Dixie Jet Services, the company that runs the Covington Municipal Airport, contends the city owes it more than the $367,389 under the early termination clause in the two parties’ contract.
In lieu of filing a lawsuit, Dixie Jet asked the city to agree to mediation, and at Monday’s meeting, the city council unanimously agreed to, with the caveat that the full council must vote to approve any agreement before it is binding.
City Attorney Ed Crudup said Tuesday that mediation is set for 1:30 p.m., Monday at city hall.
The city terminated its contract with Dixie Jet in early September, cancelling the 10 years remaining on the original 20-year contract. Under the early termination clause, the city was required to reimburse Dixie Jet for the company’s original investment, based on a declining amortization schedule. The clause is designed to protect Dixie Jet, to ensure that it either had the opportunity to make enough money to offset its original investment, or was repaid for its investment if the contract was ended early.
While Dixie Jet Owner Bob Riddell has repeatedly said he has invested $2.5 million in the airport, the original contract lists only the original $1 million investment he made. The city has said that Riddell failed to follow the process to have any other investments recorded in the contract, and it did not approve the changes and is not responsible for reimbursing him for those improvements.
For the pieces of equipment that Riddell can take with him that’s not an issue, but he said some of his investments are in infrastructure that cannot be moved. The two sides will attempt to find a middle ground through mediation. Dixie Jet attorney John Strauss could not be reached for comment Tuesday afternoon.
Dixie Jet is currently operating the airport, but the 90-day early termination period will end in mid-December. The city will then assume control of operations.