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STATE OF OKLAHOMA
2nd Session of the 58th Legislature (2022)
COMMITTEE SUBSTITUTE
FOR
HOUSE BILL NO. 3692 By: Wallace
COMMITTEE SUBSTITUTE
An Act relating to property; amending 60 O.S. 2021,
Sections 176 and 178, which relate to trusts for
public functions; modifying bidding require ments;
defining terms; providing for compensation; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 60 O.S. 2021, Section 176, is
amended to read as follows:
Section 176. A. Express trusts may be created to issue
obligations, enter into fi nancing arrangements including, but not
limited to, lease-leaseback, sale-leaseback, interest rate swap s and
other similar transactions and to provide funds for the furtherance
and accomplishment of any authori zed and proper public function or
purpose of the state or of any county or municipality or any and all
combinations thereof, in real or personal prop erty, or either or
both, or in any estate or interest in either or both, with the
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state, or any county or m unicipality or any and all combinations
thereof, as the beneficiary thereof by:
1. The express approval of the Legislature and the Governor if
the State of Oklahoma is the beneficiary;
2. The express approval of two -thirds (2/3) of the membership
of the governing body of the beneficiary if a county is a
beneficiary;
3. The express approval of two -thirds (2/3) of the membership
of the governing body of the beneficiary if a municipality is a
beneficiary; or
4. The express approval of two -thirds (2/3) of the membership
of the governing body of each be neficiary in the event a trust has
more than one beneficiary; provided, that no funds of a beneficiary
derived from sources other than the trust property, or the operation
thereof, shall be charged with or expe nded for the execution of the
trust, except by express action of the legislative authority of the
beneficiary prior to the charging or expending of t he funds. The
officers or any other governmental agencies or authorities having
the custody, management or control of any proper ty, real or personal
or mixed, of the beneficiary of the trust, or of a proposed trust,
which property shall be needful for the execution of the trust
purposes, are authorized and empowered to lease the property for
those purposes, after the acceptance of the beneficial interest
therein by the beneficiary as hereinafter provided.
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B. Any trust created pursuant to the provisions of this
section, in whole or in part, may engage in activities outside of
the geographic boundaries of its be neficiary, so long as the
activity provides a benefit to a large class of the public within
the beneficiary's geographic area or lessens the bur dens of
government of the beneficiary and which does not solely provide a
benefit by generating administrative f ees.
C. A municipality may convey title to real property which is
used for an airport to the trustees of an industrial development
authority trust whose beneficiary is the municipality. The
industrial development authority trust must already have the
custody, management or control of the real p roperty. The conveyance
must be approved by a majority of the governing body of the
municipality. A convey ance pursuant to this section may be made
only for the sole purpose of allowing the authority to sell t he
property for fair market value when the pr operty is to be used for
industrial development purposes. Conveyances made pursuant to this
subsection shall be made subject to any existing reversionary
interest or other restrictions burdening the property an d subject to
any reversionary interest or oth er restriction considered prudent by
the municipality.
D. The trustees of a public trust having the State o f Oklahoma
as beneficiary shall make and adopt bylaws for t he due and orderly
administration and regula tion of the affairs of the public trust.
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All bylaws of a public trust having the State of Oklahoma as
beneficiary shall be submitted in writing to the G overnor of the
State of Oklahoma. The Governor must approv e the proposed bylaws
before they take effec t.
E. No public trust in which the State of Oklahoma is the
beneficiary may be amended without a two -thirds (2/3) vote of
approval of the trustees of th e trust; provided, that any amendment
is subject to the app roval of the Governor of the State of Oklaho ma.
Any amendments shall be sent to the Gove rnor within fifteen (15)
days of their adoption.
