The Peninsula Airport Commission’s use of taxpayer funds to pay off a $4.5 million debt of a failed airline has, two years on, sparked a major house-cleaning.
Newport News City Manager Jim Bourey resigned as a commissioner Thursday, saying he felt his decisions on the body, which included voting to guarantee a loan to People Express Airlines, were justified.
The commission ended its six-decade-old relation with the law firm of its attorney, Herbert V. Kelly Jr.
It put Newport News/Williamsburg International Airport executive director Ken Spirito on paid administrative leave.
And, for the first time, it said it regretted its dealings with People Express, which operated out of the airport for less than three months in 2014.
“This was a very stressful time for the the airport but we want to show that we are trying to be diligent and effective and efficient,” commission chairman George Wallace said at the end of a more than two hour closed door meeting. “We’re going to be be bigger and better than we have been.”
Executive Director Ken Spirito was placed on paid leave.
Wallace, former mayor of Hampton, said Spirito would remain on administrative leave while a state audit continues.
The state cut off funds to the airport in January after a review prompted by Daily Press stories about the loan payment uncovered the use of $3.55 million of state funds to help pay off the People Express debt.
“We want to protect the integrity of the audit and at the same time not put a cloud on Ken,” Wallace said.
“It’s like when an officer gets a serious complaint and is placed on administrative leave pending an investigation,” commissioner Rob Coleman said.
He said once the audit is completed, the commission will decide Spirito’s status going forward.
Spirito declined to comment as he left the airport, saying only: “I’m going home.”
That audit is likely to take some time because the commission is not providing documents investigators have requested, in some cases two or three times, and because commission staff have not made themselves available, Virginia Secretary of Transportation Aubrey Layne has said. Wallace said the documents the state wants are actually in the custody of TowneBank, which made the loan and which was made whole by the commission guarantee.
Airport attorney Kelly, who wrote the resolution empowering the commission’s then chairwoman to sign the loan guarantee, is a member of TowneBank’s Peninsula board. The resolution, which the commission approved after deciding in a closed session to guarantee the debt, did not mention that the body has decided to take on the risk of paying off People Express’ IOU.
Asked for reasons for the decision to end Kelly’s representation, Wallace said the commission just felt it was time for change.
Bourey announced his resignation from the board before the closed meeting.
“The past month has been a very difficult time for the airport and me personally. I am tremendously disappointed with the level of misinformation exists√ and the tremendous confusion for everyone that has been created,” he said.
“While I feel all the Commission’s actions that I supported were justified, I am resigning my position from the Commission immediately in the hope that this will allow for a fresh start for the Commission.”
The Newport News City Council, meanwhile, scheduled a closed session for 10 a.m. Tuesday to discuss the performance of one of its three appointees. Its notice did not specify which of those three — Bourey, City Clerk Mabel Washington or City Attorney Collins Owens — would be the subject of the discussion.
In its statement regretting the People Express deal, the commission said it would invite Williamsburg, James City County and York County to join Newport News and Hampton in sending representatives to its decision-making board. The commission used $700,000 from the Regional Air Service Enhancement Committee, a regional body funded by local governments that tries to woo airlines to the airport. That move prompted Hampton, James City County and York County to put a hold on their contributions to the group. The commission also used $300,000 of federal funds meant to pay for marketing and to guarantee revenue for the People Express service.
“With the lessons learned, the PAC intends to exercise greater due diligence and transparency moving forward,” the statement said. “We continue to hold the public trust as our guiding principle.”
In addition to inviting the other localities to join its board, the statement said the commission would cooperate fully with the state audit, and supported legislation approved by the General Assembly to reform the way the state gives funds to airports.
The statement marks a significant break. Spirito and members of the commission have argued that a state manual on the use of funds intended for improvements to public airport facilities allows for "air service development projects, " and that the loan guarantee was such a project.
Layne said the payment violates a 30-year-old state policy. Other Virginia airport executives have said they knew the state funds could not be used that way.
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