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City Issues Response to False Campaign and Statements Made by IC Bus of Oklahoma and Navistar

This article was archived on 6/7/2020

Background Documents and Additional Details


On the afternoon of Tues., May 5, IC Bus of Oklahoma and their parent company Navistar launched a false campaign and subsequently issued a formal press release from Navistar’s corporate headquarters, claiming that the City of Tulsa has threatened to evict IC Bus from their facility – a false statement.

The City of Tulsa has no intent of issuing an eviction notice as the City is currently under agreement with Navistar to negotiate and sign a new lease with IC Bus of Oklahoma and has been moving forward with good faith efforts to negotiate a new lease.

The below provides a brief summary of the actions taken by the City over the course of nearly two years of negotiations and attempts to partner with IC Bus and Navistar to invest in substantial maintenance issues at the plant. The City of Tulsa remains committed to partnering with our largest employers in Tulsa, and to leverage public assets and resources in a fiscally responsible manner.

Mayor G.T. Bynum said, “The City of Tulsa is currently negotiating the renewal of a lease on one million square feet of industrial work space owned by the citizens of Tulsa. The tenant has leased that space for two decades at a total lease price of one dollar. The only thing required of the tenant under their contract is that they properly maintain this taxpayer-owned facility so it is safe.

“A public relations campaign launched today grossly mischaracterizes these negotiations in an obvious attempt to politicize them. My response: the citizens of Tulsa will not be played for suckers.

“I remain confident we can identify common ground to secure jobs and properly maintain this facility. We’ve done so with great success during my time as mayor with other tenants, and I see no reason why this case would be any different. 

Overview and History of Negotiations To-Date

In 2017, the City of Tulsa and Tulsa City Council adopted the City’s first Strategic Plan, known as the AIM Plan. Under the AIM “Add Jobs and Grow the Workforce,” the City established the proposed action to “Develop and implement a plan to revitalize Air Force Plant 3 (AFP3) and industrial land surrounding the airport.” Since this time, the City and its public trust authorities have been engaged in comprehensive efforts to invest in public assets and support private investment and job growth. Notable announcements that have resulted from these efforts include American Airline’s commitment to invest $550,000,000 in its Tulsa Maintenance Base and Spirt AeroSystems plan to invest $80,000,000 in their Air Force Plant 3 facilities. Both of these announcements have represented substantial public-private partnerships, with the City leveraging significant public resources to spur investment and job growth.

In October 2018, the City of Tulsa initiated discussions to partner with IC Bus of Oklahoma and Navistar to remedy maintenance issues which have been a topic of persistent discussion between the parties and publicly. The below provides a timeline of efforts since that period.

 

Date

Action

Notes

December 2017

AIM Plan adopted by City Council

Includes stated priority to develop strategy to invest in the revitalization of AFP3.

January-July 2018

Asset Management and Mayor’s Office of Economic Development research and develop proposed strategies for implementing capital improvements at AFP3

Focus on availability and use of Vision Tulsa Airport Infrastructure Funds and potential use of City-guaranteed revenue bonds through the Tulsa Public Facilities Authority, in addition to a willingness to investigate additional mechanisms to facilitate a partnership approach to private investments.

August 2018

Finalize proposals for major investments in AFP3 facilities for Spirit AeroSystems and Navistar/IC Bus

Conduct outreach to Spirit AeroSystems and Navistar/IC Bus leadership to schedule meetings with Mayor G.T. Bynum, Asset Management, and Economic Development leadership to present partnership investment proposal.

October 29, 2018

Presentation to IC Bus plant leadership regarding investment proposal to allow for the implementation of $16,000,000 in critical electrical repairs previously identified by a Navistar-funded consultant, Ghafari Associates (produced on September 22, 2017)

Plant leadership provide presentation to City leadership that acknowledges maintenance disparities and lack of capital plan to address. “Majority of electrical infrastructure is extremely aged and obsolete…substation decks are in poor shape posing significant risk to production if failure occurs.” 

November 9, 2018

Follow-up call with Navistar facilities leadership regarding investment proposal; call initiated by Navistar following meeting with IC Bus plant staff

 

Participating Navistar staff: Karen Golden, Global Facilities and Risk Management; Megan White, Manager – Global Real Estate

Purpose was to provide overview of the proposal. Focus of Navistar staff was whether they could continue to maintain their $1 lease.

January 23, 2019

Follow-up email to Navistar staff by Kian Kamas to determine status of the review of COT proposal; COT staff had received no communication since 11/9/18 conference call

Conference call set for February 8th.

