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Airport change needs study, city officials say

By Steve Harrison and Jim Morrill
sharrison@charlotteobserver.com

Charlotte officials are citing Charlotte Douglas airport’s “potentially damaging” handling of bond revenues and “severe” security deficiencies as reasons an independent authority should not be given control of the airport.

In a letter to Mecklenburg’s legislative delegation sent Monday, Mayor Anthony Foxx and City Council members said that other city departments stepped in to fix those problems.

“Our efforts to keep CLT on track are now being used as a reason for a governance change,” they said.

City officials asked that any change in the airport – run by the city since 1935 – be delayed until a study can review the implications of moving the airport to an authority.

Rep. Bill Brawley and Sen. Bob Rucho, both Matthews Republicans, are leading an effort to create an independent Charlotte Regional Airport Authority that would oversee the airport. Two weeks ago, Rucho introduced a bill that would create an 11-member board with a majority of members appointed by surrounding counties and state politicians, including Gov. Pat McCrory.

The measure to transfer control to an authority appears to be on the fast track. The Senate Rules Committee is scheduled to consider it Wednesday morning.

Foxx is expected to make the city’s case personally when he meets with the delegation three hours before the committee is set to consider the bill.

If the airport were to move to an independent authority, its finances would be removed from city oversight and approval. The board would oversee the airport’s finances, including the issuance of bonds.

City officials are pushing back, saying other city departments have had to help the airport – something that wouldn’t be possible if an authority controlled the airport.

In 2010, the Internal Revenue Service told the city it was planning to audit some of the airport’s tax-exempt bonds used to finance airport improvements. In response, the city’s finance department and its bond counsel, Parker Poe, found the airport had co-mingled money from $150 million of taxable and tax-exempt bonds issued in 2004.

The city was concerned it could lose the tax-exempt status of its bonds.

Parker Poe told the IRS that the airport’s accounting problems was a “federal tax violation” but it stressed it was a one-time problem and the airport didn’t gain any financial advantage.

In April 2011, the city issued strict financial guidelines on the airport, removing some of the autonomy that longtime aviation director Jerry Orr had enjoyed.

Orr told the Observer last week that he didn’t think the accounting problems were a “big issue.”

“Essentially, what we did was in the accounting process we co-mingled some money that was taxable bond money and non-taxable bond money,” Orr said.

Rucho contended on Tuesday that the city didn’t catch the errors stemming from the 2004 bonds. He said it was the airport that caught errors made by the city.

“That’s another good reason the authority needs to be under its own control,” he said.

City Finance Director Greg Gaskins said the finance department and the airport worked together to solve the problem. When asked about Rucho’s comment that the city was to blame, Gaskins said he couldn’t comment. But he said he believes it’s well-established that Orr has publicly stated that the problems stemmed from airport accounting.

Sources told the Observer last week that former City Manager Curt Walton considered disciplining Orr in the matter. Walton retired in December.

Security questions

The city letter also cited security problems at the airport.

In November 2010, law enforcement believed a Mecklenburg teenager breached airport security and stowed away inside the wheel well of a Boston-bound jet.

The Charlotte-Mecklenburg Police Department led an investigation of airport security in 2011 and said the airport needed more security officers and better perimeter fencing.

In late 2012, Walton shifted control of security at Charlotte Douglas from the airport to CMPD.

“A two-year review of security at CLT revealed deficiencies severe enough to warrant turning over policing at the airport to (Chief Rodney Monroe) and the Charlotte Mecklenburg Police Department,” the letter said.

The letter also said they “see no compelling reason to even consider transferring CLT to an authority.”

Foxx and council members said they are willing to launch a study that would include the newly formed American Airlines and the General Assembly. The letter said the study should examine why some airports are run by authorities, while others, such as Atlanta and Chicago, are city departments like Charlotte.

Brawley, the House sponsor of the authority bill, said there’s a “broad base” of support for it throughout the region and in Mecklenburg County.

“The question is, what else do we need to know to make sure this is a good decision?” he said. “We have enough information to know this is the appropriate step at this time.”

Rucho dismissed the city’s request to study it.

“There’s no reason to study it,” he said. “It’s really straight-forward. It’s not that complicated.”

Democrats are more supportive of a study.

“I’m always for putting everybody at the table and trying to work through things before moving ahead,” said State Rep. Becky Carney of Charlotte, who said she would want a short study.

Sen. Dan Clodfelter, a Charlotte Democrat, said the city’s letter was “a pretty responsible suggestion.”

“That’s the way matters like this have been handled in the past, the delegation waits for local (leaders) to talk it through among themselves before they bring it to Raleigh,” he said.

Last year’s switch in control of the Asheville airport from the city and county to an authority hasn’t gone smoothly. City officials are fighting over an appointment, the state could find itself liable for millions in a disputed land transfer and the Federal Aviation Administration said the transfer might violate earlier agreements.

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