Houlton International Airport, where a dispute over the use of a building might cause future federal aid to be cut.  Credit: Joseph Cyr / Houlton Pioneer Times

The Federal Aviation Administration has threatened to withhold funding for future projects at Houlton International Airport if the town does not honor the deed terms for a building at the airport.

The FAA warned the town in December of the potential penalties because it allowed the building, on less than an acre and owned by a local businessman, to be leased for non-aviation use. A letter from the FAA and other documents were obtained by the Bangor Daily News under a Freedom of Access Act request. An FAA spokesperson said the town has not responded to the letter, but has until Feb. 1 to do so.

At risk is potentially millions of dollars in federal funding for the small airport, located on more than 1,000 acres of land that the federal government deeded to the town in 1947. The airport relies on federal money for maintenance and improvements. It received $14.7 million in federal funding from 1983 to 2020, including $4.4 million last September to reconfigure a taxiway, said Gail Latrell, the FAA’s regional director.

The airport, used for general aviation and with no commercial flights, laid out ambitious growth plans in its master plan in May 2019, including for four nested hangers which, with pavement and automobile parking, would cost at least $5.3 million. It is unclear whether the airport would lose all federal grant support if the dispute continues, but the FAA said the airport gets $150,000 annually in federal funds that might be at risk.

A private plane takes off from Houlton International Airport in July 2013. Credit: Joseph Cyr / Houlton Pioneer Times

Under the deed, the town must honor federal laws that include prohibitions on non-aviation use and require prior approval of leases by the FAA, Lattrell said. Houlton’s airport and eight others in Maine fall under a 1944 law governing the conversion of surplus military airports to civilian ones after World War II. Each has its own lease and set of conditions.

Houlton Town Manager Marian Anderson said the town takes its responsibilities seriously, but “has an obligation to be fair, thorough and professional to all parties involved.” She said the FAA letter is under review.

“The period to respond to the FAA is driven by facts and they are not all in yet,” she said. “We will not be taking any action until they are.”

The alleged infraction arose after Beals Aircraft Service of Houlton won an award in September to lease the building to the federal General Services Administration for office space and storage with nearby parking. Company owner Terrance Beals also owns the building at 19 Industrial Drive.

Lattrell wrote that the lease was “a clear violation” of deed restrictions and said the FAA intends to hold the town in “apparent noncompliance” until the situation is corrected.

Brown Development, a Houlton contracting firm that competed for the federal lease, challenged the award, citing the non-aviation use. The General Services Administration is now “reevaluating the award decision,” according to Lattrell.

“Our only goal is a fair bid process,” said Sara Moppin, a Portland-based lawyer representing Jim Brown, the owner of Brown Development. “That means a process where the General Services Administration and the town respect the law and don’t try to lease property where its use would be illegal.”

Moppin said the administration has not responded to her questions about the status of the award, when it would be reevaluated and confirmation that the lease between the federal agency and Beals has been terminated. A General Services Administration lawyer involved in the matter did not return a request for comment.

Jonathan Hunter, a Bangor-based lawyer representing Beals, said the deed restriction “goes well beyond” FAA policies on the sale of airport property. He said the FAA routinely allows such property to be used for non-aviation purposes and has previously approved sales of Houlton airport property to private businesses for those types of uses.

“The hangar in question is not located on airport property, but rather on private property of Mr. Beals, and was built at his own expense,” Hunter said.

This is not the first time the town has been accused by the FAA of not complying with its requirements. In 1990, the town deeded the property to Beals without notifying the FAA or getting its approval. In 1991, the town asked the FAA to approve the sale of the property, but the FAA denied the request and told it to buy the property back.

In 2006, the FAA found that the town had not yet done so. In a complex twist of events, the town had Beals deed the property back to it in 2010. The FAA then allowed the town to deed the property while keeping several restrictions in place, including the aviation-only use. The town in turn deeded the property back to Beals with those restrictions.

The General Services Administration issued its request for a proposal in January 2020 for warehouse and storage space for up to 15 years. In March, Houlton’s town manager sent a notice to Terrance Beals and the administration saying the town would not consider a lease between them to violate a restriction and that the town would not take any enforcement actions against them. When that notice was later questioned, the town’s lawyer said the town “could not and did not waive” FAA restrictions.

Brown Development protested the award with the Government Accountability Office in October and the company’s lawyer notified the FAA of the objection in mid-November. Several days later, the FAA notified the town, Beals, Brown and the federal agency that it would continue to enforce deed restrictions. In December, the FAA denied a request by Beals’ lawyer for a release or temporary waiver of the restriction.

As of early December, the federal agency was reevaluating the award decision. Moppin said a General Services Administration lawyer emailed her on Jan. 15 saying the federal agency hopes to conclude its evaluation “in the near future.”

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