After a year of failed negotiations, the Oregon Department of Transportation demanded that the Sisters Eagle Airport repay more than $733,000 in grant money the state had deemed was misused — nearly double the amount ODOT previously wanted repaid.

The airport property owners and operators responded Friday when its attorneys filed a claim against ODOT.

On Monday, ODOT released a statement that said it “entered into a full year of good faith, complex and confidential negotiations with the owners of the Sisters Airport in order to reach a settlement regarding the grant. Those negotiations failed to reach a settlement.”

The state agency has since filed a counterclaim demanding the full amount of grant money be returned, said ODOT spokesperson Dave Thompson.

ODOT entered a grant agreement with the airport in 2015, agreeing to provide Sisters Eagle Airport $733,259 in ConnectOregon funds to be used “solely for construction of a taxiway on the property, pavement of aircraft parking and ramp areas, installation of runway lighting and improvements associated with these projects.” ConnectOregon uses lottery money to fund projects that would improve various nonhighway modes of transportation.

The agency received a “citizen inquiry expressing concerns” about the use of the funds for the runway project in 2017.

After further investigation, ODOT concluded airport owner Benny Benson had misused $390,185 of the grant funds, including $215,436 that was paid to Benson, other airport managers and two companies — ENERGYneering Solutions, Inc. and B2 Aviation — where Benson is the president and he and his wife, Julie, are co-owners.

Sisters Eagle Airport also owed $13,033 to meet the minimum match requirement that was set up in the grant agreement but was never paid.

The original amount of $390,185 in allegedly misused funds was supposed to be repaid in April. On Feb. 16, ODOT demanded repayment of the entire amount of the grant of $733,259 within 15 days.

On Friday, the Bensons’ corporations Sisters Airport Property LLC and Sisters Runway Inc. filed the suit in Marion County Circuit Court asking for a judicial declaration stating no money is required to be repaid, said Bob Steringer, the attorney representing the Bensons’ corporations. The suit also asks the court to require ODOT to pay attorneys fees.

The Bensons are the co-owners of Sisters Airport Property and Julie Benson is the president and secretary of Sisters Runway Inc., according to court documents. Sisters Airport Property is the company that operates the airport and Sisters Runway Inc. owns the property where the airport is located.

“We made a decision not to make further public statements other than what we filed in court,” Steringer said. “We’ve done the best we can.”

According to court documents filed on Friday, the airport says it did not breach the grant agreement and that it “completed the project as promised and ODOT has suffered no damage as a result of the alleged breaches.”

In addition, the suit states that ENERGYneering Solutions was the general contractor for the project even though there was no written contract at the time of the project. A contract was later written stating it would “retroactively” cover ENERGYneering Solutions’ performance during the project, according to court documents.

In the counterclaim filed Monday, ODOT states that the airport submitted five invoices for services performed by ENERGYneering Solutions to the tune of $852,399.06 — including more than $25,000 paid to Benson and two charges for mobilization that ODOT says were not credible because the associated businesses are located at the airport. The submitted invoices also included hourly rates for ENERGYneering Solutions employees that far exceeded payroll costs for those same employees, according to the court documents.

In the statement released by ODOT, the agency said it is letting the issue work itself out through the legal system or until a settlement is reached.

“At all times in the past year ODOT negotiated confidentially and in good faith, attempting to settle the dispute. ConnectOregon grants are funded by Oregon Lottery dollars. ODOT values the integrity of the program, and is taking this next step to protect public (funds),” the statement said.

The airport has 30 days to respond to the counterclaim, though the matter could end up going to trial, Steringer added.

— Reporter: 541-617-7829, acolosky@bendbulletin.com