The Woodward News

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August 20, 2012

City issues response to FAA report

Woodward, Okla. — Woodward City Attorney Aaron Sims has sent a reply to the the Federal Aviation Administration (FAA) regarding a recent compliance inspection report that alleged the city improperly handled airport property.

The allegations in the FAA report included that the city "inappropriately transferred title to airport land to the [Woodward] municipal authority," and received proceeds from leasing that land, which should have gone to support airport operations.  The report also alleges that the lease amounts do not "bear any relation to fair market value based on appraisal."

"The City is offended by the unsubstantiated allegation that the City illegally leased the subject properties at less than fair market value," Sims wrote in the letter to FAA officials.

The attorney read the letter in its entirety to Woodward City Commissioners during their regular meeting Monday night in City Hall.  He stated the letter had already been mailed earlier in the day.

Click below to watch a video of Sims reading the letter and then responding to a few questions from City Commissioner Steve Bogdahn.

The letter was addressed to Mr. Edward Agnew, manager of the Arkansas/ Oklahoma Airports District Office with the FAA.  But additional copies were mailed to Edward Chambers, the compliance program manager who conducted the inspection; Victor Bird, director of the Oklahoma Aeronautics Commission; Michael P. Huerta, acting administrator for the FAA; and U.S. Sen. James Inhofe.

Sims claims that the inspector provided no support for the allegation that the city was leasing property at below market value, having never requested any appraisal information concerning the determination of fair market value.

In addition, he stated that in determining that market value, only the value of the land itself, minus any buildings or other improvements, could be considered since only the land itself was released by the FAA to the city.

Considering that factor along with the city's subsidization of airport operations to the tune of $800,000 in the last decade, Sims said city records show that the airport has received far more in revenue than whatever proceeds have been generated by the leasing of the airport property.

"It is clear, historically, that the City's general fund has provided the funds to pay the cost of airport operations in an amount far in excess of the fair market rental value of the released Airport properties," he said.

Nevertheless, the attorney said the city would revise some of its accounting procedures to clarify that the airport does receive revenue generated from leasing any airport land.

"To address the recommended action from the Inspector's report, the City, as a function of accounting, will assign all future rental income from the land alone to the airport fund portion of the City's accounting system," he said.

In addition, he said all future leases for airport land will clearly reflect what portion of the rental amount is attributable to the land alone.

But the city doesn't intend to act on another recommendation in the FAA report, which told the city to "return" title to the airport properties in question back to the airport.

That's because the city attorney refutes the allegations that the city "inappropriately" transferred the titles to begin with.

Sims said that the Woodward Municipal Authority (WMA) "is an appropriate entity in which title to these properties may be held."

That is because the WMA was set up as a public trust, and therefore, by statute, is allowed to hold title to real estate, he said.  And since the WMA was created for the benefit for the city, it may act on behalf of the city, including holding title for land owned by the city, which includes the airport, he said.

"Therefore, the City asserts that no change in title of the airport properties is warranted and that title is now, and has always been, held by an appropriate entity," Sims said.

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