ANNOTATED

ANNOTATED

OUTLINE OF TERMS

FIRST PHASE

1. The Airport Authority may construct a 14-gate, approximately 250,000-square foot replacement terminal, including baggage and concessions.

· The Framework provided for a 14-gate terminal of 330,000 square feet, not including up to 35,000 square feet for Airport Authority offices. The size of the proposed terminal in the Framework was negotiated based on very rough estimates of required space, not connected to a precise analysis of the terminal needs . In fact, the proposed terminal size envisioned in the original Framework is larger than necessary to serve the number of passengers that are expected to use a 14-gate terminal.

· The Authority and the City have agreed that it is reasonable to plan the terminal to accommodate 6.7 million passengers annually by the year 2015. As explained below, it is highly probable that the 6.7 million passenger level will not be reached until many years after 2015. For planning purposes, however, it makes sense to provide for a worst-case scenario. This planning horizon and approach is consistent with industry practice.

· The 14-gate terminal will come close to serving the full projected demand with adequate levels of service consistent with industry standards. Additional gates (as provided in phase II) would ensure appropriate service quality as the traffic levels approach the design objective of 6.7 million annual passengers.

· In negotiating the Framework, it would have been better if both sides had analyzed in detail the exact design specifications of the proposed terminal, but everyone was under considerable time constraints at that time and there were many other terms that were much more important for both parties. The new figures are the result of greater thought and analysis and will be able to meet the Airport’s actual needs in terms of fire and building codes, ADA and industry standards for levels of service in terminal facilities.

2. The Authority may use a total of 5,000 parking spaces west of Hollywood Way for public parking.

· The Framework provided that the Airport Authority could build 5,000 parking spaces west of Hollywood Way, but did not clarify whether this limitation applied to all parking spaces or just public parking spaces. The proposed Outline clarifies that the limit applies only to public parking spaces, not to spaces for employees or rental cars. In addition, this proposal uses the term “use” since it was unclear what the parties meant in the Framework by “construct.”

3. The Authority will secure federal authorization for and will implement and permanently enforce a mandatory 10 p.m. to 7 a.m. curfew on all flights (with exceptions for medical, weather, and mechanical emergencies).

· One of the core understandings of the Framework was that a terminal would be built only once there was meaningful nighttime noise relief. The Framework would have allowed the Authority to build a 14-gate terminal in the first phase if it implemented a nighttime closure of the terminal that would have had the practical effect of halting all nighttime commercial operations. All the parties at the time believed that that approach would have to provided interim noise relief without going through extensive federal approval process. Unfortunately, the FAA indicated that it considered the terminal closure to constitute a curfew that legally could not be implemented without following the elaborate federal approval processes. Thus, the basis for this pillar of the Framework deal was removed.

· FAA Administrator Garvey acknowledged last month that meaningful nighttime relief is a core element of any terminal replacement agreement and that a curfew showed real promise for being approvable under federal law and for providing the necessary noise relief. She promised to expedite the Part 161 Study. We expect that Garvey’s commitment will mean that the curfew can be studied and implemented within about 18 months – considerably less than the 4 years for the more extensive study originally proposed.

· Based upon advice from the FAA, we believe that a curfew can be obtained in 18 months or less – if the Authority limits its Part 161 Study to a curfew at this time and does not include other possible noise relief measures in the study.

4. The Authority will implement a funding mechanism to finance insulation of at least 50% of all homes within the 65 dB CNEL, as depicted on the 1998 FAA-approved noise exposure map, and will complete insulation on 30% of homes prior to occupancy of the new terminal and agree upon a timetable for completion of all sound insulation.

· These noise insulation terms incorporate the provisions of Phases I and II of the Framework.

· As of 1998, there were approximately 2200 homes within the 65 dB CNEL contour in Los Angeles and Burbank. The Airport Authority has committed in a proposed agreement with the City of Los Angeles to treat homeowners in Burbank and Los Angeles equally, meaning that a total of approximately 733 homes in both cities would have to have been insulated by the time the new terminal is occupied.

SECOND PHASE

5. The Airport Authority may expand the terminal up to a total of 16-gates, and approximately 280,000 square feet including baggage and concessions.

· The Framework’s Phase II also would have allowed a 16-gate terminal. However, a 370,000-square-foot terminal (as contemplated by in the Framework) is larger than needed to accommodate the 6.7 million passengers for which the City and the Authority have concurred should be the design capacity for the 16-gate terminal.

· Like the Framework, this Outline is silent on the timing for when the Authority builds the additional gates – but other provisions of the Outline encourage the Authority to begin the process for additional gates once growth in passenger traffic makes the additional gates advisable.

