Reference is made to my memorandum dated July 28, 1977. That memorandum was in response to your inquiring whether a city, county, or public airport authority must own and control an airport in order for it to be eligible for loans and grants of State funds for planning, acquisition, construction, or improvement of an airport pursuant to Article 1B of Chapter 113 of the General Statutes. It was my opinion that the legislative intent was that such airports must be owned and controlled in order to qualify for such aid. Nevertheless, as the memorandum indicated, the language of the relevant studies is ambigious.
You now request that I review the eligibility of the City of Lexington to receive such a grant. It is my understanding that the application by the City of Lexington is for a State grant in the amount of $34,000 to be expended, along with $34,000 of local tax funds, to contruct a partial parallel taxiway and aircraft parking apron at Lexington Municipal Airport.
The copy of the lease, executed on April 3, 1967, indicates that the airport was leased for a period of 30 years to the City by Mr. John S. Dillard and wife, Hessie H. Dillard. There are 19 years remaining before expiration of the lease. There is an agreement executed on the same day as the lease, between the City and Joe V. Dillard (son of Lessors), that allows him to be the operator of the airport during the term of the lease. One of the terms of this agreement is:
"The City is to receive no payment from the sale of any product or the rendering of any service at said airport, and it is specifically agreed that the operator is to receive all profits from the operation of the airport as compensation for his services rendered as operator in full, . . ."
Another term of the agreement is:
"No person shall operate an aircraft from this airport for compensation or hire, or engage in aircraft rental, flight instruction, or any other business contrary to the financial interest of, or without the express permission of the operator;"
The use of tax funds for capital improvements on leased land may raise a question of the propriety of such use of tax funds. These grantes are subject to limitations of G.S. § 113-28.8 which provides:
"Loans and grants may be made for such projects, activities, or facilities as would in general be eligible for approval by the Federal Aviation Administration or its successor agency or agencies. . . ."
A grant for the proposed improvement would not be eligible for approval by the Federal Aviation Administration, unless it is publicly owned. 14 CFR § 152.29 (copy attached). Until the legislature clearly provides for grants to privately owned airports as this one or until a definitive court ruling is rendered, it is recommended that the application for the grant be denied.
Rufus L. Edmisten Attorney General
Archie W. Anders Assistant Attorney General