FAA Did Not Ensure Revenue was Maximized at Denver International Airport
On February 28, 2011, we issued our report on the Federal Aviation Administration's (FAA) oversight of airport revenue at Denver International Airport. The objective of our review was to assess the effectiveness of FAA’s oversight in ensuring: (1) the airport is as self-sustaining as possible and obtains fair market value for land sales; and (2) the sponsor uses airport revenues only for airport purposes in accordance with Federal law. These revenues include those from the sale of the Stapleton International Airport (Stapleton) property, which was closed and replaced by the Denver airport in February 1995.
We found that FAA did not exercise effective oversight of land sales, which allowed Stapleton land parcels to be sold to a developer for less than fair market value, resulting in the airport losing at least $71 million in revenue. FAA allowed the airport's sponsor (the City of Denver) to sell Stapleton property based on values established in a 1999 appraisal without the option to take advantage of any potential increases in real estate prices over the life of the 25-year agreement between the City and the developer. Also, FAA oversight was not effective in ensuring proper use of airport revenues because it did not prevent the City from diverting airport revenue from the airport to fund redevelopment, parks, and infrastructure -- a federally prohibited non-airport purpose. We made four recommendations to FAA focused on improving the process of ensuring fair market value for land sold from any future airport closures, ceasing funding of any prohibited Denver airport revenue diversions, recovering revenue diversions from previous sales of Stapleton property, and exploring ways to obtain fair market value from future sales of Stapleton property . FAA nonconcurred with our findings and recommendations, and we consider them as open and unresolved and request that FAA reconsider its response.