconfiguration of the airport would nothave been 'operationally and economically feasible '

...that the 'costs to reconfigure the BlueAshAirport prove[ d] to beprohibitive'

... that 'adequatefinancing assistance [was] not available. ' Nothing in the 2006Agreementallows the Respondent to close the Airport simply because it wishes to use the revenue received from the saleforpurposes other than aviation-related expenses. " [FAA Exhibit 1, Item 5, page 2] The Complainant goes on to state that the "Respondent did noteven place theAirport revenue in a restricted fund when it first began to receive thepayments. The money went into the comingled (sp) Miscellaneous PermanentImprovementFund, Fund 757

.... Additionally, the Complainant makes the argument that ifthe money was deposited into a nonaviation account, the City was still engaging in revenue diversion- even ifno money was spent from the proceeds ofthe sale. The Complainant contends that "an Airportowner, who for a period of years, illegally diverts restricted airportmonies and, aftergetting caught, pays the money back, cannotbe allowed to walkaway with no consequence for itsaction." The Complainant argues, "The moment thefirstpaymentwas made, the money becameAirport 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 theproperty returned to Cincinnati on August28, 2012. He does not dispute that all of that money was returned to Blue Ash onAugust28, 2012. He does not dispute that the Airportwas thereafter closed. He does notdispute that the City workedwith FAA to resolve the agency's concerns about thepotential for revenue diversion. He provides no new facts to rebut the City's evidence that the money received from BlueAsh was not (emphasis theirs) spent for non-airport purposes, but waspreserved in a special City account until refunded to BlueAsh. At bottom, because thefunds were refunded to Blue Ashpursuant to the RescissionAgreement, there are no fonds to be restored to the Airport andany concerns about the use of thefundsprior to rescission are moot. " The City goes on to state, "Unable topresent 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 notspent for non-airportpurposes, and that he believes that the City handled thefunds in a way that couldhave led to revenue diversion. Such speculation isfacially insufficient to meetMr. Meyer's burden of proving an actual violation.

6Moreover,fear of'potential diversion' and 'intent to divert' are notviolations of the revenue use laws. " [FAA Exhibit 1, Item 6, page 1] On March 9, 2012, Milton Dohoney, Jr., CityManager for the City ofCincinnati sent a letter to Christa Fornarotto, Associate Administrator for Airports stating that the permanent closure ofthe 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 FederalAviation 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 thefederallyfunded improvements extinguished in 2003. However, the city's disposition of the $37.5 millionfor the sale of I30 acres of airportproperty to the city of BlueAsh must be addressed As discussed before, this money accrued to the airport, is consideredairport revenue, and is still subject to revenue use obligations. We want to remindyou that the city must provide the FAA aplan 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 advisedyou on March 9, 20I2 of its intent to closepermanently Cincinnati-BlueAsh Airport (ISZ). At that time, the City hadnot set a date certain for closure andadvisedyou that ISZwould close no earlier than June 8, 20I2. The City has now determined that it will close ISZ onAugust 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 andreturn theparties to the status quo ante. The rescission andrelatedagreements were approved by Cincinnati and Blue Ash, on, respectively, August I, 2012 andAugust 9, 20I2. Pursuant to that agreement, the parties wouldrescindand unwind the 2006Agreementprior to the closure of the Airport on August 29, 20I2. On July 30, 20I2, Cincinnati sent the FAAformal noticepursuant to
...49 US. 

### C. § 463I9 and, to the extent applicable, I4 C.P.R. §I57. 5(b) (2), of its intention to permanently close the Airport onAugust 29, 20I2." The City goes on to explain, "On the afternoon of August 28, 2012, Cincinnati andBlueAsh executed the RescissionAgreement andrelated documents, including the transfer of title to the ParkProperty back to Cincinnati. Also on August28, 20I2, pursuant to the Rescission Agreement, Cincinnati returnedthe $6million it had received under the 2006Agreement 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 ofpermanent closure ofthe 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

