FAA investigates possible misuse of Erie International Airport funding

The Federal Aviation Administration is investigating possible misuse of federal funding by the Erie Regional Airport Authority.

The FAA also is investigating whether the authority diverted airport revenue and allowed the company that provides aircraft services at the airport to charge some customers more than others for fuel.

Airport Authority President Dan Giannelli was notified of the investigation in an Aug. 23 letter from Rick Harner, manager of the FAA's Harrisburg Airports District Office. A copy of the letter was obtained by the Erie Times-News.

"The Federal Aviation Administration is in possession of information indicating that the Erie Regional Airport Authority (ERAA), sponsor of Erie International Airport ... may be in violation of its federal grant obligations as it relates to its operation of the Airport. Specifically, we are concerned that ERAA may have misused federal grant funds, diverted airport revenue, and allowed the (company providing aircraft services at the airport) to unjustly discriminate against airport users," Harner said in the letter.

The FAA letter asks for documentation on how federal Airport Improvement Program grants and Coronavirus Aid, Relief and Economic Security Act funding for the airport were used between April 1, 2020, and July 1, 2022, and specifically asks for details of CARES Act money spent for employee bonuses and pensions.

The FAA also asked for details and documentation concerning the 2021 sale of airport-owned property on Powell Avenue; how much is charged for aircraft fuel and if some customers are charged more than others; and information on airport decision-making, including whether a majority of authority members are required to approve spending, property sales, grant applications and other actions, or if the authority president and/or airport executive director can make those decisions.

The FAA additionally asked for minutes of authority meetings held between April 1, 2020, and July 1, 2022.

The agency declined to provide additional details about the investigation and what the penalties might be if violations are found.

"The FAA doesn’t comment on open investigations or speculate about possible outcomes," FAA spokeswoman Emma Duncan said in an emailed response to Erie Times-News inquiries.

The Erie Regional Airport Authority has received and invested more than $25 million in FAA funding over the last four years to improve the airport and its facilities and to ensure efficient airport operations, Giannelli said in an emailed response to an Erie Times-News inquiry about the FAA investigation.

The investigation most likely was initiated in response to a citizen's complaint concerning the use of federal funding, he said. There is a process for citizens to ask FAA to investigate airport practices.

The authority is gathering the information requested by FAA, Giannelli said.

"The ERAA has always been a good steward of public funds and has an excellent working relationship with the FAA.  We look forward to providing the FAA with the requested information and to the resolution of this administrative review," he said.

The FAA letter asks that requested information be provided within 30 days.

Employee pensions and bonuses

The Erie Regional Airport Authority authorized using CARES Act money to fully fund its obligation for airport employees' pensions in November 2020.

Airport Executive Director Derek Martin told authority members at the time that previous requests for reimbursement of $14,000 monthly payments to the pension fund had been approved and paid with CARES Act funding and that pension obligations are a permitted use of the money, according to minutes of the authority's Nov. 18, 2020, meeting available on the airport website.

How much CARES Act money was spent to fully fund employee pensions was not recorded.

A Times-News review of authority minutes found no board action authorizing the use of CARES money for employee bonuses.

Giannelli declined to comment on specifics of the FAA investigation, including whether bonuses were paid with the federal funding.

The Airport Authority received almost $20 million in CARES funding allocated in 2020 and 2021.

Airport projects funded by the money include parking lot improvements and construction of a snow removal equipment building. The money also paid the 25% local match for a $1.2 million Pennsylvania Department of Transportation Bureau of Aviation grant to install an additional passenger jet bridge and continue airport terminal roof improvements.

The Powell Avenue property

Authority-owned land on Powell Avenue in Millcreek, near Erie International Airport, was sold to a local development company for $30,000 in February 2021, according to Erie County property records.

The Erie Regional Airport Authority authorized its sale in June 2020.

The half-acre property at 1426 Powell Ave. was purchased by the Airport Authority in 1996 for $70,000. A home on the property at that time was later removed.

The authority bought the property and two others nearby as part of a multi-year noise-abatement project. The authority planned to re-sell the properties and use the proceeds toward the cost of soundproofing homes close to the airport.

Instead, the authority later used federal funding for the project to buy and raze the Orchard Park Mobile Home Park on Wilkins Road, which is within the airport's noise-abatement area.

The Powell Avenue property is also within the noise abatement area, according to an environmental study done for the airport's 1992 master plan, and may be subject to FAA guidelines concerning its use.

The FAA is asking for documentation on the property sale, including appraisal information, the deed of sale, the proposed use of the property and how sale proceeds have been used.

May 2022: Developer takes Erie Airport Authority to court for failing to sell Wilkins Road property

The 20.6-acre Wilkins Road property was sold for $400,000 in May 2021 to a local development firm that planned to build duplexes and townhomes on the site. Those plans stalled in July 2021 when the FAA informed the Airport Authority that the property "must not be used for residential purposes."

The authority subsequently notified NLA IV Real Estate Holdings that it could not proceed with the property sale.

The company earlier this year filed a lawsuit requesting the Erie County Court of Common Pleas to order the authority to proceed with the sale or pay costs incurred for the planned development.

Aircraft fuel prices

The FAA is asking for information on how much North Coast Air charges for aircraft fuel, and whether some customers are charged more than others. North Coast Air provides aircraft fueling and maintenance services at Erie International Airport.

FAA has asked the Airport Authority to provide any fuel pricing policy that the company may have as well as its lease with North Coast Air.

A North Coast Air official could not be reached for comment Friday.

About the Airport Authority

The nine-member Erie Regional Airport Authority oversees airport operations, facilities, maintenance and staff.

Five members of the authority are appointed by Erie City Council, four by Erie County Council.

The authority members are:

• Daniel Giannelli - President

• Aaron Susmarski - President Pro-Tem

• Andrea Zdaniewski - Vice President

• David Hallman, Jr. - Secretary

• Marybeth Smialek - Treasurer

• Richard Wagner - Board Member

• Gregory Hayes - Board Member

• Brian Slawin - Board Member

• Sue Weber - Board Member

Contact Valerie Myers at vmyers@timesnews.com. Follow her on Twitter @ETNmyers.

This article originally appeared on Erie Times-News: FAA investigates possible misuse of funding for Erie airport