Oklahoma Turnpike bond sale condition met, sale can proceed

A court decision on Monday cleared the way for the Oklahoma Turnpike Authority to head to the municipal market with $500 million of bonds to start financing a controversial expansion program.

The Oklahoma Supreme Court, which validated the bonds Aug. 1 in a 6-3 decision, denied a petition for a rehearing requested by property owners who unsuccessfully challenged the debt issuance.  On Sept. 11, Oklahoma’s Council of Bond Oversight gave final state approval to the bonds conditioned on the resolution or dismissal of the rehearing petition. 

“This is one of the final steps in OTA being able to move forward with the issuance of $500 million in bonds for the ACCESS (Advancing and Connecting Communities and Economies Safely Statewide) Oklahoma long-range plan,” the state agency said in a statement.

OTA noted it will meet all of the oversight council’s procedural conditions before selling the bonds as soon as late October. Those conditions, which include opinions from bond, underwriter, and disclosure counsels, are typical for bond issuances.

The $5 billion, 15-year ACCESS program, which was announced in February 2022, ran into legal delays and political opposition driven by property owners surprised to find themselves in the path of proposed expansion routes. 

Ahead of pricing, the second senior revenue bonds were rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings — all with stable outlooks. Those are the same ratings OTA had for its last issuance of about $366 million of revenue refunding bonds in 2020.

In a statement, Oklahomans for Responsible Transportation, which has been fighting the ACCESS program, said it reminds “all potential investors that there is an ongoing investigative audit and the OTA was denied permission from the Bureau of Reclamation to build across federal lands, which is required for both of the proposed alignments.”

“For these reasons we believe any bonds issued in 2023 will be far riskier than their credit ratings imply,” the statement said.

Oklahoma Attorney General Gentner Drummond ordered the audit in March, citing concerns about “improper transfers between the OTA and the Department of Transportation; improper contracting and purchasing practices; and inadequate internal financial controls.” The reclamation bureau in January denied OTA’s application for the South Extension to cross two sections of federal property. 

A team of underwriters for the bond sale has been in place since summer 2022, although Wells Fargo resigned as lead underwriter in May in the wake of its placement on the Oklahoma Treasurer’s list of companies banned from government contracts for “boycotting” the oil and gas industry. RBC Capital Markets was tapped as its replacement.