MOORLACH UPDATE — OC Register — October 19, 2011

The Transportation Corridor Agencies (TCA) have two main revenue sources, the tolls and developer fees.  In the last few years, developer fees have declined significantly.  Consequently, the San Joaquin Toll Road (the 73 Freeway) is having fiscal concerns, again.  There is one major improvement project that is on their radar screen:  the John Wayne Airport (JWA) remodeling project.  The last time JWA built its new terminal building, the TCA charged this developer fee.  The concessionaires had to pay this fee because the Federal Aviation Administration (FAA) ruled that this building permit fee was not an eligible airport expense.  These many years later, the TCA is back with their request.  Unfortunately, the new concessionaires may not have been aware of this ancient history, so the permit fee has come as quite a shock.  To make it more egregious, the fee is for the establishment’s leased space plus the common area.  Consequently, the per-square-foot fee is very high.  Two things scream out for justice.  The first is that after the original Terminals A and B were built, this nation experienced the 9/11 terrorist attacks and the Transportation Security Administration (TSA) was formed, causing airports to be divided facilities and limiting unrestricted public areas.  The second is that JWA asked its concessionaires to keep waiting lines out of the way of those walking to their gates, therefore this space is not useable to concessionaires.  The easy solution is to have the concessionaires pay for their actual leased space and have JWA pay for the common area as a cost of the Terminal C construction project.  In an environment where every government bureaucracy is fighting for the same bone, this solution seems out of our grasp.  It is now manifesting itself as a conflict between opening Terminal C and the related new parking lot, and opening the new food concession opportunities.  The OC Register captures it in today’s Update below.  The first article is the electronic version, which includes photos, that also appears on the MSNBC website, and the second is the dead-tree version.

Food spots won’t debut with new JWA terminal

Fee fight delays food: New Terminal C was supposed to open with heavily-hyped new dining choices. But a county fee fight means most will be dark on Nov. 14, the opening day

By NANCY LUNA / THE ORANGE COUNTY REGISTER

When John Wayne Airport unveils a $543 million airport expansion Nov. 14, passengers expecting to feast on new food options will instead face major hunger pains.

A majority of restaurants and concessions slated for the new Terminal C — including Pinkberry, Zov’s and an Anaheim Ducks-themed bar — won’t be ready when airport officials debut the multimillion project. Starbucks and one food stand will be open but others won’t come on board until mid-December.

The delay is being blamed on previously undisclosed fees tenants must pay to the Transportation Corridor Agencies, according to food vendors and county officials. Carl’s Jr., for example, had to pony up an extra $80,000 for the toll road agency before it could start renovating its Terminal C space.

"We were delayed more than a month on starting construction because of these unexpectedly high fees," Carl’s Jr. spokeswoman Beth Mansfield said.

Any airport expansion triggers development fees for the TCA because the project benefits from the San Joaquin Hills (73) Toll Road. The fees, along with tolls, pay off bonds used to fund the road’s construction.

The dispute centers on how the fees were calculated.

Food vendors and county officials say the agency is charging tenants for square-footage in common areas of the 282,000-square-foot terminal. In other words, they say, vendors are being asked to pay for public space they’re not occupying.

"This is nuts," said Supervisor John Moorlach, whose district includes the airport. "This is not fair taxation."

Some tenants, including Carl’s Jr., discovered the additional fee when they tried to pull their building permits with the county over the summer. Construction fell behind for the burger chain and for airport food vendor HMS Host International as each eatery questioned the higher costs.

"Obviously it was an unanticipated cost," HMS Host spokeswoman Susan Goyette said.

HMS Host is responsible for bringing in most new restaurants to Terminal C, including Zov’s, Jerry’s Wood-Fired Dogs, Pei Wei, Pinkberry and Anaheim Ducks Breakaway Bar & Grill. According to the TCA, HMS paid nearly $362,000 in “common area" fees, and $69,000 for space it is leasing at the airport. 

Goyette said HMS has filed an appeal on the "additional fees being charged."

"Regardless of the appeal, we are focused on delivering our restaurants as quickly as possible to travelers at John Wayne Airport," Goyette said.

In the case of Carl’s Jr., the total tab for TCA fees reached more than $100,000 – about $80,000 over the vendor’s budget.

Mansfield said the chain’s airport franchisee, James Yeung, shouldn’t be required to pay for space his restaurant is not leasing. That method of calculating the fee was not disclosed during the bidding process, she said. Because Leung doesn’t have the money to pay for the added costs, Carl’s Jr. paid on his behalf, but under protest, she said.

Besides Carl’s Jr. and HMS Host, Caterina’s Candies has also filed an appeal with the toll agency. The challenges will go before the agency’s board as early as December.

"It’s like hungry dogs going after the same bone," Moorlach said of the money dispute.

TCA spokeswoman Lori Olin said there should be no surprises about how the agency calculates its fees.

The "methodology and application of development fees" is a part of a joint agreement made 20 years ago between John Wayne Airport, the TCA and the County of Orange, Olin said.

"During the last two years, TCA was in constant contact with John Wayne Airport and the County of Orange and offered to further communicate regarding development fees to possible tenants," she said.

Ultimately, she added, it is the “airport’s responsibility to relay” the fee structure to tenants. 

Airport officials did not return a request for comment when asked if the "common area" fee charges were explained clearly during the bidding process. 

In the meantime, airport spokeswoman Jenny Wedge said Terminal C will open as planned Nov. 14 even though it’s amenities will not be completely finished.

"Passengers will be checking in, going through security screening, boarding aircraft and claiming bags in Terminal C on that day – of course, that’s our core business," Wedge said. "Passengers will hopefully appreciate the extensive improvements to date and will soon see even more variety of dining and retail options that they’ve asked for."