7On 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 ofthe 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 ofpermanent closure ofthe Cincinnati-Blue Ash Airport for publication in the Federal Register. [FAA Exhibit 1, Iteml4] On October 4, 2012, the FAA issued the Notice ofDocketing. [FAA Exhibit 1, Item 7] On October 22, 2012, the City ofCincinnati filed a Motion for Extension ofTime to file its Answer. [FAA Exhibit 1, Item 8] On December 13,2012, the City ofCincinnati 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 ofCincinnati, Ohio's Answer to Complaint. [FAA Exhibit 1, Item 5] On February 19, 2013, the City ofCincinnati 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 ofthe airport from the City ofCincinnati. [FAA Exhibit 1, Item 15] On January 16, 2014, the City ofCincinnati responded to FAA's request for additional information. [FAA Exhibit 1, Item 19] On February 26,2014, FAA filed a Notice ofExtension ofTime until May 30,2014. [FAA Exhibit 1, Item 20] On May 29,2014, FAA filed a Notice ofExtension ofTime until July 31, 2014. [FAA Exhibit 1, Item 21] On July 30,2014, FAA filed a Notice ofExtension ofTime 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.
8Issue 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,AirportRevenues, by using funds from the sale ofthe 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 ofTitle 49 U.S.C. §§ 47107(b) and 47133.

V. APPLICABLE LAW AND POLICY I. Grant Assurance 25,AirportRevenues Grant Assurance 25,AirportRevenues, implements provisions ofTitle 49 U.S.C., § 47107(b) and§ 47133, et seq., and requires, inpertinentpart, that the sponsor ofa federally obligated airport assure:

a. All revenues generated by the airport andany 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 andwhich are directly and substantially related to the actual air transportation of passengers orproperty; or for noise mitigationpurposes on or off the airport. [

...] b. Aspart of the annual audit required under the Single AuditAct of 1984, the sponsor will direct that the audit will review, andthe resulting audit report willprovide an opinion concerning, the use of airport revenue and taxes in paragraph (a), and indicating whether fundspaidor transferred to the owner or operator arepaidor transferred in a manner consistent with Title 49, UnitedStates Code andany other applicableprovision of law, including any regulationpromulgated by the Secretary orAdministrator.

c. Any civilpenalties or other sanctions will be imposed for violation of this assurance in accordance with theprovisions of Section § 47107 of Title 49, United States Code. [Assurance 25] FAA's Policy andProcedures Concerning the Use of AirportRevenues (64 Fed. Reg. 7696, February 16, 1999) (Revenue Use Policy) provides, among other things, the FAA's policy on the use ofairport revenue. It provides, 

### in relevant part, that: 1. All fees, charges, rents, or otherpayments receivedby or accruing to the sponsor for any one of thefollowing reasons are considered to be airport revenue: b. Revenue from sponsor activities on the airport. Airport revenue generally

9includes all revenue received by the sponsor for activities conducted by the sponsor itself as airport owner andoperator, including revenue received: i. From any activity conducted by the sponsor on airportproperty acquiredwith 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 airportproperty not acquiredwith federal assistance, but only to the extent of thefair rental value of the airportproperty. Thefair rental value will be based on thefair 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 ofFederal 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 ofa national system ofsafe 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 ofairports. Rather, it monitors the administration ofvaluable rights, which airport sponsors pledge to the people ofthe United States in exchange for monetary grants and donations ofFederal 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. Itprovides 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 ofFederal funds or the conveyance ofFederal property for airport purposes. The Order, inter alia, analyzes the various obligations set forth inthe standard airport sponsor assurances, addresses the application ofthe assurances in the operation ofpublic-use airports, and facilitates interpretation ofthe assurances by FAA personnel. The FAA Compliance program is designed to achieve voluntary compliance with Federal obligations accepted by owners and/or operators ofpublic-use airports developed with FAA administered assistance. Therefore, in addressing allegations ofnoncompliance, the FAA will 10make 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 allegedorpotentialpast violation of applicablefederal 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 ofTransportation 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 ofsuch assistance. These sponsorship requirements are included in every airport improvement program (AlP) grant agreement. Upon acceptance ofan 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. Rightto 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 onthe 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 ofa motion, request, or order has the burden ofproof. A party who has asserted an affirmative defense has the burden ofproving the affirmative defense." [14 CFR 16.229(b)- (c)] This standard burden ofproofis consistent with the Administrative Procedure Act (APA) and Federal case law. The APA provision states, "[e]xcept as otherwiseprovidedby statute, the proponent of a rule or order has the burden of proof" 5 U.S.C., §556(d). See also, Director, Office ofWorker's Compensation Programs, Department ofLabor v. Greenwich Collieries, 512 US 267,272 (1994); Air Canada eta!. v. Department ofTransportation, 148 F3d 1142, 1155-56 (DC Cir, 1998). Title 14 CFR § 16.229(b) is consistent with 14 CFR § 16.23, which requires the
11complainant to submit all documents then available to support his or her complaint. Similarly, 14 CFR § l6.29(b)(l) states that "[ejachparty shall file documents that it considers sufficient to presentall relevant facts andargument necessary for the FAA to determine whether the sponsor is in compliance. " 2. RighttoAppealtheDirector'sDetermination A party to this decision adversely affected by the Director's Determination may file an appeal with the Associate Administrator within 30 days after the date of service ofthe initial determination. Ifno appeal is filed within the time period specified, the Director's Determination becomes the final decision and order ofthe 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 ofthe 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 inthe 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'sResponsibility with Regardto anAppeal 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 AssociateAdministrator's responsibility to determine whether (a) the findings of fact made by the Director are supported by apreponderance of reliable, probative, andsubstantial evidence, and (b) each conclusion of law is made in accordance with applicable law, precedent, and publicpolicy. " [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.]