F. No trust in which a county or municipality is the
beneficiary shall hereafter create an indebtedness or obligation
until the indebtedness or obligation has be en approved by a two-
thirds (2/3) vote of the governing body of the beneficiary. In the
event a trust has more than one beneficiary, as authorized by th is
section, the trust shall not incur an indebtedness or ob ligation
until the indebtedness or obligatio n has been approved by a two -
thirds (2/3) vote of the governing body of two -thirds (2/3) of the
beneficiaries of the trust. Provided, however, a municip ality with
a governing body consisting of fewer than seven (7) members shall be
required to approve the creation of an indebtedness or obligation
under this subsection by a three -fifths (3/5) vote of the governing
body.
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G. All bonds described in subsectio n F of this section, after
December 1, 1976, except bonds s old to the federal government or any
agency thereof or to any agency of the State of Okla homa, shall be
awarded to the lowest and best bidder based upon open competitive
public offering, advertised at least once a week for two (2)
successive weeks in a new spaper of general circulation in the county
where the principal office of the trust is lo cated prior to the date
on which bids are received and opened; provided, competitive bidding
may be waived on bond issues with the approval of three-fourths
(3/4) of the trustees, unless the trust has fewer than four
trustees, in which case a two -thirds (2/3) approval shall be
required, and a three -fourths (3/4) vote of the governing body of
the beneficiary, unl ess the beneficiary is a county in which case a
two-thirds (2/3) vote of the members of the governing b ody shall be
required, or three-fourths (3/4) vote of the governing bodies of
each of the beneficiaries of the trust, unless one of the
beneficiaries is a county in which case a two-thirds (2/3) vote of
the members of the governing body of such county shal l be required.
No bonds shall be sold for le ss than par value, except upon approval
of three-fourths (3/4) of the trustees, unless the beneficiary is a
county in which case a two-thirds (2/3) vote of the members of the
governing body shall be required. I n no event shall bonds be sold
for less than sixty-five percent (65%) of par value; provided,
however, in no event shall the original purchaser from the issuer of
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any bonds issued by any public trust for any purp ose receive
directly or indirectly any fees, compensation or other remuneration
in excess of four percent (4%) of the price paid for the bonds by
the purchaser of the bonds from the original purcha ser; and further
provided, that the average coupon rate the reon shall in no event
exceed fourteen perce nt (14%) per annum. No public trust shall se ll
bonds for less than ninety -six percent (96%) of par value until the
public trust has received from the un derwriter or financial advisor
or, in the absence of an und erwriter or financial advisor, the
initial purchaser of the bonds, an estimated alternati ve financing
structure or structures showing the estimated total interest and
principal cost of each alterna tive. At least one alternative
financing structure shall i nclude bonds sold to the public at par.
Any estimates shall be considered a public recor d of the public
trust. Bonds, notes or other evidences of indebtedness issued by
any public trust shall be eligible for purchase by any state banking
association or corporation subject to such limitations as to
investment quality as may be imposed by regu lations, rules or
rulings of the State Banking Commissioner.
H. Public trusts created pursuant to this sect ion shall file
annually, with their respective beneficiarie s, copies of financial
documents and reports sufficient to demonstrate the fiscal activit y
of such trust, including, but not limited to, budgets, financial
reports, bond indentures and audits. Ame ndments to the adopted
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budget shall be approved by the trus tees of the public trust and
recorded as such in the official minutes of such trust.
