Joco 913

Audit finds ‘significant deficiencies’ in management of Johnson County airports

The New Century AirCenter in the Gardner area
The New Century AirCenter in the Gardner area The Kansas City Star

An audit has found “significant deficiencies” in the management of Johnson County’s two airports, with problems including lost revenue from out-of-date leases, fire and water damage risk to planes stored in the hangars, and a lack of transparency in spending.

The audit, presented to Johnson County commissioners last week by Auditor Ken Kleffner, outlined a number of purchasing and record-keeping actions that violated county policy and resulted in questions about whether the county got a fair price on what it paid for.

The audit covers New Century AirCenter and the Executive Airport.

For example, a $1.6 million remodeling project at the New Century was split into 11 sub-projects, a practice the county prohibits because it avoids restrictions on competitive bidding and oversight by the commission.

There were also concerns about the risk of property damage from items stored in the hangars. Kleffner said an inspection of some hangars turned up one with several red gasoline containers stored on site, as well as others with non-aviation-related gear inside. A 2015 fire at the hangars was linked to restoration of antique tractors in one hangar, also a lease violation. According to hangar rental agreements, only aviation-related equipment is allowed to be stored in the hangars, Kleffner said.

The audit was completed as the airport changes leadership. Aaron Otto, assistant to the county manager, was named the new executive director last week. Otto had been interim director for nine months, following the resignation of Colin McKee.

The audit examined records from as far back as 2013 through 2016, which is roughly McKee’s term.

McKee could not be reached for comment.

Airport authorities and the commission are aware of the problems and have already begun addressing them, said Otto. The recommendations called or an extensive rewrite of the management procedures at the air centers.

“I’ll spend the next few years working on this audit,” Otto said.

Some of the audit’s sternest criticism was reserved for the way the remodeling projects were contracted. Spending on those types of larger projects requires prior approval in the county capital improvement program budget and the establishment of a special project account. The oversight is necessary to make sure the county gets fair value and bids competitively, the audit said.

That wasn’t done, however, the audit found. The remodeling was broken down into separate expenditures for its various rooms, with most of them less than $200,000.

“The former (executive director) abused his position when he directed questionable expenditures and subjected the (airport commission) and the county to increased costs and potential liability,” the audit said. The former director “demonstrated a pattern of deliberate non-compliance” with county policy, according to the audit.

Airport authorities also failed to implement changes recommended by a 2015 risk assessment study, the audit said. That lack of compliance may have contributed to an incident a year ago, in which a water leak resulted in the county paying $150,000 from two claims at the business park.

The leak occurred when there was no one present who was adequately trained to handle it. The audit also said that inspections and preventative maintenance that might have prevented the leak had been deferred from 2013 to 2016.

The audit also cited numerous problems with management of the 70 land leases and 218 hangar leases the airport commission oversees. Errors and a failure to update those leases cost the county $47,000 during the audit period. And the management was often unaware of delinquent accounts, including one for over $9,000 as of last October.

In addition the gasoline containers, other non-aviation items were stored in some hangars, including commercial mowing equipment, business records and a motor home with space heater and microwave powered by an unsafe extension cord connection, the audit said.

The relationship between the airport commission and the Southwest Johnson County Economic Development Corporation was also brought into question by the audit. The study questioned about $42,000 in costs for consulting services, catering and marketing expenses that included the use of partial season tickets to the Kansas City Royals for business retention at the New Century Air Center.

The tickets, paid for with $9,500 of county money, should have gone to tenants at the airport if the purpose was retention, the audit said. Instead the majority of them went to investors and organizations with the potential for involvement in economic development. The EDC is a non-profit corporation set up by business and government about 20 years ago to promote growth in the southwestern part of the county.

The problems caused Commissioner Steve Klika to wonder whether the commission needs tighter control over the management of the airports.

“The question I’m asking is whether or not the airport commission should be directly overseen by the commission,” to avoid recurring problems, he said. The airport operations are controlled by its governing body, which is appointed by the county commission. The county commission also controls the budget.

County Manager Hannes Zacharias said he is optimistic that the airport authorities will work hard to resolve the problems.

The two Johnson County airports in Olathe are the third and fourth busiest in the state of Kansas. In addition to runways and hangars, the New Century Air Center also has a business park with more than 50 tenants and its own water and rail service.