Airport Money Misspent on El Toro

Orange County has misspent up to $400,000 of John Wayne Airport funds on redevelopment plans for the El Toro Marine base and will have to repay it, the county’s internal auditor said Tuesday.

Auditor Peter Hughes didn’t give a specific amount for the reimbursement but said less than 1% of the $40 million in John Wayne funds spent since 1997 appears to have been misused. The final audit will be released in February.

Under federal law, revenue generated at John Wayne Airport can be used only at the airport or for planning that “directly and substantially [is] related to the air transportation of passengers or property.”

Hughes said a 20-month review has determined that the money was inadvertently misspent.

“These were clerical errors due to human mistakes and not anything intentional,” Hughes told county supervisors, who had requested an analysis of El Toro expenses in May 2000.

Supervisor Todd Spitzer asked for the audit after county and airport officials conceded last year that nearly $200,000 of John Wayne money had been used since 1998 to pay a firm that was reviewing El Toro planning work. The money was paid through the company’s contract with John Wayne Airport, not through the El Toro budget.

The Times reported last year that the county may have improperly spent as much as $834,000 in John Wayne Airport funds on El Toro. A Times analysis found that two management firms had been paid with airport money even though their airport-related duties were essentially complete. One of the firms continues to manage a handful of recreation programs at El Toro, including a golf course, stables, an officers club and an RV storage lot.

Because details of the audit haven’t been released yet, it could not be determined how the county accounted for those expenditures. Last year, then-County Executive Officer Jan Mittermeier denied airport money was misspent.

The use of John Wayne Airport funds has come under increasing scrutiny because airport security costs jumped after the Sept. 11 terrorist attacks. The airport stands to lose $10.4 million this fiscal year, partly because of a $12.8-million increase in its security spending.

About $11.8 million in John Wayne funds has been earmarked for the El Toro planning effort for the fiscal year ending June 30. The funds are used for El Toro consultants, staff and legal work. About $6 million is included in this year’s budget for a public-information program; about a third has been spent.

The board’s two anti-El Toro airport supervisors--Spitzer and Tom Wilson--want a moratorium on El Toro spending to put John Wayne back in the black. But pro-El Toro airport supervisors Cynthia P. Coad, Chuck Smith and Jim Silva moved earlier this month to wait until January to consider options, including raising parking and aircraft tie-down fees.

Hughes said Tuesday that none of the accounting errors warranted an alert to the Federal Aviation Administration, which oversees the spending of airport revenue. The 1% error rate “is rather commendable in light of the fact that it was a new [county] program,” he said.

Spitzer said he hoped the departments that misspent the money would pay it back through their regular budgets without dipping into county reserves. Supervisors have limited the amount of general funds spent on non-aviation matters at El Toro to no more than $5 million this year.

In response to a question from Spitzer, Hughes said the audit has taken so long because all the El Toro spending was examined; auditors generally review only a portion and apply the conclusions to the entire amount. The bulk of the review was completed in June, he said.

Since then, the remaining work has focused on verifying information from county employees and clarifying FAA regulations. Hughes said county employees have cooperated fully in the audit--refuting an inference by Spitzer that some employees have delayed responding to Hughes’ findings to postpone the audit’s release.