Airport: Laundry list of private firms created

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You've heard of the Houston Airport System: Along with People Movers and the statue of a cow in a spacesuit holding the Texas flag, they run one of the busiest airports in the world, Bush Intercontinental, along with the smaller Hobby and Ellington airports.

But you've probably never heard of Corporacion Quiport S.A., based in Ecuador. Or ADC & HAS. Or considered that a government agency would give birth to spinoff companies registered in the British Virgin Islands, an internationally known tax haven, home (at least on paper) to untold numbers of offshore companies, where corporate secrecy is as valued as the gorgeous white-sand beaches.

Houston airports' work overseas involves this list of interrelated companies:

* First, there's HAS Development Corp., the nonprofit that is at the center of the airport system's overseas work.

* Then there's HAS Development Capital Corp., which is registered in the British Virgin Islands, and for which there's little nuts-and-bolts information publicly available.

* There's Corporacion Quiport S.A., which was set up as part of HASDC's work in Ecuador.

* There's ADC & HAS, a for-profit venture that HAS Development Corp. set up with a Canadian airport management firm, Airport Development Corp.

* There's Coriport S.A., a venture between HAS Development Corp. and four other firms on airport projects in Costa Rica;

* And if you read nearly every line of all the available public records, you'll also find a few references to ADC & HAS Management BVI -- also in the British Virgin Islands -- as well as ADC & HAS Management Ecuador S.A.

Got all that?

It was a mouthful to try to explain over the phone to Sherri Greenberg, a lecturer and fellow at the University of Texas' LBJ School of Public Affairs who has spent her entire career in the field of public finance. She called it "quite unusual."

Vacar is, or was, a principal in at least some of these firms, including HAS Development Corp. and HAS Development Capital Corp.

Vacar said the Houston setup -- selling expertise to those airports less fortunate -- is unique in the U.S., where airports are usually run by government entities; it's more common, he said, in Europe, where airports tend to be privatized. It was tried some time ago by some airport officials in San Francisco, he said, but it didn't work because the people involved were "amateurs." (Vacar worked for a private airport management firm, Lockheed Air Terminal, years ago before he became head of the Sarasota airport; he had led the Houston airports since 1998.)

The Houston Airport System begat its first spinoff, HAS Development Corp., in 2001; its creation was approved by the City Council. It's a nonprofit agency and, like the United Way and those charities Sally Struthers does commercials for, it's exempt from taxes under section 501(c)(3) of the federal tax code. Because of that tax status, it must make some basic financial information public via an annual filing to the Internal Revenue Service.

(Story continues below timeline. Click here to jump down.)

Interactive timeline of Houston Airport System's overseas work
Use your mouse to scroll horizontally through the years.

News accounts from years past, public documents and interviews by Texas Watchdog give two events as the predicate for the creation of the nonprofit: First, Houston Airport System employees had been approached by aviation officials in Mexico about doing consulting work; second, the possibility arose for HAS workers to help with the work being done in Quito, the capital city of Ecuador, where Mariscal Sucre International Airport needed replacing -- built in 1960, it's surrounded by the Andes Mountains and has no more room for expansion.

Like all nonprofits, HASDC is run by a board of directors -- on its 2007 tax filing, those were Vacar, who served as chairman; Thomas B. Bartlett, the Houston Airport System's chief operating officer, who was the vice chairman; the then-president and CEO of HASDC, Jeffrey Scheferman; prominent Houston businessman Kase Lawal, head of oil-and-gas giant CAMAC International and a board member of the Port of Houston Authority; and Don Aviles, a leading geotechnical engineer who heads his own Houston-based firm and once worked on designing and evaluating types of airfield pavement at what is now Bush Intercontinental. (Vacar said he left the board when he retired in May; an airport system spokeswoman confirmed that the airports' interim director, Eric Potts, has taken Vacar's position on the HASDC board.)

With the exception of Scheferman, a retired Marine colonel who was paid $237,388, none of the development corporation's board reported making any money from their work with the nonprofit; Vacar told Texas Watchdog that he wasn't paid anything extra for the airport system's overseas work outside of his normal, city-paid salary (about $175,000 or so in 2007); the nonprofit form shows he was paid just $1,800 for serving as chairman in 2007.

In fact, the nonprofit reported having only three employees who earned more than $50,000 that year -- which might be surprising for a company that's supposed to be building and running international airports in other countries.

Until you realize that HASDC doesn't really build or run any airports itself. Its spinoff companies do that.

Continued on ...
Page 3: Some companies based offshore
Page 4: City's auditors say nonprofit has "crossed threshold"
Page 5: Despite public employees' labor, nonprofit says it's private

 

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