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KEEP Perspective 2
on “Risk Analysis for the
Proposed Relocation of the Bowling Green-Warren County Regional Airport” June 2002
Prepared by: Landrum & Brown, Inc. 11279 Cornell Park Drive Cincinnati, OH 45252 KEEP
Karst
Environmental Education and Protection Coalition P.O. Box 8 Oakland, KY
42159 Tel. (859)
255-8216 October 24,
2002 Executive Summary of Review
of Financial Risk Analysis for Proposed Bowling Green-Warren County Regional
Airport Introduction. In 1998, the InterModal Transportation Authority (“ITA,” a private corporation serving as development agent for Warren County) was provided a $6 million grant by the state of Kentucky to get the proposed Kentucky TriModal Transpark moving forward. Four years later, nothing substantive has been achieved, and the money is almost gone. To date, there are no businesses recruited; no airline commitments; and no private investment in evidence. For the past two years, the ITA has, via elected officials, asked the federal government for project development funding, which is the next stage in the process of building a new airport. Background. The Federal Aviation Administration (“FAA”) provides up to 90% of the cost of airport planning studies across the U.S., but only about 25% of the total public investment in airports.* It funds financial risk analysis studies for what it considers “large speculative” projects, so that local governments can understand that they may be left with the funding obligation if there are cost overruns on a new airport or there is not enough business to provide revenues. The FAA does not approve or disapprove a risk analysis study; it simply acknowledges that the study has been completed. In this case, FAA awarded about $133,000 to the ITA to hire a consultant, Landrum & Brown, Inc., to do such a study for the proposed, new Bowling Green-Warren County Regional Airport. This study, “Risk Analysis Study for the Proposed Relocation of the Bowling Green-Warren County Regional Airport,” has to date not been vetted or critiqued. There has been no public disclosure or dialogue. Only the Executive Summary is available on the ITA Web site, and no public hearings have been held. There has been no information about this report made available to the public beyond a predictably positive press release from the ITA and a single article in the Bowling Green newspaper. Have the city, the county, and the other local governments that have signed on to support the KTT, been invited to public meetings hosted by the ITA about this study? Have there been formal presentations about this study at regular meetings of governing bodies? Have these governing bodies been encouraged to respond to this document with their own concerns and questions? This public obligation by the ITA has been finessed, at best. Hence Karst Environmental Education & Protection (“KEEP”) is providing the public with a review and response to the Landrum & Brown report (“Risk Analysis”), including the full peer review response, which was intentionally omitted from the Risk Analysis and had to be obtained from the ITA via open records act requests.
3. Inviting investment on the basis of
4.
Dodging the question of who is going to pay for this project. KEEP
has been asked to not reveal the name of the real estate peer reviewer; and in
fact, “The ITA has no written record of
this review, however, the consultant has indicated that the expert’s review was
offered verbally and indicated that he found the concepts and assumptions
acceptable for planning purposes.” (Trisha Lawrence, letter to Ouida Meier,
July 1, 2002). See Appendices E and F for the unedited, full peer review comments from karst experts Tom Aley and Dr. Barry Beck. See Appendix C for May 2002 comments from Dr. Ralph Ewers on problems with the 1981 dye trace research by Quinlan, Ewers and Ray, upon which lie many assumptions about the siting of the airport and TriModal Transpark. As examples of the information that was omitted from the Risk Analysis, Dr. Barry Beck stated that the ITA’s own studies of the risk and hazard of sinkhole collapse are “grossly abbreviated” and “totally inadequate,” and that the hazard of sinkhole collapse is “significant” (Beck, 2002, Appendix F, pages 4-5). Tom Aley commented that sinkhole collapse could result in “injury and loss of life,” chided the ITA for treating the problem as being as simple as fixing a city street (Aley, 2002, Appendix E, p. 11), and noted that “sinkhole collapse is a common and expensive problem in this region of Kentucky,” contrasting it with other, less collapse-prone karst areas (Aley, p. 4). Aley also noted that “no runway could be threaded through the assemblage of buffer zones” needed because of the presence of substantial and numerous sinkholes throughout the proposed runway area (Aley, p. 5). Aley stressed that, until the issues of potential flooding on this site are understood and resolved, the financial risk assessment is incomplete (Aley, p.1). Beck concluded: “An accurate estimate of the cost of mitigating these hazards must be factored into the cost/benefit analysis, or the final decision based on this ratio will be invalid!” (Beck, p. 8). Additionally, in his full peer review comments, the Vice
President and Deputy Director of Research for the Federal Reserve Bank in St.