I. Contracts for construction, labor, or equipment, material
materials or repairs in excess of Fifty Thousand Dollars
($50,000.00) shall be awarded by public trusts to the lowest and
best competitive, pursuant to public invitation to bid, which shall
be published in the manner provided in subsection G of this section;
the advertisements shall appear in the county w here the work, or the
major part of it, is to be done, or the equipment or ma terials are
to be delivered, or the services are to be rendered; provided,
however, should The following bidding requirements shall apply to
public trusts:
1. Construction contracts entered into by a public trust, when
required, shall be administered, advertised, and awarded pursuant to
the Public Competitive Bidding Act of 1974;
2. Operational contracts entered into by public trusts for
labor or equipment in excess of Two Hun dred Fifty Thousand Dollars
($250,000.00) shall be awarded by public trusts to the lowest
responsible bidder, pursuant to a bid, which shall be published in
the manner consistent with the bid solicitation requirements imposed
on state agencies under the Oklah oma Central Purchasing Act;
3. Any construction contract issued under this section by a
public trust may provide for a local bid preference of not more than
five percent (5%) of the bid price if the public trust governing
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body determines that there is an economic benefit to the local area
or economy. Provided, however, the local bidder or contractor m ust
agree to perform the contract for the same price and te rms as the
bid proposed by the nonlocal bidder or contractor. Any bid
preference granted hereund er must be in accordance with an
established policy adopted by the governing body of the trust to
clearly demonstrate the economic benefit to the local area or
economy. No local bid preference shall be granted unless the local
bidding entity is the second lowest qualified bid on the contract.
The bid specifications shall clearly state that the bid is s ubject
to a local bidder preference law. For purposes of t his section,
"local bid" means the bidding person is authorized to transac t
business in this stat e and maintains a bona fide establishment for
transacting such business within this state. This pro vision does
not apply to any construction contract for whic h federal funds are
available for expenditure when its provisions may be i n conflict
with federal law or regulation;
4. Should the trustee or the trust ees find that an immediate
emergency exists, which findings shall be entered in the journal of
the trust proceedings, by reason of which an immediate outlay of
trust funds in an amount exceeding Seventy-five Thousand Dollars
($75,000.00) the emergency threshold provided in the Public
Competitive Bidding Act of 1974 for construction contracts, or Two
Hundred Fifty Thousand Dollars ($250,000 .00) for other contracts
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subject to this section is necessary in order to avoid loss of life,
substantial damage to property or damage to the public peace or
safety, then the contracts may be made and entered into without
public notice or competitive bids; provided that the provisions of
this subsection shall not apply to contracts of industrial and
cultural trusts. Findings of an emergency shall be entered in the
journal or minutes of the trust proceedings;
5. Notwithstanding the provisions o f this subsection, equipment
or materials or labor may be purchased by a publ ic trust directly
from any contract duly awarded by this state or any state agency
under the Oklahoma Central Purchasing Act, or from any contract duly
awarded or approved by a governmental entity which is the
beneficiary of the public trust .
Furthermore, any construction contract issued under this section
may provide for a local bid preference of not mo re than five percent
(5%) of the bid price if the public trust governing body deter mines
that there is an economic benefit to the local area or economy.
Provided, however, the local bidder or contractor must agree to
perform the contract for the same pric e and terms as the bid
proposed by the nonlocal bidder or contractor. Any bid pref erence
granted hereunder must be in accordance with an established policy
adopted by the governing body of the trust to clearly demonstrate
the economic benefit to the local area or economy. Provided,
further, no local bid preference shall be granted unle ss the local
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bidding entity is the second lowest qualified bid on the con tract.
The bid specifications shall clearly state that the bid is subject
to a local bidder prefere nce law. For purposes of this section,
"local bid" means the bidding person is aut horized to transact
business in this state and maintains a bona fide esta blishment for
transacting such business within this state. This provision does
not apply to any con struction contract for which federal funds are
available for expenditure when its p rovisions may be in conflict
with federal law or regulation. ;
6. A public trust may enter into sole source contracts for the
purchase of equipment, labor , or both. For each sole source
acquisition, the public trust shall retain a cer tification signed by
the trustee or trustees listing the supplier 's name, address, and
contact information; affirming that the supplier is the only
business entity qualified to provide the requi red equipment or
labor, or is the only supplier abl e to provide the brand satisfying
the contract requirements, and specifying the reasons for its unique
qualifications; and giving a brief description of all efforts made
to verify that there is only one so urce for the required equipment
or labor; and
7. A public trust may enter into a cooperative purchasing
agreement for the purchase of equipment o r labor if economically
justified by way of savings, material economic value , or both. The
public trust shall consider the economic justification for using a
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cooperative purchasing agreement before entering into the
cooperative purchasing agreement. Economic justification may be
demonstrated by a comparison of current cooperative pricing to
information obtained from a request for information publicized by a
public trust.
