Flying High

Flying High

By Francis X. Gilpin

Associate Editor

The $150 ice sculpture must have seemed like a good idea at the time.

The St. Petersburg-Clearwater International Airport threw a bash in early 2003 for ATA Holdings Corp.'s airline subsidiary, which was introducing non-stop flights to Las Vegas, Los Angeles and San Francisco.

But the nearly $4,000 tab for the airport event has Pinellas County auditors wondering if taxpayers should cover such promotional expenditures when the public benefit of official partying is hard to discern.

Never mind that the financially troubled corporate parent of ATA Airlines Inc. filed for bankruptcy protection last fall.

ATA flew only two more years from the Pinellas airport before the Indianapolis-based airline pulled back from the Tampa Bay area in a company-wide retrenchment.

A week or so before the party, the ATA parent closed its 2002 books with a third consecutive year of multimillion-dollar operating losses, dropping shareholder equity to a deficit position of $120 million.

The ATA reception was funded by the county's economic development agency, not the fiscally self-sufficient airport. That means Pinellas taxpayers, not airport users, picked up the $1,139 tab for alcoholic beverages from Lundy's Liquor Catering and the $2,843 food bill from Delectables Fine Catering, which also supplied the ice sculpture for the party.

"The county is supplementing general fund activities with activities that are the responsibility of a department budgeted with enterprise funds," wrote the auditors working for Ken Burke, the county's circuit court clerk. "The county does not have a policy outlining the specific circumstances as to when it is appropriate to serve alcohol and the definition of its public purpose."

Pinellas County Economic Development is an 8-year-old agency that has grown to more than 40 employees and helped to dream up marketing ideas such as branding the region "Silicon Bay" in hopes of luring high-technology companies to set up shop in the Bay area.

The agency's director, Mike Meidel, wasn't in his current $115,500-a-year position during most of the three-year period reviewed by the auditors. But he isn't sweating their findings. "I'm not too worried about it," says Meidel.

Besides the ATA party, the auditors flagged a $20,000 expenditure by Meidel's predecessor, Richard "Buzz" David, to assist with advertising by Southeast Airlines Inc. in 2002.

Airport Director Noah Lagos, who also came to work for the county near the end of the audit period, says the cooperative marketing contract that called for the $20,000 taxpayer subsidy was approved by Pinellas commissioners. The money came from the Pinellas County Economic Development budget to augment a $1 million advertising campaign by the airline.

The contract required that the county's subsidy fund specific programs. But the auditors found the details to be nebulous.

"The PCED agreement included vague promotional deliverables that could not be related to any specific public purpose that would be beneficial to Pinellas County citizens," the auditors wrote. "Southeast is a private company; thus, any governmental contribution should clearly identify the public benefit to be received."

Southeast is now a dysfunctional company, too. The airline collapsed late last year, leaving almost 20,000 customers with worthless tickets clamoring for more than $6 million in refunds. The Largo-based discount carrier was forced into receivership by credit-card companies, which have had to make good on the refunds.

Among others looking for payment from Southeast: Pinellas County.

Lawyers for the airport sued Southeast in January to collect $97,543 in overdue ticket counter rental and landing fees, plus interest. County lawyers have moved for a default judgment against the airline.

Despite Southeast's turn for the worse, Meidel says his agency stands ready to assist Lagos with rebuilding airport business. St. Petersburg-Clearwater International has lost 74% of its passenger traffic, with the final departures of ATA, Southeast and Canadian carrier Jetsgo Corp.

Meidel says the aid could take the form of new promotional money for Leigh Valley Air and the Pan Am Clipper Connection, recent entrants into the Pinellas airline travel market.

"Air traffic is critical to economic development in general," says Meidel, who was previously president and chief executive of the Clearwater Regional Chamber of Commerce. "We'll definitely help out."

The auditors also had concerns about spending on the economic development agency's core mission of recruiting and retaining industry in Pinellas.

Even when specifics were set down about how the money was to be spent, the agency did a poor job of evaluating if the expenditure of tax money accomplished anything, according to the auditors.

As an example, they cited a $42,000 in-kind contribution of secretarial help, conference space and other support to an international trade program. "There are no outcome measures, i.e., increased exports, etc., tied to the results of this in-kind service agreement," say the auditors.

Same with another $50,000 of in-kind support and cash for a business development center operated with St. Petersburg College.

The county agency gave $177,500 to local chambers of commerce for various business assistance programs. The auditors were dissatisfied with the "highly summarized" reports coming back from the chambers. In some cases, the auditors say the reports lacked basic documentation, such as which businesses received taxpayer help.

The economic development agency's promotional budget, which averaged $184,056 a year during the audit period, reached beyond the airport. The auditors examined the agency's sponsorship of community events, including a golf tournament formerly known as the Verizon Classic and an annual dinner for the winner of the aviation-oriented Tony Janus Award.

The 2002 Verizon Classic charged $2,755 for 11 agency employees to participate. Another 20 employees went to that year's Janus Award dinner for $1,900.

Again, the auditors wondered how the public benefits from the expenditures.

Meidel says what is now called the Outback Pro-Am, for the Tampa-based restaurant chain that picked up title sponsorship last year, is an excellent marketing opportunity for the county. Pinellas officials invite corporate relocation consultants down to Florida in the winter for a round of golf with celebrity duffers and professionals from the senior tour.

The agency does the same thing during the Grand Prix automobile races in St. Petersburg, says Meidel.

What has come of the sports-oriented hobnobbing?

"The consultants used to ignore us," replies Meidel, who says Fortune 500 companies seldom handle relocations internally these days. "I don't think that's the case anymore."

The audit, made public June 16, comes at an awkward time for Pinellas commissioners. Four of them, including Chairman John Morroni, became the subject of headlines and news stories in the local press, for a scheduled July jaunt to Hawaii. Morroni and Commissioners Calvin Harris, Susan Latvala and Ken Welch are heading to Honolulu for a national convention of county commissioners, at an estimated cost to local taxpayers of more than $18,000.

Meidel says the Pinellas commissioners don't seem to have a problem with his agency's local schmoozing. The commissioners often attend these kinds of events with his agency's employees, he says.

Morroni couldn't be reached for comment.

Meidel says he has been impressed with the county's economic development staffers since he came over from the Clearwater chamber last August. "They are not your typical government workers," he says.

ECONOMIC DEVELOPMENT?

Pinellas County's economic development agency sends its employees to circulate at events where local businesses are being recognized or corporate relocation prospects can be entertained.

Event Agency Attendees Cost

Verizon Classic 11 $2,755

Tony Janus Award dinner 20 $1,900

Women in International Trade dinner 8 $1,000

Pinellas County Women's Hall of Fame luncheon 5 $1,000

Source: Pinellas County auditors, 2001 to 2004 spending