The Federal Aviation Administration has determined that Santa Monica Municipal Airport (SMO) in California violated federal law by accumulating surplus airport revenues intended for use on general city services after the airport’s planned 2028 closure, rather than spending those funds on aviation purposes. Santa Monica Daily Press reported on a Director’s Determination issued Dec. 22, in which FAA Director Michael Helvey found the city’s actions were not in compliance with federal grant assurances governing the use of airport revenue and ordered Santa Monica to revise its fee structure within 30 days and implement new aeronautical rates within 60 days.
The determination stems from a complaint filed in July 2024 by pilot Mark Smith, Kim Davidson Aviation Inc. and the National Business Aviation Association, which alleged the city improperly distinguished between aeronautical and non-aeronautical revenue surpluses and failed to use all airport revenue to benefit aviation users. According to the FAA, the city projects a non-aeronautical surplus of about $19 million by Dec. 31, 2028, when a 2017 settlement agreement allows the airport to close, and plans to reserve those funds for non-aviation purposes, contrary to federal requirements.
While the FAA rejected some allegations, including claims that the city was required to cross-credit nonaeronautical revenue to aeronautical rates, it concluded Santa Monica’s overall approach demonstrated intent to create a surplus it could not lawfully spend. The city has 30 days from issuance to appeal the determination to the FAA associate administrator for airports; otherwise, the ruling will become final agency action. Santa Monica has encountered other challenges from the FAA over the handling of funds in the past.
