The saga of the bankrupt Great Plains Airlines is still costing the government millions of dollars in 2015.
Millions of taxpayer dollars were given to the private startup company but some of the loan details led to lawsuits and claims of illegal activity. No one has ever been charged with a crime for involvement with Great Plains Airlines.
The Tulsa Airports Improvement Trust and Bank of Oklahoma Financial Corporation through mediation settled a federal lawsuit concerning a loan guarantee for the failed airline.
Reports say that the trust will pay $1,560,000.00 to the Tulsa Industrial Authority and BOK Financial Corp and the bank will relinquish its mortgage on 15 acres of the Air Force Plant 3 at Tulsa International Airport.
Two years ago, the TIA and BOK sued the Tulsa Airports Improvement Trust for $15,600,000.00 for breach of contract when the trust failed to turn over collateral it guaranteed for a loan for the failed private airline.
Under the mediation deal, the Tulsa Regional Chamber will get $125,000.00 from the airport trust.
BOK claimed the $15,600,000.00 included principal, interest and fees that were owed to the bank for a loan it made to Great Plains Airlines in 2000. Great Plains defaulted on the loan in 2004 and at that time owed $7,100,000.00 on the note.
“We regret that errors made in 2000 by TAIT in structuring the transaction led to this long legal battle,” Tulsa Airport Improvement Trust Chairwoman Mary Smith said in a press release.
Under federal law, public airports are not allowed to finance public airlines.
The business scheme for Great Plains Airlines was to develop a regional service from Tulsa to Los Angeles, New York and Washington, D.C. Instead of purchasing airplanes, the airline leased two regional jets that lacked the range to make it to either coast and the airline began service to Colorado and Tennessee instead.
The City of Tulsa approved the issuance of $30,000,000.00 in Tulsa Industrial Authority bonds for Great Plains Airlines after the Oklahoma Legislature approved $18,000,000.00 in tax credits in 2000.
The tax credits at that time could be sold to other companies for a percentage of their face value. Great Plains sold the tax credits for $15,000,000.00 and used part of that money to repay the loan.
The $30,000,000.00 went to Great Plains after the industrial authority mortgage Air Force Plant 3 property next to Tulsa International Airport. The trust said it would buy the property should the airline fail.
Bank of Oklahoma previously sued the trust and former Mayor Kathy Taylor, who was on the Board of Bank of Oklahoma before she became mayor, agreed to settle that suit – without the consent of the City Council – with about $7,000,000.00 from the city’s sinking fund (funded by property taxes).
The Oklahoma Supreme Court later ruled that the city should not have joined the suit as a defendant and the money was ordered to be returned to the city.