OKLAHOMA CITY – The state Supreme Court has given its blessing to revenue bonds sought by state transportation officials in order to secure a federal loan. The funds will help finance the Oklahoma Department of Transportation’s program to upgrade two-lane highways throughout the state.
House Bill 2986 enacted by the Legislature last year authorized the Oklahoma Capitol Improvement Authority to issue bonds in an amount necessary to generate net proceeds of $200 million in order to secure loans from the U.S. Department of Transportation via the Transportation Infrastructure Finance and Innovation Act.
According to an agenda item from a meeting of the state Transportation Commission, proceeds from the TIFIA loan will fund a portion of ODOT’s Rural 2-Lane Advancement and Management Program.
Total costs associated with RAAMP are estimated to exceed $400 million, the Supreme Court’s decision relates. Funding will be secured through a combination of federal allocations, appropriations from the Legislature, and proceeds from “one or more revenue notes” secured through USDOT.
The Transportation Commission’s vote to authorize ODOT to “pursue the sale of state bonds to help secure federal, low-interest loans” will “fast-track” numerous improvements to rural two-lane highways with deficient shoulders, backers of the plan said.
Through the U.S. Department of Transportation, ODOT “can accelerate two-lane projects already listed in the 8-Year Construction Work Plan.”
“Using this innovative funding strategy, Oklahoma will be one of the first states in the nation to take advantage of a rural Transportation Infrastructure Finance and Innovation Act loan through USDOT’s Rural Projects Initiative,” ODOT officials said.
The TIFIA program provides credit assistance for qualified projects of regional and national significance. Many large-scale, surface transportation projects – highway, transit, railroad, intermodal freight, and port access – are eligible for assistance.
A benefit to Oklahoma from the TIFIA program is a $50 million grant secured by the Texas Department of Transportation to improve I-35 at the Red River.
With an influx of federal grants and additional state funding, the Oklahoma Department of Transportation reports it is maximizing new dollars to plan for more than 1,600 critically needed highway construction and safety projects in the next eight years.
With more than 300 new projects added to the 8-Year Construction Plan for 2022-29 approved on Oct. 4, ODOT will commit nearly $2 billion extra into highway infrastructure and the state’s economy.
This will bring a total impact of nearly $8 billion by the end of the decade. Commissioners also approved a $484 million investment in preventive maintenance through the companion Asset Preservation Plan for 2022-2025.
“Oklahoma truly has some great momentum in bringing our highway system back to a manageable condition, and this year’s update to the 8-Year Plan and Asset Preservation Plan will help us continue to preserve and enhance the transportation system,” Oklahoma Secretary of Transportation and ODOT Executive Director Tim Gatz said.
“We will continue our work completing corridor upgrades, adding shoulders to rural, two-lane highways and improving pavement conditions.”
With the restoration of $180 million in state appropriated funding and an anticipated increase in the Rebuilding Oklahoma Access and Driver Safety Fund annual cap from $575 million to $590 million in 2023 and each year afterward, ODOT was able to budget for more critically needed projects in this plan update.
All nine Supreme Court Justices approved the bond/loan plan on April 5, but one dissented in part.
Financing “earmarked for remediating Oklahoma’s rural roadways has been expressly authorized by the Legislature … as an essential governmental function,” the Court noted, adding, “We have routinely approved similar bond/loan applications in the past.”
Justice Dustin Rowe concurred in the decision, but reluctantly.
The OCIA “is essentially asking that we issue an advisory opinion affirming the legality of the TIFIA loan agreement,” Rowe wrote. “[W]e are being asked to prematurely pass judgment on whether a complex financing structure and hypothetical financial instruments comply with the laws and the Constitution” of Oklahoma. “As a general matter,” he reminded his colleagues, “this Court does not issue advisory opinions or answer hypothetic questions.”
By rendering its judgment now, the Supreme Court is “sanctioning a process that has yet to be carried out – and approving instruments which have yet to be issued,” Rowe wrote. In addition, the Court is “foreclosing the right of any person or entity to challenge their validity at a later date, even if a meritorious claim arises.”