NEWPORT NEWS, Va. (WVEC) -- The Virginia Department of Transportation found that the Peninsula Airport Commission (PAC) inappropriately used state funds to pay debt left by the failed People Express.
VDOT's Assurance and Compliance Office (ACO) conducted an audit of the PAC at the order of Secretary of Transportation Aubrey Layne.
The review determined several key items:
- Commonwealth Entitlement Funds were used for unauthorized purposes.
- Commonwealth Entitlement Funds were used as collateral to guarantee a TowneBank "Draw Down Line of Credit" issued to People Express (PEX), a private corporation.
- Commonwealth Entitlement Funds were used to satisfy the default obligation of PEX at TowneBank
- PAC administrative staff, including the former executive director did not always provide complete, open, and timely disclosure of key and/or material matters to the commission.
- Conflicts of interest, either real or perceived, were not disclosed.
The ACO recommended that the airport commission reimburse the Commonwealth $4,511,153 and take all reasonable steps to recover state, local, and airport funds used to satisfy the default obligation of PEX.
Interim Executive Director for the Peninsula Airport Commission Sandy Wanner said it’s too early to figure out how the commission would recover the funds.
“I think the auditors have given us some trails but nothing I can comment on now,” Wanner stated. “Now that we have the audit, we’re prepared to respond to many of the recommendations.”
Wanner told 13News Now the PAC acted upon some of those quickly, including recommendations at the management level.
“They already adopted a new travel policy, a new record retention policy.”
State officials cut off funding to the airport in in January and Layne directed the audit to begin.
Layne spoke to 13News Now over the phone Friday afternoon and said he believes the audit speaks for itself.
“This was a significant breach of the public's trust,” Layne stated. “These are serious issues we have to deal with, but what I'm focused on is getting the governance in place and benefiting the traveling public.”
Layne plans on working with the airport commission as it moves ahead.
“Recommendation will be what we need from them so they can get state funds again,” Layne told 13News Now.
“There's nothing to hide, and we will be open and transparent,” Wanner promised.
13News Now looked into what some of the “reasonable steps” available to recover the funds are.
The airport sits on roughly 825 acres. City records show that land, itself, is worth $24,738,800. Everything on the land is worth $35,765,100, which brings the total value to $60,503,900.
Land values are reassessed every year, so on July 1, 2017, that number will increase to $63,459,600.
The total value is more than the $4,511,153 debt.
It's not clear if the PAC could use that worth to repay the money or if it even is an option to sell off some of the land or what's on it to recoup what the commission owes.
There's no word yet on how the Peninsula Airport Commission will repay the state, or, if it's even an available option to sell off some of the land or what's on it, to recoup what the commission owes.
As for preventing similar practices in the future, the state recommended the commission establish clear policies and procedures for drawing up contracts such as the one related to People Express.
There is a special meeting of the Peninsula Airport Commission on Monday, June 5 at 4 p.m. in the Newport News/Williamsburg International Airport Banquet Room. Discussion will include legal issues relating to the VDOT audit, the People Express Airlines, Inc. loan, and extending the interim executive director's contract.
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