December 10, 2006

     The Columbia Gorge Regional Airport will have a new fixed-base operator (FB0) next March, and if the last airport board meeting is any indication, the FBO will be the president of the company that manages the airport along with the recently-resigned chairman of the board.
     The board’s Nov. 17 recommendation to sign an agreement with a new company, consisting of Chuck Covert and Rolf Anderson, has caused the outgoing FBO to protest the selection process, and various pilots to complain about secrecy and deception in the process.
     Those involved say everything is “above-board” and the agreement would bring significantly enhanced revenues to the airport to help it grow.
At its November meeting, the board voted to advise the airport’s two owners, the City of The Dalles and Klickitat County, to sign a five-year lease agreement with Gorge Aviation Services, LLC.
     That lease would permit the newly-formed company — consisting at present of Rolf Anderson and Chuck Covert — to rent hangar space to provide FBO services at the airport, which include pumping fuel and running the flight school.
Anderson is president of Aeronautical Management, Inc., the firm that since March 2005 has managed the airport, which is jointly owned by the city of The Dalles and Klickitat County.
     Covert, who resigned as airport board chair on Sept. 29 — effective Oct. 1 — has already won city approval to become the airport’s fourth manager alongside Anderson, Jim Lehman and Jim Broehl, who sits on The Dalles City Council.
However, the Klickitat County Commission, which at its Dec. 5 session postponed action on the lease agreement until Tuesday, also declined to consider the proposal to add Covert to A.M.I.
     Commission Chairman Ray Thayer, who also sits on the airport board, said he had some questions about whether that wouldn’t make the relationship between A.M.I. and the FBO “too close.”
     Changes in FBO role
     According to City Manager Nolan Young, the airport has progressed since 10 years ago, when the current FBO, Flightline Composites, came in. With the airport now under full-time management, he said, the board decided it was “time to change the relationship” with the FBO.
     At present, Flightline pays no rent for the use of the large maintenance hangar, an adjacent lean-to, and the underground fuel island in exchange for providing certain services, including some basic caretaking and upkeep at the airport. A.M.I. says it will now assume those functions.
     “There’s no longer a need to [compensate] someone to do that,” Young explained.
     Flightline’s lease ends Feb. 28, and company owners Dennis Kindig and Anne Yanotti rejected terms of a new deal, which would have required them to pay rent for the facilities they use.
     Covert and Anderson said they have agreed to such terms.
“We want to make this airport profitable,” Covert told the board at the meeting, “but we need to increase revenues.”
     Specifically, Young said, they thought they should change to an airport operator that rents space at the airport from which to operate its services business.
     Rents charged will reportedly increase airport revenues by more than $40,000 annually. The bulk of that increase is represented by the $3,300 monthly rent that Gorge Aviation would pay.
     Maintenance an issue
     Kindig has been criticized publicly at board meetings for not providing aircraft maintenance, though he claims he did and was “always within the terms of [his] lease.”
     Lehman and Covert have said Kindig benefitted his Hood River business by funneling clients over there and competed with the airport by renting out his hangar space for private planes.
     Covert said the change in FBO was motivated in part by the desire to have more maintenance directly at the airport.
     “Why not do it here?” he said.
Although Kindig occasionally took aircraft over to his mechanic in Hood River, where he is also FBO, he said it was strictly a convenience issue.
     He said the board may be correct in faulting him for not actively promoting maintenance at the airport, but flight instructor Dave Koebel, who runs the flight school for Kindig, disagrees.
     Koebel says Flightline spent three years trying to bring a full-time mechanic to The Dalles and that the position was publicly advertised for six months.
“We couldn’t get anybody to come,” he said, adding that at least three candidates visited but, one by one, decided there “was just not enough business.”
     New mechanic
     Under the terms of its lease, if Flightline is unable to find a qualified mechanic with authorization instruction after a six-month advertising period, it must make half the large hangar it is occupying available upon receiving notice from the airport that a mechanic has been found.
     A.M.I. gave this notice in an Aug. 18 email to Yanotti.
At the Oct. 20 board meeting, Covert introduced Jim Shoptaw of Jaswend Aviation as the airport’s new full-time mechanic, with services beginning Nov. 1.
