Money for airport improvements threatened

A federal agency warns it might suspend grants because of a dispute over land leases at TIA.

By JEAN HELLER

© St. Petersburg Times, published February 20, 2000

TAMPA -- For the second time in eight years, the U.S. Department of Transportation has recommended suspension of federal aviation grants to the Hillsborough County Aviation Authority because of questions about how land is leased at Tampa International Airport.

Withholding grants is a step the Federal Aviation Administration rarely takes, but it could mean the end of federal dollars for airport improvements totaling millions each year until corrective action on the leases is taken.

The FAA declined to take that action when the inspector general of DOT, the FAA's parent agency, recommended it in 1992 and is not likely to take it now, because FAA audits of the leases as recently as last fall concluded they meet federal requirements.

The inspector general cannot require the cutoff.

This is the latest development in a years-long dispute between the owners of WestShore Plaza in Tampa and the Aviation Authority over the leasing of 155 acres at Boy Scout Road and West Shore Boulevard to Taubman Centers, a national developer of shopping malls.

Taubman has begun construction of a 1.25-million-square-foot upscale mall on the site near a new 400,000-square-foot office building that opened last November. Grosvenor International, which owns WestShore Plaza a mile away, argues that the land leases between Taubman and the airport fall short of the fair market value of the property and give the new mall, International Plaza, an unfair competitive advantage.

The FAA requires that when surplus airport land is leased for non-aviation purposes, the leases be valued at least at the fair market price.

Twice last fall, the inspector general's office asked the FAA to review the leases and in both cases, the FAA responded that the leases met federal regulations.

"We do not agree with the FAA's position," Inspector General Kenneth Mead wrote to U.S. Sen. Connie Mack in December. In 1992, "we recommended that FAA suspend discretionary grants until HCAA complied with federal requirements, established fair-market value by appraisals and periodically adjust(ed) lease rents to insure a fair-market return . . . The FAA declined. . . . However withholding discretionary grants to HCAA is appropriate."

All sides in the dispute are puzzled about the meaning of another portion of the letter, which says, "There is still no assurance that office/retail space will be constructed," and without such development, rental rates fail to keep up with fair market value.

"It's under construction," said Louis Miller, executive director of the Hillsborough County Aviation Authority. "The office building was occupied as of Nov. 1, and the steel is going up for the mall. I'm having a real hard time understanding the letter. It seems to say if development occurs, everything is okay. Well, development is happening right now."

John Simon, managing director for development for Taubman agrees.

"The IG seems to say if the property is not developed the (lease's escalator clause) will be inadequate," he said Thursday. "But it is under development. This is a validation of our project."

However, John Flavin, president of Grosvenor, said he isn't sure how to read that part of the letter.

"I have not spoken directly to anyone in the IG's office, so I really don't know what the letter means," Flavin said. "You could read it, I guess, to say that with development, the lease arrangement is okay, but I think it says that over the years, the lease rates have been inadequate and the base development rent is inadequate. I think the recommendation for cessation of federal funding is a good indication of how serious the IG considers this to be."

Mead's letter to Mack also claimed the Hillsborough County Aviation Authority had failed to comply with the IG's demand in a 1992 audit that the lease be amended the next time it was revised to reflect fair market value.

Miller wrote Mack on Thursday telling him it appears the IG had not seen a 1996 appraisal on the 155-acre site done when the lease was last revised, which said the lease terms provide fair market value.

Officials with the IG's office who could clarify the letter could not be reached for comment.

The 1996 appraisal found the mall property worth $18,900 an acre. But almost directly across Dale Mabry Highway, a parcel was appraised at the same time at $433,000 an acre and eventually sold for $288,000 an acre.

International Plaza contends WestShore is comparing apples to oranges because it does not take into account the millions of private dollars poured into the property to make it suitable for development.

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