A federal program designed to help disadvantaged minority businesses secure concession contracts at Phoenix Sky Harbor International Airport is benefiting a small cadre of wealthy political insiders, according to a report released today by the libertarian Goldwater Institute.
Group: Concession leases aid political insiders
The report, the result of a three-month investigation by former East Valley Tribune reporter Mark Flatten, mainly centers on Maricopa County Supervisor Mary Rose Wilcox, who for months has been questioned by political rival Sheriff Joe Arpaio about her leases with the city-owned airport.
Citing public records, the Goldwater investigation states that Wilcox is one of the biggest beneficiaries of the federal Airport Concession Disadvantaged Business Enterprise program, or DBE.
Wilcox, a Phoenix Democrat, did not return a call for comment.
Phoenix officials declined to comment on any specifics of the report or discuss the fact that Goldwater sued the city this year for giving tax subsidies to the developer of the CityNorth project. That case is being weighed by the Arizona Supreme Court.
Airport spokeswoman Alisa Smith said the Federal Aviation Administration sets guidelines for how airports secure and administer contracts and the city followed these rules. The city, she said, has been conducting ongoing studies to determine if disadvantaged businesses have had an equal opportunity to compete for airport contracts.
"The city regularly reviews contract compliance," Smith said. "If any deficiencies are found, they are pursued and corrected."
The DBE program, which began in the late 1980s to correct past discrimination and level the playing field, requires that minority- and women-owned businesses have a minimum stake in airport contracts.
In 2004, Wilcox, who is Hispanic, teamed with Host International Inc. to co-own a Chili's franchise in Terminal 4, according to the 25-page report which is available online at www.goldwaterinstitute.org.
Soon after, Wilcox reported $113,000 in profits from the deal, even though she did not financially contribute.
Host International, which has the main contract for all food and beverage sales in Terminal 4, had loaned Wilcox $450,000 that was to be repaid through restaurant profits, the report states. It goes on to say that Wilcox violated city and federal policies by failing to bring money into the partnership or have a role in the day-to-day operations of the franchise.
Flatten said the most lucrative airport-concession leases have gone to business owners who are past government officials, have been appointed to city and state boards and commissions, and who have donated $87,000 to campaigns since the beginning of the 2004 election cycle.
Many of the DBE business owners have net worths of more than $1 million and hold multiple contracts.
"This program is a scam within a scam," said Clint Bolick, a Goldwater attorney.
Bolick said the institute has no plans to sue the city again, but recommends that Phoenix reform the process so airport contracts are awarded to businesses based on criteria other than ethnicity or gender.