Tulsa County: October 2020 Archives

The only contested Tulsa County office on the ballot is a rematch for Tulsa County Commissioner, District 2. Republican Josh Turley seeks to defeat 12-year incumbent Democrat Commissioner Karen Keith.

Dr. Turley, whose doctorate is in organizational leadership, had a distinguished 24-year career at the Tulsa County Sheriff's Office, serving as the TCSO's first civilian crime scene investigator and developing the department's first Risk Management program, which succeeded in reducing car accidents involving deputies and tort claim payouts. Turley independently developed policies and procedures to be used by smaller sheriff's offices and county jails to improve performance and minimize risk. Turley has since built a private company, Everything Behind the Badge, which develops custom policy and procedure manuals to help local law enforcement agencies improve their professionalism at an affordable price. Turley has been endorsed by the Tulsa County Deputy Sheriff's local, the Tulsa Police local of the Fraternal Order of Police, the Oklahoma Second Amendment Association (OK2A), and State Sen. Nathan Dahm, among many other endorsements displayed on the Dr. Josh Turley for Commissioner Facebook page.

Turley is an advocate for genuine transparency in Tulsa County government. Turley wants Tulsa County to follow an open data policy -- by default, data used and generated by county officials (except for personal data restricted by law) would automatically be made available to the public, without the need for an open records request.

A county commissioner is responsible for maintenance of all public roads in the district that are not state highways or within city limits. District 2, which covers the western arm of Tulsa County, includes a great deal of unincorporated territory where the only roads are county-maintained roads. Turley has called attention to the terrible state of roads like West 41st Street, the main east-west artery in western Tulsa County south of the Arkansas River, and Old Highway 51, which is popular for cycling and access to fishing on the river below Keystone Dam. He says that incumbent Karen Keith hasn't fulfilled her road responsibilities during her 12 years in office. Rural roads are perhaps out-of-sight and out-of-mind for a midtowner like Keith.

Democrat incumbent Karen Keith, a former television reporter and anchor, was first elected in 2008. She has been very visible this year representing Tulsa County at daily COVID-19 press conferences. She was also very visible in her opposition to President Trump's visit to Tulsa in June, calling for city officials to say no to Trump in order to "preserve our image and save our downtown and arena." Turley ran a strong race against Keith in 2016, but fell short against Keith's name recognition and fundraising advantage.

Keith is unquestionably likeable, and her likeability seems to have tempted many Republicans to consider voting for her as their one gesture toward bipartisanship. That would be a mistake. We need new county commissioners, regardless of party, because the current commissioners aren't being good stewards of taxpayer resources. Electing Josh Turley to District 2, the only seat on the ballot this year, would be a great first step.

Tulsa County Commissioners, acting as the board of the Tulsa County Industrial Authority (TCIA), have authorized hundreds of millions of dollars in bonds. Some of these are revenue bonds, borrowing money now to fund projects, and pledging future sales tax revenues to pay the debt. As of June 30, 2019, according to the TCIA's 2019 annual audit, TCIA had $111,729,421 in outstanding revenue bonds. Counties, like cities and school districts can also issue general obligation bonds which are repaid by higher property tax rates. According to Tulsa County's 2019 CAFR, the county has no general obligation debt.

TCIA also issues bonds known as conduit debt to finance construction projects for businesses (e.g. nursing homes, apartment complexes) and non-profits (e.g. schools, hospitals) that "promote the development of industry and culture and industrial, manufacturing, cultural and educational activities... [to] benefit and strengthen culture and the economy." Tulsa County taxpayers are not on the hook for these bonds; they are repaid by the end user. The end user benefits in that the bonds are typically tax-exempt, making them more attractive for investors. As of June 30, 2019, TCIA had $604,545,944 in outstanding conduit debt, an increase of $73.6 million from the previous year, "the result of a $53.7 million lease revenue note and a $66.9 million revenue bond being issued during the fiscal year, offset by debt repayments."

MunicipalBonds.com has a couple of examples of how conduit bonds can be controversial when they are issued to finance private companies that were rejected by banks. Back in 2003, BatesLine called attention to conduit debt TCIA issued to finance the purchase of apartment complexes for low-income housing by company run by a "dear friend" and bond adviser of one of the county commissioners; TCIA then issued bonds for double the original amount to a non-profit that purchased the complexes from the first company.

2003 was before Karen Keith was a commissioner, but just yesterday I was made aware of a case of securities fraud that involved numerous conduit bond issues from various local authorities, including $5,700,000 in bonds issued by Keith and her fellow TCIA board members on March 21, 2014, to an entity controlled by Atlanta nursing home developer Christopher Brogdon. I am just learning about this, so I don't know all the details, but at the very least it looks like Keith and the TCIA should have done more due diligence before issuing the bonds, given that this deal was the last in a long string of questionable deals cited by the Securities and Exchange Commission. In any event, it's clear that we need analytical, skeptical county commissioners on the TCIA who will carefully scrutinize every entity that seeks to borrow against our county's reputation.

