North Carolina Administrative Code › Title 08 - ELECTIONS › Chapter 14 - WRITTEN OPINIONS › Opinion 2004-06-21 - WRITTEN OPINIONS

Current through Register Vol. 39, No. 2, July 15, 2024
STATE BOARD OF
						  ELECTIONS
6400 Mail Service Center
.
Raleigh, NC 27699-6400
GARY O. BARTLETT
Mailing Address
Director
PO Box 27255
June 21, 2004
Raleigh, NC 27611-7255
(919)733-7173
Fax (919)733-0135
Mr. John R. Wallace
Wallace, Creech & Sarda, LLP
P.O. Box 12065
Raleigh, NC 27605
Re: North Carolina Democratic Party's Request for Advisory
				Opinion pursuant to N.C Gen. Sat. §
								163-27.23 on Use of Private
				Aircraft
Dear Mr. Wallace:
You have requested a written opinion pursuant to N.C. Gen.
				Stat. §
								163-278.23 on the application of
				the reporting requirements and contribution limits of Article 22A of Chapter
				163 of the North Carolina General Statutes to the use of private aircraft by
				the North Carolina Democratic Party and its nominees. You anticipate that
				representatives and nominees of the Party, particularly statewide candidates,
				will travel extensively this election year and may use private aircraft at
				times. Private individuals have on occasion offered to the Party's
				representatives, including nominees, the use of private aircraft in which they
				have an ownership interest. You request guidance on several specific questions
				that may arise with the respect to the use of private aircraft.
There are several means by which a candidate or party political
				committee may obtain the use of aircraft. A political committee may purchase a
				ticket on commercial aircraft or may contract with a charter airline service in
				an arms-length transaction. In both instance, the actual expenditure for the
				ticket or the charter service should be reported.
Contributions may not exceed $4,000 per primary or election and
				must be made by an individual.
				G.S.
				163-278.13. Aircraft may be owned by an
				individual or may be owned by a corporation or other business entity. If the
				aircraft is individually owned and its use is donated to a candidate or
				political committee, the fair market value of the donated use should be
				reported as an in-kind contribution by the recipient committee under
				G. S.
				163-278.6(6) and
				278.8.
The use of an aircraft owned by a corporation or business
				entity, however, may not be donated to a candidate, party or political
				committee.
				G.S.
				163-278.19(a). However, in
				the instance in which a corporate executive is allotted a certain and finite
				use of a corporate aircraft in compensation for and in consideration of
				employment, the individual may upon prior approval of the campaign reporting
				office, donate his or her right to use such aircraft. In the event such
				donation is intended, the prospective donee must advise the State Board
				Campaign Reporting Office five (5) business days prior to the intended use of
				the corporate aircraft providing the State Board of the following matters: (1)
				a description of the plane to be used including manufacturer, model number and
				weight; (2) the intended flight path and distance; (3) whether the crew members
				are volunteers or are to be provided by the corporation along with the use of
				the aircraft; (4) expected terminal and related charges; and (5) whether the
				executive is provided with unlimited or limited usage of the corporate aircraft
				and if limited, the number of hours or miles such use which are granted per
				anum.
Upon review of the submission, the State Board may determine
				that the proposed usage is acceptable and upon such determination, such usage
				shall constitute an in-kind contribution by the individual donor, the value of
				which shall be established in accordance with the subsequent paragraphs of the
				instant advisory opinion. However, the State Board of Elections Campaign
				Reporting Office may determine that the proposed flight will constitute a
				contribution by a corporation or business entity not otherwise permitted to
				contribute and may decline to approve the contribution. In any event, with
				respect to any approved flight, usage of the aircraft may only be approved
				where the access and usage to the aircraft is part of an employee's
				compensation package and is reported to state and federal tax and other
				regulatory authorities. Furthermore, the employee may only donate the use of
				his or her share of such aircraft to a candidate or committee in an amount not
				to exceed $4000.00 per primary or general election.
A more difficult question is how to value fairly the donation
				of the use of aircraft. I have been unable to locate any established,
				controlling legal or accounting standard ascertaining the value of the use of a
				donated aircraft; however, there is information publicly available that should
				permit political committees to ascertain a fair valuation of donated aircraft
				and crew. David Roy Blackwell, a licensed pilot and Special Deputy Attorney
				General in the Attorney General's Office, has identified multiple, publicly
				available sources for assessing the costs of owning and operation private
				aircraft. See Memorandum from D. Blackwell to G. Bartlett (6 May 2004) (copy
				attached).
In calculating the donated use, or in evaluating how much
				compensation is owed for the use of a private aircraft that is not donated, the
				first step is to determine the average cost per flight hour of the make and
				model aircraft. The average cost per flight hour may be determined from one of
				the web sites listed in Mr. Blackwell's letter. Once the average cost per
				flight hour is determined, it should be multiplied by the number of flight
				hours fairly attributable to the political committee's use. These hours would
				include flight time necessary to reposition the aircraft.
Some of the average cost per hour data includes the average
				cost of the appropriate crew for the aircraft. If so, you do not need to
				separately determine the crew costs per flight hour. If the crew costs are not
				included, you must first determine if the pilot is a volunteer. Sometimes
				pilots who own their own aircraft will volunteer flight time to a candidate or
				political committee. Volunteer services are not included in the definition of a
				contribution.
				G.S.
				163-278.6(6). If the pilot
				or pilots services are not voluntarily given, them Mr. Blackwell has surveyed
				the current costs and they range per hour from $30 per flight hour for a single
				engine pilot with a three-hour minimum to $90 per flight hour with a $300 per
				day minimum for a turboprop or light jet twin-engine aircraft. Any time
				associated with the trip that the pilot or crew must spend in addition to
				actual flight time, and travel expenses they charge in addition to their other
				compensation, should be added to the estimated value of the contribution if it
				is paid by someone other than the committee. If the pilot costs are paid by the
				committee, then they would be reported as expenditures.
In sum, if a political committee wishes to accept the donated
				use of an aircraft or its crew, it is essential that the committee report that
				use as an in-kind contribution. Information is available by which a committee
				may assign a reasonable value to the donation. In auditing reports listing
				contributions or expenditures for the use of aircraft, this office will use the
				above principles and information to evaluate the reasonableness of the value
				assigned. The committee should specifically disclose the type of aircraft used,
				the number of hours it was used, and the number of crew members who were
				compensated for the use. The committee should be prepared to explain the
				assumptions it used in calculating the costs associated with committee's use of
				the aircraft. Finally, the total contributions of an individual donor should
				not exceed $4,000. This office will be happy to answer any questions that may
				arise as a committee determines the value of a particular contribution of the
				use of an aircraft.
This opinion is based upon the facts as stated in your letter
				dated February 19, 2004. If those facts should change, you should evaluate
				whether this opinion is still applicable and binding. In addition, changes in
				statutes or case law may affect this opinion and you should evaluate their
				applicability. This opinion will be filed with the Codifier of Rules to be
				published unedited in the North Carolina Register and the North Carolina
				Administrative Code.
Sincerely,
Gary O. Bartlett
Executive Director
cc:
Julian Mann III, Codifier of Rules
Kelly L. Loving, Robinson Bradshaw &
						  Hinson