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"San Bernardino airport continues attack on Grand Jury report"
Thursday, July 28, 2011
S.B. County: Airport board rebuts civil grand jury report
By KIMBERLY PIERCEALL
The Riverside (CA) 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.
Tim Sabo, legal council for the airport, right, listens to speakers during
Wednesday's meeting of the San Bernardino International Airport Authority.
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
"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.
Director Don Rogers, left, argued that the hiring of developer Scot Spencer,
right, did not violate a federal ban following Spencer's fraud conviction.
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.
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