Aug. 3--The Tulsa Airports Improvement Trust may find itself liable to the federal government for more than $700,000 in costs for an aircraft noise mitigation program.
Airport trustees last week rejected an extension of their five-year, $40 million noise program with Cinnabar Service Co. In deciding to seek alternative bids for management of the program, trustees also scrapped a Cinnabar agreement to repay $705,913.40 in disputed noise funds to the Federal Aviation Administration.
If the FAA determines noise funds were spent on ineligible projects -- and without a repayment agreement with Cinnabar -- TAIT may have to reimburse the FAA, airport officials say.
"What happens now?" Airports Director Jeff Mulder said. "I don't know."
Nancy McNair, airport legal counsel, said Cinnabar and airport staff members negotiated an agreement for the company to establish a $350,000 letter of credit with a local bank as well as having $350,000 in future noise program management fees withheld pending resolution of the dispute with the FAA.
"We had a method established to secure the repayment of funds if the expenses were determined to be in eligible" by the FAA, McNair said. "It is an ongoing process with the FAA to determine if those were eligible costs or not. The (Cinnabar) agreement is part of what the board didn't approve on Friday."
Tulsa airport trustees voted unanimously Friday to shut down the noise program and seek new management with lower administrative costs.
Federal noise mitigation programs began 20 years ago in Tulsa with property buyouts of homes affected by average aircraft noise levels of 70 decibels.
FAA acoustical studies found that 1,672 homes, four schools and three churches in neighborhoods mostly south of the airport were eligible to participate. Most of the properties experience noise levels in excess of 65 decibels, which is equivalent to the noise heard when standing next to a busy freeway.
Property owners were given the choice of sound insulation, a sales assistance program or selling flyover easements.
In 492 homes sound insulated over the past five years, administrative costs have averaged about $14,000 per home. Administrative costs include field agent liaison services with homeowners; acoustical testing and engineering; architectural and engineering work; environmental services; construction oversight and inspection, and program management.
Actual construction costs are averaging about $31,000 per home, Cinnabar executives said.
Airport staff members say administrative costs were high to begin with because earlier airport boards designed a program that was neighbor-friendly.
And, they said, after the Sept. 11, 2001 terrorist attacks, FAA funding for the noise program dropped from an anticipated $14 million a year to less than $7 million annually.
FAA noise program funding became so tight in 2002 that airport staff directed Cinnabar to stop work in December, said Jeff Hough, deputy director of engineering and facilities.
"Cinnabar had 76 homes open and under construction," Hough said. "They had to shut their subcontractors down, they had materials they had to store, but they had to keep enough people available so that when the federal money flowed they could gear back up and start work again."
But FAA funding for Tulsa's noise program didn't resume until September 2003.
"The funding stopped right before Christmas," said Cinnabar President Bob Parmele. "We felt we had an obligation to the 76 homeowners. We advanced the money -- our own $2 million -- to the subcontractors so they could complete those homes. The airport staff said it needed to be done, but they didn't have the money."
When the federal funding resumed, TAIT paid Cinnabar according to the invoices submitted by the company. TAIT was reimbursed by the FAA.
However, FAA officials in Oklahoma City and Fort Worth subsequently notified TAIT that some delay, demobilization and startup costs incurred by Cinnabar between the funding shortfall in December 2002 and the resumption of the program in September 2003 were not eligible for federal reimbursement.
"There was nothing illegal or diverting of funds," Hough said. "The mistake was getting ahead and awarding contracts that were worth more than the FAA funds available."
Parmele said the parties had agreed to the $350,000 letter of credit and the withholding of $350,000 from future Cinnabar management fees until the dispute with the FAA was resolved.
But that agreement dissolved with the board's rejection of Cinnabar's contract extension.
"We have no agreement with the airport at this time," Parmele said. "Is the airport liable? I don't know.
"It's a matter for the attorneys to figure out at this point."
