The City of Sparks

Office of the

September 13, 1996



Washoe County Grand Jury
Washoe County Court House
One South Sierra Street
Reno, NV 89501

Re: Request for Investigation of Allegations Concerning The Airport Authority of Washoe County

Dear Members of the Grand Jury:

During the month of August 1996, the Sparks City Council met with its two representatives on the Board of Trustees of the Airport Authority of Washoe County to evaluate their performance. During the course of this evaluation, the City Council and City staff were presented with facts and allegations concerning the Airport Authority. On August 26th the Sparks City Council adopted a motion directing the City Attorney to forward allegations of wrong doing concerning the Airport Authority to the Washoe County Grand Jury for possible investigation.

Subsequent to the August 26th meeting, I have received additional information concerning the alleged wrong doing at the Airport Authority and have met with several individuals who provided oral statements. In this letter I will present those items which I feel are most worthy of your consideration.

I respectfully submit these items to you and request your review.

Number 1: Airport Authority executives entered into a three (3) year contract with attorney John Sande to lobby in the State Legislature. The cost for these services is $72,000. It is alleged that the Airport executives failed to notify the Trustees of the contract and falsely reported to the Nevada Department of Taxation that the contract was in the amount of $28,000.00.

Number 2: During the fiscal year 1995/96 the Airport Authority budgeted $219,000.00 for legal expenses. The actual expenditure was almost $700,000.00 which included settlements as well as legal expenses. This exceeded the authorized budget.

Number 3: The Airport Authority purchases Reno Air Race Association tickets which are given as favors to the FAA and other officials. The total expense is alleged to be in the neighborhood of $10,000.00 for these expenses. Is this a lawful use of public funds?

Number 4: Every year Executive Director Robert White holds a Christmas party at his home for politicians and influential people. The party is paid for by the Airport Authority.

Number 5: The Executive Director uses Airport Authority funds in the amount of $1,500.00 to $2,100.00 annually to send himself and certain airport Trustees to Dallas, Texas to play in a golf tournament to benefit the Ronald McDonald House.

Number 6: Director of Administration James Kitchel used his Airport Authority credit card for a personal dinner engagement with the parents of Kim Matthews, Airport Authority Marketing Assistant. Ms. Matthews’ parents are neighbors of Mr. Kitchel.

Number 7: The Airport Authority has allegedly engaged in an unfair business practice by refusing to lease space to Great American Airlines for $.17 per square foot. It leased the same area to Reno Air for $.13 per square foot.

Number 8: Approximately two (2) years ago, it is alleged that the Airport Authority entered into a contract with one or more airlines to build a jet bridge at the airport. To purchase the jet bridge from the private company, the Airport Authority gave credit against landing fees.

The contractor on the job was a firm called Bridgetec. It is alleged that the arrangement for private construction was intended to bypass the requirements of Chapter 338 of the Nevada Revised Statutes regulating public works projects. The owner of Bridgetec wrote a letter to the Reno Gazette-Journal complimentary of Robert White.

Number 9: There is an alleged abuse of change orders regarding the construction of the baggage claim area. It is alleged that the original bid was in the amount of 2.2 million dollars, but the project ultimately cost 13 million dollars due to change orders. One of the change orders was in the amount of $500,000 for a ticket counter remodel which was outside the scope of the original bid. The contractor for the baggage claim area was Clark & Sullivan. It is alleged that an architectural firm named Casazza, Peetz and Hancock filed a claim or lawsuit concerning the improper change order.

Number 10: A bill for $1,800.00 from the Gold Coast Agency (private investigators) showed up in March of this year in James Kitchel’s expenditures with no explanation of what it was for. A car owned by Jackie Decker (phone 825-4833) was broken into and materials pertinent to the Airport Authority which were critical of management were removed from the car in March. The question has been asked as to whether the the Gold Coast Agency was paid to take the documents in Ms. Decker’s possession. In late August documents drafted by her attorney regarding Rewana Farms were taken from her unlocked car.

Number 11: In February 1995 Robert White hired the Phoenix, Arizona law firm of Brown & Bain to represent him at Airport Authority expense because he felt that newspaper articles had damaged him and the airport. Mr. White wanted to investigate Trustee Tina Manoukian who he believed had leaked confidential information to the press. Mr. White attempted to schedule a closed personnel session regarding Ms. Manoukian. Ms. Manoukian’s lawyer, Cal Dunlap, demanded that any such meeting be open and the issue died. Ms. Manoukian paid her own attorney's fees.

