Tuesday, February 28, 2017
State broadening airport loan investigation
By Dave Ress
The Newport News (VA) Daily Press
A Peninsula Airport Commission meeting called to discuss change orders for its security checkpoint project turned contentious Monday morning when the former food and beverage provider at Newport News/Williamsburg International Airport accused executive director Ken Spirito and attorney Herbert V. Kelly Jr of bad faith.
The state is broadening its investigation into the Peninsula Airport Commission, which met for two hours behind closed doors Monday to discuss legal issues and the job performance of an unnamed employee.
An hour into the meeting, commissioners asked airport Executive Director Ken Spirito and commission attorney Herbert V. Kelly Jr. to leave the room.
The commission took no action after the meeting, which also included a legal briefing on the state audit prompted by its use of taxpayer funds to pay off a $4.5 million TowneBank loan to the startup People Express Airlines. People Express operated out of Newport News/Williamsburg International Airport for less than three months in 2014.
That audit is likely to take longer than expected because the commission is not providing documents investigators have requested, in some cases two or three times, and because commission staff have not made themselves available, said Virginia Secretary of Transportation Aubrey Layne.
"Based on other information we've received, we are broadening the scope of the investigation," Layne said "The state takes very seriously the use of its money. ... We're fiduciaries; this is the taxpayers' money and that's what's really got me going."
Spirito said it was the state that canceled a meeting with commission staff last week.
"We have done everything they've asked for, as they ask for more and more information," Spirito said.
Layne said investigators with the inspector general's office and office of the attorney general are looking at other ways to get the information they have been asking the commission to provide.
He declined to say what steps they would take or whether the broader investigation was looking at matters other than the use of $3.55 million of state funds to help pay off the $4.5 million People Express debt.
The state cut off funds to the airport after a review prompted by Daily Press stories about the loan payment uncovered the use of state funds.
The commission also used $700,000 from a regional body, funded by local governments, that tries to woo airlines to the airport. That move prompted Hampton, James City County and York County to put a hold on their contributions to the group. The commission also used $300,000 of federal funds meant to pay for marketing and to guarantee revenue for the People Express service.
After Monday's closed-door meeting, airport commission chairman George Wallace, former mayor of Hampton, declined to say more than that the discussion involved employee job performance and legal issues involving the state audit, last week's court decision upholding the commission's termination of the lease of its food and beverage provider and Department of Alcoholic Beverage Control license requirements.
The lease for the airport's longtime restaurant and bar operator, New Dominion Clubs, which ran the Blue Sky Cafe, ends Wednesday.
Spirito said the airport plans to have food available for travelers, though the health department and the ABC department have not issued permits necessary for selling food or liquor.
Earlier, an open meeting called to discuss change orders for its security checkpoint project turned contentious when the Blue Sky Cafe's owner accused Spirito and Kelly of bad faith.
Two members of the public joined restaurant owner Tom McDermott in calling for Spirito and Kelly to lose their jobs. They also said Newport News City Manager Jim Bourey should resign from the commission.
McDermott said Spirito and Kelly had misrepresented the commission's actions in terminating his lease at the airport, specifically about plans to operate a restaurant on its own and about procurement act requirements. McDermott has sued to reinstate that lease, but a Newport News Circuit Court judge ruled last week that the airport was within its rights to end the agreement.
But the court ordered the airport to repay McDermott for the depreciated value of his investment over the years, a figure he told the commission amounted to about $950,000.
"I put my money into this. Ken has put no money into the airport ... they do this with other people's money," he said, adding that the commission's decision to guarantee the People Express loan was a prime example of airport missteps.
"This is a public body ... is this how a public body supposed to act for God's sake?" he said.
"If it was your money, if you were writing the check, would you have written that check?" Hampton resident Lynn Stivers asked the commission.
Peter Paine, a Newport News resident, said he was upset that the commission decided to guarantee the loan in a closed-door meeting, saying it was typical of the way the body does business. He said it echoed the haste to do a deal and the lack of disclosure about plans to open a Wegman's supermarket on airport land at the intersection of Interstate 64 and Jefferson Avenue.
"Excuses, deflections and inadequate records. Not one iota of remorse. You messed up. It wasn't a good gamble," he said. "Take responsibility."
It is almost unheard of for members of the public to attend commission meetings or to speak during the portion of the meeting opened for public comment.
At one point in the contentious meeting, commissioner Steve Mallon bristled at a comment from Kelly that Mallon chill out.
The remark was not appropriate, Mallon said.
Before going into closed session, the commission approved spending $581,000 for work on space that will become a new airport restaurant.
Spirito said doing so did not commit the airport to getting into the restaurant business but was needed whether it or an outside firm provided the service. He said it would likely take another $100,000 to provide furnishings and equipment for the restaurant space.