HOUSTON – This past March, KPRC 2 Investigates provided Houstonians an in-depth look at the Houston Airport System’s Development Corporation (HASDC), a small corporation with three employees earning more than $800,000 annually combined. “I appreciate you bringing this forward, but without you, I would not know about it,” said Mayor John Whitmire.
KPRC 2 Investigates continues to shine a light on HASDC, which assists Latin American nations in improving their airport operations. Its biggest revenue producer is the International Airport in Quito, Ecuador, generating around $2.1 million, according to Agustin Arellano, President and CEO of HASDC.
Our initial report showed how HASDC is “affiliated” with the Houston Airport System but has no legal or financial responsibilities. Arellano adds, HASDC is a private non-profit corporation, self-funded without any contributions from the city or the Houston Airport System. The corporation was established nearly twenty-five years ago with approval from the Houston City Council.
Less than 24 hours after our first report, HASDC’s website was taken down and revamped, removing mentions of affiliation with the Houston Airport System, and adding a new policy section. “We decided to clean that up because we certainly are not affiliated, we work for, but we are not affiliated,” said Arellano.
During our months-long investigation, we uncovered numerous emails showing collaboration between high-ranking executives within the city’s airport system and Arellano’s team. Notably, the Aviation Director for the Houston Airport System also serves as the Chairman of HASDC’s Board. Jim Szczesniak, who became the city’s new Aviation Director following the abrupt resignation of former director Mario Diaz, sent Arellano a letter asking many of the same questions we had previously posed to Szczesniak.
Diaz, the former airport director has no ties to KPRC 2 Investigates Mario Diaz.
Our investigation reveals that the private non-profit has been reporting overall net assets of approximately $20 million to the IRS. HASDC’s IRS filings state, “The organization seeks to promote air transportation, trade, and economic development for the benefit of the Houston Airport System,” as it provides support globally under the name Houston Airport System Development Corporation.
“Do you know of any time we’ve seen any kind of money coming back from Ecuador on this,” we asked the City of Houston’s Attorney Arturo Michel.
He responded with the Mayor by his side, “We’re having the finance department and legal take a look at that to see what’s come in.”
Arellano mentioned that in recent years, HASDC provided a $5 million grant to Collins Aerospace, an anchor tenant at the Houston Spaceport. This occurred even though the Spaceport has its own Development Corporation with membership appointed by the mayor.
Arellano noted the airport’s involvement in the grant process, “They go to HAS, and they do the application, and then HAS can bring those cases,” said Arellano.
When asked if this was an open grant to any corporation, Arellano admitted, “No, no it is not open to any corporation.”
However, the Houston Airport System tells KPRC 2 Investigates it has no records for grant applications after we filed a Texas Public Information Act request for the applications Arellano mentioned.
We presented our findings to former U.S. Attorney Ryan Patrick, who bluntly told us, “By looking at these documents, you can’t exactly tell what this non-profit is for and what they do.”
Patrick, who has experience in examining IRS filings to ensure compliance with federal law, said, “I would start asking a lot of questions. I’d want to see records, understand which public employees are working on these projects, and get behind these IRS filings.”
Although he’s only been on the job for a few months, Szczesniak believes the private non-profit, separate from the city but whose business he helps oversee, is beneficial.
“What we are trying to do is use it to generate economic activity for the Houston region. Whether we pour that into the airports or the spaceport, it’s all about growing the economy in Houston,” said Szczesniak.
The Houston Airport System states HASDC provided a $250,000 grant to San Jacinto College for an aviation program and $50,000 for a new chapel at William P. Hobby Airport.
