The Woodward News

August 20, 2012

City issues response to FAA report

Rowynn Ricks
Woodward News

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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Here is the letter sent by City Attorney Aaron Sims to FAA officials

Aug. 20, 2012



Mr. Edward Agnew, Manager

Arkansas/Oklahoma ADO

Federal Aviation Administration

2601 Meacham Blvd.

Fort Worth, TX 76137



Re: West Woodward Airport (WWR), Woodward, Oklahoma; FY 2012 Post Inspection Land Use Report



Dear Mr. Agnew

The City of Woodward (City) is in receipt of the FY-2012 Post Inspection Land Use Report compiled by Edward Chambers on the West Woodward Airport (WWR) in Woodward, Oklahoma dated July 24, 2012. It appears this inspection was conducted on your recommendation. Please accept this correspondence as the City's response to this Report and a request for information from the FAA.



The report states that Inspector, Mr. Chambers, visited the West Woodward Airport on June 11 and 12, 2012. The Inspector indicated that upon arrival at the airport, he met with a group of "concerned citizens," including the airport manager. The Inspector apparently met with these "concerned citizens" for a substantial amount of time, while spending less than three (3) hours with the City's representative, Mr. Doug Haines, during his two (2) day inspection. The City would request that the Inspector identify the "concerned citizens" upon whom the Inspector relied to provide information concerning the City's operation of its airport and the surrounding industrial properties.



Prior to receiving the Report, the City Manager, Mr. Alan Riffel, was contacted by Randy Ellis, an investigative reporter with the Daily Oklahoman, on July 27, 2012. Mr. Ellis had in his possession a copy of an Inspection Report concerning the West Woodward Airport. When asked, Mr. Ellis identified the report as being dated July 16, 2012. However, the Report to the City is dated July 24, 2012, and was not received until after being contacted by Mr. Ellis. The City would request an explanation of the discrepancy in dates and how the media received a copy of a report before the subject of the inspection received the report. We appreciate your attention to these procedural questions.



The Inspector references various deeds and leases concerning the airport property from agencies of the Federal Government to the City of Woodward dating to 1948. The Inspector also references various Releases from the Federal Government to the City concerning properties dated between 1970 and 1998. Following these releases, the released property was deeded to the Woodward Municipal Authority (WMA), a public trust. The Inspector has required that title to these properties be "returned to the airport." It should be recognized that these properties have always, since acquisition by the City, been titled in either the City or the WMA.



Moreover, West Woodward Airport (WWR) and its operations are ultimately under the oversight and ownership of the City. The City created, by ordinance, an Airport Authority Board, to assist the City in the operation of the City's Airport . The Airport Authority is not a separate legal entity and does not have any authority apart from the City. The role of the Airport Authority is currently that of an advisory board.



Concerning the titled ownership of the properties, the City contends that WMA is an appropriate entity in which title to these properties may be held. In 1968, the Woodward Municipal Authority was created pursuant to the authority granted in Title 60, Oklahoma Statutes, Section 176, et. seq. WMA is a public trust created for the benefit of the City of Woodward. Oklahoma state statute specifically provides a public trust may hold title to real estate. One of the stated purposes of the WMA is to perform, on behalf of its beneficiary, the City, the functions and powers as authorized by industrial development statutes. The express purpose of the released airport properties are for industrial development. Again, much the like the Airport itself, apart from the City, the WMA cannot exist. Title of property in a public trust is the legal equivalent of holding title in the name of the beneficiary. 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.



The Inspector makes the assertion that the subject property has been sold and/or leased for less than the fair market value. The Inspector provides absolutely no support for his allegation. He never requested any appraisals or legitimate information on the fair market rental value of the properties. The City is offended by the unsubstantiated allegation that the City illegally leased the subject properties at less than fair market value.