February 8, 2019

Asset Management, Engineering Services, Legal, and Mayor’s Office of Economic Development conduct follow up call with Karen Golden and Megan White of Navistar

Kian Kamas provides follow-up information related to the proposal and desire for the City to respond to the maintenance needs identified by IC Bus staff in their initial presentation. General sentiment from Navistar staff is non-responsive to efforts to assist with identified critical infrastructure needs.

February 14, 2019

 

 

Mark Hogan sends formal letter to Navistar notifying of City of Tulsa’s intent to engage a third party to inspect and assess the facility

 

Focus of inspection and assessment is to gain an independent, third-party assessment of the state of key building components for which Navistar is responsible for repairing and maintaining under the terms of the lease.

February 18, 2019

Kian Kamas notifies Navistar of COT intent to move forward with planned Vision-funded improvements

Goal of implementing improvements is to ensure critical maintenance/repair is performed to ensure viability of asset long-term. Navistar staff seeks to confirm that grant does not come with any requirements in exchange; COT staff confirm the grant does not have requirements attached but does not eliminate key maintenance and repair provisions in the lease.

February 22, 2019

Mark Hogan sends formal letter regarding Vision funding of electric improvements

Confirms that improvements do not come with associated requirements, but do not relieve the tenant of maintenance and repair requirements in the current lease.

March 7, 2019

Karen Golden confirms receipt of letter dated February 14th

Indicates that the requested records related to previously performed, in-progress, or planned and budgeted repairs, maintenance, preventive maintenance and capital maintenance will be provided by deadline of April 30th.

April 30, 2019

Karen Golden provides 1-page overview of Navistar facility investments

Overview provides no details or back-up documentation, highlights $1.4M/year average spend over the past 8 years; projects $1.5M/year average spend over next 5 years; identifies average annual spend of $800k on facility maintenance and repair.

 April 30, 2019

Mark Hogan responds to Karen Golden email requesting additional detail on facility investments

 

Note: no response was received to this request

Requests additional information related to roofing, fire system upgrades, asbestos abatement, capital improvements and facility maintenance, IT infrastructure upgrades, road and parking lot upgrades, and security system upgrades.

August 2019

Cyntergy conducts assessment of Air Force Plant 3 facilities

 

August 12, 2019

Mayor G.T. Bynum approves contract for electrical upgrades at IC Bus leasehold

Southeast Tulsa Construction, Inc., Project No. 170045.2N, Contract No. 13511, amount of $1,576,647.36.

September 30, 2019

Cyntergy provides final results of assessment to Asset Management

Assessment provides independent verification of multiple Events of Default.

November 18,2019

City of Tulsa mails Notice of Default to Navistar

Letter dated November 13, 2020.

December 16, 2019

Jacqueline Gelb emails Kian Kamas requesting call to discuss impact of Notice of Default on Navistar’s operations

 

January 15, 2020

In-person meeting with City of Tulsa and Navistar staff

 

January 17, 2020

City of Tulsa mails Notice of Termination of existing lease to Navistar

Notice of Termination requests Navistar enter into Agreement to conduct negotiations to enter into a new Lease Agreement no later than February 14, 2020.

February 13, 2020

City of Tulsa and Navistar enter into Standstill Agreement

City of Tulsa and Navistar commit to entering into good faith negotiations to enter into a New or Amended and Restated Lease Agreement, to include a Maintenance Plan to remedy past due maintenance.

February-March

City of Tulsa and Navistar begin initial lease negotiations

 

April 15, 2020

City of Tulsa and Navistar enter into amended Standstill Agreement

Extends timeline for negotiations to May 29, 2020. City of Tulsa provides Navistar counsel with detailed timeline to ensure negotiations are able to progress on schedule in an effort to ensure a New or Amended and Restated Lease is completed by May 29, 2020.

April 16, 2020

City of Tulsa provides Navistar with copy of project schedule for Vision Tulsa-funded electrical improvements

Work to begin May 1, 2020 and take approximately 6 months to complete.

April 21, 2020

City of Tulsa, IC Bus plant leadership, and Navistar staff host video conference to discuss Maintenance Plan

Purpose of meeting was to discuss improvements made to-date at plant, identify areas of compromise, and continued areas of disagreement.

April 28, 2020

Navistar returns proposed Amended and Restated Lease to City of Tulsa with review and comments

 

May 1, 2020

City of Tulsa sets meeting with Navistar for Thursday, May 7th to continue discussions on Lease Agreement

City of Tulsa commits to providing a response draft of the lease by Wednesday, May 6th.

Background Documents and Additional Details