Official Statement Airport Commission City and County of San ...

computations made in accordance with the requirements of the Lease and Use Agreements of the landing fee rate
and the Terminal Area rental rates for the next fiscal year. The signatory airlines and the City then use their best
efforts to adjust the Terminal Area rentals and landing fees to their mutual satisfaction.
If at any time during the fiscal year, the actual expenses (including debt service) of the Terminal Area and
the Groundside Area are projected to exceed by ten percent or more the actual revenues in the Terminal Area and
Groundside Area, the Commission may, after using its best efforts to reduce expenses, and upon 60 days notice to,
and in consultation with, the signatory airlines, increase the Terminal Area rentals. The Lease and Use Agreements
require the signatory airlines to pay such increased rentals or such lesser amount which equals the projected
deficiency for the remaining months of the then-current fiscal year. Landing fees may similarly be increased in the
event the actual expenses (including debt service) of the Airfield Area and Airport Support Area are projected to
exceed by ten percent or more the actual revenues in such areas.
Airline Review of Capital Improvements
Under the Lease and Use Agreements, the City agrees, with a limited exception described below, to use its
best efforts to finance all capital improvements through the issuance of Airport Revenue Bonds. A “capital
improvement” is defined under the Lease and Use Agreements as any item of expenditure with a cost (including
design and planning costs) exceeding $100,000 in 1981 dollars and a useful life of more than three years.
Proposed capital improvements with a cost in excess of $300,000 in 1981 dollars are subject to certain
review procedures established under the Lease and Use Agreements. A majority in interest of the signatory airlines
(defined to mean more than 50% in number of the signatory airlines who, on the date in question, also account for
more than 50% of the aggregate revenue aircraft landed weight landed by the signatory airlines at the Airport during
the immediately preceding fiscal year) may require the Commission to defer a given capital improvement for six
months so that such airlines can present their views with respect to such capital improvement. The Airport,
however, may budget and spend up to $2 million in 1981 dollars (as adjusted by a formula in the Lease and Use
Agreements) per year from current revenues on capital improvements without airline approval, or a greater amount
as may be approved by a majority in interest of the airlines. Capital improvements which are required by (i) a
federal or state agency having jurisdiction over Airport operations, or (ii) an emergency which, if the improvements
are not made, would result in the closing of the Airport within 48 hours, are not subject to the review procedures.
Other Lease and Use Agreement Covenants
The City covenants under the Lease and Use Agreements to operate the Airport in such a manner as to
maximize revenues from concessionaires, lessees and other non-airline users.
The City also agrees that no charges, fees or tolls of any nature, direct or indirect, shall be charged by the
Commission, directly or indirectly, against any signatory airline, its passengers, its suppliers or others for the
privilege of purchasing, selling, using, storing, withdrawing, handling, consuming, loading, unloading or delivering
any personal property of the airline or its suppliers or for the privilege of transporting personal property or persons
to, from or on the Airport. In addition, the City agrees that no other charges, fees or tolls of any nature shall be
charged by the Commission against any signatory airline or its employees or passengers for any of the premises,
facilities, rights, licenses and privileges granted under the Lease and Use Agreements to the airline or its employees
or passengers. However, the Commission is permitted to impose a passenger facilities charge or other similar
charge on passengers not prohibited by federal law; provided, however, that any revenues generated thereby shall be
deposited in the Airport Revenue Fund, and shall be used only for Airport purposes.
The airlines have each agreed to make certain accommodations to permit new entrants to operate at the
Airport in the signatory airlines’ exclusive leased space. See “SAN FRANCISCO INTERNATIONAL AIRPORT–Existing
Airline Agreements.”
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