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"Pinal Airpark continues to be plagued by problems"

Tuesday, December 27, 2011

Pinal Airpark continues to be plagued by problems
Recent audit finds 30-year pattern of mismanagement
By Lindsey Collom
The Arizona Republic

The runway is nearly crumbling more than a decade after being identified for
repair. Its lighting system, also in need of upgrade, is the original from
Signs of neglect at Pinal Airpark near Marana are only part of the problem.
A recent audit of Pinal County's Airport Economic Development Department
shows a pattern of mismanagement dating back at least 30 years.
At its heart is a lease agreement signed in 1982 that gives one tenant,
Evergreen Maintenance Center, full rein of the airpark at a cost well below
market value. The terms also keep Pinal County out of the running for
airport improvement grants and risk the property's repossession by the
Federal Aviation Administration.

County auditors say the airfield has languished under Evergreen's watch and
that Pinal should have played a more hands-on role by maintaining "prudent
and active oversight" of its property. Meanwhile, company executives say
they have been good partners with the county and are working with them to
identify and act upon property improvements.
In County Manager Fritz Behring's mind, the need for change doesn't stop at
the end of the runway.
"As long as that lease is intact, it's a bad deal for the county and it
should have never been signed," Behring said recently by phone. "This has
been an underutilized resource in the county for some time, and my feeling
is we're going to approach it differently."
The park serves as a place to store hundreds of old commercial aircraft. The
theory is that the dry climate will preserve the planes in case they are
needed again.
Evergreen Maintenance Center bills itself as the world's largest commercial
aircraft servicing and storage facility. Its operation at the airpark goes
back to 1975, when then-parent company Evergreen International Aviation
bought the assets of a previous tenant and CIA front, Intermountain
Aviation. Evergreen entered into a 25-year lease with Pinal County in 1982.
Issues with the lease were identified as early as 1990 by authors of the
Pinal Airpark Master Plan. The county-sponsored document outlined steps for
development of the airport through 2010 and estimated Pinal would need to
spend more than $35 million to "further enhance what is already an economic
engine to the area." To do that, authors wrote, the county would need to
renegotiate its lease with Evergreen to maximize potential for federal
funding, and eliminate any portion of the contract that violated the deed
cementing Pinal's ownership of the airport.
In a November report to county supervisors, auditors noted that none of the
recommended improvements was ever made.
In June 1948, the United States War Assets Administration deeded the Marana
Army Air Field to Pinal County. In accepting the deed, Pinal had to agree
that the "entire landing area, and all structures, improvements, facilities
and equipment...shall be maintained for the use and benefit of the public"
and that no entity would be given "exclusive right" to the airport.
But exclusive use is exactly what Evergreen got, lease documents show. Its
terms gave Evergreen the right to sublease space without county approval and
reap all proceeds from rents, fuel sales and other transactions on the
property. An Evergreen representative declined to provide annual revenue
figures to The Arizona Republic, but in its prime, the company's airpark
operations were estimated to bring in up to $50 million each year.
The lease agreement also requires the tenant to be responsible for upkeep of
the facilities and entitles Pinal to any structure built or any improvements
made on the premises upon the lease expiration. Evergreen officials say they
have spent more than $8.7 million on the airpark during the life of the
lease, including construction of a main hangar, an office building and
structural renovations.
Auditors cited a 2002 study of regional airport systems by Pima Association
of Governments that identified needed upgrades to the airpark's runway and
taxiway lighting, original to the airfield's construction in 1942. To follow
study recommendations, it would cost more than $1.9 million, or about $2.4
million by today's standards, to outfit the runway with high-intensity
lighting and taxiways with medium-intensity lighting.
Auditors also cited a 2010 pavement management system analysis of the
Arizona Department of Transportation, which rated Pinal Airpark's runway
condition at 52 points out of 100, noting that a runway would be unusable at
40 points or less. The study estimated it would cost about $2.6 million to
restore the runway to good condition.
It's not clear why the exclusive contract with Evergreen went through. Jimmy
Kerr, one of the original three supervisors to sign off on the 1982 lease,
said he doesn't recall specifics but that most questions were silenced by
ongoing military operations and the idea that Evergreen had government
contracts. Operations continue today. On the airpark's southwest flank, the
Department of Defense operates a skydiving school that also provides
training in explosives. North of the airpark is Silverbell Army Heliport,
where Army National Guard pilots learn how to fly Apache and Longbow
helicopters and participate in military combat operations.
In Oct. 1991, The Republic reported that Evergreen was threatening to take
its operations elsewhere if Pinal didn't act soon to extend the company's
lease. Although the lease was active for another 15 years, company
executives said plans to build two large hangars couldn't be justified
economically without an extension. Executives said the expansion would
create 500 jobs, more than doubling their local workforce.
Officials from both camps haggled over details. The county wanted to charge
more rent, but Evergreen argued that Pinal hadn't invested in the airport
and shouldn't expect a greater return. Ultimately, the county signed off on
a 40-year lease extension in 1992 that didn't address issues highlighted in
the airpark master plan.
Evergreen pays Pinal a base rent of $368.301.64 plus annual adjustments.
Just before the audit began, county officials realized a miscalculation
meant Evergreen had been paying less than what was owed since 1999. Pinal
sent a letter to Evergreen executives earlier this month, asking they pay
the nearly $800,000 in back rent by February.
County officials hope to renegotiate the Evergreen lease and are exploring
how the company's sale to Relativity Capital, LLC, earlier this year may
factor in.
>From Evergreen leadership's perspective, the company has had "a
longstanding, positive relationship with Pinal County" and views the audit
as "a step forward if the option to apply for (federal airport improvement)
funding becomes a goal," said Kelly Isley of Corcoran Associates, who
handles public relations for Evergreen Maintenance Center.
Meanwhile, the county is working to implement practices and strategies
recommended by the audit, Behring said.
"There's so many hats to go around, so much responsibility to be shared,"
Behring said. "My staff has been notified that this is not going to be
tolerated under my tenure here. If this kind of crap happens moving forward,
things will be much different. One person did not cause this problem."

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