Woodward, Okla. — 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.