House advances $120 million State Capitol repair bond issue
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Published: 23-May-2014

OKLAHOMA CITY – A $120 million bond issue to renovate, repair and remodel the dilapidated State Capitol was approved by the House in a bipartisan split vote Thursday night, 55-34.

House Joint Resolution 1033 by Speaker Jeff Hickman, R-Fairview, was favored and opposed by Republicans and Democrats alike.

H.J.R. 1033 proposes a lease-revenue bond issue that would be retired with yearly appropriations from the Legislature to the Oklahoma Capitol Improvement Authority, which in turn would make the annual payments on the bonds. The debt would be retired over a 10-year period.

Hickman reminded his colleagues that earlier this year the House passed and sent to the Senate a $120 million general-obligation bond issue that would have been submitted to a vote of the people. The Senate rejected that measure and proposed instead a 25-year, $160 million lease-revenue bond issue approved by the Legislature. The House thumbed its nose at that plan.

The latest iteration of H.J.R. 1033 is a compromise, and “could save upwards of $100 million in interest costs” compared to the Senate’s proposal, Hickman said.

No one in the House has indicated opposition to an overhaul of the Capitol. The disagreement centers on the method of financing the massive project.

Democratic Leader Scott Inman, D-Del City, debated in favor of a pay-as-you-go plan financed at least in part from the state’s “rainy day” fund, which contains more than $500 million. Hickman said the rainy day fund is a savings account intended to provide funds for emergencies, such as tornado recovery efforts. The State Capitol has been deteriorating for decades, under Democratic and Republican administrations alike. “This is irresponsibility, not an emergency,” he said.

Inman also objected to the plan because the GOP proposes to incur debt by borrowing $120 million after cutting the state income tax by $266 million even though the state budget has a $188 million hole. During previous debate in support of a Capitol improvements bond issue, Rep. Sky McNiel, R-Bristow, said the current 3½% interest rate on debt is “pretty cheap money.”

Rep. Mike Reynolds, R-Oklahoma City, insisted that Hickman’s plan is unconstitutional because the bond issue would not be submitted to a statewide vote of the people. However, the lease-revenue concept was validated by the Oklahoma Supreme Court on an $800 million statewide highway construction program the Legislature authorized in 1997. Supporters of the concept, including Rep. Earl Sears, R-Bartlesville, contend it’s the Legislature’s responsibility to maintain “the people’s house.”

Backers of a bond issue also noted that State Bond Advisor Jim Joseph said earlier this month that the State of Oklahoma will pay off $960 million of tax-backed debt – 41 percent of its long-term obligations – over the next five and a half years, by the end of calendar year 2019.

That debt load includes almost $132 million in governmental purpose general-obligation (GO) bonds that were outstanding at the first of the year. Those are the remainder of a voter-approved $350 million bond issue sold in 1992 for multiple state-agency and higher-education projects, Joseph said. Final payment on those bonds will be made on July 15, 2018, he said.

The payoffs also include $160,000 in bonds issued last year by the Oklahoma Capitol Improvement Authority (OCIA) for the State Regents for Higher Education that are to be retired in about a month, records of the state Office of Management and Enterprise Services (OMES) indicate.

Some bonds that mature next year were issued by the OCIA for capital improvements for the Tourism and Recreation Department, Quartz Mountain Center and Park, the Oklahoma School of Science and Mathematics, the Military Department, the Attorney General’s Office, the Native American Cultural and Educational Authority, the Oklahoma State Bureau of Investigation, and the State Regents.

According to OMES, bonds that will be retired in 2018 were issued for the Oklahoma Department of Transportation (ODOT) and the State Regents. Bonds that mature in 2020 were issued in 2010 by the OCIA for ODOT.

The OCIA was created in 1959 to provide bond funding for the construction of office buildings and other infrastructure support for various departments and agencies of the State of Oklahoma, particularly those leasing office space. During its lifetime, the Authority has funded numerous building and infrastructure improvements, including projects benefiting many state agencies, state colleges and universities, correctional facilities, and highway improvements.