At that meeting, Anderson explained that Kindig would sublet half the hangar space to Shoptaw for $500 until March, after which Shoptaw would rent the full hangar for $2,100. Anderson said a group of unspecified private individuals was covering that rent as an incentive to Shoptaw.
     Those individuals were revealed at the next meeting to be Covert and Anderson of Gorge Aviation Services. Covert said they will continue to subsidize Shoptaw’s rent until the end of the first year, meaning next November.
     Covert said he first contacted Shoptaw two years ago, but the arrangement that brought him to the airport just came together in the “last few months.”
In announcing his earlier resignation at that same October meeting, Covert listed his involvement with “bringing maintenance to the airport” among his reasons for stepping down. He also said he was bringing an aircraft out to rent and “some other things.”
     Avoiding conflict
     Covert told the board he had wanted to avoid a conflict of interest. “I didn’t feel comfortable,” he said.
     He told The Chronicle that at the time he tendered his resignation he was not thinking of becoming the FBO, though he had expressed an interest 10 years earlier.
     However, pilots John Fulton and Will Mensink recalled a conversation in August with Lehman, in which he told them that Covert and Anderson were going to be the new FBO.
     Lehman said the pilots must have misunderstood. He said he must have been complaining about A.M.I.’s decision to let Covert in as manager. He said he had been outvoted and was “disgruntled” about it.
     He also said the conversation must have taken place later than August.
Flight instructor Dave Koebel, who runs the flight school for Kindig, said Lehmann told him in August or September that the FBO would be Covert and the
airport’s three managers. Kindig reported similar information to The Chronicle Sept. 16.
     Lehman said he did not recall the conversation and would not have said that.
“Jim [Broehl] and I are definitely not a part of Gorge Aviation,” he added.
Covert noted that he would not lie about his involvement.
     “I have my personal reputation to worry about,” he said.
Covert said his philosophy is that “if you always tell the truth, you don’t have to worry about it. People will take what they want to hear.”
     Unidentified interest
     Kindig provided The Chronicle with the printout of an email from A.M.I., dated Aug. 25, informing Flightline that it had an unidentified “entity” interested in the FBO agreement and thus did not need to resume negotiations with Flightline.
     Saying the identity of negotiating partners was confidential, Anderson would not identify that entity except to say that it was not Gorge Aviation.
     Koebel said A.M.I. had also been unwilling to tell Kindig the name of the new mechanic he was to be working with until the October meeting at which Shoptaw was introduced.
     “I don’t understand the mystery,” Koebel said. I don’t think there’s anything illegal. I just don’t understand.“
     “I don’t know that there’s been anymore secrecy about this than any other contract negotiation,” said Broehl in response to the complaints.
     Lehman agrees that “everything’s been above board. There’s no subterfuge or secrecy... nothing sinister about what’s going on.”
Covert said, “I don’t know what people are looking for. We want to do everything above-board.”
     Koebel conceded that everything may be all right despite his perceptions. “Chuck has been the most motivated member” of the board, he said. “He’s always wanted to see the airport go.”
     New search process
     Unlike 10 years ago, when Kindig came in, this time there was no request for proposals or public bidding involved in the search for the new FBO.
     The search process was “pretty informal,” said Broehl. “It’s kind of a new way of doing it.”
     He said A.M.I. and the board treated the FBO contract as more of a lease agreement. Essentially, he said, they assessed fair market value for the maintenance hangar, lean-to, and fuel island and went first to Kindig, then to other people, looking for someone to pay that price.
     Covert said the search process amounted to “A.M.I. talking to some different people.”
     Anderson said they made proposals to “a handful” of people “as far away as Portland and Seattle,” but declined to identify them.
At the Dec. 5 meeting of the Klickitat County Commission, Broehl said there had been three, two that visited the airport and one that “talked.”
     Covert said that in January he encouraged the board, as its chair, to send out a request for proposals but was outvoted. He said the board preferred to negotiate, first with Kindig and then with others.
     “I wouldn’t have any problems with going out to RFPs,” he said. “I don’t know if that would just delay the process, [or] if it would better it....”