· The proposed design capacity of the terminal will accommodate reasonable growth at the Airport at least until 2015 – and probably much longer given past growth patterns at the Airport. While it is always difficult to predict future growth, historical data shows that a capacity of 6.7 million annual passengers provides ample growth potential. From 1995 through 1999, the number of passengers using the Burbank Airport actually declined by almost 5 percent as shown in the table below. That decline occurred when the national, state and regional economies were booming. The Joint City/Airport Traffic Study assumes the new terminal will open in 2003 with 5 million annual passengers and then grow at 2.5 percent per year until 2015 when it reaches 6.7 million passengers. Based on the actual decline during the last 5 years, a 2.5 percent growth rate is extremely optimistic. If the growth rate were 1.5 percent per year, it would take until 2023 to reach 6.7 million passengers. At 1 percent per year – still much faster than the current trends would justify -- it would be 2033 before 6.7 million annual passengers were reached.

Airport Passenger Traffic

1995 - 4,972,575

1996 - 4,838,483

1997 - 4,717,688

1998 - 4,731,656

1999 - 4,736,293

6. The Authority may use an additional 1,000 parking spaces, up to a total of 6,000 parking spaces west of Hollywood Way.

· This measure is the same as in Phase II of the Framework with the clarification mentioned above with respect to excluding employee and rental car parking and substitution of the term “use” instead of the word “construct” in the Framework.

7. The Authority will secure federal authorization and will permanently enforce a noise budget. The required study and application for federal approval must be initiated once passenger traffic at the Airport has grown by 10 percent above today’s levels. The budget will impose a limit on the community noise burden (expressed as the average L_eqnoise level at the 18 permanent noise monitoring stations) at current levels. The intent is that (a) community noise burden would never be greater than it is today, (b) the Airport would be able to accommodate reasonable commercial growth (up to 6.7 million annual passengers) without significant commercial aircraft substitutions, and (c) additional growth in passengers beyond that level could be achieved within the limit set by the budget only if quieter aircraft are substituted for noisier aircraft.

· The Framework required the imposition of restrictions on noisy Stage II and hushkitted jets that create a disproportionate amount of the noise at the Airport. However, FAA expressed great concerns about these provisions, citing two issues: national and international disputes relating to restrictions on these jets and the rigidity of an outright ban. Because FAA would have to approve the restrictions on hushkitted jets, FAA’s concern suggested that Phase II of the Framework would be very difficult to attain.

· We have come to learn from hours and hours of discussions with the FAA and the Authority that Burbank can achieve its noise relief objectives without the rigid provisions of the Framework.

· Accordingly, Burbank proposes to replace the inflexible restrictions on Stage II and hushkit planes with a noise budget. A noise budget provides a flexible tool to limit noise in the most efficient way possible while allowing aircraft operators and the Authority the flexibility of deciding how best to allocate the permissible limit on noise among the diverse pool of airport users.

· The budget has been carefully designed to achieve the objective of not increasing the noise levels around the airport. At the same time, we wanted to ensure that the Airport had flexibility to provide a reasonable level of growth. Since the City and the Authority concur that the design capacity of the terminal should be to serve 6.7 million passengers annually, we asked our technical consultant to design a noise budget that achieved the objective of preventing a degradation in the noise environment while meeting the growth projections. The proposal satisfies these criteria.

· Like the Framework approach with the bans on stage II and hushkitted aircraft, this Outline contemplates that the Authority will not immediately apply for authorization to impose the budget. Instead, the City proposes that the Authority not be required to seek the budget until there has been substantial passenger growth (which would necessarily be accompanied by growth in the number of flights at the Airport).

· If airlines or jet owners want to conduct more flights beyond the design capacity of the terminal, they can do so but only if they use quieter planes – because the noise levels are subject to a limit based upon today’s noise levels.

· This approach affords aircraft operators much more flexibility than the simple ban on stage II and hushkitted aircraft. Because a flexible noise budget is much more likely to be approved by FAA , it makes it much more likely that a Phase II terminal could be built

· The noise budget is designed so that it is practical for airlines to continue to operate their aircraft without the need to make substitutions in types of aircraft (e.g., there is no need to substitute 757s for 737s) until the terminal reaches its design capacity.

GENERAL CONDITIONS

8. Until such time as the noise budget is implemented, the following supermajority provisions shall apply. (a) A supermajority Commission vote will be required to change the use of, or reconfiguration of, any interior space in the terminal building (based upon a space use plan incorporated in the agreement). (b) Once passenger traffic has increased 10 percent above today’s levels, a supermajority vote will be required to authorize any capital project costing over $100,000 or to approve or modify any use or lease agreement with any Airport tenant.

