As an infrequent issuer of General Obligation bonds, the State of Oklahoma relies primarily on the Oklahoma Capitol Improvement Authority (OCIA) to access the capital markets and issue bonds to finance capital projects for state agencies and road and bridge infrastructure projects for the Department of Transportation.
The OCIA was originally created in 1959 as a funding source for construction of State of Oklahoma (“State”) office buildings within the State Capitol Complex.
The statutory power of the Authority was expanded in 1998 to encompass the financing of improvements and enhancements for various State universities, colleges, agencies, boards and authorities.
The Authority consists of eight (8) members:
1. Governor ( Chairman)
2. Lieutenant Governor ( Vice Chairman)
3. State Treasurer (Secretary)
4. Director of the Office of Management and Enterprise Services
5. Director of the Department of Human Services
6. Secretary-Member of the Oklahoma Tax Commission
7. Director of the Department of Tourism & Recreation
8. Director of the Department of Transportation.
The Authority elects one of its members as Secretary. For many years, the Secretary member was the Director of OMES and OMES provided the staff to administer the day-to-day duties of the Authority. On February 19, 2020, the Authority appointed then State Treasurer Randy McDaniel to the position of Secretary and shifted the administrative duties to the Office of the State Treasurer.
Each series of OCIA bonds is secured by a lease with a state agency. These agreements require the particular department or agency to make periodic payments (rental payments) to the Authority. The monthly rental payments are set by the Authority and include 1/6th of the semi-annual interest, 1/12th of the annual principal and the agencies portion of OCIA’s administrative fee. The monthly rental payments are collected into a revenue fund established for the specific bond issue and deposited into a sinking fund with the trustee/paying agent to make debt service payment to bondholders.
Because different departments and agencies are involved, nearly all Authority bonds are separately secured and not issued on parity. In addition, in most cases, payments required to be made under such leases agreements for the purpose of paying debt service on such bonds are to be made from legally available funds from any source including but not limited to moneys budgeted and appropriated by the State Legislature to such State departments and agencies.