lowecur
Well-known member
- Joined
- Sep 14, 2003
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Welp it seems B6 lapdog Sen Charles Schumer has requested the US Attorney General look into unsavory business dealings involving SWA at Islip Airport. The purported funding of the terminal was just a smoke screen where SWA is getting their money back and more from Federal airport assistance programs and taxpayer money. Herb has declined to comment, and Pete is serving 90 days in jail for stealing campaign funds.
imp:
http://www.newsday.com/news/local/longisland/ny-liair0626,0,695741.story?coll=ny-top-headlines
Terminal expansion's public price tag
SANDRA PEDDIE AND EDEN LAIKIN
Newsday Staff Writers
June 24, 2006, 11:57 PM EDT
Disgraced Islip Supervisor Pete McGowan billed the Southwest Airlines expansion at Long Island MacArthur Airport as a deal that wouldn't cost taxpayers a penny. But a Newsday investigation has found that millions of public dollars are nonetheless being spent on the project, and because of the way Islip Town structured the deal with the airline, local taxpayers won't get the benefit of millions in rent and concession fees.
Federal, state and Islip town records show that at least $65 million in public money, the bulk of it federal grants, is being spent to defray costs of the expansion and related construction at the airport. On top of that, the airline pays no rent and keeps all net concession fees from its new terminal -- at least $100 million in rent, and an undisclosed amount in concession fees over the next 25 years.
While the 174,000-square-foot terminal was built on town-owned land with some public funds, the Southwest expansion deal with Islip was forged with little input from town residents. Because Southwest paid for the construction, no public bidding was required.
Records show there also was no extended environmental review, even though the project involved clearing 80 acres of land.
In addition, Newsday's investigation has found, campaign records show that contractors who worked on the project contributed at least $87,375 to former Supervisor Pete McGowan and Islip Republicans since 2000. McGowan is currently serving a 90-day jail sentence for stealing campaign money and taking campaign kickbacks unrelated to the airport deal.
"This just proves that the public needs to be aware of how money is spent," said Yvonne Patterson-Quirk, president of the Islip Town NAACP, who filed a taxpayer lawsuit -- later dismissed primarily because a judge ruled that it exceeded the statute of limitations -- over construction at the airport. "Because even though he claimed no taxpayer money went into it, public money did."
Town defends deal
Acting Town Supervisor Eric Hofmeister defended the agreement, saying Islip residents benefited. "I think the town is getting a tremendous asset as a result of the deal," he said. "We're getting a company such as Southwest, obviously a large airline, that has a vested interest in MacArthur."
The airport expansion is under investigation by Suffolk District Attorney Thomas Spota, whose detectives last week also found serious fire hazards in the Southwest terminal. Town officials have said they are cooperating with the investigation.
Southwest has expanded its operations at other airports around the country, but those projects were mostly publicly funded.
Such airport building projects typically take five to 10 years, said Daniel Petree, dean of the College of Business at Embry-Riddle Aeronautical University in Daytona Beach, Fla. At Islip, Southwest will have completed construction in about three years.
"I certainly understand why the airline would want to do it. They have to respond to market demand, and they don't feel like they can wait five or 10 years," he said.
However, he added, "Because you expedite the process, you don't get the full public hearing, and things can get overlooked or get missed or, frankly, not addressed."
Unanimous support
With McGowan leading the way, town board members voted unanimously for the deal in August 2000. Councilwoman Pamela Greene, who is running for supervisor, conceded they knew few details.
Pav-Co, a Holbrook-based asphalt company that has contributed generously to Islip Republicans, got the contract to expand the parking lot at a cost of $3.5 million, Werner said. Records show that Pav-Co, which is facing federal fraud charges filed last year for bid-rigging on local contracts, has done at least $20 million in work at the airport since 1998. Pav-Co attorneys have denied the charges.
Pav-Co also did the work on the new apron, where planes pull up to the terminal to pick up and discharge passengers. As has been reported by Newsday, large and potentially dangerous cracks started appearing in the apron last November, and town and company officials are conducting tests to determine the cause.
With great fanfare, Southwest celebrated its debut at MacArthur on St. Patrick's Day, 1999. A little more than a year later, town records show, company and town officials quietly agreed on key points of the deal to expand the terminal.
According to a June 18, 2000, letter from Southwest property manager Peter Houghton to then-Town Attorney Messina, Southwest agreed to design, finance and construct the new gates. In exchange, it would not have to pay sales taxes for materials, would retain all net concessions from the new concourse and receive the town's assistance in getting federal funding for parts of the project. No announcement was made until three months later, in August, when the town board approved the agreement.
"It was the perfect situation where two different parties with different, but complementary needs met," said Ronald Ricks, a Southwest senior vice president. "We needed real estate to operate here and Islip needed air service."
He added, "It's a creative, precedent-setting model."