· Growth will occur without affirmative action by the Commission. The supermajority voting requirement (approval by a majority of each city’s delegation) is deemed necessary to prompt careful deliberation by the Commission before it takes action that could bypass the intent of the agreement between the parties. Burbank needs the assurance that the design will not be significantly reconfigured to expand its capacity beyond the agreed-upon level.

· While there are many Commission actions that have the potential to result in growth, Burbank respects the need for bright lines. Therefore, we propose that supermajority voting will be required to approve any change in the use of space in the terminal. Burbank does not anticipate that this will result in significant burdens on the Authority or Commission, or preclude it from meeting reasonable passenger forecasts but is intended to ensure that the intent of the agreement is preserved over time.

· We believe that there should be positive incentives for the Authority to seek a noise budget since that is the provision of this agreement that replaces the stage II and hushkit ban in the original Framework. We have been told by the FAA that a noise budget is more likely to be approved if it is not sought until several years after the curfew has been implemented. For this reason, Burbank proposes that the incentives for applying for the budget not become effective until traffic has increased substantially – 10 percent above today’s levels. At that time, we believe that the agreement should include incentives for success in seeking a budget.

· The supermajority provisions are designed both to provide an incentive for success of the budget application and to provide meaningful protections against Authority-assisted growth in the event that the noise budget is not approved.

· If the Authority is successful in seeking a noise budget, the supermajority provisions will not have any practical effect.

9. Final agreement will be conditioned upon issuance by the City of all development approvals including those under PUC § 21661.6, general plan amendments and zoning and land use entitlements no later than the effective date the final agreement.

· City approvals were part of the original Framework.

10. The City’s execution of a final agreement will be contingent upon preparation of whatever documentation is required by law pursuant to CEQA.

· This provision was added to clarify that Burbank’s approval would be subject to applicable CEQA requirements. Because the City would have been subject to these requirements regardless, this provision does not change the substance of the original Framework.

· The City is unable to be more specific at this time about the particular scope of analysis, if any, that will be required to satisfy CEQA. The City has retained a consulting firm to review the relevant technical considerations and provide a recommendation on this issue. The City hopes to be able to clarify its legal obligations within the next few weeks.

· Burbank is not proposing to require anything more than the law requires. We are not proposing a new federal EIS because that is not required by law. We doubt that CEQA will require us to prepare a new EIR. Because the existing EIR is based upon data that is more than 10 years old, we have a legal obligation to determine what (if any) additional analysis is needed. (The City has never issued any approvals for the terminal project and, though the Authority has certified the existing EIR, the City’s approvals constitute a new action under CEQA and there is a considerable question as to whether the City legally can rely upon the Authority’s EIR.)

11. The City will buy key properties in the Runway 8 safety area and sell an avigation easement and restrictive covenant to the Authority for any such properties.

· Burbank has included this offer to address safety concerns at the Airport that have been made clear by the recent runway overrun by the Southwest Airlines 737. The City has no obligation to purchase the runway safety area but believes that this good faith offer should help improve safety at the Airport.

· The City and the Authority would negotiate over which properties to purchase. The City would purchase the properties and then sell to the Authority such interests in the property as are necessary to protect the safety of the areas.

12. Should the Authority initiate a Part 150 study of runway use patterns, it will use safety as the overriding criterion for evaluating any changes in use of Runway 8.

The provision of the Framework that would have barred eastern takeoffs caused concerns both for FAA and neighboring communities. FAA recently proposed addressing this issue in a future, detailed study – the so-called Part 150 Study. Burbank agrees that this proposed approach (that was endorsed in a letter from the FAA to Congressman Rogan) would allow all interests to be considered and addressed in a comprehensive fashion. However, it is critical for Burbank and the Authority to clarify that safety must be the most important factor driving this analysis.

13. The Authority will strictly enforce all existing airport noise rules.

· This provision was part of the original Framework.

14. The Authority will comply with the California Government Code Section 6546.1 ceiling on the size of the Airport’s noise impact area as interpreted by the California Court of Appeal.

· This provision was part of the original Framework, but the Outline clarifies that the “noise impact area” is defined pursuant to its proper meaning under state law as decided by the California Court of Appeal.

15. The Authority will implement a policy of rotating the Commission Presidency among the 3 cities to ensure that at least one Commissioner appointed by each city shall serve as Commission President for at least three out of each ten (10) year period.

