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City of Charlotte details Charlotte Douglas audits

While Charlotte Douglas International Airport remains in limbo, the city of Charlotte plans to spend roughly $260,000 on audits to probe how the airport operated under former aviation director Jerry Orr.

City Manager Ron Carlee has started a handful of reviews focusing on issues such as how much airport employees should be paid; whether the airport’s accounting practices have been proper; the amount of security needed; and how the airport awards contracts.

“I don’t know what we will find exactly,” Carlee told the Observer earlier this week. “We are looking at everything, top to bottom.”

The city on Friday released a memo that detailed the cost of three of the outside audits. A fourth consultant is expected to be hired in January.

Orr – who heads the newly created commission – said Friday he isn’t sure why the city is spending money on consultants when Charlotte Douglas is considered a high-performing airport.

The city had previously spent $150,000 to hire consultant Bob Hazel to determine what was the best way to govern the airport. Hazel said an authority should run the airport, a finding that angered some council members.

“It seems to me that Charlotte is a model, not one in need of being fixed,” Orr said. “It looks like a solution in search of a problem. That’s what I think.”

Richard Vinroot, the commission’s attorney, said he is concerned the city is looking for problems as a reason to not allow the commission to run the airport.

“I wonder if they aren’t trying to find something wrong with this spectacular successful airport,” Vinroot said. “Is there some excuse not to abide by the legislature’s decision?”

The N.C. General Assembly passed a law in July that shifted ownership and control of the airport to an authority. Legislators repealed that law and replaced the authority with a commission that would run the airport while the city would own it.

The city sued to block that law and received a temporary restraining order in Superior Court.

During Orr’s more than 20 years as aviation director, he was allowed to run the airport with minimal oversight from the City Council.

But that changed in the last several years, as city officials began exerting greater influence over the airport.

One point of contention between council members and Orr was over how the airport accounted for tax-exempt bonds used to build a new runway and other projects last decade.

The Internal Revenue Service had questioned the airport about its accounting methods, and city officials said mistakes had been made in how money had been spent. For a period, the city was worried the airport would lose its tax-exempt bond status.

The aftermath was that the city placed tighter financial controls on the airport in April 2011.

Carlee said earlier this week the audits and reviews didn’t stem from the IRS problems.

•  The city hired the consultant McGladrey starting Sept. 27 to examine the airports areas, such as accounting for grants received; FAA reporting and compliance procedures; and adherence to debt management and debt reporting requirements.

“Audits of this type are common practice whenever a major leadership transition happens, or a shift in governance is possible, ” the memo said.

The city expects to pay McGladrey between $64,000 and $84,000.

• The city said it will hire Waters Consulting Group within two weeks to look at whether changes need to be made to how airport employees are paid “to keep positions competitive in today’s marketplace.”

Waters Consultant Group was hired by council members last year to help them assist in a search for a new city manager. The cost of the study is expected to be just under $87,000.

•  The city said it’s in negotiations with Matrix Consulting Group to analyze the airport’s procurement procedures, or how the airport buys things. The cost is estimated to be between $50,000 and $90,000.

•  The city said it hopes to award a contract for a financial services consultant with experience in aviation debt management, financial forecasting and financial modeling.

The aviation department “will be the day to day beneficiary of the firm’s expertise,” the memo said.

The cost of that consultant isn’t yet known.

•  The city and Charlotte-Mecklenburg Police are discussing how to review how airport security is handled.

For most of Orr’s tenure, Charlotte Douglas handled its own security. But after the death of a north Mecklenburg teenager, who law enforcement believe breached Charlotte Douglas security to stow away in a wheel well of a jet, the city put CMPD in charge of airport security.

Police costs at Charlotte Douglas increased from $2.6 million to $5.5 million in fiscal year 2013 as CMPD added staff and existing officers moved to the department’s higher pay scales.

Orr was unhappy with the takeover and the resulting higher costs, which he said would be paid for by airlines.

The memo said the city might use a combination of CMPD officers and “corporate airport police.”

“This is an evolving best practice in a few airports nationally,” the memo said.

The city and Mecklenburg County recently made the final four appointments to the 13-member commission that could be running Charlotte Douglas.

Carlee said the commission’s first meeting could be in November.

In August, a Superior Court judge said the FAA should determine who should run the airport.

In September, the Federal Aviation Administration kicked the issue back to Superior Court. The FAA said the court must determine whether the commission is a part of the city or a separate governmental entity before it decides who should be given the operating certificate.

Harrison: 704-358-5160
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