J. As used in this section:
1. "Equipment" means an item or product and includes al l
personal property used or consumed by a public trust that typically
will last and be used multiple times ove r a period of more than
twelve (12) months;
2. "Labor" means activity which is primarily accomplished
through the use of physical or mechanical m ovement to produce a
given result; and
3. "Sole source" means an acquisition which, by specification,
restricts the acquisition to one supplier .
K. Any public trust created pursuant to the provisions of this
section shall have the power to acquire lan ds by use of eminent
domain in the same manner and according to the procedures provided
for in Sections 51 throug h 65 of Title 66 of the Oklahoma Statutes.
Any exercise of the power of eminent domain by a public trust
pursuant to the provisions of this se ction shall be limited to the
furtherance of public purpose projects involving revenue -producing
utility projects of which the public trust retains ownershi p;
provided, for public trusts in which the State of Oklahoma is the
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beneficiary the exercise of the power of eminent domain may also be
used for public purpose projects involving air transportation.
Revenue-producing utility projects shall be limited to projects for
the transportation, delivery, treatment or furnishing of water for
domestic purposes or for power, including, but not limited to, the
construction of lakes, pipelines and water treatment plants or for
projects for rail transportation. Any pub lic trust formed pursuant
to this section which has a county as its beneficiary shall have the
power to acquire, by use of eminent domain, any lands located either
inside the county, or contiguous to the county pu rsuant to the
limitations imposed pursuant to this section.
K. L. Provisions of this sectio n shall not apply to entities
created under Section s 1324.1 through 1324.26 of Title 82 of the
Oklahoma Statutes.
L. M. Any trust created under Section 176 et seq. of this
title, in whole or in part, to ope rate, administer or oversee any
county jail facility shall consist of not less than five members and
include a county commissioner and the county sheriff, or their
designee, and one member appointed by each of the county
commissioners. The appointed membe rs shall not be elected
officials.
SECTION 2. AMENDATORY 60 O.S. 2021, Section 178, is
amended to read as follows:
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Section 178. A. The instrument or will creating such trust may
provide for the appointment, succession, powers, duties, term,
manner of removal and compensation of the trustee or trustees
subject to the provisions of subsections C and E of this section,
and in all such respects the terms of said the instrument or will
shall be controlling. Trustees, who are public officers, Elected
officials, who also serve as trustees, shall serve without
compensation, but may be reimbursed for actual expenses incurred in
the performance of their duties as trustees. Trustees who are not
elected officials may receive reasonable compen sation and may be
reimbursed for actual expenses related to the performance of their
duties as trustees. For purposes of this section, reasonable
compensation shall not exceed a stipend per meeting equal to the
regional average for compensation of members of othe r governmental
or nonprofit boards and shall be approved by the beneficiary of the
public trust. If the said instrument or will makes no provisions in
regard to any of the foregoing, then the gener al laws of the state
shall control as to such omission or omissions. Every person
hereafter becoming a trustee of a pu blic trust first shall take the
oath of office required of an elected public officer and every
officer and employee who handles funds of a public trust shall
furnish a good and sufficient fidelity bond in an amount and w ith
surety as may be specified and a pproved by the persons constituting
a majority of each of the governing bodies of the beneficia ries of
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the trust, such bond to be in a su rety company authorized to
transact surety business in the State of Oklahoma but in no event
shall any bond be required of a trustee. The cost of said the bond
shall be paid from funds of the trust authority. The oaths of
office shall be administered by any person authorized to administer
oaths in the State of Oklahoma, and shall be fi led with the
Secretary of State in trust s wherein the State of Oklahoma is the
beneficiary; in the office of the county clerk in a trust wherein
any county is beneficiary; and i n the office of the clerk of the
municipality in a trust wherein any municipali ty is the beneficiary.