Political gains
With Southwest's expansion plans taking shape, contributions began to flow into the campaign coffers of McGowan and Islip Town Republicans. Southwest and its company co-founder, Herb Kelleher, began to contribute $1,500 a year, beginning in 2000, records show. Pav-Co and its related companies gave $19,200 from 2000 to 2005. Aviation Constructors, the general contractor for the first phase of the expansion, gave $11,000, the records show.
By comparison, Pav-Co gave $2,900 to McGowan's campaign from 1996 to 1998, and Aviation Constructors gave a total of $1,600 in 1997 and 1998.
Kelleher, who has retired as Southwest's chief executive, declined to be interviewed.
Having Southwest finance the construction was touted as a major coup for the town. A review of records shows that millions of public money would, nonetheless, be funneled into the project.
Although Southwest paid for the construction, it is expected to receive at least $21.6 million in federal funds, generated from a ticket surcharge, for construction-related costs. Another $13 million in federal funds was spent to expand the ticket and baggage areas, and $12.4 million for terminal roadway improvements to accommodate increased traffic.
As for local costs, records show, Islip Town spent more than $1.8 million on legal and engineering fees and at least $969,485 to publicize the new gates.
A rent-free deal
The benefits to Southwest didn't stop there. Southwest pays no rent on the terminal for 25 years, according to a Securities and Exchange Commission filing.
Currently, the airport charges $24.73 a square foot, with annual increases, to other airlines. At the 2006 rate, that means savings of more than $4 million a year for Southwest, or more than $100 million over the life of the lease.
Southwest officials declined to say how much income the company earns from concessions. By comparison, at Manchester-Boston Airport, where Southwest leases 20,582 square feet -- or about one-eighth of the space the airline has at MacArthur -- the airport earns more than $4.2 million in rent and $1.3 million annually from concessions, according to Assistant Airport Director J. Brian O'Neill.
One other element of the Southwest deal made it unusual -- it was written as a concession agreement.
Because Southwest was already operating at the airport, the expansion was not treated as new business, which would normally have to bid for the work.
To oversee the construction and expedite the permit process for Southwest, Islip hired a Hauppauge-based engineering firm, Cashin Associates, town officials said. Executives at Cashin did not return repeated calls for comments.
In 2003, Democrat Ginny Fields ran against McGowan for supervisor. In campaign speeches, she called the expansion a "secretive back-room deal." McGowan won, after touting his role in the airport expansion.
The project became a part of McGowan's legacy as supervisor, his supporters said. So it was only fitting that when the new terminal was opened in 2004, it acquired a new name: The Peter J. McGowan Concourse.
McGowan held up the opening for a week, Werner said, to make sure they installed $6,500 worth of lighting around his name.
After his conviction in March, his name was removed.
imp: http://www.newsday.com/news/local/longisland/ny-liair0626,0,695741.story?coll=ny-top-headlines
Terminal expansion's public price tag
SANDRA PEDDIE AND EDEN LAIKIN
Newsday Staff Writers
June 24, 2006, 11:57 PM EDT
Disgraced Islip Supervisor Pete McGowan billed the Southwest Airlines expansion at Long Island MacArthur Airport as a deal that wouldn't cost taxpayers a penny. But a Newsday investigation has found that millions of public dollars are nonetheless being spent on the project, and because of the way Islip Town structured the deal with the airline, local taxpayers won't get the benefit of millions in rent and concession fees.
Federal, state and Islip town records show that at least $65 million in public money, the bulk of it federal grants, is being spent to defray costs of the expansion and related construction at the airport. On top of that, the airline pays no rent and keeps all net concession fees from its new terminal -- at least $100 million in rent, and an undisclosed amount in concession fees over the next 25 years.
While the 174,000-square-foot terminal was built on town-owned land with some public funds, the Southwest expansion deal with Islip was forged with little input from town residents. Because Southwest paid for the construction, no public bidding was required.
Records show there also was no extended environmental review, even though the project involved clearing 80 acres of land.
In addition, Newsday's investigation has found, campaign records show that contractors who worked on the project contributed at least $87,375 to former Supervisor Pete McGowan and Islip Republicans since 2000. McGowan is currently serving a 90-day jail sentence for stealing campaign money and taking campaign kickbacks unrelated to the airport deal.
"This just proves that the public needs to be aware of how money is spent," said Yvonne Patterson-Quirk, president of the Islip Town NAACP, who filed a taxpayer lawsuit -- later dismissed primarily because a judge ruled that it exceeded the statute of limitations -- over construction at the airport. "Because even though he claimed no taxpayer money went into it, public money did."
Town defends deal
Acting Town Supervisor Eric Hofmeister defended the agreement, saying Islip residents benefited. "I think the town is getting a tremendous asset as a result of the deal," he said. "We're getting a company such as Southwest, obviously a large airline, that has a vested interest in MacArthur."
The airport expansion is under investigation by Suffolk District Attorney Thomas Spota, whose detectives last week also found serious fire hazards in the Southwest terminal. Town officials have said they are cooperating with the investigation.
