DALLAS — The Oklahoma Council of Bond Oversight approved a $26 million state bond issue for dam improvements near Tulsa in a special session Thursday after earlier postponing a decision.

The lease revenue bonds, which were approved by a 5-to-0 vote, are expected to go to market the week of Feb. 20.

They will be issued by the Oklahoma Capitol Improvement Authority and supported through annual legislative appropriations.

The council voted Jan. 26 to delay the sale, but met in special session Thursday at the request of the authority board.

State bond councilor James Joseph said members of the council were reluctant to approve the sale until they could be assured that the Legislature and Gov. Mary Fallin were aware of changes in the scope of the project being financed with the proceeds.

The bonds were authorized by the Legislature in 2009 as the state match to $50 million of federal funds for projects on the Arkansas River in Tulsa County, but Congress has not appropriated the federal share.

The original proposal included work on three low-water dams on the river, but Tulsa and the River Parks Authority revised the scope to focus only on the Zink Dam. The other dam projects will be backed by the federal funds whenever they become available.

“Some of the members wanted to make sure the governor and the Legislature understood that not all of the projects in the enabling legislation would be funded,” Joseph said.

The 2009 enabling act calls for the bonds to be used for “construction of Zink Dam improvements, stream bank stabilization, and construction of two additional low-water dams on the Arkansas River in Tulsa County.”

The Council of Bond Oversight said it wouldn’t authorize the bonds until it received a concurrent resolution from the Legislature and a letter from the governor acknowledging the changes, but relented at the request of the Capitol Improvement Authority.

The authority voted Jan. 30 to ask the bond council to meet in a special session for the purpose of reversing its unanimous decision.

“The authority asked the council to reconsider,” Joseph said. “The governor is a member of the improvement authority, so the bond oversight council determined that those stipulations were not necessary.”

Rep. Mike Reynolds, R-Oklahoma City, said he has been contacted by some residents of Tulsa County about a state constitutional challenge to the bond sale.

Reynolds spoke at Thursday’s meeting against the bonds.

“The constitution is very clear in saying that when the Legislature authorizes a bond issue, that money must be spent specifically on those projects in the legislation,” he said.

Reynolds said the reversal was sought because lawmakers would not have signed off on the changes in the project scope.

“There was a lot of political pressure on this board to reverse their decision, with that pressure coming from the Tulsa area,” Reynolds said.

Reynolds said he is considering asking for a legislative resolution opposing the bond sale.

“We absolutely need to take another look at this before obligating the taxpayers of Oklahoma for those bonds,” he said.

Joseph said the improvement authority had hoped to sell the bonds this week, but a delay in posting the preliminary official statement pushed the sale back by a week.

Moody’s Investors Service assigns an Aa3 rating to the bonds. Fitch Ratings reported a AA rating for the appropriation-backed debt.

Standard & Poor’s had not issued a report by early Friday, but maintains a AA rating on the $1.3 billion of lease revenue bonds issued by the improvement ­authority.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.