"Company sues Jax airport over concessions"

Monday, November 15, 2004

Company sues Jax airport over concessions 
By RICHARD PRIOR 
The St. Augustine (FL) Record 


JACKSONVILLE -- The attorney for a Pennsylvania firm that has filed an
intent to sue the Jacksonville Airport Authority and Executive Director John
Clark III for wrongful termination of its advertising contract said either
"greed" or "favoritism" motivated the change.

"We believe the intent all along was to award the contract to Mr. (Ron)
Townsend," former chairman of the JAA, said Michael Freed, with Brennan,
Manna & Diamond. "However, we weren't there to witness how this plan came to
be.

"At most, it's a plan that was not thought out well and would result in
tremendous loss of revenue to the airport. At worst, it was a conspiracy to
violate the state ethics and competitive procurement laws."

The intent to sue that Freed filed on Aug. 17 is a requirement when an
action is to be taken against a government or government agency.
Essentially, it gives the agency six months notice of the plaintiff's
intentions.

The JAA and Interspace Services signed an agreement in 1999 under which the
Allentown, Pa., firm would provide services and equipment to run advertising
concessions in the airport.

According to a side letter that accompanied the contract, Interspace would
make capital investments to the advertising set-up in the terminal and
agreed to eight performance criteria.

In exchange for meeting the criteria, the company's contract would be
extended for five more years.

Interspace's investment in advertising materials and equipment now totals
$403,000, Freed said. The renewal criteria also have been met, he added.

"Although Interspace guaranteed $200,000 annually, the Authority was
actually receiving over $300,000 each year," said Freed. "In addition, plans
from Interspace would have increased the airport's take to north of
$500,000."

Number one among the performance criteria called for Interspace to maintain
an 80-percent occupancy rate for advertising displays.

That goal was accomplished, even though all American airports "suffered
major losses" following the Sept. 11, 2001, terrorist attacks, Freed said in
a letter to Cindy Laquidara with Jacksonville's Office of General Counsel.

"Over the term of the agreement," Freed wrote, "Interspace more than met the
80 percent occupancy rate and maintained annual advertising sales at the
Airport more than 200 percent higher than before the JAA engaged
Interspace."

The time that occupancy was below 80 percent, Freed said, is legally
excusable because of the Sept. 11 terrorists, whose actions "could not have
(been) anticipated or controlled."

Clark abruptly terminated the contract in a June 10 letter to the company's
chief executive officer, Marianne Lieberman. The effective date was Aug. 31.

"The decision not to exercise the renewal was performance based," said Ernst
Mueller, with the General Counsel's office. "The JAA is going to have those
functions filled by normal processes.

"They didn't maintain the 80-percent figure. There were a few smaller items,
but occupancy of the advertising space probably is the primary one.

"We're sorry they're unhappy, but we don't think they should be suing us."

Clark also found himself on shaky unethical ground, Freed said, when a JAA
committee recommended that Interspace be replaced by a start-up company,
Townsend & Associates.

Townsend, the Authority's former chairman, resigned in September 2003. He
reportedly would have been guaranteed a $42,000 annual fee for his
advertising work, Freed wrote in a letter to the General Counsel's office.
The airport was guaranteed nothing.

Townsend came in for rounds of criticism in 2002 when he single-handedly
approved a $28,629 raise and bonus for Clark. He also gave Clark a
three-year extension on his contract, which still had a year to run.

Townsend withdrew his name from consideration for the advertising contract
when another bidder said favoritism had motivated the Authority. The company
that complained, Departure Media Inc., of Charlotte, N.C., got the contract
when Townsend bowed out.

"The irony is that this company, which only handles one airport now, was
rated even lower than Townsend, who has no advertising experience," said
Freed.

Interspace would like to mend the relationship but fears it may be too late,
said Freed.

"Advertisers expressed great disappointment, especially with the Super Bowl
less than 100 days away," he said. "The artwork, which the customers paid
for, became virtually worthless.

"At best, it's a situation of intended greed by the Airport Authority, who
thought they could do better and more profitably what Interspace had been
doing. At worst, it's a case of favoritism."


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