The OCIA issues revenue bonds that are backed by lease agreements with the various state entities. OCIA’s lease revenue bonds are rated AA by Fitch and by Standard & Poor’s, and Aa3 by Moody’s.

Oklahoma’s per capita debt load ranks 38th  lowest in the nation, Joseph said.

Oklahoma’s State Capitol is “a hundred-year-old house” encompassing more than 400,000 square feet of space and is in dire need of extensive interior and exterior renovations, Capitol Architect Duane Mass told House Democrats earlier this year.

“We have delayed and put off taking care of this building, and that needs to end today,” Hickman said in appealing for support of H.J.R. 1033. “We need to begin the journey to repair ‘the people’s building’.”

The improvements would cost an estimated $120 million, at least, but the total tab could climb to perhaps $160 million if unforeseen problems are encountered, Mass said. The entire project would take five years to complete, he said: one year to “map it out” and four years to perform the work.

H.J.R. 1033 would authorize a bipartisan nine-member State Capitol Repair Expenditure Oversight Committee whose duties would be to prepare and approve a “project programming plan” for the repair of the building. The members would include three individuals appointed by the governor, one Democrat and two Republican state Representatives, plus one Democrat and two Republican state Senators.

The Capitol dates from the World War I era. The groundbreaking occurred a century ago, in 1914; state officials occupied the building in 1917 and the Legislature convened its first session there in 1918, although construction wasn’t completed until 1919, records reflect.

The preface to the “State Capitol Building Historic Conditions Report” issued three years ago laments that the life cycle of the building is “nearly over” because the structure has “suffered through a century of use, exposure to the elements and sometimes neglect.”

Among the findings of an extensive inspection:

* Mechanical, electrical and plumbing systems throughout the building are “worn out.”

* Life-safety systems, including fire alarms, fire suppression and emergency egress, are “woefully inadequate or non-existent.”

* Communications systems have been “piecemealed over the years and will not support future innovations” in technology.

* The exterior façade is “rapidly deteriorating … through seasonal weather extremes.” Restoration and stabilization of the limestone skin is a major issue.

* A 4-pound chunk of concrete fell through the ceiling of a House office in the basement recently, and the granite steps are “suffering from deterioration and require restoration.”

* Many of the lower areas and the tunnels surrounding them “have lost integrity in the waterproofing and some seepage is occurring.”

* The terrazzo floor in the basement “must be completely replaced … in 80 percent of the areas.”

* Insulation “is and always will be a concern” because when the Capitol was constructed, insulation “was not a consideration and limited areas exist where it can be added.”

* The cab design and controls of the elevators “are all in marginal but working condition,” but the elevators still utilize “antiquated power delivery to the main motor systems serving them.” Also, some elevator components are nearing the end of their lifespan. Consequently, comprehensive improvements need to be made to all of the elevators.

* Griffins on the roof, overlooking the Capitol grounds, have deteriorated. “All features of their faces are gone, worn away by pollution and water.”

* The plumbing systems in the Capitol contain a mixture of pipes installed over a century.

* The original sanitary sewer lines were lead and cast iron, and much of the sewer lines today are paper thin.

* The original water pipes were manufactured of steel; over the years, much of that has been replaced by copper piping in renovated areas. Nevertheless, most of the copper pipe installed half a century ago needs to be replaced.

* Each year “the calcium build-up in domestic water pipes and the waste build-up in sewer lines increases,” Mass and his associates pointed out in their report. Piping replaced because of leaks “has been corroded to the point where the area left for water flow is a fourth of the original flow area.” This forces the same volume of water through a smaller opening, which increases the pressure of the water – which splits the thin walls of the deteriorated pipes. Water pipes in the Capitol are collapsing “to the point that the maintenance staff” struggles to repair all of the leaks.

* It appears that approximately 80 percent of the plumbing pipe inside and under the Capitol needs to be replaced. “This includes all of the roof drainage piping, and most of the sanitary waste, vent, and domestic water piping…”

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