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White Elephants Grinding Down Flagler Airport

| May 17, 2010

No-flight zone.

You could call Craig Coffey Flagler County’s administrator. You could also call him the clean-up man, and not in the baseball sense of the term. Coffey is having to do in Flagler what local, state and the federal government are having to do across the country: clean up real estate and business deals gone bust, with taxpayers left holding the bag.

A decade of speculative, poorly thought out and at times pandering arrangements between the county government and the private sector have turned the county airport into a warehouse of white elephants: buildings, hangars, commercial space and even a road that the county leased, financed or built on private businesses’ promise of surefire returns, only to be burned.

Craig Coffey Looks at the Brighter Side
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“You’re handed a set of problems, the best thing you can do is take those lemons, for lack of a better term, and make lemonades. If I had to put that in context, that’s exactly what we’re doing,” Coffey said. “We’re doing all the things we need to do to become lean and mean, just like a business would, and survive in this economy. And the reality is, the economy is affecting us just like it would any other business. It’s a struggle, and it’s something we’re having to deal with, and at the end of the day, those investments looked marvelous at the time, because they were in a high economy. Now, in a poor economy, when some of those have gone south, they look like terrible investments. I think at the end of the day it’s going to be somewhere in between the high and the lows.”

That day’s end is far off for now.

How The County Invested in Lemons

In 2004 the county agreed to build a $2 million mega-hangar for the Ginn Corp., the development concern, against the promise of a 20-year lease of the building. Ginn went bankrupt and left the county with an empty hulk and quarterly mortgage payments of $50,000. In 2006 the county, using a $500,000 federal grant and the same speculative promise of a 20-year lease, built a headquarters for Cakes Across America.

That business never generated the jobs it said it would. The state wanted its money back, and Flagler had to give it up. Coffey worked out a deal with the cake company to make quarterly payments of $13,370 back to the county. Somewhere along the way the county also built a road for Richard Smith, a developer whose buildings on airport property are also hurting. The county is still owed some $150,000 for that road.

Monday, county commissioners learned of the latest white elephant in the airport zoo. This one leaves the county making $13,200 a month mortgage payments until 2024, on a building that’s sat empty since 2009. It’s also not as bad as it could have been.

The Embry-Riddle Fiasco

Here’s the story: Back in 2004, Embry-Riddle Aeronautic University signed a 10-year lease to run a flight-training program out of a 19,100-square foot building the county built for it specifically at the airport. The university also pledged to buy at least 104,000 gallons of fuel every year. Airport officials at the time touted the program as they did anything else growing speculative legs under their noses — as a seed of untrammeled growth.

Barely a year after operating it, Embry-Riddle quit taking students for the flight school. The Commercial Airline Pilot Training program, as the venture was called, no longer fit the university’s “strategic vision.” Instead of getting out of the lease, the university found a company to sublet the program — Flight Training Services International of Kennesaw, Ga. By 2008, up to 2150 Chinese would-be pilots were training at the school, living in Flagler, spending their money here and assuming that they’d leave as pilots. Some did. Many didn’t. In January 2009, the school quit operating. Embry-Riddle continued to make payments.

Bad news isn’t good for the university’s image. This month Embry-Riddle worked out a deal to exit its lease in exchange for $900,000. The money goes into the airport’s coffers (which are separate from the county’s general fund, where your property tax revenue goes). Those coffers have been so depleted that the county’s general revenue fund had to loan them $600,000. The $900,000 will help, up to a point.

When Banks Have You By the Loans

The county still owes $1.14 million on the building it built for Embry-Riddle. But it can’t pay that off early with the $900,000 and $200,000 extra. Nor can it be refinanced. Why? Because the loan negotiated for it — by the late Phil Pulliam of the clerk of court’s office, who left behind financial messes of his own when he supervised the construction of the new courthouse in Bunnell — was one of those nutty schemes that forbade repayment before maturity.

The loan, financed by Bank of America, also has fluctuating rates. Repayments were $11,498.44 per month when Embry Riddle first got the building. They’re now $13,200. That rate may yet go up. That’s your local fallout from shady loan schemes of the bubble years.

Still, the $900,000 will be the equivalent of three years’ worth of mortgage payments for the buildings the county built for Ginn and Embry Riddle. But the money doesn’t replace the jobs or residents lost that once filled those buildings. Nor does it refill the buildings.

Commissioner Barbara Revels didn’t hide her skepticism when she addressed Coffey’s deal with Embry-Riddle: “I agree that the appearance of the negotiations that you’ve done with them and coming forward to do this has the appearance of a windfall for the county at this time, but what I’d like to do is not to let this slide if we approve this today, and that this be a long discussion at our workshop when the airport comes up.”

Coffey promised commissioners a brighter picture of the airport’s future when it does get discussed at a July workshop.

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3 Responses for “White Elephants Grinding Down Flagler Airport”

  1. John Rivera says:

    Where is the county attorney, Albert Hadeed? Shouldn’t the county legal staff be looking at contracts before they are entered into? Every bit of this had to have legal review. Why put the blame on the dead man, Phil Pulliam who had NO authority. Phil Pulliam worked for the Clerk of Court, Gail Wadsworth.

    Tax payers spent hundreds of thousands of dollars on leading up to and conducting a STATE AUDIT by the Auditor General’s office because of mismanagement, and the Board of County Commissioners took no action after the findings were revealed in April 2009! Don’t you think it is time a Grand Jury be called in? Why the cover up? Come on commissioners, remember you are elected and work for us.

  2. Kevin says:

    Dear John,

    In today’s times politiicans don’t work for us. They make us work for them and ensure at our expense we keep providing for their ineptness and lack of oversight and restraint. Is stoning them a bad idea?

  3. FlaglerLive says:

    Carl Kern, not Al Hadeed, was the county attorney at the time of these deals John. Hadeed became attorney in 2007.

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