Louis warned that the capital requirement assumptions of building a new airport
should be modified to account for “bad” cases of higher costs and lower
proceeds from selling the existing airport (Landrum and Brown 2002, peer review
comments). Conclusion. The FAA funded this Risk Analysis with the intent that it be an “unbiased risk assessment study in order to obtain an independent and well-informed opinion regarding project feasibility” (Larry Kiernan, Manager, Airport Capacity Branch, Office of Airport Planning and Programming, FAA. Memo, June 6, 2001. Appendix D). The ITA has avoided public dialogue about this Risk Assessment and, indeed, withheld the most damning of comments until forced to turn them over. KEEP believes that the gross inadequacies found in the ITA’s studies is unconscionable, especially given the fact that the private corporation has spent almost $2 million in Kentucky taxpayer dollars for consultants to do this deficient work. The ITA and its leaders, elected and appointed, are suppressing information about the airport and TriModal Transpark project that could lead to injury and death. This information is revealed in the following pages. The ITA and its leaders, elected and appointed, are
presenting false information as truth: at the Cabinet for Economic Development
Web site, the aerial view of development site 227-010, the Kentucky TriModal
Transpark, represents 2,439 acres as being vacant and ready for development (www.thinkkentucky.com). This is an
example of the many misrepresentations and falsehoods discussed in the
following pages. The new airport and Kentucky TriModal Transpark are risky proposals, so risky that the federal government cannot be counted on to bail out this project. Ultimately, local taxpayers and governments and the Commonwealth of Kentucky will be left holding the bag. Table of Contents
Fatal
Risks in the Risk Analysis page Introduction 6 Fatal
Risk #1
6 Fatal
Risk #2
8 Fatal
Risk #3
11 Fatal
Risk #4 14 Conclusion:
Very Risky, Indeed! 16 Appendices
Following after
page 17
A.
Roger W. Brucker, KEEP steering committee, “Vocabulary and Meaning Unique to the Risk Analysis: Reader Beware!” B.
Photographs of potential for flooding and collapse: KY TriModal Transpark airport area, Bowling
Green, and Dishman Lane. C.
Dr. Ralph Ewers, karst expert. Comments on Quinlan, Ewers, Ray dye trace
research. D.
Larry Kiernan, FAA. Memo, June 6, 2001. E.
Tom Aley, karst expert. Comments in full from “Risk Analysis.” F.
Dr. Barry Beck, karst expert. Comments in full from “Risk Analysis.” Fatal Risks in the Risk Analysis
Introduction. The Risk Analysis advises accepting an enormous amount of economic and environmental risk in order to proceed with the airport replacement project. There are at least four fatal risks in the Risk Analysis, each of which will end the project, should its proponents be so unwise as to proceed. These fatal risks are discussed, below. In order to develop this list of Fatal Risks, these documents were reviewed: the Landrum & Brown “Risk Analysis Study,” and the products of a separate peer review panel made up of representatives of these disciplines and occupations: airline officials, real estate, geology/hydrology, geology/sinkholes, airport manager/airport official, and economist. Problems were encountered in obtaining the full peer review comments, which should have simply been appendices to the Risk Analysis. Instead, these comments had to be obtained via two open records act requests. The real estate consultant did not provide
written comments and had his name suppressed from the peer review list (it was
obtained via the open records request). This real estate consultant is the
principal of a realty advisory company that Kentucky’s Secretary of State lists
as inactive and not in good standing. Further checking reveals his direct
association with KY Gov. Paul Patton, President Dan Cherry of the ITA, and
through business connections, to a relative of the ITA’s lead attorney. Additionally, the highly critical comments from the two karst expert reviewers, Tom Aley and Dr. Barry Beck, also had to be obtained via an open records act request. Their comments are provided in full in Appendices E, F. Fatal Risk #1: Building the airport in a karst
floodplain, contrary to FAA regulations and local ordinances. KEEP asks the ITA: Should the FAA authorize
building a greenfield replacement airport in a flood-prone area on unstable
ground where the potential for rapid pollution has been demonstrated? Airports
should not be built on floodplains. Beyond the illegality, floods pose safety
hazards to air operations. Tom Aley, President of the Ozark Underground
Laboratory, and Expert Review Panel member for the Risk Analysis, discusses
this fatal risk at length in his report submitted to Landrum & Brown, Inc.
for inclusion in the Risk Analysis. The
substance of this distinguished karst expert’s report on the risks involved in
building a replacement airport was omitted from the Risk Analysis, and had to
be obtained by KEEP through an open records request. It is reproduced in Appendix E because it is based on scientific
evidence, familiarity with FAA requirements, and experience with at least one
airport built on a karst terrain with less sinkhole collapse and flooding potential than the sponsor’s
proposed site on the sinkhole plain west of Oakland. Aley
states that the Risk Analysis cannot be
completed until the
question of potential flooding problem is addressed and reconciled. He states
that there is a “major data gap” as to the potential for flooding at the
proposed airport site (Aley, p.1). He states “the ITA’s implicit assumption of
no flooding that would impact the airport has no validity whatsoever” (Aley,
p.1). See also Dr. Barry Beck’s comments on flooding (Beck, Appendix F, pp
7-8). The
Bowling Green, KY area has for many years been the recipient of chronic floods.