The Inspector also alleges that the City diverted revenue away from the Airport. The facts actually show that the City's general fund has consistently been used to subsidize the airport operations. Over the last ten (10) years, operations at the Airport have generated approximately, $3.9 million, while the cost of airport operations was approximately $4.7 million. Please note this amount does not include City participation in grants. On average over the last ten (10) years, the City general fund has provided $80,000.00 per  year for airport operations over and above the revenues generated by airport operations. The Inspector did not consider this financial information and failed to even request this type of information.



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. Another factor to consider is, when released, the properties in question were unimproved and contained no buildings or other assets. Therefore the rental amounts in question would only be applicable to the value (sale or rental) of the land alone, without improvements.



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. In all future leases, the City will specifically identify that portion of the rental amount attributable to the land alone and will provide for inflation induced escalation of that rental amount.



The Inspector also required a gun range to be relocated off the airport property. It should be noted that this gun range was used solely for skeet and trap shooting utilizing shotguns. This was not a rifle or handgun range. The gun range was closed immediately upon receipt of the report. The City is attempting to find a suitable alternate location.



The Inspector referenced a 1989 letter concerning the gun range. The City is not able to confirm receipt of that letter. The City would like to inform the FAA that at the time the gun range was located at its current location, Runway 5-23 (the crosswind runway) had been abandoned for several decades. This runway was reconstructed pursuant to FAA guidelines in approximately 2003-2004.



The Inspector further required the relocation of a travel trailer and cargo trailer off the airport property. This will be addressed. The enforcement of these matters has historically been the responsibility of the airport manager, and prior to March of 2012, the Airport Authority Board.



A T-hangar which has been removed was also mentioned in the report. The airport authority found the subject T-hangar to be structurally unsound and believed it to pose a danger to persons and property. This finding occurred in 2008. The airport authority requested the hangar be removed by the City. The City, pursuant to statutory authority, declared the hangar as surplus property and entered into an interlocal agreement with the Town of Fort Supply to dismantle and remove the hangar at no cost to the City. In all aspects, this procedure was done according to law.



Finally, the Inspector referenced the disposition of a portion of asphalt milled from the abandoned crosswind runway. As part of the reconstruction of Runway 5-23, the FAA authorized the milling of the abandoned runway and the use of the millings in the base of the reconstructed crosswind runway and the storage of the remainder of the salvaged materials. It is the City's understanding that salvaged material from the airport may be sold, so long as either the proceeds from the sale be credited to the airport fund within the City's accounting system, or the amount received be taken into account in any subsequent AIP grant applications.



The City requested offers to purchase the millings and the City sold the millings to two (2) separate entities, which have no inappropriate ties to the City or any of its officials. The City sold approximately 1,000 tons at approximately $3.50 per ton, with the buyers providing all loading and transport of the product from the airport property. The Inspector stated an estimated value and amount with no support for those allegations.



If there are millings which cannot be accounted for either by being used in the reconstruction process, sold as described above, or still remaining at the airport property, the removal of these amounts occurred without the consent of the City or its officials. The airport is fenced, gated and is supposed to be locked. The responsibility for monitoring of the fences and gates is upon the airport manager, and, prior to March of 2012, the Airport Authority Board.



The airport fund, as part of the City's accounting system, will be credited with the amount received by the City for the sale of the millings.



The City believes this response addresses all the legitimate concerns of the FAA as addressed in the FY-2012 Post Inspection Land Use Report on the West Woodward Airport (WWR). The City considers all issues addressed and this matter closed.



If you have any questions or require further documentation, please do not hesitate to contact me.



Very truly yours

(s) Aaron R. Sims

Aaron R. Sims



copies of this letter were sent to

City Manager

Mayor

City Commissioners



Edward Chambers, PE

Compliance Program Manager

2601 Meacham Blvd.

Fort Worth, TX, 76137



Michael P. Huerta, Acting Administrator

Federal Aviation Administration

800 Independence Ave., SW

Washington, DC 20591



Victor Bird, Director

Oklahoma Aeronautics Commission

120 N. Robinson Ave. Ste. 1244W

Oklahoma City, OK 73102



The Honorable James M. Inhofe

205 Russell Senate Office Building

Washington, DC 20510-3603