New FBO Does Not Comply With Fair Market Value Policy

In a letter sent to officials at Lake Cumberland Airport (KSME) in Somerset, KY, the FAA says a lease agreement between the airport and a new FBO is in violation of one of 39 grant assurances required by the federal government.

FAA spokeswoman Kathleen Bergen said in the letter that there was a problem with "assurance 24", which says the airport should "do everything in its power" to obtain fair market value on every transaction. The Commonwealth Journal reports that Bergen's letter indicates that the incentives offered by the airport to the new FBO are different from those offered to the former company, which does not meet the federal guidelines.

"In this case we received a complaint and did an informal investigation, and we found that the airport was not getting fair market value," Bergen said.

Airport officials are on notice that they have until May 31st to present a recommended course of action back to the FAA addressing the agency's concerns. If no response is received, a formal investigation will be launched. Berger said the airport could be placed in non-compliance status, which could jeopardize future AIP grants to the airport ... but admitted that is not likely to happen. She said the FAA makes "every effort" assure that airports comply with the rules, and would not pull grant funding until all other efforts have been exhausted.

FMI: www.faa.gov