As the photos in Appendix B suggest, flooding is a chronic problem at and near
the replacement airport site. Sinkholes near the proposed runway location flood
during high rainfall. For detailed information about sinkhole flooding
occurrence and flood events in the Barren River area, go to
www.kyclim.wku.edu/BRADD/sinkholes/sinkholes.html Can
this flooding at the replacement airport site be remediated or mitigated? The answer is NO, or Bowling Green would
have solved the problem years ago. The city of Bowling Green has drilled more
than 600 injection wells to drain away damaging storm waters into the
underground rivers below the surface. The maintenance department employs a
dedicated drilling rig to keep the injection wells open, because they plug with
brush, soil, and trash. Stormwater runoff, flooding, and stormwater quality
issues are major unaddressed problems for Bowling Green that it is now facing,
due to looming federal deadlines (EPA Storm Water Permit due March 2003). . The
ITA’s karst consultant, Dr. Nicholas C. Crawford, describes mitigation and
remediation measures that will eliminate flooding (Crawford, N., 2002. “Site
Evaluation and Design Assistance for the Proposed Kentucky TriModal Transpark
Preliminary Report (Based Upon Existing Data Only).” Center for Cave and Karst
Studies, prepared for the ITA). However
Aley refutes the idea that stormwater retention ponds lined with impermeable
membranes will solve the problem. He states that “failure of liners due to
various processes including subsidence or collapse is a common occurrence in
karst areas. Maintenance and repair costs of such liners are commonly
substantial” (Aley, p. 9). Beck states that “detailed geotechnical exploration
of the area” must take place prior to any liner use (Beck, p.5). The
weight of retained water and other liquids to be stored at the proposed airport
has not been calculated, and is likely to cause profound collapse (see also
Laura Carbó Maldonado, “Hydraulic characterization of sinkhole filters,”
mayaweb.upr.clu.edu/inge/FLAB/RESEARCH/research.htm). Cut and fill grading operations
will open new sinkholes, as has happened in most site development projects
around Bowling Green (see Lovers Lane and Dishman Lane photos in Appendix B). Conclusion:
The high cost of flooding and the virtual impossibility of preventing
flooding, with disastrous implications for airport function and for stormwater
problems in Warren County, create Fatal Risk #1. Fatal Risk #2: Postponing the consideration of major
financial risks by categorizing them as mere environmental risks to be
addressed later in an Environmental Impact Statement (“EIS”). KEEP asks the ITA: Will all environmental risk assessments be postponed until later phases? Already-identified environmental risks (see KEEP Perspective # 1, May 2002) add millions of dollars to the project cost, and the fatal risks identified herein will inevitably make the project fiscally impossible. Environmental risk assessments should be done now, because these are also economic risks. Is it fair to issue general obligation bonds to finance a construction project where no competent field checks have been made of the risky geology and hydrogeology, and where every environmental scientist except the sponsor’s consultants have decried the sponsor downplaying and misrepresenting the cost of the environmental risks? Collapse is a chronic problem around Bowling Green and the proposed replacement airport site. The risk of collapse is described in vivid detail in Beck’s comments. According to Dr. Beck, “the risk and hazard of sinkhole collapse is inadequately addressed in the Preliminary Karst Evaluation (Law Gibb Group) and it is hardly mentioned in the Risk Analysis Study” (Beck, p. 4). Further, Beck states “the detailed planning studies of the engineering geology of the site must adequately evaluate and mitigate the hazard of sinkhole collapse, which will involve detailed investigations” (Beck, p.5). Aley states that “subsidence or sinkhole collapse could interrupt aircraft use of the facility for a period of time necessary to make repairs. Such repairs … could require up to several months… Sinkhole collapse during a landing or take-off could result in injury or the loss of human life” (Aley, p. 11). According to published accounts, the cost of a single collapse – Dishman Lane in Bowling Green, which took place in February of 2002 – carries a repair price tag of $800,000 to $1,000,000 (see photos, Appendix B). The combination of possible injury or loss of life, business interruption, and subsequent claims of negligence for building on unstable karst doom this project. The Risk Analysis argues for postponing all considerations of environmental risk, such as collapse, until the formal EIS investigation is set in motion by federal authorities: “Environmental risk, based on several existing studies, is not present or can be mitigated, but this tentative conclusion will be further analyzed in future studies including an Environmental Impact Statement required to be prepared by the FAA. Thus, the full extent of potential environmental risk is not addressed in this report, but will be studied in subsequent analysis and is allowed for, to some degree, in the financial allowances” (Landrum & Brown, 2002, p. 2; see also p. VI-9). These environmental risks are economic risks. These risks have been repeatedly identified and presented to the ITA and to local, state, and federal authorities, and in public hearings and meetings held by the ITA and other entities (KEEP Perspective #1, May 2002; www.stoptranspark.org; www.rogerbrucker.com; www.WCCMG.org ). For the Risk Analysis to be valid, these environmental issues with very high price tags must be considered in full, now. Postponing an assessment of environmental risks is unconscionable. A fair and unbiased assessment of the economic impact of these fatal risks would indicate that the airport and Transpark projects