OKLAHOMA CITY Culminating months of controversy and a battle with Oklahoma Gov. David Waiters, the state's Turnpike Authority yesterday approved selling $475 million of bonds to expand its toll road system by about 63 miles and improve its two oldest highways.
The unanimous approval of the bond package, coupled with $214 million for cash-financed maintenance projects on the 563-mile system, represented a compromise reached in recent days between the Turnpike Authority and Waiters.
Most Turnpike Authority members had wanted to focus on maintenance while the governor continued to push to get at least some of the new projects that were contained in a $1.7 billion construction program proposed last year.
In announcing the five-year compromise plan, authority chairman Jim Orbison said the $689 million proposal to rehabilitate roads and to build three new turnpike projects, not the 10 initially envisioned in the governor's proposal, had won Walters' support. The governor did not attend the meeting, and his spokesmen could not be reached for comment.
"Without the governor's support, we wouldn't have a plan," said Orbison, who added later that "the plan represents a middle ground that was reached."
He said the plan now contained a reasonable amount of bond issuance. "This is a good package: one that contains the vitally important rehabilitation of our two primary revenue generators, the Turner and the Rogers, as well as some new projects that will bring Oklahomans safer turnpikes, new infrastructure, and assist our state in building a better road program," Orbison said.
Under the plan approved yesterday, $475 million of revenue bonds would be sold to pay for $60 million in improvements on the Turner Turnpike and $70 million in improvements on the Will Rogers Turnpike. The toll roads are the oldest and most heavily used in the state.
In addition, $185 million would be spent to build a Muskogee Turnpike Extension from Webbers Falls to Poteau and $160 million for a Kilpatrick Turnpike Extension from Portland Avenue to Interstate 40.
Under the cash-financed program, the Creek Turnpike would be extended to the Turner Turnpike for a cost of about $61.8 million. Other improvements from paving to light installation would be paid for with $152.4 million.
Plans call for starting the rehabilitation and bond programs in the near future. "We want to move as rapidly as possible," Orbison said.
The debt issuance proposal is expected to be brought before the Executive and Legislative Bond Oversight Commission at its meeting in late September and 30year bonds issued in October or November in a competitive sale.
No decision has been made yet on whether the bonds will be sold at once or serially, said Wayne S. Burggraaff, senior vice president at Evensen Dodge Inc. in Minneapolis, and the authority's financial adviser. More details on the structure should be determined within the next few weeks.
"There are many things we have to do before we go to market," Orbison said.
Under current plans, the authority would repay the bonds from toll revenues which would be increased by an average annual increase of 6.5% over the next five years. The increases are coupled with a more than 4% toll rate rise that was implemented last year.
John Smolley Jr., a vice president at Connecticut-based Wilbur Smith Associates, said Oklahoma toll rates are now significantly below the nationwide average and the increases should not result in a large exodus of drivers from the toll roads.
In addition, the authority's executive director, Terry Young, said the rates will continue to be lower than the nationwide average. Plans call for putting the rate increases into effect early next year.
With the planned rate increases, debt service coverage would be 1.17% next year and 1.21% in 1996. It would increase in subsequent years, according to projections prepared by the authority.
Oklahoma Turnpike Authority officials maintain that the toll road system, which is the second largest in the nation behind New York, is in good financial shape, with revenue growth often reaching about 3% to 4% a year.
If the project financing and toll increases are implemented as expected, the three new turnpike segments should be completed in 1998 or 1999, making the toll road system about 626 miles, surpassing New York as the largest in the country.
While some have questioned whether Oklahoma needs so many turnpikes, Young said the plan provides key population centers that do not have good access to highways with better transportation and provides key links to interconnect the system.
The compromise plan culminates the resolution of some disputes over the necessity of toll road construction in the state as well as delays because of investigations of Turnpike Authority bond issues by the Securities and Exchange Commission.
The SEC is investigating the 1992 and other bond issues for the Oklahoma Turnpike Authority and has questioned the selection and payment of underwriters. Despite the ongoing investigation, Orbison said the authority board decided to proceed after talking with its bond counsel because the investigation should not interfere with the bond offering.
The compromise plan also ends a fight between the governor and the Turnpike Authority. Earlier this year, the authority had proposed a $480 million maintenance plan and then reduced it to $347 million in July.
But the governor said the proposal jeopardized the financial strength of the Turnpike Authority by borrowing long-term to pay for short-term improvements such as paving.
The compromise plan reached yesterday was a response to the governor's remarks, which were made in July. The authority board is appointed by the governor.