Terminal C is the centerpiece of the Airport Improvement Program, which includes added parking and new terminal facilities. The expansion also includes a major food overhaul in each terminal.

Oasis Grill & Sky Lounge, Gibson Guitar Lounge, Sports Page Pub and Wolfgang Puck food stands are closing as the airport ushers in a number of local and regional restaurant brands in each terminal.

Terminal C restaurants opening Dec. 14 include Zov’s, Pei Wei, Pinkberry, Jerry’s Dogs and Anaheim Ducks Breakaway Bar & Grill. Carl’s Jr. could open by mid-to-late November. CNN News Stand and Caterina’s specialty gift and food shop are also opening in December.

Though Terminal C will be nearly void of new eats, other parts of the airport will have new concessions by mid-November.

Terminal A: Zov’s Grab-n-Go is slated to open Oct. 24 in the pre-security area. The food stand will offer Lentil soup, salads and sandwiches made famous by the founder of Zov’s Bistro in Tustin. California Pizza Kitchen debuts Oct. 26.

Terminal B: Wine bar Vino Volo debuted earlier this summer. La Tapenade Mediterranean Café opened last week in the pre-security area. Hobie Sand Bar, a beach-themed restaurant named after O.C surfing icon Hobie Alter, opens Nov. 16.

Key brands sticking around include Starbucks (three locations) and McDonald’s, whose two locations in Terminals A and B are expanding. The McDonald’s makeover is not expected to be complete until next year.

Once the expansion is finished, the food and restaurant space at the airport will grow from roughly 15,000 square feet to nearly 27,000 square feet.

Image002

Fee confusion delays eateries at JWA’s new Terminal C

Nancy Luna Register Writer

When John Wayne Airport unveils a $543 million airport expansion Nov. 14, passengers expecting to feast on new food options will instead face major hunger pains.

A majority of restaurants slated for the new Terminal C – including an Anaheim Ducks-themed bar – won’t be ready when airport officials debut the multi-million project. Starbucks and one food stand will be open but others won’t come on board until mid-December.

The delay is being blamed on previously undisclosed fees tenants must pay to the Transportation Corridor Agencies, according to food vendors and county officials. Carl’s Jr., for example, had to pony up an extra $80,000 for the toll road agency before it could start construction, chain spokeswoman Beth Mansfield said.

Any airport expansion triggers development fees for the TCA because the project benefits from the San Joaquin Hills toll road. The fees, along with tolls, pay off bonds used to fund the road’s construction. The dispute centers on how the fees were calculated.

Food vendors and county officials say the agency is charging tenants for public space they’re not leasing.

“This is nuts,” said Supervisor John Moorlach, whose district includes the airport. “This is not fair taxation.”

Some tenants, including Carl’s Jr. and airport food vendor HMS Host International, discovered the additional fee when they applied for building permits.

“Obviously it was an unanticipated cost,” HMS Host spokeswoman Susan Goyette said.

HMS Host is responsible for bringing in most new restaurants to Terminal C, including Zov’s, Jerry’s Wood-Fired Dogs, Pei Wei, Pinkberry and Anaheim Ducks Breakaway Bar & Grill.

The company paid fees so it could move forward with construction. However, HMS Host filed an appeal with the TCA over its total charge. According to the TCA, HMS paid nearly $362,000 in “common area” fees.

Caterina’s Candies and Carl’s Jr. have also filed an appeal with the toll agency.

TCA spokeswoman Lori Olin said there should be no surprises about how the agency calculates its fees.

“During the last two years, TCA was in constant contact with John Wayne Airport and the County of Orange and offered to further communicate regarding development fees to possible tenants,” she said. Ultimately, she added, it is the “airport’s responsibility to relay” the fee structure to tenants.

Airport spokeswoman Jenny Wedge said TerminalC will open as planned Nov. 14 even though it’s not completely finished.

Terminal C is the centerpiece of the Airport Improvement Program, which includes added parking and new terminal facilities.

FIVE-YEAR LOOK BACKS

October 19

1996

There was a major Supervisorial campaign and it was covered by Shelby Grad of the LA Times in “Candidates Agree on Some Issues, but Display Very Different Styles – Garden Garden Grove Councilman Mark Leyes has a significant funding lead over Westminster Mayor Charles V. Smith.” 

The two candidates vying for the 1st District seat on the Board of Supervisors both represent ethnically and economically diverse cities in the heart of central Orange County.

But Garden Grove Councilman Mark Leyes and Westminster Mayor Charles V. Smith are decidedly different politicians, giving voters a distinct choice come November.

Leyes has the support of Supervisor Jim Silva and Treasurer-Tax Collector John M.W. Moorlach as well as the County Firefighters Assn. and Orange County Marshals Assn.

But Leyes’ most influential backing comes from a host of state and federal legislators, including Pringle, Assemblyman Jim Morrissey (R-Santa Ana), GOP State Senate Leader Rob Hurtt (R-Garden Grove) and Rep. Dana Rohrabacher (R-Huntington Beach).

Not surprisingly, the county’s bankruptcy crisis and its aftermath is the dominant issue in the campaign.

2001

Daniel Taub of Bloomberg News provided an Edison update in “Edison’s Bryson Wins State Bailout, Still Has Critics.”

                Generators and other creditors remain unhappy with Edison because it hasn’t provided details on when it will pay the debts they’re owed.  They could still force a bankruptcy filing if the plan’s key provisions are delayed.

                “Tactically, you’d want to keep some of your opponents closer to you rather than try to irritate them, “ Moorlach said.

The plan faces other obstacles.  The Utility Reform Network, a San Francisco-based consumer group, has said it will appeal the settlement because the agreement violates state utility regulations.  The County of Los Angeles also is considering an appeal, because it didn’t have enough time to review the plan before it was approved.

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