Tulsa Airport defaults loan
Defaulted airport loan raises concerns
By Julie Bisbee
The Oklahoman
A demand by taxpayers that members of the Tulsa City Council and two other boards refrain from voting on measures that would require taxpayers to help pay $7.5 million on a defaulted loan has no bearing, the Tulsa city attorney said Monday.
Taxpayers and members of Citizens for Fair and Clean Government filed the demand Thursday with the mayor and the city council.
The demand seeks to postpone any vote that would allow the Tulsa Industrial Authority, Tulsa Airport Improvement Trust and the City Council to take action on the defaulted loan with Bank of Oklahoma. The demand cites a portion of Oklahoma law that allows taxpayers to sue government entities if they believe taxpayer dollars were unlawfully spent.
"It doesn't do anything," said Alan Jackere, city attorney. "There haven't been funds unlawfully spent, because nothing has been done."
Bank of Oklahoma gave a $30 million loan to help get the now-bankrupt Great Plains Airlines to locate in Tulsa. As collateral for the loan, the Tulsa Airport Improvement Trust gave the Tulsa Industrial Authority a portion of land near the airport.
However, this land was given to the airport by the Federal Aviation Administration and can't be sold to help pay for an airport, according to federal restrictions. If the debt doesn't get paid, the airport could face bankruptcy, among other options, said Jeff Mulder, Tulsa airport director.
The city had discussed helping to pay off the debt to ensure the future of the airport, but settlement talks broke down last week and now the lawsuit between the Tulsa Industrial Authority and the Tulsa Improvement Trust is headed for courtroom.
"There are a number of defenses that we think ought to be brought to a court's attention," Jackere said. "I think we were constantly looking for ways to settle the matter but there was no real meeting of the minds."
Tulsa Mayor Bill LaFortune has supported settlement talks, but last week said he would follow Jackere's advice and stop pursuing a settlement.
"I have serious concerns about the economic viability and the ongoing operations of our airport if litigation proceeds," LaFortune said in a statement. "However, the city attorney has ... issued a formal memorandum advising the city against proceeding with a potential resolution at this time."
David O'Connor, with Citizens for Fair and Clean Government, said his group was glad to hear that city would not be part of a settlement. However, tax dollars are still being squandered, O'Connor said.
"We were pleased," O'Connor said. "We're not blind enough to see that they done this before. As long as people sit back and do nothing this will continue to happen."
In legal documents filed Thursday, the Tulsa Industrial Authority claims the Tulsa Airport Improvement Trust did not hold up its end of the agreement between the two boards and should be responsible for paying off $8.5 million, the original $7.5 million, plus interest. If the trust, which has no revenue stream other than grants to do projects at the airport, can't pay it, then former airport trust attorney Richard Studenny should be held liable, the lawsuit alleges.
Studenny is being accused of giving bad advice that was the basis for the agreement. "He provided several years of outstanding service to Tulsa's airport trust," said Studenny's attorney Christine Little. "We look forward to defending our client's good name in court."
The parties are due back in court Nov. 23.
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