     That option is among the alternatives available to The Dalles City Council when it considers the lease agreement on Monday, according to a staff report prepared by the city manager.
     Besides the options of simply accepting or rejecting the board’s recommendations to sign, or proposing amendments to the agreement, Young also included an option to first offer the same lease to Flightline.
     Flightline was offered the same or a very similar agreement in June, but Kindig is unsatisfied with city attempts to resolve minor discrepancies between the draft of the lease proposed to Gorge Aviation and what was proposed to him in concept earlier.
     Lehman accused Kindig of being unwilling to “step up to the plate” and sign the lease.
     According to Young’s drafting of the council alternative, the city council would sign the lease with Gorge Aviation if Flightline rejects it again.
     When asked if Flightline would sign the lease in its current form, Kindig said “probably not” but that he might consider the fuel island lease. That was originally offered separately from the hangar lease and rents, for $1,200 monthly.
Legal wrangling
     Kindig submitted a protest to the City of The Dalles arguing that the search process had violated the Public Contracting Code, which would have required competitive sealed bidding or competitive sealed proposals.
     In a written opinion, City Attorney Gene Parker recommended to Young that the protest be denied on various technical and substantive grounds. Among other things, Parker wrote that the lease agreement does not qualify as a procurement or public contract because it does not involve an expenditure on the part of the city.
     Oregon Revised Statute 279A.010(1)(x), to which both Kindig and Parker refer, defines “public contract” as a “sale or other disposal, or a purchase, lease, rental or other acquisition, by a contracting agency, of personal property, services...”
     Randy Perkins, a pilot and local attorney who has been retained by Kindig and who helped draft the protest, said the proposed lease agreement is a form of disposal.
     “I can find 25 statutes where the language ‘sell, lease or otherwise dispose’ is used.”
     Parker, who gave the initial verbal advice that a competitive process was not required, stood by his position, saying the City does not see the proposed agreement as a procurement or public contract.
     Perkins said the proceeding “falls squarely within the public contracting code” and that the lease agreement is “clearly a public contract.”
     He also said that giving Kindig a second chance, if the city council chooses to do so, “doesn’t address the purchasing policy issues.”
     “The whole problem with this thing,” he said, “is just the secrecy with which these guys undertook it and the obvious cross-interests.
     ‘‘Public purchasing statutes are there to make sure things don’t end up looking like this, and even if they are not required by the statutes, I would think responsible government would want to use them.”
     He says ORS279B.050(3) gives agencies that authority and he plans to recommend such action to the city council Monday night.
     A question of profits
     The members of the airport board share the view that the more than $40,000 in added revenue that would be provided by the new lease agreement makes it a very attractive option in light of long-standing desires to make the airport self-sufficient.
     “The new income looks very enticing; it’s difficult to do anything but support it,” said board member Norm Deo during the discussion before the board’s Nov. 17 vote.
     Young, who is sitting temporarily on the airport board as city council representative until councilor-elect Jim Wilcox can take over, praised the agreement at that meeting, saying, “We now have an entity that has a vested interest in the airport growing.
     “They’re taking a risk,” he said, referring to Gorge Aviation’s willingness to subsidize Shoptaw and take on what Anderson referred to as an “onerous lease.”
“We need to take a bit of a risk also,” Young said before speculating that success was “just around the corner” for the airport.
     Anderson says the investment money is coming out of his and Covert’s pockets and that they don’t expect to make much money with the FBO business for some time.
     “Maybe there’s not $40,000 worth of income [in it],” he said. “We’re not going to make money this year.”
     He said that while, “obviously, no one wants a losing business,” he is not fazed by those challenges.
     “Airports and airplanes are passions, not just businesses. All of us who fly are a little bit crazy,” Anderson added.
     Kindig and Perkins have questioned Covert and Anderson’s qualifications for the job. Both are pilots and businessmen, but neither has experience running a fixed-base operation.
     “You have to look for a qualified bidder,” said Perkins. “You want to look a little bit beyond gross dollars. That’s not the way you do public business.”
Covert said his long-time involvement with the airport and business background qualify him. “I’ve been involved with businesses all my life,” he noted.
     New manager?