12VI. ANALYSIS AND DISCUSSION Standing Before addressing Complainant's allegations, we must first address the issue ofwhether Complainant has standing to file a complaint with the FAA under the Rules of Practice for Federally-Assisted AirportEnforcementProceedings (14 CFR Part 16). Complainant alleges he can file a 14 CFRPart 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 ofFederal 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 ofthe 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 anddeprive 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, 2012), page 17-20, which noted that complainant lost standing after Complainant sold airport-related asset during the pendency ofthe case. [FAA Exhibit I, Item 4, page 16] Additionally, the City contends, "The closure of the Airportdeprives Mr. Meyer of standing. First, Mr. Meyer cannot be affectedby any alleged revenue diversion because the Airport is now closedandhe is not now, and cannot in thefuture 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 "aperson doing business" with the Airport, nor does hepay "fees or rentals to the Airport."Accordingly, Mr. Meyer does not, and cannot, establish standingpursuant to 14. 

### C.FR. §16.23(a), and the Complaint must be dismissedpursuant to 14 

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

... here, where the Airporthas been closedandremoved from the NPIAS andall revenues alleged to have been illegally diverted returned to BlueAsh, 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 thatthe 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 ofthe Airport, it does not change the
13fact that the Complainant was a user ofthe 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 ofthe federal airport funds allegedly diverted. [61 Fed. Reg. 53998 (October 16, 1996.)] The Director disagrees withthe 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 ofthe airport

- which per the Respondent results in the Complainant's loss ofstanding. The Record establishes that the Complainant was an aeronautical user ofthe Airport during the period that he alleges revenue was unlawfully diverted from the airport; this was prior to the closing ofthe 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 inthis Part 16 proceeding. Moreover, the FAA may investigate an allegation ofrevenue diversion regardless ofwhether 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 oftheir well-substantiated claim ofrevenue diversion. For such claims there is a presumption ofstanding

... regardless of whether there is a substantive showing ofdetrimental 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 ofinformation: 1. Armual report on revenue use submitted by the sponsor under the provisions of49 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 ofPractice for Federally Assisted Airport Enforcement Proceedings, and 4. DOT Office oflnspector General audits. Accordingly, the Director finds thatthe Complainant has standing to file a complaint under Part 16, and the FAA will investigate the Complainant's allegation ofunlawful revenue diversion. Issue 1 -Whether the City ofCincinnativiolated 49 U.S.C. 

### §§ 47107(b) and 47133, Restriction on Use of Revenues and Grant Assurance 25,AirportRevenues, by using funds from the sale ofthe Blue Ash Airport for non-aviation purposes.

14The Complainants alleges "Cincinnati used the revenuefrom the sale of airportproperty for non-aviation related expenses in violation of the Statute andPolicy. [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 ofBlue Ash. The City states, "The City andFAA staff have [sic] worked cooperatively to resolve FAA 's concerns thatproceeds from the 2006Agreement were subject to revenue diversion rules. To ensure that it did not violate any federal obligation, and thatFAA 's concerns werefolly addressed, Cincinnati didnot spend thoseproceeds for any non-Airportpurpose, and ensured that all of theproceeds 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 ofFederal 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 ofpassengers orproperty." Grant Assurance 25(a), AirportRevenues 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 ofthe 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 ofpassengers or property; or for noise mitigation purposes on or offthe airport. The Complainant makes a number ofallegations, 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 ofairport revenue for a condominium project, a streetcar system, environmental remediation and miscellaneous expenditures. Complainant's Allegations 1. $300,000 [ofairport revenue] was paidtoward the Mt. Auburn Place Condos Project. 2. $11 million [ofairport revenue] was earmarked for the construction ofCincinnati's streetcar system. 3. OnNovember 28, 2007, Cincinnati passed Ordinance 416-2007 which

