Airport/ODOT dispute headed to court

A year ago, the Oregon Department of Transportation sent a demand letter to Benny and Julie Benson, owners of Sisters Eagle Airport, seeking the repayment of $377,152 in ConnectOregon V grant funds and payment of an additional $13,033 to meet the minimum requirement for matching funds for grants entered into in 2015.

The state agency alleges that the airport "misexpended" grant funds allocated for specific airport improvement projects. (See "ODOT demands repayment of grant funds," The Nugget, March 29, 2017, page 1.)

Since then, the airport and ODOT have been engaged in negotiations over the repayment demand. Now, the dispute is headed to court.

"They've reached an impasse and they're seeking outside guidance from the legal system to reach a fair and equitable resolution," said Matthew Bowler, a partner in the Mandala Agency public relations and brand management firm in Bend. "The negotiations don't appear to have been fair in the eyes of the Sisters Airport... It's disappointing, but it really is the next step that they feel they need to take."

On Thursday, March 15, Sisters Airport, LLC, (SAP) filed a complaint in Marion County Circuit Court seeking a jury trial to determine and adjudicate facts in the dispute. Bowler said that the complaint was filed in Marion County because that is where the original contract for the airport work was granted. Over the weekend, ODOT filed a counterclaim, demanding repayment of the entirety of the ConnectOregon V grant. (Links to the complaint and the counterclaim may be found embedded in the text at the bottom of this story).

In a statement, the agency said: "In March 2017, the Oregon Department of Transportation (ODOT) requested repayment of just over $390,000, based on compliance review findings and terms of the project agreement. After making this request, ODOT entered into a full year of good faith, complex and confidential negotiations with the owners of the Sisters Airport in order to reach a settlement regarding the grant.

"Those negotiations failed to reach a settlement. As a result, ODOT has filed claims in Marion County Circuit Court for Sisters Airport to return the entire grant. Moving to court resets the claim to the full grant amount, as an issue to be decided in litigation."

Sisters Airport Property LLC and ODOT entered into a grant agreement in May 2015 in which the airport was to receive an amount not to exceed $733,259 to be used for construction of a taxiway, pavement of aircraft parking and ramp areas, installation of runway lighting, and improvements associated with those projects.

An ODOT review concluded that, "ODOT paid invoices submitted by the grant recipient (the airport) that are ineligible project costs totaling $377,152." The demand letter lists eight categories of allegedly ineligible project expenses, including work on a hangar and $57,976 in construction associated with a drainage runout area that was constructed on property not belonging to the airport. (That construction has since been removed at the expense of Sisters Eagle Air Estates Homeowners Association; See "HOA removes airport runway runout, The Nugget, December 13, 2017, page 1.)

The Bensons and ENERGYneering Solutions, Inc. (ESI) were project mangers for the grant-funded work. The letter demands repayment of funds paid to them.

The Sisters Airport, LLC complaint asserts that "all expenses for which SAP sought reimbursement were reasonable expense reimbursable under the grant agreement and were adequately documented." The complaint further asserts that "the grant agreement does not prohibit reimbursements of expenses associated with Benjamin Benson's professional services to ESI."

The Bensons argue that ODOT is not entitled to repayment unless ODOT can show that it was injured by SAP's acts, and that ODOT was not injured, since SAP performed its obligations in completing the project.

The complaint seeks to stop ODOT from demanding repayment and also seeks attorney's fees and other plaintiff's costs.

The ODOT counterclaim asserts that "plaintiff's use of ConnectOregonV grant funds at issue in this case was fraught with self-dealing, profiting from public funds, unreasonable expenses, accounting problems and multiple violations of the governing grant agreement."

ODOT spokesman David Thompson told The Nugget that ODOT will have no further comment until the issue is resolved.

"We do not wish to negotiate this through the media," he said.

No court date has yet been set.