At its Nov. 27 session, The Dalles City Council voted unanimously to approve the addition of Covert to A.M.I. after City Manager Nolan Young included the airport management team’s request in his report.
     Broehl, who is also a city councilor, recused himself from the vote, which was not on the published agenda.
     In explaining their decision to make that request, Broehl and Anderson shared in the view that Covert’s long-time involvement with the airport would make him an “asset.”
     Covert agreed.
     “I can’t think of anybody on the board who’s been as involved with it as I have, except Ron Somers,” he said.
     Only Lehman had opposed the move. “I was the holdout,” he said. “I didn’t think it was necessary; I thought we were amply staffed.”
     Lehman emphasized that his opposition was “only a business decision” and said it had nothing to do with concerns over potential conflicts, which he did not see.
     Commissioner concerned
     However, Thayer, who appeared to favor the proposed lease agreement while presiding over the Dec. 5 Klickitat County Commission session, has expressed some doubts about that move.
     “I may seek some legal opinions about that,” he told Broehl, Covert and Young, who were making the request on behalf of the airport, Gorge Aviation and the city, respectively.
     Contacted later by The Chronicle, Thayer said his concern was about A.M.I.’s oversight of the FBO, which is expected to be Gorge Aviation. If Covert becomes part of A.M.I., he asked, then “who’s watching what?”
     He said the presence of Anderson on both the management team and the company it oversees “might” pose a problem, but he said he thought a dual role for both men would make the “appearance of fairness” an issue.
     “It may be perfectly all right,” he said, but added that he is going to pursue the matter to “see what I find out.”
     Covert declined to comment until he had talked to Thayer.
     Separate things
     Anderson was emphatic that A.M.I. and Gorge Aviation are “two separate things” and said he “didn’t understand” how they could be linked except that their functions are carried out in the same place, meaning the airport.
     He said he saw no problem with the oversight issue, since A.M.I. would only be monitoring Gorge Aviation’s compliance with their lease, and information about payment — or non-payment — would be public and reported to the airport board through the city finance department.
     “We report to the board,” he said of A.M.I., and secondarily to the city and Klickitat County. He added that the management team does not decide the rates or terms of leases.
     Nor, he said, does A.M.I. get 10 percent of the lease, as had been rumored.
An incentive clause in A.M.I.’s contract gives the management team 10 percent of all leases and sales relating to new development but excludes leases for existing buildings at the airport.
     Parker said he didn’t see any potential conflict with oversight as long as the city was aware of the situation and addressed any concerns that might develop about separation of duties.
     “They’re there as our representative,” he said.
     Parker said he would have to consult the minutes for the January and February 2005 meetings to address another concern — raised by Kindig and echoed by Perkins and Koebel — about an earlier potential conflict.
     The January minutes describe the hiring process for the new airport manager, while the February minutes record the board’s discussion and vote on its selection, A.M.I., which included two then-airport board members: Jim Broehl and Jim Lehman.
     The February minutes note that Broehl and Lehman did not participate in the discussion and vote, but the January minutes describe them as part of the hiring committee, along with the rest of the board.
     “You don’t have to have been around very long to know that’s wrong,” Perkins said.
     Broehl said it was “really stretching it” to consider that a conflict. He said he and Lehman did not participate in the hiring process and were involved only as interviewees.
     Action pending
     Both the Klickitat County Commission and The Dalles City Council must approve the FBO lease agreement with Gorge Aviation for it to go forward.
The Dalles City Council will consider the matter tomorrow, Dec. 11. The proposed lease agreement is the last action item on the agenda for the meeting, which starts at 5:30 p.m.
     The Klickitat County Commission postponed action on the lease at its Dec. 5 session after commissioner Joan Frey requested more time to familiarize herself with the issues surrounding Kindig’s protest.
     She said she also wanted the third commissioner, Don Struck, who was not at the meeting, to be involved.
     Klickitat County will consider the lease agreement Tuesday, Dec. 12 at the county courthouse at 205 S. Columbus Ave. in Goldendale. It is the second item under old business, estimated for a 3:15 p.m. hearing.
     Thayer said he wouldn’t guarantee the request for the addition of Covert to A.M.I. would be on that meeting’s agenda.