Feds raise questions about services contract at Somerset airport

May 22--SOMERSET -- Federal authorities have said a contract for aircraft-maintenance services at the Somerset airport appears to be improper.

The Federal Aviation Administration last week notified Don Bandy, chairman of the Somerset-Pulaski County Airport board, that the agency was conducting an "informal investigation" of a complaint about the contract.

The complaint concerns a lease to provide services at the airport, such as airplane maintenance and inspections, by what is called a limited fixed-base operator.

The board signed a lease in March with Somerset Regional Aviation LLC to work on airplanes at the Somerset field.

As part of the deal, the board agreed to lease a hangar to the company for $1 a year and to pay up to $8,000 a year toward the company's liability insurance.

The value of the hangar lease, including utilities, and the insurance payment would total about $28,000 a year, said John Tuttle, vice chairman of the airport board.

The board was not providing free rent or an insurance subsidy to another company that has provided aircraft-maintenance services at the airport for years, he said.

"It's a sweetheart deal," said Tuttle, who voted against the contract.

The FAA notified the board that in the agency's opinion, the new lease violated the terms airports agree to when accepting federal grants.

The FAA has given the Somerset airport $14.9 million since the late 1980s for projects such as runway extensions and construction of a new terminal, according to the agency.

The agency's concern is that the airport is not getting the required fair market value for the incentives provided to Somerset Regional Aviation, said Kathleen Bergen, a spokeswoman for the agency.

The FAA thinks the deal would make it "unreasonably costly or impractical" for the airport to have more than one fixed-base operator, according to its letter to Bandy.

The FAA asked the airport to terminate or change the lease. Failure to do so could result in suspension of federal funding for the airport, the FAA said.

One outcome could be that the local board would have to offer the same deal to Wally Iversen, who has been a limited fixed-base operator at the airport for years, Tuttle said.

Iversen said he pays $1,000 a month to rent hangar space and $100 a month to act as a limited fixed-base operator at the airport.

"If they're going to give him a concession, I sure as heck after 20 years should get the same concession, or better," Iversen said.

Airport board member Richard Vanhook, who voted for the new contract, said the goal was to increase airport traffic and revenue.

Vanhook said Iversen has few customers at the Somerset field. The owners of most planes based there go elsewhere for maintenance, Vanhook said.

Among other things, that means there are no jobs for aircraft-maintenance graduates at the adjoining technical school, Vanhook said.

The owner of Somerset Regional Aviation, Joel Huff, has an established customer base at the airport in neighboring Wayne County and presented a proposal to increase traffic at the Somerset field, Vanhook said.

Iversen did not present a proposal to the board, he said.

"Our whole goal was not only to provide jobs but to get the airport more self-sustaining," Vanhook said.

Tuttle said he doubted the new deal would generate enough additional business to offset the full cost of the incentives.

The idea is to have Somerset Regional Aviation pay more rent as its business builds, Vanhook said.

The airport receives money from the county's occupational tax for operations.

Pulaski County Judge-Executive Barty Bullock said he asked the board to try to increase airport traffic.

Bullock said his understanding was that Iversen was not providing the level of service many pilots wanted.

In hiring the new company, the airport board said the airport did not have on-site maintenance available.

However, Iversen said that's simply not true. Iversen said he is fully qualified to provide maintenance services and inspections, and he has been a limited fixed-base operator at the Somerset field since 1993.

"I've had a good (maintenance) shop on the airport," he said.

Iversen's complaint to the FAA, prepared by attorney Winter R. Huff, alleges the deal with the other operator is improper because the contract does not spell out the full cost to taxpayers and because it's not fair.

Bergen said the FAA tries to resolve such disputes short of filing a formal complaint.

Copyright 2012 - The Lexington Herald-Leader, Ky.