· The provision was part of the original Framework.

16. The Authority will waive all legal claims.

· This provision was part of the original Framework.

17. The Authority commits maximum legally permissible mitigation funding for:

(a) Transportation infrastructure mitigation as recommended in the joint traffic study

(b) Mass transit design and dedication of right-of-way

(d) Impact fee for police and fire ($.12 per new square foot) and not for library and parks ($.38 per new square foot).

(e) Sewer facility charges

(f) New water and electric distribution facilities

· The City has had several discussions with the FAA regarding the Authority’s responsibility to comply with federal requirements on the use of airport revenue. Minor modifications have been made to the certain provisions of the Framework dealing with payments to the City to ensure compliance with the FAA’s views on these federal standards.

· The Authority and the City have jointly commissioned a traffic study to assess traffic impacts from the new terminal. Nevertheless, the FAA has told us that that agency would strenuously object to certain expenditures by the Authority for traffic mitigation and mitigation of other Airport impacts that occur off Airport property. We believe that the FAA is wrong in their interpretation of federal legal requirements but we have proposed not to challenge the FAA’s view.

18. The Authority will make an annual payment in lieu of taxes (PILOT) in the amount of property tax otherwise payable to the City or the Burbank Redevelopment Agency on Airport property were such property taxable. The PILOT will be offset by payments made in the previous item if required under federal law.

· The City has worked with the FAA to ensure that this requirement complied with federal limitations on the use of airport revenue. The FAA has agreed that the PILOT may be allowable but has demanded that the parameters of this payment be better defined and that steps are taken to ensure that the Authority was not paying twice (once under the PILOT and once under the mitigation payments) for the same expense. The minor changes reflected in the Outline respond to these concerns.

· Since we do not know the amounts of mitigation costs (which would have been the responsibility of the Authority under the Framework or under applicable state law), the PILOT has been modified from the Framework to remove the ceiling on the annual payment.

· The intent is unchanged from the original Framework: the Authority will make payments to compensate the City for lost property tax revenue and for mitigation costs associated with growth in the Airport and Airport traffic.

19. The City shall not increase the tax rate applicable to transient parking at the Airport during the time that bonds issued to finance development of the new terminal remain outstanding.

· This provision was part of the original Framework.

20. The Authority and the City will agree on revisions to language in the residential avigation easements, which shall ensure that the Authority will be responsible for providing additional noise attenuation or other remedial work on a previously noise insulated home if the interior noise level of a home exceed pre-established limits

· This provision was part of the original Framework.

21. The Authority will design all construction on the B-6 Property in an appropriate manner that recognizes aviation history and complies with the City’s Art in Public Places requirements.

· This provision was part of the original Framework.

22. The City and the Authority will dismiss all pending litigation with a stipulated order that incorporates the terms of the final agreement.

· This provision was part of the original Framework.

23. The use of and construction on the B-6 property will be formally limited to the footprint of a 16-gate terminal (and related facilities) as set forth in an Airport Layout Plan that will be attached to the final agreement.

· This provision is intended to clarify that the City approvals that would accompany a final agreement are intended to provide approvals only for the terminal and related facilities set forth in the agreement and that modifications to the project would require future City approvals. (See discussion above on supermajority voting to change the internal space usage in the terminal.)

· This provision is analogous to the restrictions that appear in similar City land use approvals for large, integrated projects.

24. The City will release the Authority from covenants and deed conditions contained in Property Transfer Agreements except as provided in the final agreement.

· This provision was not part of the original Framework but appears in the Title Transfer Agreements. The City believes that the parties always intended for the City to give such a release upon a final agreement. This is intended to clarify the original intent.

25. The Authority will demolish the existing terminal and impose use restrictions on future use of site.

· This provision was part of the original Framework.

26. The substantive terms will be memorialized in the appropriate legal vehicle(s) -- an amendment to the Joint Powers Agreement, a development agreement, deed restrictions or court orders -- depending upon advice from the FAA.

· In the Framework, all of the substantive provisions would have been contained in a Development Agreement (as well as other specialized agreements for particular purposes). However, FAA has indicated that it would vehemently oppose such an approach that would tie the final agreement to the City’s exercise of its zoning and land use approval powers.

· The FAA has recommended, as an alternative, that some of the terms of the final agreement be prepared as amendments to the JPA Thus, Burbank proposes changes in the means of memorializing the deal to address FAA’s concerns. Burbank would work with the Authority and FAA on the precise mechanisms that satisfy the FAA’s views on the appropriate legal vehicles for achieving our mutual objectives.