The Peninsula Airport Commission’s use of local government funds to pay off a $4.5 million TowneBank loan to the defunct People Express Airlines is leading two local governments to put a freeze on payments to a regional group formed to promote air service at Newport News/Williamsburg International Airport.
The James City County Economic Development Authority voted Thursday to suspend payments to the Regional Air Service Enhancement (RAISE) Committee until it gets more information about the state’s concerns over the airport’s use of funds, authority chairman Tom Tingle said. RAISE puts up money for incentives to woo airlines to the airport and to market the airport to airlines.
York County Administrator Neil Morgan, the former city manager of Newport News, said he would also recommend that county supervisors hold off setting aside any more funds for now.
“We’re very interested in supporting to make sure the Newport News/Williamsburg airport has resources to get new business,” said Ruth Larson, the JCC Board of Supervisors’ liaison to the EDA. “We just want to be sure public monies are well spent and well handled.”
Morgan said he and county supervisors want to support the airport and are eager for Elite Airways to begin service. The Maine-based airline is delaying a scheduled March launch of service to Newark, N.J., and Islip, Long Island, “due to the challenging perceptions surrounding” the airport.
“We want to get a comfort level about how decisions are made, then we’ll see,” Morgan said. “We want a comfort level that York County taxpayers have a voice.”
The airport commission used $700,000 of RAISE committee funds in 2015 to help pay off a $4.5 million debt that People Express owed TowneBank. It also used $300,000 of federal money intended for marketing and revenue guarantees and $3.55 million of state funds intended for facility improvements.
Daily Press reports on the loan payoff prompted an investigation by state officials two weeks ago. When they discovered that the airport commission used state funds to help cover People Express’ debt, Secretary of Transportation Aubrey Layne cut off state payments to the airport and ordered an audit.
Layne said the payment was the largest-ever unauthorized use of state aviation funds, adding that it violated a 30-year policy that such funds are not intended to support private enterprises.
Airport executive director Ken Spirito and the commission’s board said there is nothing in the state’s written guidelines that bars airports from using state funds to pay off a loan to an airline.
Commissioner Jim Bourey, current city manager of Newport News, has said the airport kept the state fully informed about its use of the money, referring to an email sent to the state the day after the Daily Press reported the loan pay-off. The email was sent to one of the state officials Layne directed to look into the airport’s use of funds to make that payment and came in response to an email from that official to the commission.
Tingle said the James City County EDA’s agreement to support the RAISE committee continues through the end of June. The suspension affects the quarterly payment due by then.
“So we hope to get more information on the situation prior to then,” he said.
He said the EDA was not making a judgemnt one way or the other on the airport’s use of the money.
Morgan said York paid this year’s assessment last July and would hold off renewing an agreement to contribute until its concerns are satisfied.
The RAISE committee’s biggest contributor is Newport News, which is kicking in $108,431 this year, while Hampton is contributing $54,974. James City County is the third-bigger contributor, at $26,804, while York County’s contribution this year was $26,186. Gloucester County, Williamsburg and Poquoson are contributing smaller sums towards this year’s total of $241,625.
The Newport News Economic Development Authority is the committee’s fiscal agent, which means it manages the committee’s money.
Jessica Wharton, the airport’s director of air service, marketing and public affairs, declined to comment.
Florence Kingston, who as Newport News’ director of development is the top staff person for the EDA and oversees its work as RAISE’s fiscal agent, did not respond to a voice mail message seeking comment.
The airport commission decided in a closed meeting in 2014 to guarantee a line of credit for People Express, which was a start-up airline already more than $1 million in debt and which at the time was being sued in Newport News Circuit Court for $50,000 of unpaid credit card bills. The airline’s founder, Michael Morisi, had filed for personal bankruptcy five years earlier.
Ress can be reached by phone at 757-247-4535.