Southwest has expanded its operations at other airports around the country, but those projects were mostly publicly funded.
Such airport building projects typically take five to 10 years, said Daniel Petree, dean of the College of Business at Embry-Riddle Aeronautical University in Daytona Beach, Fla. At Islip, Southwest will have completed construction in about three years.
"I certainly understand why the airline would want to do it. They have to respond to market demand, and they don't feel like they can wait five or 10 years," he said.
However, he added, "Because you expedite the process, you don't get the full public hearing, and things can get overlooked or get missed or, frankly, not addressed."
Unanimous support
With McGowan leading the way, town board members voted unanimously for the deal in August 2000. Councilwoman Pamela Greene, who is running for supervisor, conceded they knew few details.
Pav-Co, a Holbrook-based asphalt company that has contributed generously to Islip Republicans, got the contract to expand the parking lot at a cost of $3.5 million, Werner said. Records show that Pav-Co, which is facing federal fraud charges filed last year for bid-rigging on local contracts, has done at least $20 million in work at the airport since 1998. Pav-Co attorneys have denied the charges.
Pav-Co also did the work on the new apron, where planes pull up to the terminal to pick up and discharge passengers. As has been reported by Newsday, large and potentially dangerous cracks started appearing in the apron last November, and town and company officials are conducting tests to determine the cause.
With great fanfare, Southwest celebrated its debut at MacArthur on St. Patrick's Day, 1999. A little more than a year later, town records show, company and town officials quietly agreed on key points of the deal to expand the terminal.
According to a June 18, 2000, letter from Southwest property manager Peter Houghton to then-Town Attorney Messina, Southwest agreed to design, finance and construct the new gates. In exchange, it would not have to pay sales taxes for materials, would retain all net concessions from the new concourse and receive the town's assistance in getting federal funding for parts of the project. No announcement was made until three months later, in August, when the town board approved the agreement.
"It was the perfect situation where two different parties with different, but complementary needs met," said Ronald Ricks, a Southwest senior vice president. "We needed real estate to operate here and Islip needed air service."
He added, "It's a creative, precedent-setting model."
Political gains
With Southwest's expansion plans taking shape, contributions began to flow into the campaign coffers of McGowan and Islip Town Republicans. Southwest and its company co-founder, Herb Kelleher, began to contribute $1,500 a year, beginning in 2000, records show. Pav-Co and its related companies gave $19,200 from 2000 to 2005. Aviation Constructors, the general contractor for the first phase of the expansion, gave $11,000, the records show.
By comparison, Pav-Co gave $2,900 to McGowan's campaign from 1996 to 1998, and Aviation Constructors gave a total of $1,600 in 1997 and 1998.
Kelleher, who has retired as Southwest's chief executive, declined to be interviewed.
Having Southwest finance the construction was touted as a major coup for the town. A review of records shows that millions of public money would, nonetheless, be funneled into the project.
Although Southwest paid for the construction, it is expected to receive at least $21.6 million in federal funds, generated from a ticket surcharge, for construction-related costs. Another $13 million in federal funds was spent to expand the ticket and baggage areas, and $12.4 million for terminal roadway improvements to accommodate increased traffic.
As for local costs, records show, Islip Town spent more than $1.8 million on legal and engineering fees and at least $969,485 to publicize the new gates.
A rent-free deal
The benefits to Southwest didn't stop there. Southwest pays no rent on the terminal for 25 years, according to a Securities and Exchange Commission filing.
Currently, the airport charges $24.73 a square foot, with annual increases, to other airlines. At the 2006 rate, that means savings of more than $4 million a year for Southwest, or more than $100 million over the life of the lease.
Southwest officials declined to say how much income the company earns from concessions. By comparison, at Manchester-Boston Airport, where Southwest leases 20,582 square feet -- or about one-eighth of the space the airline has at MacArthur -- the airport earns more than $4.2 million in rent and $1.3 million annually from concessions, according to Assistant Airport Director J. Brian O'Neill.
One other element of the Southwest deal made it unusual -- it was written as a concession agreement.
Because Southwest was already operating at the airport, the expansion was not treated as new business, which would normally have to bid for the work.
To oversee the construction and expedite the permit process for Southwest, Islip hired a Hauppauge-based engineering firm, Cashin Associates, town officials said. Executives at Cashin did not return repeated calls for comments.
In 2003, Democrat Ginny Fields ran against McGowan for supervisor. In campaign speeches, she called the expansion a "secretive back-room deal." McGowan won, after touting his role in the airport expansion.
The project became a part of McGowan's legacy as supervisor, his supporters said. So it was only fitting that when the new terminal was opened in 2004, it acquired a new name: The Peter J. McGowan Concourse.
McGowan held up the opening for a week, Werner said, to make sure they installed $6,500 worth of lighting around his name.
After his conviction in March, his name was removed.