.. .directed that revenues received from rental or sale of any Citypropertypurchased for anypurpose other than expressways, Blue AshAirport, ParkBoard or Recreation Commission purposes, be deposited into Fund 757, Miscellaneous PermanentImprovement Fund,for thepurpose of allowing theproceeds from the sale of the Blue AshAirport 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 15remediation work plan at the Blue Ash Airport

... "As Cincinnati conveyed title to Blue Ash in June, 2007, theproperty requiring the lead remediation was no longer an airport. Since it was no longer an airport, Cincinnati could not spendrevenue from the sale of the airport land on lead remediation on thatproperty. " 5. On January 26, 2011, Cincinnatipassed Ordinance 7-2011 authorizing the City Manager to accept andappropriate a grant for $1,087,500from the Ohio's Clean Ohio Revitalization Fund (CORF) toprovide resources to remediate leadcontaminatedsoil at the Blue AshAirport

....andauthorizing the transfer andappropriation of $37 5, 000 for thepurpose of providing the 25% local matchfonding requirements for the grant." 6. OnAugust 1, 2012, Cincinnatipassed Ordinance 294-2012 authorizing the transfor of $170,000 from the Miscellaneous Permanent Improvement Fund 757 toprovide resources to complete the removal of contaminatedsoil and undergroundstorage tanks from BlueAshAirportProperty to be transferred to the City of BlueAsh and for costs associated withfinal 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 AshAirportSale wasplaced in the General Capital Investment Program. " 8. (8-19) "According to the Searchable Expenditure Databaseprovided on the City of Cincinnati's website, Cincinnati has spent over $2.8Mfrom the Miscellaneous PermanentImprovement Fund from 2009-2012

.... it is extremely likely that this money was spend onpurposes 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 ofmonies that belonged to the [former] Airport. The allegations ofimproper expenditures range from contributions to a condominium project, development ofa streetcar system, lead and other remediation work atthe former Airport, and general allegations ofmore 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 itdid notspendany of theproceeds from the 2006Purchase andSale Agreement for non-airport purposes. Specifically, through detailed financial records showing the running balance of City Fund 757, Miscellaneous PermanentImprovementAccount (Fund 757), the City account into which the 2006Agreementproceeds were deposited, the City showed that:

• The City did not spendany of theproceeds from the 2006Agreement for anypurpose. Thefull amount of thepayments received from the City of Blue Ash between November 2006 andAugust 2012- totaling $6 million- was heldby the City from the time thefirst paymentwas made throughAugust 28, 2012, when the $6 million was returned to Blue Ash in connection with the rescission of the 2006Agreement.4

4 In the City's Response to FAA's Request for Additional Information, evidence showing $6 million returned to the City ofBlue Ash was provided. [FAA Exhibit I, Item 19, exhibit 4] 16• Atall times, Fund 757 hadan unencumbered balance greater than thepayments received from Blue Ash, taking into account all other authorized or appropriatedwithdrawals or transfers from Fund 757. • The City Council didnot make any appropriation of theproceeds from the 2006 Agreement, and therefore didnot direct that any of thoseproceeds be spent for any purpose, including any non-airportpurpose. Accordingly, the City believes the recorddemonstrates overwhelmingly that the allegations of the Complainant lack meritand 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 ofBlue 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 ofthe similarity in the Complainant's allegations

