Wyoming Tribune-Eagle (Wyoming) - by Becky Orr

A federal agency says the city and Cheyenne Regional Airport violated the terms of a $650,000 grant and may have to repay the money.

Robert E. Olson, the director of the Denver Regional Office of the Economic Development Administration, sent a letter to Cheyenne Mayor Rick Kaysen and Cheyenne Regional Airport Director of Aviation Dave Haring on Nov. 9.

The finding comes after an investigation conducted by the Office of the Inspector General, which is part of the U.S. Commerce Department.

EDA will require full repayment of the grant if matters raised in the investigation are not resolved, Olson wrote in the letter.

The grant provided money to renovate an existing airplane hangar at the airport into an aircraft painting facility. The grant was to help create new jobs by teaching people how to paint aircraft.

The paint shop is empty now.

EDA approved the grant in 1995 and added more money to it in 1997.

Wyoming’s State Loan and Investment Board matched the grant with state money, for a total of $1.3 million.

The investigation found three areas of violations, Olson wrote.

The airport’s second mortgage of the paint shop building violated the agreement.

Secondly, airport leases did not receive prior written approval from the EDA, as required, Olson wrote.

The airport also did not meet grant requirements to charge fair market value to tenants and in its anti-discrimination clauses.

Contacted Thursday, Olson said he could not offer additional comment without approval from EDA’s public affairs division.

Olson’s letter said the airport has to provide a detailed explanation of “encumbering the building without prior written approval from the EDA.”

The EDA also wants documentation that the airport charged fair market rent for “each tenant of the Cheyenne Regional Airport,” along with copies of tenant leases from Nov. 13, 1995, until now to determine if lease agreements are in compliance.

At its last meeting, the Cheyenne Regional Airport board approved hiring Sherman Appraisers of Cheyenne at a cost of up to $12,000 for appraisal work for the tenant leases.

The city is not taking action in the matter, Kaysen said Wednesday. The city and Laramie County created the airport board years ago so that its management team would run daily operations, he said.

Kaysen said he discussed the issue with Haring, who has discussed it with his board. Productive dialogue to move forward has occurred with the airport and the federal agency, he said.

Haring started work at the airport in 2007. He said the EDA approved the original lease on the building.

Airport management didn’t realize EDA approval was needed for subsequent leases, he said.

The issue “kind of fell through the cracks” after the death of former Airport Manager Jerry Olson and when management shifted, Haring said.

Once airport officials found out, they wrote a letter to EDA, Haring said.

The airport leased out the paint shop building three times without EDA approval, following the terms of original lease, he said.

The EDA never contacted the airport about the commerce department’s recent investigation, he said.

“We don’t necessarily agree with everything they’ve said,” Haring said.

“We disagree we’ve had any discrimination,” he added, referring to one of the findings. He said he also takes care of about 100 leases at the airport.

Paul Martin is the president of Sky Harbor, the fixed-base operator at the airport. Sky Harbor operated the paint shop under a lease from about 2005-08.

Haring wrote in documents that Sky Harbor fell behind on its rent by $250,000.

Martin disagreed.

In a written statement, Martin said the purpose of the EDA grant was to create 65 “badly needed jobs for Cheyenne residents n not to provide profit on the lease for the airport.”

It is up to the EDA n not the airport manager n to set lease rent and give tenants a fair chance to make a long-term success of the business, Martin wrote.

He wrote that “the airport manager did not involve EDA in leasing the building, so the agency could not protect those jobs by enforcing the rent EDA set in the grant.

“Mr. Haring concealed from EDA and the courts (that) he charged Sky Harbor more than that amount. Sky Harbor actually paid $189,000, an overpayment of about $93,000,” Martin wrote.

Martin added that he hopes Kaysen will meet with him to rectify the airport’s violations by allowing Sky Harbor to resume employing local residents at the paint shop, “this time under a lease actually approved by EDA.”