should be immediately abandoned. If karst is as widespread as claimed in the Risk Analysis (40% of the U.S. land east of Oklahoma: Landrum & Brown, p. 3), then this site on the Central Kentucky sinkhole plain is at the top 1% level of risk due to flooding, instability and collapse, and pollution. One would be hard pressed to find a more vulnerable – and thus expensive – site anywhere else. A 1988 map, “Karst Hazard Assessment of Kentucky: Sinkhole Flooding and Sinkhole Collapse,” illustrates that Warren County is in the “Highest Risk” area of the state for collapse. A look at this map is also instructive because other Kentucky airports cited by the ITA as being built on karst, are located in less risky karst areas. This map, prepared by Nicholas Crawford and James Webster for the WKU Center for Cave and Karst Studies, can be viewed at the Web site of the Warren County Planning Commission, www.warrenpc.org The ITA’s consultant claims that “a storm water system which the ITA is committed to providing will greatly reduce the risk of groundwater contamination, sinkhole flooding, and regolith collapse sinkholes.” (Crawford, N., 2002, p. 3). To this, the ITA adds, “Utilizing proper engineering technology and construction methods, both industrial development and environmental protection can be accomplished.” (ITA, Vision promotional direct mailer, p. 4, 2002). Every karst remediation project requires costly investigation, individual engineering and planning, and special construction techniques. This consultant recommends construction of rubber-lined stormwater retention ponds, without regard to the weight of water as a contributor to collapse. As was the recent case in Alachua, Florida, lined ponds collapse with catastrophic effect and pour their contents underground before anyone can respond (“New craters in detention pond at Dollar General,” Heuss, Constance S., Alachua Post, April 19, 2002, p. 737; copious other references in the Gainesville Sun and Alachua Post from 1999 - 2002). The consultant also recommends (Crawford, 2002, p. 42) the use of sand and peat moss filters to “treat” stormwater runoff, without regard to the fact that sinkholes swallow sand, soil, trees – yes, and peat moss. Additionally, peat moss filters are inherently high maintenance structures because they plug with sediment, and the sphagnum moss must be replaced every two to five years, assuming it is still in place (Geerts, S.M. and Barb McCarthy, 1996, Wastewater Treatment by Peat Filters, Vol. 10, No. 1, Small Flows, Small Flows Clearinghouse, U. Minnesota). None of the costs of these special measures has been factored into the project budget, except for a catchall contingency allowance that may be an order of magnitude too low. Other environmental risks with high price tags that were ignored or downplayed in the Risk Analysis:
Conclusion: Fatal Risk #2 says it loud and clear: The economic costs of environmental problems are being ignored until it is too late. Investors, beware! Fatal Risk #3: Inviting investment on the basis of:
KEEP asks the ITA: Will the Risk Analysis adequately warn
investors and concerned local governments of the fatal risks, the expensive
secondary risks, and the cost of failure? Or will the ITA press ahead with
unconventional borrowing, land acquisition, engineering planning, construction,
and legal sunk cost commitments? Is it wise to invest in attempting to
stimulate aviation demand at a location where the only justification is a
forecast of demand made by the FAA, based on no market research? Is the assurance by local government
officials -- that they can commit taxpayer funds to underwrite the entire
project -- enough to offset the risk posed by the low-growth outlook for
general and commercial aviation? Is
it prudent to allocate general obligation funds to underwrite replacement of a
city/county airport (operating at 26% of capacity, according to E.P. Systems
Group, P. Meyer, letter to FAA and Warren County executives, August 3, 2001;
Haarstad, Havard, “Independent economic group finds fatal flaws,” p. 5 of Our
Backyard Journal, April 2001 ) in order to provide a sales feature for an
industrial park project? Is it sufficient to justify replacing an
excellent airport that can continue to serve the community, because of
anecdotal concerns about noise and security? Do unlimited government resources exist to
fund construction of a project where the costs of new adverse environmental
consequences are sure to exceed already-known, already-ruinously expensive
environmental risks? Will hidden contingent fees for contractors mask low construction bids, since the sponsor will underwrite the construction surprises in this karst terrain? terrain (cf. Flyvbjerg et al., 2002, Underestimating Costs in Public Works Projects - Error or Lie?: Journal of the American Planning Association, v. 68, no. 3, p. 279-295 (specifically p. 281 where geology is mentioned)? Plans for
the sale of the present Bowling Green airport: Discussion
Note the repeated warning in the Risk Analysis that the present airport must be sold and funds be made available before land acquisition and construction of the replacement airport can begin (pp. 6-7, III 5, III 7, III 13, V 3-5, VI 7). One of the Airline Experts on the peer review panel for the Risk Analysis stated with some urgency that for this project to go smoothly, development of the new airport must take place “fast,” and the present airport “has to be sold as soon as possible to recover the funds for the new Airport” soon (Landrum & Brown, 2002, unnumbered page). The only scenario by which this can happen is for the South Central Kentucky Regional Development Authority (SCKRDA) to issue promissory notes to buy the present airport. It is difficult to see how that will be carried out by this unincorporated group of individuals, without obligating the local government general revenue stream. However, this group was able to negotiate a $6 million “bridge loan” from a consortium of banks based on first mortgage deeds on unimproved farmland (anticipated) and in anticipation of the approval of bond issuance (still pending on appeal). The financing risks should be evident to all prudent observers. This house of cards is held together with the thin glue of a promise that the money for the replacement airport will come from a combination of revenue from the sale of the present airport, plus “State,” “tenant,” and “local” funds (Landrum & Brown 2002, pp. 2, 3, III 17, and V 3-4). No justification of the estimated revenue from the sale of the present airport is provided in evidence, except a real estate appraiser’s estimate. Where are the facts? Where is a rigorous study of comparable situations nationwide, which would provide real data for decision-making? It needs to be stressed that the FAA is not going to rescue this situation from failure. The Risk Analysis points out several times that the “FAA share” of the funding for this project is limited to the proceeds from the sale of the present airport, “with no new FAA funds assumed” (Landrum & Brown, 2002 p. 2, III 3). Any additional FAA funding would be only available through competition with other airports; thus “the level and timing of additional FAA funding, if any, is unknown” (Landrum & Brown, 2002, p. 6). Previous studies by the sponsor have “validated” that the present Bowling Green-Warren County Airport is being used to only 26% of capacity (see discussion of the misleading use of this term and others in Appendix A, Roger W. Brucker, “Vocabulary and Meaning Unique to the Risk Analysis: Reader Beware!”). Due to the adverse economy, present airport use is presumably even less than that modest figure. Out of this relatively light load of aircraft operations, 92% of this demand is training flying or pleasure flying (Landrum & Brown, 2002, p. I 6). An aircraft operation is defined as one takeoff or one landing. A student pilot performing five touch-and-go repetitions accounts for 12 aircraft operations! It appears that real demand at the present Bowling Green airport is low, and does not justify investment of taxpayer funds in a replacement just to meet hoped for, possible future demand. The FAA’s annual forecast for 2002 states that, barring business/corporate flying, “discouraging” is the word that best describes the general aviation outlook. Passenger traffic is forecast to begin recovery during or after 2004 (Paul Lowe, “Business aviation is the only bright spot in FAA GA forecast,” AINOnline, April 2002). The assertion is made that there are no “brownfields” – environmental contamination – problems with the present airport that would diminish or eliminate sales proceeds (Landrum & Brown, 2002, pp. III 1, 3). Airports are notorious spillers of toxic pollutants, and this one has a tank farm. Where are the facts? Where is the research, the comparisons with other similar situations, the environmental historic track record of the present airport? This is not the right time to be building a new airport, with aviation in a slump, investment and Wall Street confidence low, a history of profound underperformance and lack of demand at the present airport, and a decidedly shaky strategy for obtaining the funds necessary for the replacement airport. The present airport requires an annual subsidy of more than $100,000 from local government funds. Future needs for airport services: DiscussionThe most
significant quote from the Risk Analysis on the topic of the need for future
services at a replacement airport is found on page I 1: “the [present] airport
currently has no passenger service.” Other uses of the present airport
are similarly underwhelming: Commercial flights consist of three single engine
FedEx Cessnas daily, and “ad hoc” charter planes (p. I 7). Military use is
constrained to “transient helicopters,” perhaps three a day (p. I 8).
Remarkably, these stark facts accompany a fanciful discussion of potential scheduled airline activities at the proposed new airport, among them a projected annual 42,700 emplanements on 30 – 50 seat regional jet aircraft by 2009. This is a startling figure for a city of 50,000 (Landrum & Brown, 2002, p. I 3). These and other numbers of possible future aviation activity at this proposed replacement airport appear to have been invented, or borrowed from other equally unsubstantiated “validations” printed by the consultants and their sponsor, the ITA. Where is the market research, the solid historical documentation, the rigorously-tested evidence that there will be any real demand for this proposed airport? Can the replacement airport be justified on the basis of “security”? The Risk Analysis argues thus (pp. 2-3, IV 3). However, careful reading reveals that the sole testimony on this topic is a comment by the airport manager that “the closeness of airport neighbors may result in increased noise complaints or increased concern over safety issues” (p. IV 3). Anecdotal remarks about as-yet unvoiced complaints do not make a compelling case for “security” problems! Have any measurements or objective data been collected according to rigorous standards, to validate these claims? Apparently, no noise measurements have been made. If the present airport is unsafe, why has the FAA not shut it down? The Risk Analysis asserts that a longer runway would be desirable to accommodate larger aircraft, and that acquiring land at the present airport site to lengthen the runway is impossible, due to the presence of luxury residences (p. IV 1,2). Where is the data to verify these assertions? Many existing airports lengthen their runways through acquisition of adjacent properties because it is generally more financially prudent to use the invested capital with incremental spending than it is to start over. For example, Lambert Field in St. Louis was expanded after a huge cemetery was moved. Meanwhile, the Mid America Airfield (Transpark) less than 30 miles away sits nearly vacant. Following are summary points regarding numerous other remarkable or questionable assertions in the Risk Analysis: ·