- improper expenditures from City Fund 757- the Director will provide a comprehensive analysis at the end ofthis section rather than addressing each allegation separately. In furtherance ofthe Director's investigation, the Director requested the Respondent to answer certain budgetary related questions, and to submit (1) Copy ofCity ofCincinnati wire transfer confirmation or check copy ($6 million) for City ofCincinnati; (2) Copy ofBlue Ash wire transfer confirmation or check copy ($6 million); (3) Copy ofCity ofCincinnati disbursements journal showing payments ($6 million); and ( 4) Copy ofCity ofBlue Ash receiptsjournal showing receipt ($6 million). In addition the Director requested the Respondent to provide financial records (e.g. general and specializedjournals, ledgers, supporting worksheets, supporting analysis, vouchers, financial statements and corresponding footnotes) that support the Respondent's contention that the City did not spend any ofthe 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 2009/20I0ApprovedBiennial Budget of Cincinnati, BudgetPolicy Item I4, pages III2, $300,000 waspaidtoward the Mt. Auburn Place Condos Project, thefunds being repaid in 2009 from the BlueAshAirportFund[and the]payment is clearly a violation of the Statute in thatproceeds from the sale of airportproperty was being usedtopay 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 authorizedthepayment of $300,000 from the "BlueAshAirportFund, " thatpayment must have been made withfundsfrom the 2006Agreement or otherAirport funds. This is incorrect. The Biennial Budget is aplanning document that does not authorize the expenditure of

fondsfrom any account
....As explainedabove, once FAA stated itsposition that the 2006
17Agreement proceeds wereAirport revenue, the City took steps topreserve thosefundspending resolution of the issue. Consistent with the City'spolicy topreserve the 2006Agreement proceeds, a review of City records shows that there was nofollow-up City Council action authorizing thepayment of $300, 000 for the Mt. Auburn Place Condos Project from the 'Blue AshAirportFund' Infact, the $300,000payment was madefrom Fund 758 (Income Tax Permanent Improvement Fund), which didnot contain any of theproceeds from the 2006 Agreement or any otherAirport 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 ofCincinnati, Budget Policy Item !4, pages 11-12, $11 million was earmarked for the construction ofCincinnati's streetcar system. The streetcar system will be debt financed for approximately 10 years and proceeds from the sale ofBlue 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 BlueAshAirport capital revenues originally set asidefor the streetcar be redirected aspromised tofimd future economic development with a view towardneighborhood 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 canfind nofurther action on these Motions; however, thefact that they were made leads one to conclude that 

### if Cincinnati believed it couldspend the airport revenue on items such as condo refurbishment andstreetcars, 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 ofits Answer, the City states, "

... Mr. Meyer relies on a statement of intent in the 2009/2010ApprovedBiennial Budget contemplating the use of certain 2006Agreement proceeds for the streetcarproject. By separate ordinance, City Council identified the 2006Agreementproceeds as onepossible source of funds to secure bonds that wouldhelp finance the streetcarproject. The bonds were issued on December 12, 2012, after rescission and closure of the Airport. Noproceeds from the 2006Agreementwerepledged or otherwise expended to the streetcarproject before December, 2012. Hence, none of the 2006 Agreement proceeds were used in any way for the streetcarproject. " [FAA Exhibit 1, Item 4, pages 22-23] Inthe Respondent's response to FAA's request for additional information, the Respondent also notes, "Of course, there is no specific documentation to show that thefunds were notspent. To show that thefunds were always in Fund 757, therefore, the Cityprovided excerpts from the Journal for Fund 757 showing that the unencumbered balance of Fund 757, taking into account all appropriations andauthorized expenses, exceeded the amount received from BlueAsh atany time between November 2006andAugust2012. The City alsoprovided the sworn testimony from the Finance Department official responsiblefor managing theproceeds from the 2006 Agreement and the Assistant City Manager showing that theproceeds from the 2006Agreement hadbeenpreserved in Fund 757." [FAA Exhibit 1, Item 19, page 3]

18The Complainant argues repeatedly that "By the Respondent's own admission, it didnot quarantine the money toprevent accidental expenditures, but instead comingled the money in the 'Miscellaneous Permanent Improvement Fund', Fund 757, andbegan spending the money on other expenses. Respondent may have backfilled the Fund oncefinding out that the money was restricted, but that does not discount thefact that the City spent the aviation-related revenuefor non-aviationpurposes. "[FAA Exhibit 1, Item 5 (bulleted point 5)] The Complainant's allegation #3: OnNovember 28, 2007, Cincinnati passed Ordinance 416-2007 which "

