State sells $17.6M in bonds to rehab dams

OKLAHOMA CITY – The state Capitol Improvement Authority is selling $17,665,000 in revenue bonds to help finance repairs and renovations to several high-hazard upstream flood control dams in Oklahoma.

Senate Bill 1938 enacted in 2020 empowered the Oklahoma Capitol Improvement Authority to issue the bonds on behalf of the Oklahoma Conservation Commission.

“We close on the transaction April 7,” said Andrew Messer, Deputy State Treasurer for Policy and State Debt Management and director of the OCIA. The True Interest Cost on the bonds is 3.44%, he said.

The proceeds from the sale of the bonds will be coupled with a 65% federal match “to extend the life of the dams,” said state Rep. Carl Newton. “Many of these dams are more than 50 years old and have reached their life expectancy,” the Cherokee Republican said.

Officials said Oklahoma has 266 high-hazard dams – tagged with that label not necessarily because they’re structurally deficient, but rather because they are situated in populated areas. “It is important that we protect the homes and cities that are built beneath these structures, many of which supply water to surrounding communities,” Newton said.

Dams that are assigned the high-hazard potential classification are not necessarily in danger of imminent failure. Instead, that label is assigned to a structure whose failure or “misoperation” would probably cause loss of human life.

At least 11 dams are on the rehab list and are prioritized “considering greatest need and the ability to complete the project,” according to Bryan Painter, the Conservation Commission’s public information officer.

The bond package was set at $17.5 million “because the estimated 35% sponsor match required for all of these projects is $17 million to $20 million,” said Trey Lam, the Conservation Commission’s executive director. The estimates were developed by planners and engineers with the U.S. Natural Resources Conservation Service, Lam said.

The OCC intends to leverage the bond proceeds “to obtain approximately $35 million in matching federal funds” from the U.S. Department of Agriculture, parent agency of the NRCS, to repair upstream flood control dams in the state, OCIA documents state.

The Capitol Improvement Authority sold $17,665,000 in bonds, which produced enough money to deposit $17.5 million in the OCC Construction Fund and $150,000 for costs of issuing the bonds.

Debt service will total $24.78 million, which includes the $17.65 million in principal plus $7,133,934 in interest. The debt is to be amortized over 20 years.

The Legislature intends to appropriate “sufficient monies” to the Conservation Commission each year to make payments “for the purposes of retiring the obligations” created by SB 1938, the bill provides.

The bonds “are not an indebtedness of the State of Oklahoma, nor shall they be deemed to be an obligation of the State of Oklahoma” or of any of its political subdivisions, OCIA documents state. Further, “neither the faith and credit nor the taxing power of the State of Oklahoma” or any of its political subdivisions “is pledged … to the payment of the principal of or the interest on” the OCC bonds.

The NRCS reports it has constructed nearly 11,000 of the dams in 47 states. The watershed projects represent $14 billion in infrastructure and have provided flood control, municipal water supply, recreation, and wildlife habitat enhancement.

Oklahoma leads the nation with 2,107 upstream flood control dams. They were built in 61 of Oklahoma’s 77 counties by the Soil Conservation Service, forerunner of the Natural Resources Conservation Service. The first of those structures was built in Oklahoma in 1948 near Cordell.

Beckham County has 42 of the upstream flood control structures; Caddo County, 104; Canadian County, 16; Comanche County, 10; Creek, 56; Custer, 121; Garvin, 146; Grady, 153; Greer, 13; Harmon, 14; Jackson, 4; Jefferson, 10; Kiowa, 47; Lincoln, 64; Logan, 39; McClain, 87; Murray, 58; Noble, 89; Oklahoma, 2; Pawnee, 16; Payne, 34; Pontotoc, 71; Roger Mills, 143; Stephens, 63; Tillman, 13; Washita, 140.

“Before the year 2000, the NRCS did not have the authority to provide technical or financial assistance to watershed project sponsors in rehabilitating aging dams,” said Tammy Sawatzky, director of the Conservation Programs Division of the state Conservation Commission.

Watershed project sponsors (in most cases conservation districts) do not have adequate funds to rehabilitate those dams, she said. Congress passed the Watershed Rehabilitation Amendments of 2000, authored by Oklahoma Congressman Frank Lucas of Cheyenne, which authorized the NRCS to provide technical and financial assistance to project sponsors in rehabilitating the dams.