Is it Most Sincerely Dead ? Airport Chief Says Lawsuit Over Fast Park To Be Withdrawn

In an exclusive this afternoon, Jon Murray, IndyStar reporter, quoted Indianapolis Airport Director, Bob Duncan, as saying the Airport's two year battle to stop a Fast Park facility from locating in Ameriplex, will end.  Murray relays the following:

Authority Board President Mike Wells discussed the issue with other board members and found consensus in support of airport officials’ plans to drop the lawsuit, Duncan said this afternoon.

Coincidence or final straw, this comes as the Council readies for Prop 148 on Monday night.  This Council Resolution chides the airport for continuing to engage in the lawsuit filed to overturn the land use changes, granted by the Metropolitan Development Commission, that would allow a Fast Park & Relax facility to be built on 31 acres just off Ameriplex Parkway.

In keeping with the long strange trip this has been, Murray quotes Councillor Bob Lutz, whose district includes the northern half of the Indianapolis Airport, and who aptly put it :

 “I am so happy and so furious all at the same time!” he wrote in an email to The Star. “All of the wasted effort and taxpayer dollars. Plus the time, energy and money Ameriplex and Chavez had to spend and what was accomplished? Nothing!”

Lutz was the key driver of the Council's decision last fall, to dock the Airport budget by $100,000; the expected cost of the lawsuit in outside attorneys.  He also got 13 Councillors to vote against the entire Airport budget when it came before the full Council.

IBJ reporter, Kathleen McLaughlin, reports that Prop 148 may be withdrawn if the termination of the Airport's lawsuit can be directly verified.

At-large City-County Councilor Zach Adamson, a Democrat, said he would not pull his resolution from Monday night's agenda until Midwest Logistics confirms that the airport will withdraw its appeal. "They had two and a half years to do the right thing, and they refused to do it," he said of the airport authority. "It's criminal what they've done to this business."

Adamson initiated Prop 148 and has been a steadfast opponent of the lawsuit.

Can this day have finally arrived?  I looked on the Airport's website and cannot find any press release.  But, Murray has Bob Duncan's comments and I am hearing of email verifications coming from the Mayor's office and from Mike Wells, President of the Airport Authority Board, as well.

So, just maybe the wicked witch is not only dead, but most sincerely dead !

Mike Wells, Indy Airport Board President, Misled Press and Public on Airport Finances

On May 14, 2012, almost all local news outlets reported that the Indianapolis International Airport lost $31.3 million in its operating fund in 2011.  Mike Wells, President of the Airport Board, was prominently featured, talking about how the airport must improve its non-airline revenues, most notably through protecting on-airport parking proceeds.  On May 24, the $31.3 million loss figure was repeated when the media reported that three top executives of the Airport had been laid off to save money.

On May 25, [correction: the internal memo was sent on May 15, 2012] Airport CFO Marsha Stone, sent an internal memo to all airport employees, refuting the notion that the airport is in "financial trouble" - instead laying out how the airport actually saw a real net operating profit of $74.9 million in 2011.

Wells got the story aired all over town that the airport is facing financial problems.  By doing so, he misled the press and the public about the true nature of the airport's situation.  But, was his real target for the misinformation Judge Michael Keele, who is considering the Airport's lawsuit against the MDC that aims to derail plans for a Fast Park facility on a prime site in Ameriplex?

Here are links to the news articles (with the exception of those printing AP reports and/or IBJ reporting):  IBJ (Chris O'Malley - May 14 - May 24)  Indy Star (Dan McFeeley - May 24, 25)  WRTV (Norm Cox on May 14 and general story on May 24)  Fox59 (Kjerstin Ramsing May 14 and general story on May 24).

I have uploaded a copy of the internal memo sent by Marsha Stone, so you can review it in its entirety.
Stone begins by blaming the media for the misinformation getting published.  She says:

You may have noticed recent news stories referring to supposed "financial trouble" faced by the Indianapolis Airport Authority.  Driving these stories is the format in which our financial reports are required to be presented by various accounting rules and the difficulty the media and others have in analyzing and reporting on them.

