IN RE: the Application of the OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY for Approval of $25 Million Oklahoma Capitol Improvement Revenue Bonds (2012)

¶ 1 The Oklahoma Capital Improvement Authority (OCIA) has applied for the Court's approval of revenue bonds pursuant to 73 O.S. Supp.2009 § 336.¹ We determine that the proposed bonds are unconstitutional. Accordingly, we deny the application.

FACTS AND PROCEDURAL HISTORY

¶ 2 In 2009, the Oklahoma Legislature passed Senate Bill No. 239 which became codified at 73 O.S. Supp 2009 § 336.² This statute concerns the Arkansas River, it authorized the OCIA to improve the City of Tulsa's Zink Dam and to construct two lower-water dams along the Arkansas River, as well as stabilize the stream. Efforts were to be coordinated with the City of Tulsa, Tulsa County, surrounding communities, Indian Nations, and the United States Army Corps of Engineers. It also provided for $25 million in bonds to finance the project.³

¶ 3 The OCIA was created and operates pursuant to 73 O.S.2011 §§ 151 et seq.⁴ The River Parks Authority (RPA) is a public trust created by the City of Tulsa and Tulsa County to develop and maintain the public park located in the City of Tulsa along the Arkansas River, commonly referred to as River Parks.⁵ The Zink Dam, the dam which currently controls the water level along the park, is owned by the City of Tulsa and operated by the RPA. The proposed bond project includes a lease arrangement between the RPA and Department of Central Services (DCS). The RPA would lease any improvements made to the Zink Dam and DCS will receive annual appropriations from the Legislature to make the lease payments to the RPA. This is how the bonds are to be financed.

¶ 4 On August 29, 2012, pursuant to 20 O.S.2011 § 14.1,⁶ the OCIA filed in this Court the application for approval of the $25 million dollar bond issue to improve the Arkansas River in Tulsa County, Oklahoma, known as the River Project. The Tulsa Metropolitan Chamber of Commerce, the Cities of Sand Springs, Tulsa, and Glenpool, and the RPA participate amicus curiae, and support the bond issue as economically advantageous to the State of Oklahoma. They also insist that the bonds serve a valid public purpose and that the proposed use is consistent with the statutory authorization. The parties have consented to their participation.

¶ 5 State Senator Patrick Anderson and C.L. Elliott, a former chairman of the Council of Bond Oversight for the State of Oklahoma filed objections, protesting to the bond issue. They argue that the bonds violate the Okla. Const., art. 10, §§ 14, 15, and 16,⁷ as well as art. 10 § 25.⁸

¶ 6 Currently pending is a nearly identical district court lawsuit involving the same parties. Title 20 O.S.2011 § 14.1,⁹ clearly provides the Supreme Court with exclusive original jurisdiction to hear and determine a bond application such as this. Nevertheless, on August 22, 2012, six days before this application was filed, Senator Anderson filed a petition in the District Court of Oklahoma County (Case No. CV–2012–1785). In that case, he sought a declaratory judgment, as a citizen, taxpayer, and member of the Legislature, to have 73 O.S.2011 § 336 declared unconstitutional.¹⁰

¶ 7 Jerry Fent, an Oklahoma Taxpayer, filed a motion to intervene in the District Court objecting to the district court's jurisdiction to hear the validity of an Oklahoma bond issue. Fent's motion to intervene has not been ruled on nor has the district court made a ruling.

¶ 8 In this cause, the Protestants argues that the Court should not assume jurisdiction of this matter because it has exclusive jurisdiction to determine questions of law.¹¹ They insists issues of fact exist which need to be resolved in the district court, including issues such as: 1) what entity has a legal right to make improvements to the Zink Dam; and 2) what entity has an insurable interest in the improvements to the Zink Dam in order to protect the bond holders. Because it is more judicially efficient for this Court to decide the matter and because this cause is of significant public interest our decision renders the district court action moot.

I. Authorization of the OCIA

¶ 9 One of the Protestants' most elementary arguments is that the purpose of the OCIA is to provide adequate and suitable space for offices and to improve and expand the State highway infrastructures¹² and because the Zink Dam is neither a State office facility nor a highway improvement, the OCIA has exceeded its statutory authority. The attorney general and the amicus curiae counter that, regardless of the general purpose of the OCIA, in § 336 the legislature specifically authorized bonds for improving the Zink Dam.¹³ This argument is reinforced by In the Matter of the Application of the Oklahoma Capitol Improvement Authority, 2005 OK 90, ¶ 12, 130 P.3d 232, wherein we stated that:

The statutes enabling the Authority empower it to do certain things. 73 O.S.2001 & Supp.2004 § § 151–332. While they generally empower it to issue bonds for the construction of highways or buildings, they do not limit the Authority's power to those purposes.

