DALLAS Oklahoma can proceed with planned bond issues under its master lease agreement program for higher education projects following a Sept. 24 ruling by the Oklahoma Supreme Court that the bonds are constitutional.
The court rejected as without merit a challenge by an Oklahoma City attorney.
Oklahoma Development Finance Authority sought validation of the program by the court earlier this year after an Oklahoma City attorney, Jerry Fent, questioned whether the enabling legislation combined two subjects into a single piece of legislation, which is not allowed under the state constitution.
Several lease revenue bond requests totaling $154.5 million were put on hold in January when Fent protested a proposed $38.5 million issue of lease revenue bonds at January’s meeting of the state Council of Bond Oversight.
The bonds were requested by the University of Central Oklahoma to build a building for the state medical examiner’s office in Edmond.
Oklahoma has issued a total of $416.6 million of the bonds under the Oklahoma State Regents for Higher Education's Master Lease Program, including $287 million of master real property lease bonds and $129.6 million of master equipment lease bonds.
Proceeds from the bonds are used to build facilities and purchase equipment at state colleges and universities. The debt is supported by annual lease payments appropriated by the Legislature.
“These types of bonds are not debts of the state as a matter of law because the Legislature cannot be forced to appropriate funds to repay them,” the court said in its validation ruling.
The forensic facility in Edmond will be the first project considered by the state bond panel after the court’s validation, said state bond advisor James Joseph. The request is on the agenda for the Sept. 26 meeting.
“We will move forward with the medical examiner’s project, but many of the others are going to have to re-file,” Joseph said. “They had 180 days from the council’s approval to sell the bonds, and that period expired the day before the ruling came down.”
Several of the requests were for refunding issues, he said, and some proposed refundings may no longer be economically viable.
“Unfortunately, with this delay those opportunities may have been lost,” Joseph said.
Joseph said he expects a flurry of lease revenue bond proposals to be submitted in the next few months.
“There should be quite a backlog of projects,” he said. “We didn’t have any bond issues in 2012, and we have not been able to do any so far in 2013.”