The forthcoming
Eclipse 500 business jet needs only 2,500 feet of runway. ·
Most of the
training demand could shift to competitive airports. ·
Base case is
artificially low. ·
Contrary to the
ITA’s assertion, the public was not included in project planning. Critical public comments are omitted
entirely. ·
The assertion
that there is no risk to the FAA is false. ·
Scheduled
airline 3-plane per day operation with 35-50 seat jets is unrealistic even at
40% load factor. Wishful thinking for a town of 50,000, predicted by the 2000
Census to grow by 4% in 10 years. ·
If there is
real demand for airline service, wouldn’t scheduled limo service to Nashville
or Louisville be offered now? ·
No fire station
is planned for the new airport – must drive out from BG. No control tower and
no cross runway are planned. Safety and security? Conclusion: It is not
justifiable, nor even logical, to state that a surrounding industrial park will
benefit if and when the airport is developed. A new airport should meet real
demand, not serve as a sales talking point for industrial sites. This is just
one example of Fatal
Risk #3: Inviting investment on the basis of sketchy
plans for sale of the present airport; the likelihood of a major cash shortfall
during the replacement process; a fictitious demand scenario; and a deceptive
risk analysis based on wishful thinking, baseless projections, and marketing
hype. Fatal Risk #4: Dodging the question of who is going to
pay for this project. The Risk Analysis identifies private investment as a major source of money for constructing the new airport (Landrum & Brown, 2002, pp.7, V 4-5). Who do they have in mind? As noted above, the FAA will not bail out this project. Local and regional governments will have to pay for it, if there is little or no private investment. Consider these points: The present airport has to be sold at
just the right moment, and at the right price, for this chain of events to work
smoothly and not collapse mid-way. The local governments that have agreed to
support this project have been assured that they do not have to pay anything
until 2007. The ITA’s sanguine yet
undated timetable (p. V 6) is unrealistic, given the community uproar, which is
downplayed. A decision to stop is not considered, with sunk cost implications. Surely it is past
time for this project to be brought to a halt, before economic damage develops,
locally and regionally. In October, 2002, KEEP called for business and political leaders to release a marketing consultant’s study that casts serious doubt on the feasibility of the Transpark project. Dated September, 2002, the report raises concerns about the county’s ability to adequately finance the proposed 4000-acre industrial park and airport. KEEP filed an open records request to obtain a copy of the report. However, ITA denied the request. The ITA admitted they possessed a preliminary draft and preliminary memoranda of ongoing market analysis work commissioned by a third party. The ITA refused to provide those documents, claiming them to be exempt from public disclosure. This new study of market demand was believed to have been commissioned by the Bowling Green Area Chamber of Commerce. It was presented to the ITA board last month by Margaret Grissom, CEO of the Chamber of Commerce. Allegedly she criticized ITA officials for buying land for the project, given the adverse findings. A further allegation is that the parties to the secret meeting agreed to keep the report hidden until after the election. If true, implications of this attempt to conceal the bad news about no demand could seriously affect the willingness of the consortium of local banks to extend their $6 million “bridge loan” to purchase unimproved farmland. The original plan was to create an unincorporated land buying agency of the ITA and government, the South Central Kentucky Regional Development Authority. The banks loaned the Authority funds to tide them over until the court approves the $25 million bond issuance. Presumably, the loan was secured by conditional deeds to purchased land. The collateral value of the land now may be in question if there is no market demand, and the risk is unacceptable to loan portfolio examiners or risk insurance providers. The ITA reported that most of the $6 million is spent, but has refused to release its federal income tax statement until after the election in November. The bond issuance appeal filed by Joey Roberts continues to work its way through the court of appeals. Curious financial maneuvers and critical information holdback by the ITA and its supporters raise challenging questions: · Why does the ITA follow a pattern of hiding the economic bad news and promoting purely speculative projections of hoped-for Transpark demand? · Is the future of the Transpark and its airport to be characterized by past dodging, denying, downplaying, and deceptive dismissal of all adverse risks repeatedly detailed in scientific and economic expert reports? · Can demandless marketing work when precedent from similar multi-modal industrial parks on even more easily developed non-karst terrain in North Carolina and Illinois clearly warn of a bottomless sinkhole of risk, debt, and financial failure? · Would any company relocate to the Transpark and its airport, given the fatal environmental and economic risks that prudent investigation reveals? · Can dividing the Transpark project into successively smaller phase “bitter pills” justify the expenditure of $100 million or more of public funds, or even $25 million of bonded indebtedness? · Isn’t it cynical and dishonest to stick the taxpayers by funding an airport to replace an underutilized airport in which no private enterprise would invest, and for which no revenue stream can be identified? Conclusion: Very
Risky, Indeed!