Implicit in this holding is that nothing in the enabling statute precludes the Legislature from directing the OCIA to issue bonds for another purpose—as directed by the Legislature. Consequently, this argument is unpersuasive.

II. Article 10 § § 14–15 of the Oklahoma Constitution

¶ 10 Article 10, § 14(a) prohibits the State from assuming the debt or liabilities of any county, municipal corporation, or political subdivision of the State.¹⁴ Article 15(a) prohibits the State from extending credit to any municipality or political subdivision of the State.¹⁵ The Protestants argue that because the City of Tulsa undisputedly owns the Zink Dam, improvements to it cannot be assumed by the State without violating §§ 14 and 15 of the Oklahoma Constitution. The Proponents contend that §§ 14 and 15 are not violated where the State's credit is not being given, pledged or loaned to the RPA. Nor is the RPA borrowing money or repaying the State.

¶ 11 The Protestants contend that the State is committing to borrow money for the benefit of a single municipality and its operating public trust which is being paid from appropriated State dollars. They insists that borrowing money for the benefit of a single municipality is tantamount to assuming the debt or anticipated debt of the municipality and as such violates these provisions. The amicus curiae do not dispute that the State does not own the Zink Dam, but they argue the State will own an interest in the improvements made to the Dam, so it does, in fact, hold sufficient legal interests to secure the indebtedness and ensure that the funds are used for a public purpose.

¶ 12 In Reherman v. Oklahoma Water Resources Bd., 1984 OK 12, 679 P.2d 1296, we held that a provision of a bond resolution which allowed the State Water Resources Board, in event of default of a local entity, to transfer monies from the debt service reserve fund to pay the principal of loan of a defaulting local entity to cover any deficiencies occurring in the debt service fund, violated constitutional prohibitions against the State's assumption of the debt of a county, municipal corporation, or political subdivision and pledging or lending of state's credit to local entities. We held that the principle of equity applied that what may not be done directly should not be allowed to be done indirectly.¹⁶

We further reiterated a point that this Court made shortly after statehood:

[a]n act violating the true intent and meaning of the Constitution, although not within the letter, is as much within the purview and effect of a prohibition as if within the strict letter; and an act in evasion of the terms of the Constitution, as properly interpreted and understood, and frustrating its general and clearly expressed or necessarily implied purpose, is as clearly void as if in express terms forbidden.17

¶ 13 The Protestants cite to Reherman to support their contention that the fictional lease structure set up to finance the Zink Dam using the bond issue violates § 14. The logic in Reherman also applies to § 15, because the two provisions are intertwined. The State's involvement in this project exists only to lend its credit to and make a donation for the benefit of the municipality. If the State of Oklahoma, through the OCIA, is to hold title only long enough to borrow money and complete the improvements before transferring full ownership back to the municipality, then it would certainly appear that the bond issue is violating the spirit of §§ 14 and 15 if not the exact letter. In that regard, the Attorney General's assertions that the provisions of §§ 14 and 15 are not literally being violated does not matter, if the effect is to circumvent them. This appears to be what is happening here. Consequently, the proposed bonds are unconstitutional under §§ 14 and 15. Because we determine the proposed bonds are unconstitutional, we need not address the remaining arguments of the parties.

CONCLUSION

¶ 14 The proponents of the bonds go to great lengths to attempt to show that the bond issues will provide the State of Oklahoma not only with economic benefits, but cultural and ecological benefits as well.¹⁸ In reality, the bonds appear to be nothing more than a gift to the City of Tulsa and surrounding communities from the State. This type of gift is precisely what is prohibited by the Okla. Const., art 10, §§ 14–15. Accordingly, the proposed bonds are unconstitutional.

application FOR APPROVAL OF THE $25 MILLION DOLLAR OKLAHOMA CAPITOL IMPROVEMENT AUTHORITY CAPITOL IMPROVEMENT REVENUE BONDS, SERIES 2012A (RIVER PARKS AUTHORITY PROJECTS) DENIED.

KAUGER, J.

ALL JUSTICES CONCUR.