From staff/wire reports OKLAHOMA CITY – The Oklahoma Turnpike Authority board unanimously approved three resolutions during its meeting this month that authorizes the OTA to issue revenue bonds sufficient to generate $1 billion in construction funds to finance ACCESS Oklahoma long-range plan projects.
ACCESS Oklahoma is a strategic corridor plan that focuses on travel time reliability, easing congestion in Oklahoma’s metro areas, moving freight across the state, and adding access through new interchanges to communities that previously were not connected to turnpikes. At the core of the long-range plan is improving safety for motorists while enhancing the state’s transportation infrastructure for future growth, OTA officials said.
The Authority sold $500 million in bonds for the initial phase of the long-range plan in October 2023, which has paid for initial engineering design work among other items to start the long-range plan. After the Board’s recent approval, the next step in the oversight process for issuing this second round of bonds will be an application to the Oklahoma Council of Bond Oversight (COBO).
That agency reviews all bond issues by or on behalf of the state and its authorities and instrumentalities to ensure that all authorizations and compliance are in place. COBO also approves all fees associated with the bond offering. However, COBO does not evaluate the merits of the project, only that all financial and legal requirements are met.
Additionally, the approved resolutions authorize the Authority to potentially refinance outstanding revenue bonds to realize potential savings if market conditions are favorable, and will allow the Authority to reimburse certain capital expenditures on turnpikes and turnpike projects with the proceeds of tax-exempt turnpike revenue bonds should the need arise.
As part of his monthly report to the board, OTA Executive Director Joe Echelle provided additional ACCESS Oklahoma updates that included a revised total program cost now that the agency is nearing 60% engineering design plans on several projects.
“The initial program estimate was $5 billion in a net present value; we used quantities and information to estimate those costs in 2021 dollars,” Echelle said. “This was before any engineering design work was started and we knew those costs likely would go up.”
The new total program cost estimate is $8.2 billion based on what it will take to fund and construct the 15-year infrastructure program through 2037. This new estimate factors in 60% inflation in material and labor costs since the program’s announcement in December 2021 and anticipates future inflation.
“The highway transportation industry is not tracking inflation-wise with the cost of a loaf of bread or a gallon of milk. We are experiencing a higher inflation rate and there are lots of causes to it,” Echelle said. “Everything in this plan is more expensive and I do mean every line item is more expensive than when we estimated this three years ago.”
ACCESS Oklahoma turnpike projects will be fully paid for with bonds and will not affect any part of the state’s budgeting process, meaning revenue will not be diverted from other state priorities, Echelle said. Revenues from tolls, investments and concession leases pay all operating and maintenance costs for turnpikes and pay off the bonds issued to finance their construction. OTA bond ratings high The OTA has entered the bond market 21 times since 1950 and without fail, the requisite bond payments have been made every year on time, records show. The Turnpike Authority has eight outstanding series of bonds that total $2.017 billion.
The three major bond rating companies give the OTA’s instruments high grades.
• Fitch rated the OTA’s 2023 senior revenue bonds, as well as its 2020A and 2020B senior revenue bonds, ‘AA-’ outlook stable. That rating “reflects the Oklahoma Turnpike Authority’s demonstrated mature and stable traffic profile and significant rate-making flexibility,” Fitch reported.
• S&P Global also rated OTA’s 2023 senior revenue bonds ‘AA-’ outlook stable.
• Moody’s in September 2023 affirmed OTA’s rating of ‘Aa3’ with a stable outlook on its $500 million tranche of bonds that were sold the next month.
Out-of-state traffic accounts for approximately 40% of Oklahoma’s toll transactions. OTA does not receive any state tax appropriations. ’25 budget approved In other business, the OTA board unanimously adopted the 2025 budget, which includes $156 million for operations and maintenance and a $165.5 million capital budget. This was the second step in a two-step process to approve the Authority’s budget for the next fiscal year.
The budget is just under $400,000 more than the 2024 plan, which is a 0.26% increase. Here’s an overview of changes for 2025:
• The Oklahoma Highway Patrol will add eight new troopers to patrol the turnpike system, which is an $835,000 budget increase to a total of $22.2 million.
• Streamlining of the Authority’s tolling model by converting to cashless tolling saved $9.5 million compared with the 2024 budget. However, some costs for cashless tolling are increasing such as higher postage and a higher volume of license plate lookups as part of the PlatePay electronic tolling.
• Inflation and unprecedented low unemployment have led to employee recruitment and retainment costs, which included a market adjustment for certain job categories. Also, inflation has increased costs in utilities, road maintenance materials, and increased vehicle and equipment repairs due to supply chain issues, causing a $2.7 million budget increase.
• Software subscriptions to keep the Authority functioning efficiently and better technology for field workers resulted in a $6.3 million increase.
The board also adopted a $1.3 million operations and maintenance budget for the Gilcrease Expressway in west Tulsa. The Gilcrease is a non-system project and tolls from this turnpike are not part of the overall system cross-pledging.