B. Unless otherwise specified in another state law aut horizing
the creation of a state-beneficiary public t rust, any public trust
that hereafter names th e State of Oklahoma as the beneficiary shall
have five (5) trustees appointed b y the Governor of the State of
Oklahoma with the advice and consent of the Sen ate. The terms of
the trustees shall be as follows: of the trustees first appointed,
one member shall be appointed for a term of one (1) year; one member
shall be appointed for a term of two (2) years; one member sha ll be
appointed for a term of three (3 ) years; one member shall be
appointed for a term of four (4) years; and one member shall be
appointed for a term of five (5) years. At the expiration of the
term of each member and of each succeeding member, the Gove rnor
shall appoint a successor who sha ll serve for a term of five (5)
years. Whenever a va cancy on such trust shall occur by death,
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resignation or otherwise, the Governor shall fill the same by
appointment and the a ppointee shall hold office during the un expired
term. Each member shall hold office until his or her successor has
been appointed and qualified.
C. Any instrument or will creating a trust which is not within
the scope of subsection B of this section shal l provide for the
appointment of a minim um of three trustees, their succession ,
powers, duties, term, manner of removal and compens ation subject to
the provisions of subsection E of this section, and in all such
respects the terms of said the instrument or will shall be
controlling. If the inst rument or will makes no provision in r egard
to any of the foregoing, then the general laws of the state shall
control as to the omissions.
D. Meetings of trustees of all public trusts shall be open to
the public to the same extent as is required by law fo r other public
boards and commissions. Such meetings shall also be open to the
press and any such equipment deemed necessary by the press to record
or report the activities of the meetings. In such trusts wherein
the State of Oklahoma is the beneficiary, a written notice of
trustees' meetings shall be filed with the office of the Secretary
of State at least three (3) days prior to the meeting date. Records
of the trust and minutes of the trust meetings of any publi c trust
shall be written and kept in a p lace, the location of which shall be
recorded in the office of the county clerk of each cou nty, wherein
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the trust instrument shall be recorde d. Such records and minutes
shall be available for inspection by any perso n during regular
business hours. Every trust created under Sections Section 176 et
seq. of this title shall file a monthly report of all expenditures
of bond proceeds with the gove rning body of each beneficiary and
with the Governor, the Speaker of the Ho use of Representatives and
the President Pro Tem pore of the Senate in the case of a public
trust having the State of Oklahoma as be neficiary.
E. Trustees of any public trust may be removed from office for
cause, including incompetency, neglect of duty, or malfeasance in
office, by a district court havi ng jurisdiction. In the case of
persons appointed by the Governor, such persons sh all be appointed
for terms not in excess of five ( 5) years, and shall be subject to
removal for cause. In the event of remov al of a trustee under this
subsection, a success or trustee shall be appointed as provided in
the trust instrument. Provided, howev er, in the event a trustee is
so removed who is al so a member of the governing board of a
municipal beneficiary, the successo r trustee shall be appointed by
the judge of the court wherein the removal occurred; said the
successor trustee shall serve only un til the removed trustee ceases
to serve as a member of the governing board of the municipal
beneficiary and his or her successor on said the board has
qualified.
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F. The provisions of this section shall be inapplicable to any
public trust created and exist ing prior to July 1, 1988, if the
instrument or will creating such public trust shall have been held
to be a valid and bindin g agreement in an opinion of the Supreme
Court of the State of Oklahoma; and nothing in this section shall
impair or be deemed to i mpair the trust indenture or existing or
future obligations of such public trust .
SECTION 3. This act shall become effective November 1, 2022.
58-2-10954 JM 03/03/22