O.C.’s Spending at El Toro Marine Base Questioned

Orange County may have improperly spent more than $800,000 in highly restricted John Wayne Airport funds to pay contractors at the former El Toro Marine base, documents show.

Two management firms were paid the money since July, although it appears from county records that their airport-related tasks had ended and most of what they were entrusted to manage was a few recreation programs: a golf course, horse stables, officers’ club, a child care center, swimming pool and an RV storage lot.

Supervisors are expected to decide Tuesday whether to drop the recreation programs.

Earlier this month, supervisors unanimously voted to have a county auditor “scrub” the internal account set up to handle El Toro planning costs.

Supervisor Todd Spitzer demanded the review after county and airport officials conceded that nearly $200,000 of John Wayne money had been improperly used since 1998 to pay JHTM Associates to review El Toro planning work. The money had been paid through the company’s contract with John Wayne Airport.

Federal Aviation Administration officials would not comment directly on whether Orange County violated federal rules in its spending of John Wayne Airport dollars. The FAA has not reviewed Orange County’s use of airport funds since the fall of 1998, but would investigate any formal complaint, said Kirsti Dunn, an FAA spokeswoman in Seattle.

Some Cities Have Had to Repay Funds

In recent years, federal officials have forced government officials overseeing airports in Los Angeles, Florida, New York, Georgia and Texas to repay millions in airport money improperly used for such activities as airport-area golf courses, police and fire services, a sewage treatment plant, business parks and sponsorship of an international film festival.

Two former top federal officials said John Wayne Airport money channeled to the El Toro project should be used only for activities directly related to the planning and development of an airport. They said it would be improper if John Wayne money had been spent to help subsidize management of El Toro’s golf course, horse stables and former officers’ club.

“They are not supposed to use airport funds for that. If they’re doing that, then they are violating the law,” said Donald R. Segner, a former FAA associate administrator, who has questioned the use of John Wayne Airport dollars for El Toro planning for more than two years.

Mary Schiavo, former inspector general of the U.S. Department of Transportation, which includes the FAA, agreed.

“The short answer is, no, it’s not allowed,” said Schiavo, who spent six years--from 1990 to 1996--investigating 43 airports across the country for improper expenditures.

Justifying airport spending by linking it to any activity at a base where there are plans for an airport is “too remote a link,” Schiavo said.

“Aviation money can only be spent [on activities] for movingpassengers and property,” the former inspector general said.

Since 1994, county officials had been planning air cargo operations at the base, the first step toward creating an international airport.

Toward that end, the county hired Cabaco Inc., an Arizona-based management company, and Gary Simon, a Huntington Beach real estate manager, in 1998 for work at the base.

But, by last spring, federal officials had grounded the county’s plans for cargo flights or any other aviation activity. The county’s top cargo negotiator quit in June, saying flights “wouldn’t happen any time soon.”

Still, the county continued for 10 months--from last July until April--to use $834,617 in airport money limited by federal law to use “directly and substantially related to the air transportation of passengers or property.”

A review of the county’s El Toro expense records by The Times shows that John Wayne Airport money helped cover $715,168 in administrative costs during that time for Cabaco’s 10-person management team and $119,449 for Simon, including $42,000 in severance pay after Simon’s contract was terminated Jan. 10.

Orange County Executive Officer Jan Mittermeier said last week that John Wayne Airport revenues have not been misspent.

She and other county officials said that although the cargo effort was eventually abandoned, Cabaco and Simon still had duties related to aviation planning. They had to prepare for the transition from a military base to a revenue-generating airfield by drafting a transition plan, conducting building inspections and taking an inventory of base property.

“All of that supports the ultimate reuse of an airport,” said John Christensen, the county’s spokesman on the El Toro project.

Monthly reports filed by Cabaco show that the company had nearly completed its assigned aviation-related tasks--the base transition

plan and inventory--before July, when the firm began overseeing the recreation programs.

Yet the company’s invoices show that an average of 74% of its management team costs in the eight months after July were charged to airport funds, although the aviation work was deemed all but finished.

A source familiar with the company’s work said managers spent less than 5% of their time after July working on overall aviation base planning tasks, and 70% of their time managing the recreation programs. The remaining 25% of time was spent on care-taking activities under a separate contract with the Navy, which still owns the land and pays the county to provide security and fire services and other maintenance chores.

The county insists that no money was misspent.

“Any work related to the [recreation programs] was not charged to aviation funds,” Mittermeier said. “Those never get any airport funds.”

Impossible to Pin Down Figures

Because the county does not require that Cabaco or Simon submit invoices based on individual management tasks performed at the base, nor does the county show a breakdown of what tasks are paid from various funds, it is impossible to know exactly how aviation funds were spent. Overall, the county paid Cabaco $2.3 million of John Wayne Airport money for base transition tasks.

Cliff Wallace, Cabaco’s El Toro program manager, said that since July, about half of the company’s management time was spent preparing for a lease allowing the county to take over the entire base until the property is deeded to the county. Though the preparation of that lease is not related to aviation, county officials argued that it supports the ultimate creation of an airport and can be paid from aviation funds.

Simon said he performed a mixof duties to plan for the transfer ofthe base but was not regularly required to bill for them separately.

For one month, October, Simon voluntarily provided a breakdown to the county of his work.

That billing shows that long after aviation planning was halted, Simon logged 40% of that month’s work on aviation-related planning, 30% on the recreation programs and 30% on Navy-reimbursed duties.

His paycheck that month, however, came entirely from John Wayne Airport money, documents show.

“The program managers were responsible for the source of the funds,” said Simon, now a consultant on the Los Angeles International Airport expansion project.

Spitzer said last week that if the county’s internal auditor confirms that any airport funds were misspent, he will call for investigations by the FAA, the Department of Transportation and the U.S. Department of Justice.

“On its face, it has the appearance of impropriety,” Spitzer said.

After questions over the use of John Wayne money surfaced in 1998, the Orange County counsel’s office researched the matter. At the time, airport foes were concerned about the amount of money paid to lobbyists and public relations firms.

Although the FAA has allowed such activities, other expenditures must tie into the overall airport master plan, County Counsel Laurence M. Watson wrote on April 8, 1999.

“Portions of the master plan which are not strictly aviation-related may also be funded from John Wayne Airport revenues, as long as those nonaviation portions are an integral part of the overall airport master plan or are for the purpose of assuring aviation compatibility,” Watson wrote.

Watson said this week that it would be impossible, without knowing the nature of Cabaco’s and Simon’s work, to give an opinion on whether the airport payments violated federal rules.

“Generally, if it is not aviation activities, in furtherance of an ultimate aviation reuse, then it should be paid with other dollars,” Watson said.