Army lease cost airport $250,000, audit says
A federal audit found that Pittsburgh International Airport officials violated federal regulations by leasing 25 acres to the Army at 76 percent below fair market value. The lease deal cost the airport $252,000 in lost revenue over two years, according to the audit by the U.S. Department of Transportation's Office of Inspector General.
The Federal Aviation Administration will investigate the lease. If the FAA agrees with the audit, released Monday, it can penalize the Allegheny County Airport Authority, which owns Pittsburgh International, by compelling it to somehow recoup the money.
Airports with serious violations risk losing federal grants that help cover the cost to maintain runways and terminals. There was no indication Tuesday that the airport authority faces losing grants.
"We will investigate the findings and get back to the inspector general," said Jim Peters, an FAA spokesman.
Airport authority spokeswoman Joann Jenny said the lease was forged by county officials in 1998 -- before the formation of the authority in 1999. Authority officials, who assumed and reaffirmed the lease, explained to federal auditors why a reduced lease was offered to the Army.
"When they negotiated this lease agreement with the Army, the Army decided it would pay all the costs to prepare the property before building on it," Jenny said. "There was a reduction in the value of the lease because we gave them the land 'as-is.' "
Jenny said the inspector general's auditors seemed satisfied with the authority's explanation in 2001.
A spokesman said the Army did not know the lease might violate federal policy.
The airport authority is required to abide by various federal policies because it receives millions of federal grant dollars annually. One policy mandates the authority not lease airport property to non-aviation entities for less than fair market value.
Auditors with the inspector general's office reviewed the FAA's oversight of how airports spend revenue, focusing on five airports, including Pittsburgh International. The audit ended in August 2001.
The 25 acres used by the Army to house the Army Reserve's 99th Regional Support Command Headquarters are in Moon Township along Business Route 60. The property was a parking lot across from Pittsburgh International's predecessor, the now-razed Greater Pittsburgh International Airport.
The 60-year lease requires the Army to pay about $40,000 a year through the first 25 years. A $1 annual payment is required for each of the remaining years.
"I guess it looked like a good deal for the airport at that time and a good deal for the Army," said Bob Penn, acting chief of the U.S. Army Corps of Engineers real estate division, based in Baltimore. The office negotiated the agreement with the county for the Army Reserve.
The inspector general's report says the lease cost the airport a total of $252,000 in 1999 and 2000. Also, the report says the authority failed to report four other non-aviation leases, with the U.S. Postal Service, Findlay and Moon townships, and state government.
Aside from Pittsburgh International, the inspector general looked at financial records at airports in Cleveland, Miami, San Antonio and Detroit.
The inspector general found $40.9 million in potential revenue misuse that was not detected by the FAA -- most at the Miami-Dade County Aviation Department.
The FAA has taken steps to improve financial reporting by airports, the inspector general's report said. The improvements include redesigning financial reporting forms.
