10:22 PM PDT on Wednesday, July 27, 2011
By KIMBERLY PIERCEALL
The Press-Enterprise
Officials with the San Bernardino International Airport Authority spent nearly three hours Wednesday dismissing what they called errors in a civil grand jury report. Officials defended the price paid for used aviation equipment and refuted claims that the airport developer's federal ban from aviation would affect airport operations.
The report criticized the management of the airport's construction costs that have grown from an original estimate of $45 million to $142.5 million since 2007 and the important role businessman Scot Spencer has played in leading that development.
Spencer was sentenced to federal prison in the early 1990s for bankruptcy fraud related to hiding payments he received for managing a revived Braniff Airlines. He later was banned from aviation in 2005 for operating an unlicensed charter airline at San Bernardino airport. He attended Wednesday's meeting but didn't make a presentation.
The civil grand jury took two years to investigate the airport's operations after receiving a complaint of "irregularities." It hired an independent auditor, Harvey M. Rose Associates from San Francisco, for $75,840 to conduct a performance audit of the airport. The firm's final report became public June 30 when the civil grand jury was published. The San Bernardino International Airport Authority has until Aug. 30 to officially reply to the grand jury report's recommendations and claims.
The grand jury report raised serious concerns about Spencer's aviation ban and stated that the "plain language understanding" of the 2005 ruling meant what he was doing at the airport was in direct violation of that ban.
A legal opinion from a Washington, D.C. lawyer with experience with the Federal Aviation Administration was presented as evidence at Wednesday's meeting that the report was wrong in its assertion. Don Rogers, executive director of the San Bernardino International Airport Authority, also cited a July 24 story in The Press-Enterprise that quoted a Department of Transportation spokesman who said the federal agency didn't think Spencer's current activities at the airport violated its ban.
After a lengthy discussion of Spencer's aviation ban, authority member and Colton Councilman Vincent Yzaguirre said he hoped to move on and focus on what they could learn from the report as far as improvements rather than focus on Spencer.
"The credibility of this airport has everything to do with an airline signing on the bottom line," he said, adding that Colton had hired Harvey M. Rose before to audit his city's departments before and the results were sometimes sobering.
"We should look at the credibility of every individual who comes into the airport to do business," he said. Asked afterward if that included the airport cutting ties with Spencer, he said he believed the airport needed to go in a different direction.
Officials defended their purchase of used aviation equipment from Spencer for $4.06 million. He had bought the equipment from American Airlines when that company renovated its terminal at John F. Kennedy International Airport in New York.
Rogers acknowledged that airport staff inspected the equipment only after the authority members had already approved buying it.
At that time, the deal was dependent on a signed equipment purchase agreement. That was never drafted or signed, despite authority approval asking for such an agreement. On Wednesday, Rogers said that was because airport leaders, including him and airport attorney Tim Sabo, decided instead to include the equipment payments in Spencer's development agreement to build the terminal. Rogers said after the meeting that the change was made at the advice of legal counsel.
Aviation industry consultants were brought in this week by airport officials to appraise the equipment they bought and compare it to what it would have cost the airport to buy the equipment new.
Len Barone, with aviation consulting firm Faithful Gould, said he worked nonstop for a few days appraising the equipment, based on a list supplied by the airport. The firm had also worked on the American Airlines terminal renovation project at JFK.
Barone said he never saw any of the equipment so he couldn't judge its condition. He also said the firm was not directed to consider the equipment's useable life or resale value.
Comparing the list of used equipment the airport agreed to buy versus appraisals his firm received from other equipment suppliers for the cost of new jet bridges, baggage carousels and terminal seats, he said the airport saved $4.84 million.
TranSystems, an airport contractor since 2007, was brought in to refute the grand jury's contention that the slope of the air bridges would exceed standards set by the Americans with Disabilities Act.
They were also asked to state that extended walkways connecting the jet bridges to the terminal were not added for fire-prevention purposes. However, the grand jury report doesn't make that claim. Instead, the report says that was a reason given by airport employees for adding the walkways and auditors questioned the explanation.
Reach Kimberly Pierceall at 951-368-9552 or kpierceall@PE.com
http://www.pe.com/business/local/stories/PE_News_Local_D_sbairport28.3ae314e.html
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