...directed that revenues received from rental or sale of any Citypropertypurchased for anypurpose other than expressways, BlueAshAirport, ParkBoard or Recreation Commission purposes, be deposited into Fund 757, Miscellaneous Permanent Improvement Fund,for thepurpose of allowing theproceeds from the sale of the BlueAshAirport property to be deposited into Fund 757. Thus, Cincinnati now allows money from the sale of the Blue AshAirport property to be deposited into this Miscellaneous Fund. As a result, the revenuefrom the airport sale now cannot be separately accounted for and couldbe going topay 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 holdthe 2006Agreement proceeds constituted revenue diversion because the account was not limited to Airport funds and there was apossibility thatAirport revenue could be spent for nonAirport purposes. HefUrther argues that the City couldhave used the GeneralAviation 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 managementprocedures. Second, the City's LunkenAirportFund 104 (mistakenly referred to as the "GeneralAviation Fund

... in the Complaint) does not qualify as a special account for holding revenuefrom permanent improvements and could not have been usedas the account for deposit of the 2006 Agreement proceeds. The City was required under Ohio law to use Fund 757 to holdthe proceeds from the 2006Agreement because theproceeds werefrom the sale of real estate. The City wasprohibited fromplacing thosefunds in the LunkenAirportFund as Mr. Meyer's suggests it shouldhave

... the City can demonstrate that none of theproceeds from the 2006 Agreementwere spent for non-Airportpurposes. " [FAA Exhibit 1, Item 4, page 23-24] The Complainant's allegations 4, 5, 6: 4. On October 22, 2008, "Cincinnatipassed Ordinance 354-2008 authorizing the transfer of$200,000from the Miscellaneous PermanentImprovement Fund 757 to develop a lead remediation work plan at the Blue AshAirport

... As Cincinnati conveyedtitle to BlueAsh in June, 2007, theproperty requiring the lead remediation was no longer an airport.

19Since it was no longer an airport, Cincinnati could not spendrevenuefrom the sale of the airport landon lead remediation on thatproperty. 5. On January 26, 2011, Cincinnatipassed Ordinance 7-2011 authorizing the City Manager to accept andappropriate a grant for $1,087,500 from the Ohio's Clean Ohio Revitalization Fund (CORF) toprovide resources to remediate lead contaminatedsoil at the BlueAshAirport

....andauthorizing the transfer andappropriation of $37 5, 000 for thepurpose of providing the 25% local match funding requirements for the grant. 6. On August 1, 2012, Cincinnatipassed Ordinance 294-2012 authorizing the transfer of $170,000 from the Miscellaneous PermanentImprovement Fund 757 toprovide resources to complete the removal of contaminatedsoil and undergroundstorage tanks from BlueAshAirportProperty to be transferred to the City of BlueAsh and for costs associatedwith final reporting to the City of BlueAsh. " 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 theportion of theformer Blue AshAirport that was to be soldto Blue Ashpursuant to the 2006Agreement. He argues that thosepayments were illegal revenue diversion because they werefor the remediation of whatwas Mr. Meyer characterizes as non-Airportproperty. Again, the facts fail to support those allegations. First, the ordinances cited byMr. Meyer authorizepayment from the 'unappropriatedsurplus of Fund 757. The ordinances do not require thepayments to be made with the 2006Agreement proceeds and provide discretion to City staff on how to make thosepayments from the unappropriated balance of Fund 757

...Second, as the account records of Fund 757 make clear, there were sufficient funds in Fund 757 topay for each of the threepayments
... without having to use the 2006Agreementproceeds

...Simply stated, City staff exercised their discretion in a manner to assure thatpayments from Fund 757 were not made with theproceeds from the 2006 Agreement. Accordingly, there is no merit to Mr. Meyer's contentions

... that the City illegally divertedAirport revenue topay for mediation on theformer Blue AshAirport 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 thepayment of$200,000 for lead remediation 'from the unappropriatedsurplus of Fund 757,' Complainant agrees that the Ordinance quote is accurate, however, this does notmean that the money did not come from the Airportproceeds. Fund 7 57 contained proceeds from the sale of the Airport comingledwith other revenue. In 2008, when this ordinance was enacted, Respondent claims not to have known thatAirport revenue was restricted. Thus, to the Respondent, the Airportmoney could have also been considered 'unappropriated funds'.... Complainant also states that since the revenue was placed in a comingledaccount 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]



### 20In 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 Ashproceeds does not demonstrate that thefunds were in fact used for thosepurposes. The unrebutted evidence demonstrates, again, that thefull amount of BlueAshpayments was availablefor Airport use at all times

...His argument rests on the illogical assumption that because Fund 757 contained both BlueAshproceeds andother non-airport revenue, and because other funds deposited into Fund 757 were used for non-airportpurposes, BlueAshproceeds 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 infact spent for non-airportpurposes. " [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 AshAirportSale wasplaced in the General Capital Investment Program

