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"Feds raise questions about services contract at Kentucky airport"

Tuesday, May 22, 2012

Feds raise questions about services contract at Somerset airport
By Bill Estep
The Lexington (KY) Herald-Leader

SOMERSET - Federal authorities have said a contract for aircraft-maintenance
services at the Somerset airport appears to be improper.

The Federal Aviation Administration last week notified Don Bandy, chairman
of the Somerset-Pulaski County Airport board, that the agency was conducting
an "informal investigation" of a complaint about the contract.

The complaint concerns a lease to provide services at the airport, such as
airplane maintenance and inspections, by what is called a limited fixed-base

The board signed a lease in March with Somerset Regional Aviation LLC to
work on airplanes at the Somerset field.

As part of the deal, the board agreed to lease a hangar to the company for
$1 a year and to pay up to $8,000 a year toward the company's liability

The value of the hangar lease, including utilities, and the insurance
payment would total about $28,000 a year, said John Tuttle, vice chairman of
the airport board.

The board was not providing free rent or an insurance subsidy to another
company that has provided aircraft-maintenance services at the airport for
years, he said.

"It's a sweetheart deal," said Tuttle, who voted against the contract.

The FAA notified the board that in the agency's opinion, the new lease
violated the terms airports agree to when accepting federal grants.

The FAA has given the Somerset airport $14.9 million since the late 1980s
for projects such as runway extensions and construction of a new terminal,
according to the agency.

The agency's concern is that the airport is not getting the required fair
market value for the incentives provided to Somerset Regional Aviation, said
Kathleen Bergen, a spokeswoman for the agency.

The FAA thinks the deal would make it "unreasonably costly or impractical"
for the airport to have more than one fixed-base operator, according to its
letter to Bandy.

The FAA asked the airport to terminate or change the lease. Failure to do so
could result in suspension of federal funding for the airport, the FAA said.

One outcome could be that the local board would have to offer the same deal
to Wally Iversen, who has been a limited fixed-base operator at the airport
for years, Tuttle said.

Iversen said he pays $1,000 a month to rent hangar space and $100 a month to
act as a limited fixed-base operator at the airport.

"If they're going to give him a concession, I sure as heck after 20 years
should get the same concession, or better," Iversen said.

Airport board member Richard Vanhook, who voted for the new contract, said
the goal was to increase airport traffic and revenue.

Vanhook said Iversen has few customers at the Somerset field. The owners of
most planes based there go elsewhere for maintenance, Vanhook said.

Among other things, that means there are no jobs for aircraft-maintenance
graduates at the adjoining technical school, Vanhook said.

The owner of Somerset Regional Aviation, Joel Huff, has an established
customer base at the airport in neighboring Wayne County and presented a
proposal to increase traffic at the Somerset field, Vanhook said.

Iversen did not present a proposal to the board, he said.

"Our whole goal was not only to provide jobs but to get the airport more
self-sustaining," Vanhook said.

Tuttle said he doubted the new deal would generate enough additional
business to offset the full cost of the incentives.

The idea is to have Somerset Regional Aviation pay more rent as its business
builds, Vanhook said.

The airport receives money from the county's occupational tax for

Pulaski County Judge-Executive Barty Bullock said he asked the board to try
to increase airport traffic.

Bullock said his understanding was that Iversen was not providing the level
of service many pilots wanted.

In hiring the new company, the airport board said the airport did not have
on-site maintenance available.

However, Iversen said that's simply not true. Iversen said he is fully
qualified to provide maintenance services and inspections, and he has been a
limited fixed-base operator at the Somerset field since 1993.

"I've had a good (maintenance) shop on the airport," he said.

Iversen's complaint to the FAA, prepared by attorney Winter R. Huff, alleges
the deal with the other operator is improper because the contract does not
spell out the full cost to taxpayers and because it's not fair.

Bergen said the FAA tries to resolve such disputes short of filing a formal

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