SAN BERNARDINO: Grand jury report on airport gets approved -- mostly

10:53 PM PDT on Wednesday, August 10, 2011

By KIMBERLY PIERCEALL
Staff Writer kpierceall@pe.com
The elected leaders overseeing San Bernardino International Airport voted Wednesday to agree to all but one of a civil grand jury's 16 recommendations despite staff spending more than a month attempting to discredit the panel's critical report that picked apart the oversight to develop the airport.

In its June 30 report, the civil grand jury raised several concerns taking issue with the airport's use of an auditing firm founded by the airport authority's executive director. It also questioned whether an individual who received two no-bid agreements to develop the airport may have inflated construction costs.

Cost to build a main passenger terminal for commercial aviation flights as well as a high-end general aviation terminal and three-story U.S. Customs building for international arrivals has grown in cost from $45 million to $142.5 million since 2007.

There are no scheduled commercial flights.

The authority has until Aug. 30 to formally respond to the grand jury's recommendations. Sam Racadio, the board's representative from Highland, suggested changes to wording so that rather than the authority saying it is considering doing something, that instead it say it "will" do something.

Those were the only changes made to the responses before they were approved at Wednesday's meeting, the last of three meetings focused almost entirely on responding to the grand jury's assertions.

"This airport is ready to fly and we must begin treating it as the big corporation that it will become," said Josie Gonzales, San Bernardino County supervisor and member of the authority, likening the airport to a "little ugly leftover" before the authority invested in its development.

"As this airport grows, we become a competitor ... and this airport is ready to compete," she said.

One disagreement

The only recommendation the authority didn't agree with was the grand jury's suggestion that the airport stop all payments related to $4.06 million it agreed to spend on used aviation equipment in 2007.

The recommendation doesn't apply because the deal is done, "and there are no similar agreements pending at this time," according to the authority's response.

The airport had agreed to pay that amount to Norton Development Co., one of several companies managed by the airport's developer, Scot Spencer, for 11 jet bridges, baggage claim systems, seats and more that had been used by American Airlines in its John F. Kennedy terminal in New York as far back as 1975.

The grand jury had said there was one remaining jet bridge being refurbished and that taxpayers could save $134,689 if the airport refused to buy it.

Spencer, who had no prior experience developing an airport and had been sentenced to several years in federal prison in the mid-1990s for fraud related to the bankruptcy of Braniff Airlines, has also received a percentage of all construction contracts awarded to build the airport.

In response to another recommendation that the authority require Spencer to present detailed monthly progress reports as mandated in his agreements, the authority said it agreed, but instead said the agency's chief financial officer would submit copies of reports and documents related to the airport's construction on a monthly basis.

"At the discretion of the (authority), the developer may be required to provide additional documentation upon demand," according to the authority's response.

Implementation of most of the recommendations would take anywhere from less than a month to a year, according to the letter to the jury.

The authority is made up of elected leaders from San Bernardino County's east valley including the county, the city of San Bernardino, Colton, Highland and Loma Linda.

The group is related to the Inland Valley Development Agency which earns revenue from tax increment and has been overseeing redevelopment of the former Norton Air Force Base since it closed in 1994 and has been funding the airport's construction and operation.

Careful review

The airport authority's executive director and assistant director, as well as San Bernardino Mayor Patrick Morris -- the group's president -- have spent more than a month defending their efforts to open a commercial airport. The grand jury report was the result of two years of investigations, interviews and an audit by San Francisco-based firm Harvey M. Rose Associates, which the grand jury hired for $75,840.

A draft version of the letter to be sent to the jury says, "this type of review, analysis, and open dialogue is both welcome and required," but reiterates what Morris and Donald L. Rogers, the executive director, have said since the report was released to the public on June 30. They contend there are a number of significant factual errors and misstatements.

"While the SBIAA recognizes the tangible benefits and value of all the recommendations contained in the document, it is essential that the foundational errors be addressed to ensure the integrity of this process," states the letter to be signed by Morris.

Included in the response to the grand jury is a copy of an economic impact report commissioned and paid for by the agency funding redevelopment of the airport, the Inland Valley Development Agency.

That study looked at all of the development that has occurred at the base since it closed in 1994, not just the airport, including the jobs created at Stater Bros. headquarters, Mattel and other businesses that located their distribution and industrial hubs at sections of the former base developed by Hillwood Development Corp.

Other attachments include a memo from a Washington D.C.-based attorney who earlier determined that Spencer's actions at the airport didn't violate his Department of Transportation ban from aviation.

Aviation construction consulting firm Faithful Gould compared the cost to build San Bernardino Airport -- a four-gate airport -- versus several others with nine to 36 gates. Based on $58.3 million to build the passenger terminal, nothing else, the authority spent $14.6 million per gate for the airport's four gates, according to the report. The average cost based on the seven other airports that were considered was $42 million per gate.


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