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Airport real-estate deal is questioned



Published: Sun, October 17, 2010 @ 12:00 a.m.

Role of board member

By Ed Runyan

runyan@vindy.com

VIENNA

Questions are being asked at the federal and local levels about a Western Reserve Port Authority airport real-estate deal entwining a long-unused, privately owned cargo building and the cargo-apron airstrip next to it.

The Federal Aviation Administration is concerned the port authority granted a lease for a 24,000-square-foot piece of Youngstown-Warren Regional Airport land under that Ridge Road cargo building for 38 years, with an option for an additional 25 years at a cost of $3,000 per year.

The problem, said Tony Molinaro, an FAA spokesman in Chicago, is that the lease “ties the port authority’s hands” for use of the cargo apron airstrip built in 1999 with $11.5 million in federal funding.

Separately, questions are being raised about port authority board member Scott Lewis’ role in the sale of the former Davis Air Cargo Center on that land.

Lewis acknowledges his company, working for Davis’ heirs to sell the building, received a fee from the sale when Millwood Inc. bought it in 2009 while he was an authority board member. He would not divulge the amount of the fee Edward J. Lewis Inc. real-estate company received from the sale, calling that “proprietary information.”

David Freel, Ohio Ethics Commission executive director, said state ethics law prevents a port authority member from participating in discussions related to a contract or service related to his or her position on the board.

Lewis, vice president for the local real-estate company, said he doesn’t believe he did anything wrong. Scott Lynn, authority board chairman, also says Lewis did nothing wrong by being involved in the project.

Complicated deal

At the center of controversy is the complicated situation of a privately owned cargo building that sits on airport land overseen by the authority.

The authority has no jurisdiction over the building per se, but any purchase of the building would have to include access to the airport property, which the authority does oversee.

The cargo building and cargo apron — 10 acres of concrete on which cargo aircraft can be stored, loaded and unloaded — were built a decade earlier in an unsuccessful attempt to lure an air-cargo company to the airport.

Almost no cargo business has been done, however, since local construction company owner D.D. Davis erected the building at a cost of $569,200 in hopes of attracting a cargo company, said Dan Keating, port authority attorney.

“They say, ‘Build it and they will come.’ Well, they didn’t come,” Keating said.

Building sale

Because the cargo building had been mostly empty for most of the past decade, the authority was pleased when Millwood expressed interest in 2008 in purchasing the building and leasing the airport land on which it sits, Lewis said.

Documents obtained from the authority also show that Lewis corresponded with the authority in January 2008 — eight months before his September 2008 appointment to the authority board — regarding the cargo building. He was responding to a board request for information about the cargo building and two other nearby buildings.

Documents obtained from the authority after a public-records request indicate Millwood bought the building for about $800,000. There is no record of the sale at the Trumbull County Auditor’s office, however.

At a February 2009 authority meeting, the board authorized Steve Bowser, former director of aviation, “to complete negotiations with Millwood Inc., pending [Keating’s] approval concerning the Davis Air Cargo Building” land lease.

Asked whether he participated in an authority closed-door executive session Feb. 18, 2009, regarding the Millwood deal, Lewis at first said he did not recall.

Authority member Don Hanni III told The Vindicator Lewis was in the meeting and participated in the discussion about the Millwood lease. In a later interview, Lewis agreed that he was there and might have answered questions but did not improperly participate in the discussion.

Hanni said he was angry when he learned that Lewis was not just offering his expertise as a real-estate professional but that Lewis’ company stood to gain financially from the deal.

Though a copy of the lease in the authority files shows it was signed in June 2009 by Bowser, Keating and former business manager Colleen Black, the authority board didn’t vote to authorize it until November 2009.

The lease granted Millwood Inc. and its real-estate arm, Pillar Partners Two, the use of the 24,000-square-foot piece of airport land off Ridge Road on which the cargo building sits.

On Nov. 18, 2009, the board approved the lease unanimously. Hanni made the motion to approve it and voted yes. Lewis abstained.

Code of conduct

Lewis said he followed the legal advice Keating provided him regarding how much involvement he could have in the Millwood deal.

He said he followed the requirements of the authority’s code of conduct by abstaining from voting on matters that dealt with his real-estate work.

Those are the same rules that are followed on every board on which he’s served, he added.

The ethics commission’s Freel said there is no specific prohibition against sitting in an executive session, but it is a good practice to avoid doing so.

“Generally, members of public bodies cannot self-deal with their public agencies,” Freel said, adding that he is not addressing this specific matter, only generalizing.

Keating said he doesn’t believe Lewis did anything improper.

“Everything that Scott Lewis did was all disclosed,” Keating said. “He did not participate in discussions at the board level.”

How Lewis’ disclosure was made is unclear, however. The Feb. 19, 2009, minutes only note Lewis’ abstention, not the reason for the abstention.

“If a disclosure is going to be made, it can only be done at a public session or by circulating a public record,” said David Marburger, an attorney who practices open-government law in Ohio. “But it cannot be done in an executive session.”

During the Feb. 18, 2009, executive session, Keating said Lewis may have answered questions posed to him, but doesn’t believe that violated the authority’s code of conduct.

Keating said he believes the state’s ethics laws and the code of conduct don’t differ in that regard.

Dan Dickten, director of aviation at the airport since April, asked the FAA in August to examine the land lease because he felt it “didn’t look right,” the FAA’s Molinaro said.

The director of aviation at the time the lease was signed in June 2009 was Bowser, who started a new job in August 2009 as deputy director for Palm Springs International Airport in Southern California.

Bowser’s job was vacant from September through March, with port authority board members filling in.

