DALLAS – The Oklahoma Development Finance Authority will defend the constitutionality of the state’s Master Lease Agreement bond program before a state Supreme Court referee Thursday.
The ODFA filed the bond validation request in May so it can proceed with a sale of $116 million of lease revenue bonds that has been stymied since January.
The bonds would fund equipment and facilities at state universities. The authority issues the lease revenue bonds, which are supported by annual legislative appropriations.
"The Oklahoma colleges and universities rely on the Master Lease program as a primary source for the financing and refinancing of equipment and real property projects,” ODFA said in the request for validation. "Most, if not all Oklahoma colleges and universities, have participated in the Master Lease Program."
The state has issued $416.6 million of the bonds. The total includes $287 million of master real property lease bonds and $129.6 million of master equipment lease bonds.
Oklahoma City attorney Jerry Fent filed a brief with the court June 20 contending that the bond program is unconstitutional.
Fent raised objections to the bond program at January’s session of the Council of Bond Oversight over a $38.5 million bond project.
The University of Central Oklahoma wants to use the proceeds to build a state medical examiner’s office at its campus in Edmond.
The university said the facility qualifies as an academic project because of interaction between students in its forensic science program and the professionals at the medical examiner’s office.
Fent wants the court to rule that all the bonds issued for the program are unconstitutional.
Fent’s position is based on multiple subject language in the Oklahoma Constitution, barring legislation that combines several unrelated issues into one bill to ensure passage or failure of the measure. The original master lease provision was included in an appropriations bill.
State Sen. Patrick Anderson, R-Enid, also hopes to void the lease revenue bonds earmarked for the state crime laboratory in Edmond.
Anderson said in a brief field June 18 that the bond program is intended only for academic needs in higher education, not for state facilities.
ODFA began issuing master lease revenue bonds in 2001 to provide colleges and universities with less-expensive funding for computers and other equipment. Real property was added to the lease revenue bond program by the Legislature in 2005.
The first real property lease revenue bonds were issued in December 2006.
ODFA’s lease revenue bonds are rated A1 by Moody’s Investors Service.
