Tracing the federal funds that should have been used to pay for an air traffic control tower simulator has proved difficult for the South Jersey Economic Development District because nearly $350,000 that could have been used to finance the equipment was lumped into the agency’s operating funds.
Steve O’Connor, the district’s new interim executive director, recently learned that the agency owes $147,770 to Adacel Systems, the company that manufactured the simulator that is being used at Atlantic Cape Community College. College officials said they didn’t know the equipment wasn’t paid for until a few months ago.
“One of the weaknesses that will have to be corrected is that there wasn’t any segmenting of how the money was spent on individual projects. Everything aviation-related went into the general operating account, so it’s difficult to know what paid for what,” O’Connor said.
Today, the equipment sits at the college’s Mays Landing campus with a nearby plaque commemorating SJEDD’s supposed investment. A dedication ceremony took place in March 2011. A press release on the event stated that the district had provided more than $280,000 in federal funding for the system.
At the time the plaque was presented to the college, the district had yet to make a single payment on the equipment.
Richard Perniciaro, the college’s dean of planning, research and facilities, said the school was under the impression that the equipment that was installed in December 2010 had been paid for. It wasn’t until early 2012 — around the same time that The Press of Atlantic City began to report on the district’s financial problems — that school officials learned that was not the case, he said.
“We knew (former SJEDD Executive Director Gordon Dahl) had gotten a grant, and the assumption was that it had been paid for,” Perniciaro said. “(Adacel) has never mentioned taking back the equipment. From the college’s perspective, we really were never on the shady end of any dealings. The deal with Adacel wasn’t ours.”
Two grants — one from the U.S. Department of Agriculture under stimulus funding, and one from the U.S. Department of Housing and Urban Development — totaling $349,000 were secured by SJEDD to help purchase the simulator. Yet only $133,000 in payments has been made to the company. SJEDD previously said it believed the grant money came from the U.S. Economic Development Agency, but that is not the case.
The rest of the $349,000 was used to pay contractors completing work at the NextGen Aviation Research and Technology Park — an allowed use under broad definitions in a $250,000 HUD grant secured in 2010, department spokesman Adam Glantz said. Documentation on a $99,000 USDA grant awarded in July 2009 states that the money was paid to Adacel for the simulator, agency spokesman Neal Hayes said.
Yet dates that the grant money was disbursed to SJEDD and dates payments were made to Adacel do not coincide.
The full invoice for the simulator arrived in January 2011. At that time, SJEDD had the $250,000 HUD grant in its coffers, but the first payment to Adacel — $100,000 — was not made until March 29, 2011. By April 2011, the district had received the USDA grant, but it wasn’t until October 2011 that SJEDD made a second payment to Adacel of just $8,000.
“It appears — and I hate to keep saying it this way, but I’m just trying to figure this out myself — that Gordon got the money from the HUD grant, made a payment a couple of months later in anticipation of the next grant coming in, and then just used the remaining money on the park,” O’Connor said.
Dahl was ousted by the district’s board last month after board members said decisions had been made without their knowledge. Dahl has since served the district, Atlantic County and the park’s board with a tort notice claiming that coercion and illegal methods were used to terminate him. In a letter to the board in March, he said he would seek more than $1 million in damages, but he has since increased his demand to $7.5 million in the tort claim.
O’Connor is charged with untangling the district’s finances. He recently determined that the district’s total debt, including the park project and other bills, totals more than $805,000.
Grants that were supposed to cover infrastructure installation at the NextGen park will not be sufficient as the district will have to make up nearly $170,000. O’Connor said he believes the difference in funding is due to the changing scope of the project, but he again said it’s hard to trace the grant money because it was lumped into a single account.
Representatives from Adacel, which is based in Orlando, Fla., declined to comment on how much is owed, when invoices were submitted and whether interest on past due payments has accumulated. A contract between Adacel and SJEDD dated Oct. 8, 2010, states that if payment is not made within 30 days of invoice, SJEDD will be liable to pay 10 percent annual interest on the amount overdue.
O’Connor said he does not believe any interest has been charged. He’s spoken with the company and intends to set up a payment plan.
District documents show that Dahl had initially planned for the nearly $600,000 simulator to be housed in the first building at the NextGen Aviation Research and Technology Park where it would be used by businesses as well as educational institutions. Documents show Dahl intended to obtain a $551,000 loan and combine it with the $99,000 USDA grant to finance the equipment.
O’Connor said he does not believe the loan was ever obtained. Plans eventually morphed into a proposal to place the equipment at Atlantic Cape Community College for use in the college’s air traffic control associate degree program. SJEDD agreed to finance a portion of the equipment. The college paid the balance with a combination of federal grants and college funds, Atlantic Cape spokeswoman Kathy Corbalis said.
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