She goes on to explain that the loss is merely a "paper loss".

In our 2011 audited financial statements, the IAA reported $167.8 million in operating expenses - but $106.2 million of that was a "paper loss" that is based on the depreciation, or loss in estimated value, of property.  IAA's annual depreciation expense also includes this charge for property we (IAA) didn't even have to pay for, such as the FedEx sort facility.  Yet when our tenants build such improvements on our property, we must record them as an IAA asset, and annually record their depreciation as an IAA expense.  However, losses attributed to a depreciation involve no change in the Authority's cash levels.

An analogy would be if someone gave you a new car as a gift, then pointed out that you faced an immediate "loss" due to its depreciation.  Even though you spent nothing on the car and saw no loss in cash, you could be said to have suffered from an "operating loss" on the car's annual depreciation.

Stone goes on to note that, outside of on paper, there was no loss - but actually a $74.9 million PROFIT.

Looking at our operating expenses for 2011 excluding depreciation, they totaled $61.6 million.  Comparing that to our operating revenue of $136.5 million, you can see we earned a $74.9 million operating profit excluding depreciation, meaning the IAA generated positive cash flow.  In fact, we recently made a $20 million early payment against our debt principal, which will save us $1 million per year in interest payments.

So, Stone's scapegoat is an uninformed media who do not know how to properly read an annual report.  But that doesn't pass the smell test.  All of the media outlets mentioned above simultaneously talked about the supposed financial woes of the airport all while getting the get-tough message from Mike Wells.  No, Wells got the reporting he wanted.
The question is, who was Wells' real target for his misinformation campaign?  The media?  Well, they bought his story, and published it.  The public?  Well, they read it and absorbed the idea that the airport is navigating a rough patch that requires considerable effort to reverse.  But, there may be one particular individual in the public who was a prime target for the incorrect status of the airport's finances.

The reason I say that is because of how I ended up with this internal memo.  I did not get it from an employee trying to feed me the tip.  I got it as part of the response to an open records request I made for all correspondence between representatives of the airport and representatives of Doninger Tuohy & Bailey, the law firm representing the airport in its lawsuit against the MDC, the lawsuit that hopes to keep the Fast Park facility from being built in Ameriplex.
The airport's Chief Legal Officer, Joseph Heerens, emailed a copy of the internal memo to Brian Tuohy, who is the lead attorney in the lawsuit.  It is possible that the two had an off-topic chat about the news reports of financial woes at the airport and Heerens sent the internal memo to Tuohy for its gossip value.
More troubling and equally plausible is the idea that the news stories were planted so the presiding Judge on the lawsuit would read them in the papers or see them on TV news and come away with the same misimpression of the airport's finances as everyone else.  The email to Tuohy could then have been pertinent to the case as a way to keep Tuohy from verbalizing the erroneous information directly to Judge Keele and thus violating legal ethics.
Whatever the motivation, Mike Wells' credibility, and frankly that of the entire Indianapolis Airport Authority, is shot.  I don't have any idea what information Mayor Ballard has received regarding the airport's profits or losses.  If he has been fed the same lies as the press and the public, then he has no moral recourse but to remove Wells from the Airport Board.  If he knows that Wells is lying to the press and the public, then he has but one political move to correct his image; and that again is to remove Wells from the Board.

The Airport Authority is a municipal corporation of Indianapolis - it is a unit of local government.  The President of the Board, one Mike Wells, who certainly knows his way around real estate depreciation, misled the press and the public about the state of airport finances - happy to let everyone think the airport is losing money hand over fist, when the reality is that it is making money hand over fist.  This is no small error - it is the most cynical manipulation of the press that I have ever seen.