The proposal to build a replacement airport eight miles from Bowling Green to enhance the sale of Transpark properties is an unjustifiable expenditure of scarce public funds at a time when the U.S. economy is in a tailspin. KEEP has identified four fatal risks to the project. Each alone condemns the project as unrealistic, unnecessary, financially unjustified, and probably illegal. Airports should not be built on flood-prone land, Airports should not be built on unstable land. Airports should not be built where the threat to a major national park looms and the threat to the aquifer is demonstrated. Airports should not be built with taxpayer funds when there is no demonstrable demand, nor even anticipated demand based on market research. KEEP believes that the Transpark project and its airport are economic wishful thinking. It is one more boondoggle, like the $90 million North Carolina Global Transpark which has yet to attract a single industrial job. Indeed, the FAA is asking North Carolina to return its $33 million, because the project has no demand and is unfinished. Some political leaders in Warren County support the replacement airport project, but the general public does not. There is insufficient demand to justify any scheduled passenger air service, even using “uneconomic” small feeder aircraft, according to past history and the Risk Analysis. Political leaders decry the unsafe absence of a control tower at the present airport, but make no provision for one at the proposed new airport. Fire safety at the proposed new airport is all but ignored. The expert consultant’s warning that a runway collapse is far more serious to life and property than a Dishman Lane collapse was omitted from the Risk Analysis. The ITA’s attempts to make the Risk Analysis appear favorable continues the pattern of disregard for public safety, arrogance and greed in financial irresponsibility, and overt engagement in investor deception that created the four flaws described above, fatal to plans for an airport and Transpark at this location. Appendices A. Roger W. Brucker, KEEP steering committee, “Vocabulary and Meaning Unique to the Risk Analysis: Reader Beware!” B. Photographs of potential for flooding and collapse: KY TriModal Transpark airport area, Bowling Green, and Dishman Lane. C. Dr. Ralph Ewers, karst expert. Comments on Quinlan, Ewers, Ray dye trace research. D. Larry Kiernan, FAA. Memo, June 6, 2001. E. Tom Aley, karst expert. Comments in full from “Risk Analysis.” F. Dr. Barry Beck, karst expert. Comments in full from “Risk Analysis.” Appendix A
Roger W. Brucker, KEEP steering committee
“Vocabulary and Meaning Unique to the Risk Analysis:
Reader Beware!”
Vocabulary and
Meaning Unique to the Risk Analysis:
Reader Beware!
Roger W. Brucker The authors of the Risk Analysis use ordinary words, such as demand, reasonable, risk, and validate in non-dictionary ways that may confuse readers. It is useful to examine some of the words for insight into the thoroughness and validity of the Risk Analysis. In theory, the purpose of a Risk Analysis is to provide prudent readers and potential investors with a dispassionate and realistic understanding of proximate and potential financial uncertainties, both fatal and secondary. Absent realism, a Risk Analysis becomes a sales promotion document, lulling even prudent readers into a false sense of security. Our KEEP review indicates that the sales function is paramount in the Risk Analysis for the replacement airport. Demand. Demand is an economic and marketing term used with rigor in those disciplines. Not so in the Risk Analysis. In the business world, demand is widely understood as needs plus wants coupled with the ability to buy: demand for a product or service is the demonstrated willingness for buyers to pay for it. The measurement of actual past and present demand is accomplished through financial accounting. A fiscally responsible company asks, “How much did we sell and how many dollars did we receive?” This process helps to measure and anticipate demand. However, the Risk Analysis lumps together real demand and possible future demand, without distinction. Thus in fact it is speaking about hoped for revenues, anticipated money, expected funds, and projected results. These are forecasts, educated guesses. To make educated guesses, economists and marketers combine historic demand data with market research to try to reduce the risk that predicted future revenues will be no more than wishful thinking. It is widely understood that past performance is not indicative of future results. There is no indication in the Risk Analysis that even this basic level of research has been carried out in support of the very optimistic demand and revenue statements claimed for a replacement airport. For example, some of the cost-benefit data accepted in this Risk Analysis is based on U.S.-wide trends of 20% increased demand per year, experienced during the halcyon economic days of the 1990s, never achieved since, and never at the present Bowling Green Airport. Of course, most financial and business experts will admit that they have never seen a pessimistic spreadsheet from someone seeking funds. Reader – and investor – beware! The result of lumping real and future possible demand in the Risk Analysis is that unsupported and generalized hopes for a now bygone era of U.S. economic growth are presented as real demand for the Bowling Green area. No competent company builds a plant on the basis of informal guesses about possible future demand! Instead, such a company requires that future demand be predicted using a methodical investigation of actual customers’ future needs and wants. No market research has been undertaken by the ITA to justify the proposed $100 million Transpark or its $34 million airport. The pages of KEEP Perspective #2 examine the shaky foundation on which some of the reported demand hopes rest, and the folly of relying on unsupported trend projections when making major financial decisions. Reasonable. Several members of the Expert Review Panel selected to comment on the Risk Analysis termed it reasonable. The generally understood meaning of this word is, “based on fact or logic,” or sometimes, “not expensive”. However, a reading of the Risk Analysis shows that this document’s use of reasonable is defined as “reasons were provided by the sponsor”. There is no regard for the facts or logic. Risk. Any analysis of risk is a study of potential losses. This is the case in the Risk Analysis, where the concern about potential loss is focused on the money that would be lost in the event of circumstances that prevent or restrict the desired final outcome, and that would result in unanticipated expenses or investment loss. Some risks can prevent achieving any part of a final outcome. They are called fatal risks because any one of them can kill a project. Other secondary risks can result in sub-optimum attainment of desired project objectives, or can increase costs beyond the budget.
