With bond market access in question, Oklahoma Turnpike work to stop
3 min read
The embattled Oklahoma Turnpike Authority will halt work on a controversial $5 billion expansion project until its access to the municipal bond market is assured.
The work stoppage effective Friday comes as the OTA faces an investigative state audit, litigation by property owners opposed to the project, and legislation that would impact the selection and actions of its board members.
The agency is also awaiting a decision by the Oklahoma Supreme Court on the validity of $500 million of revenue bonds to jumpstart funding for the 15-year ACCESS (Advancing and Connecting Communities and Economies Safely Statewide) Oklahoma plan.
“While OTA remains in a strong financial position in large part due to our exceptional accounting practices and financial controls in place, it is no longer prudent to continue funding work without a clear timetable for access to the bond market,” Tim Gatz, who is the turnpike authority director and state transportation secretary, said in a memo this week to the agency’s board.
Even if the bonds are validated, “ongoing litigation could also have a significant impact on OTA’s ability to get favorable interest rates and could affect a decision to move forward with a bond offering,” Gatz said in a separate memo to project consultants Tuesday.
He added the scope and timetable of the state audit would have to be assessed by investment advisors to determine its impact on the bond sale.
Oklahoma Attorney General Gentner Drummond ordered the audit in March, citing concerns he heard from lawmakers, state employees, and others about “improper transfers between the OTA and the Department of Transportation; improper contracting and purchasing practices; and inadequate internal financial controls.”
Drummond on Tuesday said news of the work stoppage was concerning, causing him to “question the (OTA’s) leadership and cash flow management.”
“While it is unclear what the future holds for OTA, I am certain that the investigative audit I have ordered is needed now more than ever,” he said in a statement.
Turnpike expansion opponents cheered the OTA’s decision.
“It is neither lawful nor appropriate for the OTA to continue to work on the legally unauthorized East West Connector, South Extension, or Tri-City Connector proposed new turnpike routes,” Amy Cerato, president of Pike Off OTA, said in a statement.
Property owners in the path of turnpike extensions sued the OTA last year claiming they were blindsided by the project or that planned routes lacked legislative authorization.
In December, a district court judge found OTA “willfully” violated the Open Meeting Act in a ruling the OTA is appealing.
A second lawsuit, claiming bond financing and building of three routes violate state statute, was dismissed by a district court that month on the basis that the Oklahoma Supreme Court has exclusive jurisdiction over turnpike bonds.
If the high court validates the bonds, OTA would need to return to the state’s Council of Bond Oversight because that body’s conditional approval of the debt expired in February. https://www.bondbuyer.com/news/oklahoma-turnpike-bonds-conditionally-approved
Last year, OTA selected Wells Fargo as senior manager and Stifel, Nicolaus & Company; Morgan Stanley; BOK Financial; and Raymond James as co-managers for the initial debt issuance.
Meanwhile, a bill allowing legislative leaders to appoint four of the six OTA board members, shortening their terms to six years from eight, and prohibiting them from voting on items in which they have a direct financial interest, cleared a Senate committee on Tuesday after passing the House in March in an 89-3 vote.
