SFO to Return $2.1 million in Misspent Funds

By Zusha Elinson, Bay Citizen

The Federal Aviation Administration will take back $2.1 million in stimulus funds that it gave to San Francisco International Airport because the money was used improperly, according to the Department of Transportation’s inspector general.

The airport received $14.5 million in stimulus funds to improve runways and taxiways, which was completed in 2010. But the inspector general said in a report earlier this month that $2.1 million was used for unauthorized construction. It is unclear what specifically the money was spent on.

It is the second time in two years that the San Francisco airport has been found to be misusing federal stimulus money.

The airport disclosed to bondholders in January that it was conducting an internal review of how it spends grant funds and is “working to improve its internal controls and procedures to ensure compliance with its Federal grant agreements.”

SFO spokesman Doug Yakel said the airport is still awaiting the completion of a final audit of the federal grants. But the “$2.1 million recovery described in the DOT report would not have an appreciable effect on SFO,” he said.

The airport repaid $137,000 to the Transportation Security Administration after a 2011 audit found it had made $303,000 in questionable payments to a construction management firm with funds that were intended for a baggage inspection system.

Yakel said that the earlier misuse of baggage system funds was the result of a “recording error” and the amount repaid totaled less than 1 percent of the stimulus award. The airport had received $15.3 million from the Transit Safety Administration for baggage screening equipment.

Taking back improperly used stimulus money is a rare occurrence, said Craig Jennings of the watchdog group OMB Watch.

“You just don't see that a lot,” said Jennings. “I would like to think it had a lot to do with the transparency requirements in the law.”

Misuse of funds allocated by the Department of Transportation, which distributes federal dollars for transportation projects across the country, is a broader issue, according to the inspector general, an independent watchdog for the transportation department.

Although the department has improved in recent years, there are still improper payments slipping through the cracks, the inspector general said in its November report. That includes an estimated $31 million given to airports across the country for improvements.

“Reduction and recovery of improper payments are longstanding challenges for DOT,” the report said.

The inspector general estimated in 2011 that Department of Transportation made $450 million in improper payments in its federal highway aid program. The department distributes about $60 billion each year.

Justin Nisly, a spokesman for the department, said it had a "strong record of oversight."

Last year, the Department of Transportation reviewed 90 percent of its financial programs and found an error rate of “less than 1 percent,” Nisly said.

“Within that rate, the majority of improper payments was due primarily to individual errors in project paperwork, such as administrative or documentation mistakes, rather than improper use of funds,” he said.

The $14.5 million in stimulus money went to resurface two runways, reconstruct sections of the runways, upgrade the lighting with LED lights, repaint the runway markings and improve drainage, according to a 2010 press release from the FAA.

Spokesmen for the airport, the Department of Transportation and the inspector general’s office declined to comment on the nature of the airport’s unauthorized construction.

Nisly declined to comment on what would become of the $2.1 million to be returned by the airport, saying the matter was being still being investigated by the inspector general.