In the Risk Analysis, the final outcome envisioned by the study’s sponsor, the ITA, is a fully functioning airport eight miles from Bowling Green that not only replaces the present airport, but also offers additional capabilities. Among the desired improvements would be a longer runway to accommodate larger aircraft. Examples of fatal risks in the situation under review include the possible failure of the FAA to approve a greenfield airport on a floodplain, as prohibited by law. Other examples include encountering insurmountable bedrock collapse events that terminate air operations, and a major nationwide economic crisis that makes unavailable funds earmarked for debt service. Fatal risks do not simply diminish the desired outcome. They can entirely prevent achievement of any portion of the desired goals. If sinkholes develop in the runway during air operations, the loss of life and potential damage could result in closure of the airport to air operations and expose the sponsors to ruinous financial penalties through litigation judgments. The fatal risks found in the Risk Assessment are discussed in detail in KEEP Perspective #2. Secondary risks, listed as bullet points, can raise the actual cost above available revenues, and stretch out the project for years beyond the date anticipated for commencement of operations. For example, the FAA, in an internal memo (Appendix D) that led to the funding of this Risk Analysis, observed that the proposed replacement airport is more likely to cost $150 million, rather than the $30 million proposed by the sponsor. To further warn of looming fatal and secondary risks, it needs to be pointed out that that memo was based on comparable airport construction costs for an airport not located on karst topography. Validate. To validate, in the dictionary sense of that word, is to prove in a way that cannot be objected to because it conforms to law, logic, and the facts. A validated financial statement conforms to the generally accepted rules of accounting and has been subjected to audit tests of fact for verification. Even though this process is being reexamined in the wake of recent Enron, WorldCom, Tyco, Xerox, etc. wrongdoing, most people believe one should be able to trust audited financial statements. However, the word validate has a special meaning as used in the Risk Analysis. It means previously published. Various data are described in the Risk Analysis as being validated, when what is in fact meant is that these projections have appeared in previously published benefit analyses issued by the sponsor and its consultants. In other words, previously published guesses, often based simply on wishful thinking, are termed verified merely because they have been previously printed in documents printed by the consultant and sponsors! This astonishing use of the English language occurs numerous times throughout the document. Appendix B
Photographs
of potential for flooding and collapse: KY
TriModal Transpark airport area, Bowling Green, and Dishman Lane.
Fig.
1. Caution: “High water possible” sign located just east of the proposed airport
runway. 2002.
Fig.
2. Flooded sinkholes, near the north end of the proposed airport runway. 2002.
Fig. 3. Fred Madison Road
Landfill. The
south end of the proposed airport runway would extend from the landfilled area,
to the left (north). Note water-filled sinkholes in the immediate area, and the
surface drainage to a sinkhole in the upper left (to the east). Note numerous
other sinkholes in the area, wooded and cleared. 2002.
Fig.
4. Surface drainage to sinkhole in the field immediately to the east of that in the
previous photo. This area is proposed for industrial development as part of the
TriModal Transpark, and would be immediately adjacent to the airport runway
area. 2002.
Fig
5. “Danger
High Water Area”: Residents of the Bowling Green area are VERY familiar
with the problem of chronic flooding! Eastwood Baptist Church. 2002.
Fig.
6. Flooded Bowling Green shopping center parking lot. Fairview Plaza. 1990s.
Fig.
7. Following a heavy rain, the Bowling Green area is decorated with hundreds of flooded sinkholes,
neighborhoods, parking lots, homes, businesses, and roadways. 1990s. B. COLLAPSE
Fig.
8. Lovers Lane soccer fields, Bowling Green: Two drains in this new recreation complex
have collapsed and been refilled and reconstructed twice during 2002. A large
concrete slab has shattered, due to voids opening up beneath it.
Fig.
9. The tip of the iceberg at Lovers Lane: If these collapses cannot be controlled at
new facilities on a small scale, using the latest techniques, how can an
airport runway and industrial park possibly be contemplated?
Fig.
10. The Dishman Lane collapse of February 2002 on the south side of
Bowling Green is now notoriously synonymous with bad planning and high costs in
karst, and with the unpredictability of destructive and dangerous karst
collapses. 2002.
Fig.
11. The Dishman Lane collapse, February 2002.
Figures
12, 13. Details of the Dishman Lane collapse, February 2002.
Fig.
14. Dishman Lane repair work, August 2002.
Figures
15 and 16. State Trooper Cave revealed: Work on the Dishman Lane collapse, in early (above)
and late (below) September 2002.
Conclusion: There is no right way to do the wrong thing. Karst flooding, pollution and collapse cannot be foreseen, leading to expensive and dangerous outcomes. This high-risk site is not suitable for airport or industrial park construction. Appendix C Dr. Ralph Ewers, karst
expert Comments on Quinlan, Ewers,
Ray dye trace research. Statement from
Prof. Ralph Ewers regarding the basin boundaries dye trace research published
as Quinlan and Ewers (1981) and Quinlan and Ray (1981). Date: Wed, 29 May 2002
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