> Question: The only way I see this happening is due to some AM 
> component on radio station's transmitter.
> 
> Thoughts?

Virtually all FM transmitters have some residual/undesirable AM components.
If the AM follows the applied FM modulation, it's referred to as synchronous
AM, and is usually caused by bandwidth limitations.  A properly-performing
FM broadcast transmitter will have synchronous AM products more than 40 dB
dB down, with -50 dB being a good goal to target.

Transmitters, especially tube types, may also have asynchronous AM noise
which is often caused by residual ripple in the power supply(s) which has
nothing to do with the FM audio.

If what you are truly seeing is a function of AM rectification due to RF
ingress into the repeater/controller/wiring, RFI filtering would be the way
to go.

Does the "low level" audio persist even when the repeater receiver squelch
is closed, or is it heard only when there is user traffic?

                                        --- Jeff

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