MWAA Audit a Mixed Bag

WASHINGTON — A report requested by lawmakers on the Metropolitan Washington Airports Authority supports its financial projections for the Metrorail extension to Dulles Airport, but raises concerns about MWAA’s transparency, conflicts of interest and contracting practices.

The U.S. Department of Transportation’s office of the inspector general released some of the report’s findings after an investigation that was initiated in March at the request of Reps. Frank Wolf, R-Va., and Tom Latham, R-Iowa, who chairs the House Appropriations panel with jurisdiction over transportation.

The lawmakers had expressed concern about a perceived lack of transparency and rumors of mismanagement at the authority.

The resulting report lent support to projections of Dulles Toll Road revenues, which are expected to secure more than $2 billion of bonds to finance the Washington Metropolitan Area Transit Authority’s metrorail extension to the airport.

The report was not as kind to MWAA’s internal practices, which the report labeled “insufficient for identifying and evaluating potential conflicts of interest.”

The financing of the Dulles rail project has been a subject of hot debate. The project was supposed to be a funding partnership between MWAA, Virginia, and that state’s Loudoun and Fairfax counties. However, that arrangement became uncertain because Loudoun County’s Board of Supervisors has not yet decided whether the county will participate in the next phase of construction and Virginia Gov. Robert McDonnell threatened to withhold $150 million because of a labor contracting issue his office says is in violation of state law.

Citizen advocacy groups have also objected to the plan to pay for the rail project with toll road revenues, pointing to widely varying revenue estimates produced on behalf of MWAA. Those estimates, though, are “reasonable,” the U.S. DOT reported.

“In a 2005 Dulles Toll Road study commissioned by the Virginia state DOT,” the report said, “the revenue-maximizing toll for 2005 was estimated to be about $2. Yet, in a 2009 study commissioned by MWAA, the same contractor projected that the revenue-maximizing toll would rise to slightly over $7 for 2010 and $12 for 2023.”

“Based on our preliminary review, this increase can be attributed in part to two factors, both of which relate to increased traffic on non-toll roads,” the report said. “First, the population and employment levels used in MWAA’s calculations grew substantially between 2005 and 2010 — by 8.6% and 15.3%, respectively — for Fairfax and Loudoun counties combined.”

In addition, the audit noted the second projection “revised the travel demand model” used to measure traffic and did not question that revision. While the DOT report declined to conclude that the changes account for all the discrepancies, the projections didn’t raise much concern at the inspector general’s office.

Terry Maynard of the Reston Citizen’s Association, one group that has questioned the revenue projections, said he agrees with the DOT audit but stands by his group’s concerns, noting that their own study differed in methodology than that used by MWAA.

However, the report also said the authority’s “culture that is largely unaccustomed to external audits and inquiries by the accountability community” did raise some eyebrows at DOT. “MWAA’s policies and practices are generally less rigorous than corresponding state and federal rules,” the report stated. “Notably, MWAA’s government-appointed board members are not bound to the same state ethics and financial disclosure laws as the elected officials who appointed them.”

The report raised concerns that MWAA officials are not required to disclose potential conflicts of interest as thoroughly as organizations that are formally part of government. One board member recommended that MWAA hire a particular law firm to render an opinion about new federal legislation, even though an immediate family member worked for the firm.

Wolf said the firm, Jenner and Block, was tasked with finding a way around a recently enacted law, pushed by Wolf, that forbids MWAA board members from serving beyond their terms. Wolf said he supports Transportation Secretary Ray LaHood’s suggestion, upon reading the report, that a DOT staff member be posted at MWAA.q

“The responsibilities of the MWAA board are so important to the region that no necessary effort needed to restore public trust should be omitted,” Wolf said.

“MWAA is committed to confront every single concern identified by the IG,” said John E. Potter, the authority’s president and chief executive. “We will do whatever is necessary to revise and strengthen our policies and procedures to ensure transparency and accountability. Ultimately, this will make us a stronger, more efficient organization that will be beneficial for all of our stakeholders.”

Andrew Rountree, MWAA’s vice president and chief financial officer, said he is extremely pleased that the IG validated the revenue projections for the Dulles metrorail extension. “Our investors and future investors will appreciate the extra diligence provided by the IG in this area. As of today, the actual revenue and toll transactions for the Dulles Toll Road have been very close with forecasts prepared in 2009 and 2010, since we assumed responsibility for the Toll Road.”

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