The commuter airline Surf Air has hardly been in the good graces of a vocal contingent of area residents bothered by its noisy planes flying overhead since it started using the San Carlos Airport. But the San Mateo County tax collector isn't likely to be looking favorably on the company either, given that, according to public records, the airline owes the county hundreds of thousands of dollars in taxes.
The airline, which confirmed on Oct. 5 that it would resume flights at the county-owned airport later this month after a brief hiatus, owes the county $328,371.69 in taxes, according to county documents updated Oct. 10. Aside from financial penalties for not paying the taxes on time, county assistant tax collector Robin Elliott said she is not aware of nonfinancial penalties, such as not being able to use the airport.
Surf Air paid off $57,613.60 in 2017 county taxes. It still owes the county $7,407.14 for 2014 taxes, $91,521.17 for 2016 taxes, $79,364.48 for 2017 taxes and $150,078.90 for 2018 taxes, according to county records. The charges have penalties attached to the bills since Surf Air did not pay as of Aug. 31, according to Jim Irizarry, assistant assessor-county clerk-recorder and chief elections officer.
The county taxes Surf Air's planes, which are considered business property. It's a complicated formula, but factors that go into determining the business property tax are the value of the aircraft and how many hours the aircraft spends in the county, Irizarry said. The county controller's office calculates the tax after the assessor evaluates the property value, he said. The tax collector levies the penalties, he said.
Surf Air is in active discussions with local tax authorities and is working through a resolution, a company spokesperson wrote in an Oct. 16 email.
In August, the federal government reported that Surf Air owes $2.33 million in taxes. At the time, officials reported that Surf Air owed the county $131,371 for 2017 taxes and could owe more for 2015 and 2016.
Surf Air is "nearly at an end" of settlement negotiations with Encompass Aviation, a Surf Air spokesperson said in an email. In mid-June, Surf Air replaced Encompass Aviation LLC with Advanced Aviation LLC as its flight operator. Days later, Encompass sued Surf Air, claiming $3.1 million in unpaid bills.
Surf Air countersued Encompass, asking that Encompass return the PC-12 turboprop planes it subleased from Surf Air. Surf Air claimed at least $10 million in damages.
Two of the PC-12s are already back in the Surf Air fleet and the company expects to have them all back very soon, the spokesperson wrote. Steve Harfst, president and CEO of Encompass, declined to comment on the negotiations.
Surf Air has not settled on the number of flights it will operate out of San Carlos Airport when it returns later this month. In August, airport manager Gretchen Kelly confirmed that the airline had stopped using the airport, saying that the last record the airport had of a Surf Air plane landing there was June 29. She said at the time that workers affiliated with Surf Air indicated the airline may be back in October.
Kelly said on Oct. 9 that the airport hasn’t officially heard from Surf Air about its plans to return. The airline has an operating agreement with the airport in which Surf Air pays the airport a percentage of its revenue and landing fees, she said.
"We're obviously concerned about our neighbors, but also trying to maintain a successful airport," Kelly said.
The Surf Air spokesperson said that when the airline returns to San Carlos Airport, "flight operations will start slowly to make sure we are operating in ways that reduce our noise footprint. If all goes well, we'll gradually increase the number of flights while continuing to operate out of Oakland Airport."
A startup airline that began using the San Carlos Airport in June 2013, Surf Air offered unlimited flights for a monthly fee and scheduled as many as 45 flights a day in and out of the airport.