What revenue bonds, general obligation bonds, and conduit bonds have in common is that the three county commissioners (acting as TCIA board members) decide whether to waive competitive bidding in deciding which law firm will serve as bond adviser and which financial institution will issue the bonds. I have yet to find an instance when the TCIA opted for competitive bidding for a bond issue, or even an instance when any one of the three commissioners voted for competitive bidding.

During the 2016 campaign, I called attention to a contemporaneous news item relevant to this topic: Then-state bond adviser Jim Joseph and then-State Auditor and Inspector Gary Jones spoke out against the widespread practice of school districts waiving competitive bids for bond issues.

Oklahoma school districts are spending millions of taxpayers' dollars every year by paying high fees for financial advisers, bond counsel and underwriters, says Jim Joseph, the state's bond adviser.

Many school districts continue to do the same thing year after year, while stubbornly refusing to use cost-saving competitive selection measures, he said.

"It's like picking a roofer right after a storm because he's the first guy who came to your door," Joseph said. "You're not going to get a deal, that's for sure."

State Auditor Gary Jones agreed school boards could save Oklahoma taxpayers money by obtaining competitive quotes.

"There could be tens of millions of dollars saved over a short period of time," Jones said.

Joseph went on to compare the massive fees paid by school districts to bond counsel and financial advisers, often a percentage of the bond issue, with the smaller amounts state agencies paid for much larger bond issue. Several were listed; here's one example:

For example, Midwest City-Del City Public Schools did a $72.62 million bond issue in 2012 without competitive bids. It paid the Floyd Law Firm of Norman $363,100 for serving as bond counsel and allowed Stephen H. McDonald & Associates and BOSC Inc., a subsidiary of BOK Financial Corporation, to equally split $508,340 for serving as co-financial advisers, records show.

Compare that with a $310.48 million bond issue by the Grand River Dam Authority that was done in 2014 through a competitive process. The state paid a $114,000 bond counsel fee and a $133,448 financial adviser fee.

Although the Grand River Dam Authority bond issue was more than four times as large as the Midwest City-Del City school bond issue, the school district paid more than triple the amount in bond counsel and financial adviser fees, records show.

Joseph pointed out that bond counsel, underwriter, and financial advisers often each take 1% of the bond issue as their fee, which Joseph says "makes no sense at all. It doesn't take any more work to do a $20 million issue than a $10 million issue for the bond counsel and financial adviser, but the fee is twice as high, if payment is on a percentage basis."

What does this have to do with Tulsa County? Joseph noted that the firm of Hilborne & Weidman was frequently listed as bond counsel for these competition-waived bond issues. Hilborne & Weidman was also one of two bond counsel firms selected in 2003 by the Tulsa County commissioners (acting as the Tulsa County Industrial Authority) for the Vision 2025 revenue bonds, a massive bond issue against up to all 13 years of the new sales tax. I urged at the time that Tulsa County put all Vision 2025 bond-related contracts up for competitive bid, as commissioners haggled publicly over which firms would get a piece of the action, but they waived competitive bidding and split the baby, giving each favored firm half of the business.

Over the last 17 years, there's been a complete turnover on the County Commission, but the tradition of waiving competitive bidding has persisted. Here's one example from May 26, 2009, in Karen Keith's first year as a commissioner ($110 million in bonds), another from February 1, 2010, and yet another unanimous vote to waive competitive bidding from this year, from the September 21, 2020, meeting of the Tulsa County Industrial Authority.

On May 23, 2016, the commissioners, including Karen Keith, voted unanimously to waive competitive bidding on indebtedness, but neither the minutes nor the agenda explain the amount or nature of the indebtedness. Given the proximity to the April 2016 Vision Tulsa vote, my guess is that the vote was on the revenue bonds pledged against that new 15-year sales tax stream.

How many more projects might have been built if Vision 2025 bonds had been competitively bid? Could we have had a new juvenile justice facility without being asked for more tax dollars in two separate elections (2005 and 2012)?

Given the size of these bond issues, even a 1% fee would be a huge amount for a small firm. The temptation to corruption would be immense. Think of the money the former Skiatook superintendent got in kickbacks from the janitorial supply company. That would be chump change compared to even a small cut of 1% of a $500 million bond issue.

Oklahoma taxpayers need legislation to require competitive bidding on bonds and to require counties, school districts, and cities -- and their associated Title 60 trusts -- to use the state bond adviser rather than hiring their own favored exclusive firms.

Until we get that legislation, we need county officials who will support transparency and fiscal prudence. We need more than mere niceness; we need intelligence, initiative, and analytical skill. Dr. Josh Turley, a good man with many years' experience as a county employee, can provide that kind of leadership, and I hope Tulsa County District 2 voters elect him as their new county commissioner.