Number 12: The Rewana Farms issue is one which has already received considerable media exposure. The Rewana Farms area abuts the southwestern boundaries of the airport property. It is situated south of the east-west runway. The current Nevada Air Guard Base is north of the east-west runway and south of the existing commercial terminal. It is alleged that several years ago a plan was drawn up to move the Air Guard to Rewana Farms so that the Airport Authority could expand its terminal and parking facilities to the south. The FAR Part 150 Master Plan prepared in October 1991 shows a military base at Rewana Farms. It is alleged that both the Airport Authority and the Air Guard have misled the public as to the true purpose of the Rewana Farms acquisition.

The Airport Authority has been acquiring property in the Rewana Farms area using 2.5 million dollars of federal money intended for noise-impacted property. The noise study which found Rewana Farms to be a noise-impacted area was based on the Air Guard's use of F-4 fighter jets. The conversion this year of the Air Guard operation to C-130 cargo planes has greatly reduced the noise impact and arguably made the noise study obsolete. The March 1996 Environmental Assessment prepared by the Air Guard for the C-130 conversion still shows the Air Guard staying at their base north of the east-west runway.

An opinion drafted by C. Robert Cox, attorney for the Airport Authority, dated April 25, 1996, is enclosed for your reference.

Number 13: The Airport Authority’s tentative budget prepared March 4, 1996 showed no Air Guard expenses. The final budget was presented to the Board of Trustees at their June 1996 meeting. A new line item authorizing $400,000.00 for an Air Guard Relocation Master Plan Environmental Assessment was added to the budget shortly before the June meeting. According to Sam Dehne (phone 825-1398), the airport staff did not mention to the public or to the Board of Trustees that this new expense had been added to the budget. Mr. Dehne contends that it would have been impossible for members of the public to learn of this new substantial expense when the budget was considered in June.

Number 14: It has been alleged that the Executive Director has arranged perks for the Trustees. They may receive airline tickets from airport tenants. They may also receive a FAX and telephone answering machine for their homes. If airline tickets are given to Trustees, there may be conflict of interest.

Number 15: At the April 25, 1996 Airport Trustees meeting, Trustee Geno Menchetti mentioned that he had attended a seminar and learned that some airport expenditures may violate FAA regulations. The expenditures for Air Race tickets, tables at fund raisers, golf tournaments, Christmas parties and other charitable and good will activities may be the type of expenditures which violate FAA regulations. A copy of the April 25 minutes is enclosed.

Number 16: I am informed that an excellent source of information concerning expenditures by the Airport Authority is Bob Edwards, the internal auditor. I telephoned Mr. Edwards, but he declined to meet with me because he feared he could lose his job if it became known that he had done so. He stated that he would only discuss these issues if he were subpoenaed and had the protection of the judicial process.

Additional Airport Authority employees and former employees who may have information regarding these allegations are:

1. Steve Richard - Engineer
2. Judy McElwelee - Property Manager
3. Lynn McLaughlin - Property Manager
4. Jackie Lewis - Secretary
5. Richard Hill - Former Terminal Manager (Phone 747-5095)
6. Rod Savanni - Former Engineering Manager
7. Dori Owen - Former Marketing Manager
8. Robert Mall - Former Property Manager

Number 17: Enclosed herewith is a letter from John S. Munro, Director of National Airways Corporation, a tenant at the airport. He objects to an air cargo lease to International Aviation Terminals. Also enclosed are the Minutes of the January 25, 1996 Airport Authority Trustees meeting at which the Agreement with International Aviation Terminals was approved. This is the Agreement to which Mr. Munro objects.

Number 18: There have been numerous allegations of improper dealings with airport tenants, including litigation with George Kiesel at the Stead Airport, mis-management and conflict of interest. I can provide the scanty information I possess on these matters at your request.

Steven P. Elliott
Sparks City Attorney


cc: The Honorable Mills B. Lane, III
Presiding District Judge

Richard A. Gammick
Washoe County District Attorney

responding letter from grand jury foreman Hanson