A lawsuit filed against the Oklahoma Turnpike Authority last Friday has halted plans OTA had to advance its $600 million Driving Forward program, for now. It also is stalling work on the controversial Eastern Oklahoma County Turnpike.
The OTA on Tuesday voted to “table” a move to increase toll hikes to pay for the new projects. On Thursday, the state bond oversight commission might consider a $480 million bond sale to fund the project. However, the progress of that is also in question.
“When you are dealing with a large bond and the Oklahoma Turnpike Authority, it doesn’t surprise me that someone files some type of declaratory action,” said Kell Kelly, OTA chairman and CEO of SpiritBank.
The challenge, filed in the State Supreme Court, challenges the way the legislature voted to fund the roads, even though it was way back in 1989 (and beside the point that it was the same bill that allowed the construction of the Kilpatrick Turnpike in Oklahoma City among other projects). Constitutional watchdog Jerry Fent, an Oklahoma City attorney who filed the lawsuit in 2016 says the constitution prohibits measures from being bundled together, such as several different turnpikes at one time. He was successful in court on a challenge of bundling Capital Improvement bond issues several years ago.
The lawsuit has the attention of OTA. The politically appointed board, during its regular August meeting, went into a 30-minute executive session with attorneys to “approve a Resolution authorizing the Director to make Application to the Oklahoma Supreme Court for validation of the OTA Second Senior Revenue Bonds and to defend any litigation or claim challenging the OTA’s legal authority to proceed with the issuance of bonds.”
Kelly said the toll hikes are to pay for the bond indebtedness and maintenance and construction of the state-wide toll system. OTA was asking for a 17-percent increase in tolls over three years. The first hike would amount to 12-percent with two additional 2.5-percent hikes through 2019. According to OTA’s July 2016 operating results, net toll monthly revenues came in at nearly $23 million (as they have each month this year). A little quick math shows that an eventual 17-percent hike gives OTA about $3.9 million more a month to fund the Driving Forward program which includes the EOC stretch from I-40 to I-44.
Incidentally, although turnpike traffic has increased each month this year, the OTA Operations Report Tuesday revealed that July was flat from the previous month (although the July Fourth weekend showed a nearly four percent hike of state-wide turnpike travel).
After the meeting, OTA Director Tim Gatz said the pending litigation is also affecting current work being done on the EOC, such as engineering and design work.
“It would be reasonable to expect … the litigation might slow some things and might stop some things,” he said.
Meanwhile, the State Bond Oversight Commission is expected to hear OTA’s request for it’s bond issuance at it’s meeting on Thursday morning, according to James Joseph, state bond advisor.
“The Council of Bond Oversight will consider the OTA request for approval of the proposed bond issue on Thursday. In my recommended conditions for their review, I have included the requirement that all legal challenges be resolved prior to issuance,” he said.
As for the lawsuit, a State Supreme Court Referee will hear the case on September 20 at 10 am.