OKLAHOMA CITY — No one objected, and there was no legal reason to say no: So reads the Oklahoma Supreme Court’s stated reasoning for its decision to approve a new funding mechanism for state transportation projects.
Yet a judge said he was not comfortable being asked to approve an unproven process – especially if that approval could be used as legal protection in the event of problems later.
At the end of the 2021 session, legislative leaders presented a budget plan, saying they were on track to make record investments in transportation and other budget priorities and still had money to spare. deposit in savings. Bills to put this budget plan into action were made available to the public and other lawmakers for review just hours before they were put to a vote and approved.
In that pile of bills was House Bill 2896, which authorized $200 million in bonds to fund projects in the Oklahoma Department of Transportation’s eight-year plan. The bill created a new law directing the Oklahoma Capitol Improvement Authority to issue bonds and execute federal loans with the U.S. Department of Transportation pursuant to the Transportation Infrastructure Funding and Innovation Act. .
The new mechanism allowed ODOT to use federal funding, depositing the net proceeds of the funding into a building fund “to provide financing for the acquisition of real estate, as well as improvements therein. , and personal property, to construct, maintain and improve the state highway and bridge assets identified” in ODOT’s eight-year plan.
The bill states that bonds issued under the new law “shall not at any time be deemed to constitute a debt of the state” and “neither faith and credit nor the power of taxation of the state or of any of its political subdivisions are pledged, or may hereafter be pledged, for the payment of principal or interest on such bonds.”
The law allows bond bonds to be sold, placed with the U.S. Department of Transportation, or the OCIA could enter into an agreement with “credit enhancers and liquidity providers deemed necessary to effectively market the bonds.”
OCIA filed a petition in the Oklahoma Supreme Court seeking approval for bonds issued to fund ODOT’s RAAMP plan, improving two-lane rural highways. The RAAMP plan is expected to take years, implemented gradually through “funding packages and project packages,” the court said.
“The total costs associated with RAAMP are estimated to be over $400,000,000 with funding secured by a combination of federal allocations, state appropriations, and the proceeds of one or more Department of transportation of the United States,” the court documents state.
“We have regularly approved similar bond/loan applications in the past,” the court majority said. “More recently…we faced an almost identical scenario when the Oklahoma Turnpike Authority applied for approval of revenue bonds and a TIFIA loan to finance the construction of a toll highway project near Tulsa.
“As in the present case, the OTA request was not contested. Having no objections, we assumed original jurisdiction in the 2018 case and approved the funding proposal…
“The proposed TIFIA loans are specifically authorized by the legislature as an essential government function,” the court said. “A valid notice of this request has been given by the OCIA, and no protest has been presented. Thus, there is no legally or factually justifiable reason to disapprove the request.
Only Judge Dustin P. Rowe chose to partly agree but partly oppose. Rowe agreed there don’t appear to be any clear legal issues with the app.
“I am writing separately to address a number of concerns I have about the nature of these proceedings,” Rowe wrote. With no one objecting to the request, the court was left with no real case or controversy to resolve, Rowe wrote.
“Instead, we are being asked to prematurely judge whether a complex financing structure and hypothetical financial instruments comply with Oklahoma state laws and Constitution,” Rowe wrote.
Although the court has the power to rule on the matter, “I can’t say I’m comfortable doing so,” Rowe wrote.
“In rendering judgment in this matter, we are not only sanctioning a process that has not yet been completed – and approving acts that have not yet been issued – we are also excluding the right of any person or entity to challenge their validity at a later date, even if a substantiated claim arises,” Rowe wrote.
The benefits of obtaining court approval on government-guaranteed bonds are “obvious and significant” as it gives investors confidence.
“I think, however, that the Legislature could devise other means to promote confidence in government bonds without requiring this Court to issue premature advisory opinions,” Rowe wrote.