ARLINGTON — A long-delayed state audit released Monday found that the city has not properly managed money and contracts at its municipal airport.
The report marks the conclusion of an accountability audit for city management during the 2013 calendar year.
A September audit of Arlington’s 2013 finances found no problems with the numbers. An accountability audit is a separate investigation that looks at whether city operations follow federal, state and local laws.
The issues listed in the audit all tie to Arlington’s airport.
The city has run the airport since 1959. The airport’s 2013 operating budget totaled $3.27 million. Roughly 88 percent of that came from leasing space to more than 200 businesses and organizations.
Oversight of those leases — or lack of it — is the source of most of the auditor’s concerns.
Among the state’s findings, the city: does not have written contracts for all airport leases; provided space to the nonprofit Arlington Fly-In without a formal agreement; is not timely in billing tenants; has contracts that conflict with city code; uses airport office space for a different city department; and does not have a good process for reviewing the airport’s share of public safety costs.
State law requires governments to separate public funds so that money from one area is not consumed by a different department or project. That means the airport’s budget cannot be used for things that don’t directly benefit the airport.
City officials do not believe any money that should have gone to the airport was lost due to issues with leasing or oversight, according to a reply to the state’s findings.
The auditor was unable to confirm that claim.
“Without adequate internal processes and controls, you can’t be sure you’re getting all of the money,” said Thomas Shapley, a spokesman with the auditor’s office. “If you don’t record stuff, how do you know?”
In one instance, officials didn’t revise a contract when a tenant began leasing more space, and payments were recorded in the wrong account. In another case, the city failed to update a lease for the Fly-In that expired in 2006, though the Fly-In continued to pay for and use the space.
The auditor also found that a 2001 agreement between the city and Fly-In conflicted with a 2007 change to city code pertaining to special events. The agreement has since been updated.
Arlington Mayor Barbara Tolbert is the executive director of the Fly-In, the nonprofit that puts on the city’s largest annual event. The auditor concluded that there is no conflict of interest with her work as mayor and Fly-In director. She recuses herself from airport decisions and leaves day-to-day operations to the airport commission.
“We take this job very seriously,” assistant city administrator Kristin Banfield said. “It’s a very high priority to make sure there is no conflict of interest.”
The auditor recommended that the city approve contracts before leasing space; monitor compliance with leases, city code and state law; write and regularly review an agreement with the Fly-In; better track how money from the airport is used; and make sure the airport is reimbursed for space used by other city departments.
The Community and Economic Development Department moved to the airport in 2013, but the city does not pay the airport for the space.
“With all of the cross-training and cross-staffing there, we felt we were covering enough for our share of the space,” Banfield said. “The auditor felt differently.”
The city blamed several of the auditor’s concerns on past budget shortfalls and understaffed departments. The auditor reasoned that the city has put more effort into meeting federal aviation requirements than state law.
The airport is subject to “a labyrinth of regulation” at the federal, state, county and local level, according to the city. It’s hard to know which policies to rely on if they conflict.
Officials plan to review the auditor’s suggestions and act on as many as possible, Banfield said. Three of the recommended fixes already are underway.
Airport staff began reviewing and updating leases in fall 2013. The Fly-In agreement also has been updated, and a public safety survey the city skipped in 2012 is done.
The city relies on the survey to determine how many police hours are spent patrolling the airport so money from the airport’s budget can be used to cover those costs. The 2012 survey was not done until 2013.
“We missed a year,” Banfield said. “We had low staffing and were shoe-stringing things together, and we missed it.”
It’s the only survey they’ve skipped since 1999, she said.
In future audits, the state plans to review the city’s progress toward fixing problems at the airport.
“We’re definitely going to take a look at each and every recommendation,” Banfield said. “That’s exactly what the auditor is there for is to identify what we can do better.”
Kari Bray: 425-339-3439; kbray@heraldnet.com.
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