Airport Board Did Not Authorize Lawsuit On Fast Park Zoning

What an ironic twist.  It turns out that the Indianapolis Airport Authority (IAA) Board did not authorize the lawsuit filed on its behalf, contesting the authority of the MDC to approve the Fast Park Ride & Relax project for Stansted Road in Ameriplex (see "Yesterday's Zoning Case - Its About More Than a Parking Facility", and "Indianapolis Aiport Stomps  On Free Enterprise With Court Action").

Since the March filing, I have been requesting documents from the Airport.  They show that there was no vote by the Board authorizing the lawsuit.  The final word I got was that Mike Wells, Board President, unilaterally approved it.

Yesterday I filed a complaint with Indiana's Public Access Counselor alleging that this violates Indiana's Open Door Laws - because final action was taken without a vote of the Board in a duly noticed public meeting.

I've been on a number of Boards; most incorporated non-profits and one set up by State Law.  None gave the President the power of the Board itself.  Not through the incorporation and by-laws or statutes and not through Board policy.

The IAA Board apparently did not have a Board policy allowing any President of the Board generally, nor Wells specifically, to usurp their authority or role in deciding to commence legal action.  The explanation for his power was said to be by 'inherent authority' as 'the executive representative of the board'.

State Law gives the IAA Board the sole authority and power to sue and be sued on behalf of the IAA (IC 8-22-3-11).  That means that all members in attendance at a public meeting, the agenda for which has been published at least 48 hours beforehand for the notification of the public, are the ones who get a vote on whether the IAA will be a litigant in a lawsuit - with the majority vote prevailing.  That did not happen.

How ironic that the lawsuit claiming that the action of the MDC was outside of its legal authority, should be filed on behalf of the IAA Board by an action that was outside of the legal authority of the individual (Wells) to file.

Mayor Removes Airport Director - Curiously Says Its About Economic Development

Anyone who had any reservations accepting the idea that nothing happens at the airport that the Mayor does not want to happen, need only look at the series of events that lead to the 'resignation' of John Clark as the Indianapolis Airport's Executive Director.

I first saw the news that Clark was out over at Gary Welsh's Advance Indiana blog, then the IBJ's news alert started circulating, and this morning I read more about it in the Indy Star.

Here are the dominoes.

December 16 - Michael Stayton, former President of the Airport Authority Board, announces he will step down, even though he still has two years left on his term.

December 31 - Mayor Ballard appoints Mike Wells to fill out the final two years of Stayton's term.

January 20 - Mike Wells elected President of the Airport Board at his first board meeting of this appointment.

March 10 - news reports suddenly appear of another year, more expensive trips abroad for John Clark and his top deputies.  Curiously, Mike Wells keeps using the word "I" instead of "we" or "the Board" in his statements that changes are coming.  For instance, the IBJ quotes him as saying "I'm making major changes to the travel policy".

March 19 - Wells announces immediate departure of Clark as Director.  Mayor Ballard is quoted as saying

"What I’m mostly concerned about out there is the economic development aspect of the airport,” said Mayor Ballard. "I think that’s been slow, much slower than I would have expected.

"It may have been the recession. It may have been all the economic downturn but I want to have more plans for development out there. That’s what I’m mostly focused on."

Those of you who wanted to blame Clark for announcing the cancellation of collective bargaining at the airport, which was delayed for about a month so candidate Ballard could bask in the light of a recent union endorsement - blame Ballard instead.  (see "Is Indy Airport Playing Politics For Ballard?")

Those of you who wanted to blame Clark for removing art from the airport in order to put up a garish electronic advertising screen, remember the timing.  On August 9, the removal is announced.  On August 24, Mayor Ballard swoops in to save the day.  Then, on November 30, right after the election, the art is removed.  Just in time for the 'holiday travel' season and the Super Bowl - where ads just might fetch a pretty penny.

Yes, anything the airport does leads directly back to Mayor Ballard - its a lesson John Clark has learned and its a lesson the public needs to learn.