Molinaro said it is “tough” to fix a lease “after the fact,” but FAA officials and the authority are attempting to do so.

“The port authority should have gone through the process, and they wouldn’t be in this bind,” Molinaro said, adding that it is not clear from the FAA officials handling the matter how difficult the problem will be to fix.

Millwood “didn’t do anything wrong,” Molinaro said. And building sales are outside the FAA’s jurisdiction as well.

Millwood has factories in 11 states and is engaged in industrial packaging, such as shrink wrap and new and recycled shipping pallets. The company uses the cargo building on Ridge Road primarily for research and development. The company’s headquarters are the former Delphi Packard Electric training building.

Millwood President Lionel W. “Chip” Trebilcock, did not return a phone call for this story.

cargo apron access

Bowser, reached by telephone, said he didn’t bring the FAA into discussions about the lease because he has relatively little experience with leases between the port authority and companies not connected to the aviation industry.

Bowser, Keating, Lynn and Lewis all point out that the board has taken steps to ensure that if a company comes to the authority in the future with a desire to use the cargo apron, there will be space available and access to the apron to accommodate them.

Keating called the matter an “oversight” and said he thinks the new aviation director did the right thing in reporting it to the FAA.

Lewis said he believes the lease will be upheld in the end.

Andres Visnapuu, who joined the port authority in January 2010, said he supports the work Dickten has done in taking care of “loose ends” since becoming director, such as questioning the Millwood lease.

“He’s done a great job,” Visnapuu said, adding that pointing out the problem with the lease probably “helped us avoid a catastrophe.”

Lynn, who became board chairman in the spring, said it appears the board didn’t follow proper procedures, calling it “kind of like a paperwork issue.”

He added, “At the time, none of us knew we were supposed to do that. We thought we did a great thing” because the cargo building had been unused for so long.

As for whether it is proper that Lewis or his company made money off of something that also has implications for the airport, Lynn said, “As far as I know, [Lewis] followed everything he’s supposed to, to a T.”


Comments

1redcent(38 comments)posted 3 years, 10 months ago


See Cannons of Ethics for the Real Estate Industry in Ohio: http://bit.ly/botzPo

From the reading, it sounds like a typical local-area conflict-of-interest.

However, an agency disclosure rule in Ohio requires the Broker/Agent to clearly indicate and disclose (in writing) to all parties of the transaction who the Broker/Agent represents in his/her "agency relationship."

If the parties knew and/or were informed of the agency relationship through such disclosure(s), they must have known who was representing whom in the transaction.

More importantly, the concern is that "the port authority granted a lease for a 24,000-square-foot piece of Youngstown-Warren Regional Airport land under that Ridge Road cargo building for 38 years, with an option for an additional 25 years at a cost of $3,000 per year. At $3,000 a year, that's only about $0.12-per square foot.

The board has funded all kinds of studies throughout its history. Hopefully, there is adequate support (i.e., appraisal, other evaluation or analysis) for those numbers. It only appears inexpensive for such an important piece of land, despite the reported lack of demand in the marketplace.

The sad part would be if the first deal is leveraged in a future third-party transaction for mere real estate profits (i.e., sublease) to a future developer-user and results in no real benefits to the community in terms of jobs or revenues.

Molinaro said it is “tough” to fix a lease “after the fact,” but FAA officials and the authority are attempting to do so.

Thanks to those trying to "fix" things - again, its disappointing the people reportedly on the board to represent the public interest - didn't. Or at least it appear so from the reading of this story.

Good story by Ed Runyan - runyan@vindy.com

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2glbtactivist(245 comments)posted 3 years, 10 months ago

Sounds like the entire airport thing is shady. Hanni and Lewis on the board? Come on.

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3UnionForever(1470 comments)posted 3 years, 10 months ago

Sounds like the Western Reserve Port Authority is being run by a bunch of crooks. Once again the taxpayer takes it in the shorts. Bring in the FBI & the Federal Prosecutors and let's get this investigated now.

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4author50(1121 comments)posted 3 years, 10 months ago

Stop funding this black hole of taxpayers money. Scott Lewis obviously used his posistion to better himself -- it's why many people get appointed to these boards. Who did he kick back a piece of his deal to? Hanni on the board and asking the right questions is a scary thought, but according to this very good article he made a motion to approve the deal he now questions? Visnapu has a great track record as a businessman, if one wants a board member who peddled lottery "dream" booklets.

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5Photoman(1000 comments)posted 3 years, 10 months ago

This appears to me, also, to be quite shady. This airport with its great runways, has had many opportunities to grow but has failed to grow because of local politicians and their turf wars. Meanwhile the airport in Akron grew thanks to the greed and ineptitude in Youngstown and Warren.

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6MD1533(24 comments)posted 3 years, 10 months ago

This says it all Scott Lewis! David Freel, Ohio Ethics Commission executive director, said state ethics law prevents a port authority member from participating in discussions related to a contract or service related to his or her position on the board.

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7Handala(38 comments)posted 3 years, 10 months ago

Meanwhile back at Party Headquarters the important issue of demonizing the Chamber of Commerce over Humphries supporting Kasich remains priority ONE!Hmm?

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8oldstown(198 comments)posted 3 years, 10 months ago

It's time to shut this hopeless barely-even-an-airport down. Cleveland and Pittsburgh are close enough to provide all the air service this backwoods armpit of America needs.

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9Millie(192 comments)posted 3 years, 10 months ago

Is he the trustee now in Liberty? Frank Lordi went to prison for talking to a vendor he already did business with in his own company. I would guess Lewis should resign and that agreement reopened to see who benefited. Look at all involved in the Oak Hill problem and this does not seem all that different.

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