... Therefore, it was comingledwith 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 BiennialBudget called for two transfers of$250, 000 from the 'Blue AshAirportSale' to the City capital accounts, those transfers musthave been made withfundsfrom the 2006Agreement or otherAirport funds. This is yet another speculative allegation that is unsupported by thefacts. First, as described above, the Capital Investment Program and the 2009/2010Approved BiennialBudget upon which Mr. Meyer relies areforward lookingplanning 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 $250, 000 transfers, itdid not specify the origin of the funds for transfer beyond identifying Fund 757. Thus, City staff haddiscretion 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 theproceeds from the 2006Agreement

...Because the two $250,000 transfers to the General Capital Fundwere notmade withproceeds from the 2006Agreement, 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 Databaseprovidedon the City of Cincinnati's website, Cincinnati has spent over $2. 8Mfrom the Miscellaneous Permanent Improvement Fund from 2009-2012

.... it is extremely likely that this money was spend onpurposes other thanfor airport related expenses...Since this money is coming from thefund that we know holdsproceeds from the sale of the Blue AshAirport, it is airport revenue money that Cincinnati is spending illegally on non-aviation related expenses. "

21In its Answer, the City states, "

...Mr. Meyer asserts that he has searched the City's Searchable Expenditure Database and identified $2.8 million inpayments from Fund 757 between 2009 and 20I2. He alleges that some or all of thosepayments must have been made with the 2006 Agreement proceeds because the 2006Agreementproceeds were deposited into Fund 757. These allegations are entirely speculative and on their facefail to meet his burden of proving thatAirport revenue was in fact spent for non-Airportpurposes. In any event, a review of City records demonstrates that the allegations are infact incorrect. First, Fund 757 is the account for numerous sources of City income, transfers and payments in addition to the 2006Agreement proceeds. It is incorrect to assume, as Mr. Meyer appears to, that the only source of revenue in the account were the 2006Agreement proceeds

... 

## If one does not include the full $6 million received from Blue Ash, approximately $I8. 7million was deposited in Fund 757. That is over five times the amount necessary topay for the $2.8 million in expenses identified byMr. Meyer. Second, as detailed above, the City managedFund 757 in a way topreserve the 2006Agreement proceedspending resolution ofF AA 's revenue diversion concerns. In consultation with the FAA, the City administration voluntarily took measures to ensure that the City maintainedthe full balance of theproceeds from the 2006Agreement in Fund 757 andwould continue to maintain that balancepending 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 waspaid for with the 2006 Agreementproceeds or any otherAirport 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 resolvedFAA 's concerns regardingpotential revenue diversion and (2) didnot infact spendany of theproceeds from the 2006Agreement for non-Airportpurposes, 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 receivedanyproceeds from the 2006Agreement. The City understands that FAA's 1999Revenue Use Policy appears to take theposition 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 itselfin the Revenue Use Policy, "[e ]stablishedFederal grant lawprevents a statutefrom being construed to modifY unilaterally the terms of apreexistinggrant 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]

22The City goes onto state, "Copies of those documents and other relevant iriformation are attachedto and described in theAffidavit of ReginaldZeno

... Together, those documents trace theAugust 28, 2012payment of the $6million from Cincinnati's Fund 757 to Blue Ash's designated escrow agent, via wire transfer, to the City of BlueAsh, 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 BlueAsh receiptsjournal 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 BlueAsh

... are sufficient to show thatBlue Ash received the $6 million. As a matter of law, pursuant to the Ohio Commercial Code, Blue Ash'spossession of the check made it the 'holder' of the checkwith 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 notspendany of theproceeds from the 2006 Purchase andSale Agreement on nonAirportpurposes. ' As the City described in its Answer andsupportingpapers, the broadly worded and poorlysupported allegations of the Complaintput the City in the difficultposition of having toprove a negative (notwithstanding thatMr. Meyer bears the burden of proof). Thefact is, the City didnotspendany of theproceeds from the 2006Agreement for any (emphasis from City)purpose andall the 2006Agreementproceeds were held in Fund 757 untilAugust 28, 2012, when the City refUnded that money to Blue Ash aspart of the rescission of the 2006 Agreement. The City has nowprovided the FAA with complete documentation of the activity in Fund 757, and the activity regarding theproceeds from the 2006Agreement, all of which conclusively demonstrates that none of thoseproceeds was spent for anypurpose, 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 ofGrant Assurance 25, AirportRevenues or 49 U.S.C. §§ 47107(b) and 47133 (a). However, the Complainant has provided no proofthat these expenditure ever occurred. The Complainant has speculated about what might have occurred or whatthe Respondent's intent may have been when developing its budget and other proposals. The Respondent has provided evidence that it did not spend any ofthe 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 ofthe rescission ofthe 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 whichthe 2006 Agreement was rescinded. [FAA Exhibit 1, Item 19, page 4]

