City Council approves resolution to allow airline service to get financing

TULSA, Okla. (AP) _ Financing of a new private, nonstop airline service based in Tulsa has received a crucial boost. <br><br>The Tulsa City Council on Tuesday approved a resolution that allows the Tulsa

Wednesday, November 29th 2000, 12:00 am

By: News On 6

TULSA, Okla. (AP) _ Financing of a new private, nonstop airline service based in Tulsa has received a crucial boost.

The Tulsa City Council on Tuesday approved a resolution that allows the Tulsa Industrial Authority to issue $31 million in ``notes or other evidence of indebtedness'' to assist in the service's financing.

Great Plains Airlines, which sought the resolution, must meet a Dec. 1 deadline to secure its financial plan.

The council approved the request by a 7-2 vote, narrowly achieving the supermajority required because the resolution included a waiver of competitive bidding. The resolution also sought placement of indebtedness with the Bank of Oklahoma.

Great Plains plans to target corporate travel with a no-discount airlines, initially offering direct flights to New York, Los Angeles, San Francisco, Seattle and Washington, D.C.

Councilors liked the economic advantages such a service would bring to Tulsa.

``I see this as being akin to when the city brought in the railroad,'' Councilor Sam Roop said. ``This is necessary infrastructure to a city in today's modern, corporate world.''

But Councilors Clay Bird and Randi Miller said the venture, which uses Air Force Plant No. 3 as collateral, is too risky, and they voted against it.

``I'm looking at it as to whether there's a possibility of failure. Would I invest my own money in it? No,'' Bird said.

Miller said taxpayers would probably voted against it, too.

``I think it's too high of a risk. It's the voters I have to answer to. There's not many new commuter airlines out there that are successful,'' she said.

During the tally, Councilor Art Justis hesitated noticeably before voting for the resolution. He later said it was a difficult decision because he has a lot of concerns about the project. But in the end, it appears the risk to the city is low, he said.

Councilor Joe Williams said local government has to make some type of commitment to secure tax credits for the airline.

``It's not cash. I think it is a reasonable commitment,'' Williams said.

Earlier this year, the council approved using Air Force Plant No. 3 as collateral to obtain $18 million in state tax credits, which are valued at $15 million.

Airline officials explained that the tax credits will reduce the debt by half, and $8 million of that remaining half will be put in escrow. The company also will enter into covenants leaving the city's actual exposure at about $2.5 million.

There also is $1.6 million in private funding that officials say will increase once all the financing mechanisms are in place.

Putting up the entire 335-acre Air Force plant site for collateral was necessary, officials said. The plan, they say, is to eventually release all but 25 acres, which would be enough to secure the $2.5 million at risk.