Kansas City Port Authority again in financial trouble

KANSAS CITY, Mo. -- After years of scrutiny and criticism -- and promises to do better -- the Kansas City Port Authority continues to have financial management problems, according to recent audits.

The audits found that the Port Authority, which controls millions of city dollars as it helps oversee riverfront development, has hired firms without bids, contracts or written agreements and borrowed more than $1 million to cover a cash shortfall.

Mike Burke, the Port Authority's attorney, said the problem is sloppy record keeping rather than financial mismanagement.

"There is no investigation," he said. "There is no missing money."

But city manager Wayne Cauthen said city officials have spoken to Port Authority officials about the problems, and plan to have more meetings regarding the authority's operations.

"I just find it appalling," said Mark Funkhouser, a former city auditor. "My goodness, you have to specify what you are going to pay for before you start paying for it. Once they start doing the work, you are legally obligated to pay them for the work.

"It violates the first principle of good public finance."

City attorney Galen Beaufort said the Port Authority is not legally obligated to have written contracts for its business, but contracts are always recommended.

The Port Authority has a history in recent years of financial problems. In 1998, after the authority's chairman, Elbert Anderson, was accused of bribing a councilwoman, an audit found that the Port Authority had awarded no-bid contracts in apparent violation of state law. Anderson later was imprisoned on bribing charges.

And last summer, a city audit found that the Port Authority had hired one law firm without a contract, while a second law firm had a contract with the agency that was unsigned and undated.

The problems have continued, according to a financial audit released last month by Cochran Head & Co.

Among the problems -- the agency was forced to pay for work to prepare Richards-Gebaur Memorial Airport for sale after it failed to get a formal agreement with the city to do the work. That forced the agency to take $1 million from an account that was to be used by the city water department for sewer work. The agency has until May to pay that money back; board members said the funding is in next year's budget.

The audit also found that a Maryland firm hired to help with the airport project did some work without a contract. Patrick Sterrett, then the executive director of the Port Authority, approved payments of between $20,000 and $40,000 to S.S. Papadopulos & Associates. Agency officials said they didn't know the exact amount of the bill.

But auditors discovered there was no contract, and the payments were not made. Sterrett resigned to work in the private sector.

"It was a mistake on my part," said Sterrett. "It was caught in time."

Other Port Authority officials agreed and said they were putting more stringent controls in place.

Charles Andrews, president of S.S. Papadopulos, said his company did the work months ago and wants to be paid.

Vincent Gauthier, who took over the Port Authority last month, said he is working to get the situation resolved. And he said he will work to straighten out the agency's finances, then make sure the problems don't occur again.