5 The City cites Ohio Revised Code§ 1301.201 (B)(2l)(a). 23Additionally, the Director reviewed the City ofCincinnati'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 ofmore than $6 million. Because the dollars from the proceeds ofthe sale ofthe Airport were not segregated (and there is no requirement thatthey 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 ofaccounting 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 ofreal property into the account that was used to purchase that property or, in the absence ofsuch 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 ofthe 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 ofCincinnati, after 2003 and the expiration ofits last grant was not grant-obligated to continue to operate the Blue Ash Airport as a public use airport. Perthe Grant Assurance requirements for Duration andApplicability, there shall be no limit on the duration ofthe 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 ofthe Airport, funds paid by the City ofBlue 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 ofthe former Airport premises was completed after the Airport was closed. The distinction between the two transactions is based on the City's sale ofthe airport property while the airport continued to operate as a public use airport. Funds from the sale ofexisting 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 ofthe 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 ofpassengers or property. Ifthe Airport had remained open, any funds received as a result ofa sale ofany portion ofthe 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 ofits revenue use obligations prior to the sale ofany 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.

24In order for the FAA to find a sponsor in violation ofits federal obligations under a Part 16 proceeding, not only mustthe 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 ofconversations and an abundance ofargumentative opinion and criticism do not equate to substantial and credible evidence. In a formal Part 16 complaint, the complainant has the burden ofproofto establish the complaint's allegations by a preponderance ofsubstantial 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 inthe allegations. Although the Complainant may believe that the City was in violation ofGrant Assurance 25 and FAA's revenue use policy, the evidence provided is not sufficient to bear the burden ofproof. 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 ofGrant Assurance 25,AirportRevenues 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 of49 U.S.C. §§ 47107(b) and 47133. The Complainants states that the City ofCincinnati should be assessed an interestpenalty onthe $6 million for the time that it was in Fund 757. Arguing that '

... from 2007, when thefirst paymentwas 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 eventhough 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 considereddiversion under the statute. In Air Transport Association of America andAircraft Owners andPilotsAssociation v. City of LosAngeles,

... the FAA Director, Office of Airport Compliance andField Operations, determined that the mere act of transferring aviation revenuefrom a restrictedaviation fund to a general fund is diversion under 49 US.C. 

### § 47133. In that case, the City of LosAngeles was requirednot only to return the money it hadtransferred from its aviation fund to its general fund, it was also assessedan interestpenalty for theperiodof 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 isAir Transport Assoc. of America v. City of LosAngeles, FAA Docket No. 13-95-05 (June 1, 2009, Final Agency Decision). Mr. Meyer apparently relies on thefact 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
25airportproperty was airport revenue; the case did notaddress where the money was deposited. The money hadbeenpaidto the airport andplaced in an airport-specific account. Subsequently, the City of LosAngeles took theposition 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 didFAA establish a rule that money is diverted any time it isplace 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 inpart, "

... 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 ofinterest on the amount ofany illegal diversion ofrevenues. Interest is due from the date ofthe illegal diversion." The case referred to by the Complaint is very different to this instant complaint. In the 'Investigation into the Transfers of LosAngeles InternationalAirport 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 ofthe 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 ofits 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 ofthe submissions ofthe 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 ofCincinnati is currently not in violation ofGrant Assurance 25, AirportRevenues, or 49 United States Code (USC) §47133, by depositing proceeds from the sale ofthe 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 ofBlue Ash- no transfer or withdrawals- no leakage. The Complainant has provided
26no 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.

27RIGHT OF APPEAL This Director's Determination is an initial Agency determination and does not constitute final Agency action and order subject tojudicial 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 ofthe Director's Determination.



# ~:u~drt:£1!

andall F1ertz Director, Office ofAirport Compliance

and Management Analysis

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