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SENATE FLOOR VERSION
April 13, 2022
COMMITTEE SUBSTITUTE
FOR ENGROSSED
HOUSE BILL NO. 3692 By: Wallace of the House
and
Garvin of the Senate
[ property - trusts for public functions - bidding
requirements - 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:
A. Express trusts may be created to issue o bligations, enter
into financing arrangements inc luding, but not limited to, lease-
leaseback, sale-leaseback, interest rate swaps 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 count y or municipality or any and all
combinations thereof, in real or personal property, or either or
both, or in any estate or interest in either or both, with the
state, or any county or m unicipality or any an d all combinations
thereof, as the beneficiary th ereof by:
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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 bene ficiary 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 executio n of the
trust, except by express action of the l egislative authority of the
beneficiary prior to the charging or expending of the funds. The
officers or any other governmental agencies or authorities having
the custody, management or control of any prope rty, real or personal
or mixed, of the beneficiar y 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 beneficia ry as hereinafter provided.
B. Any trust created pursuant to the provisions of this
section, in whole or in part, may engage in activities outside of
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the geographic boundaries of its be neficiary, so long as the
activity provides a be nefit to a large class of the public within
the beneficiary's geographic area or lessens the burdens 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 c ontrol of the real property . The conveyance
must be approved by a majority of the governing body of the
municipality. A conveyance pursuant to this section may be made
only for the sole purpose of allowing the authority to sell the
property for fair mark et value when the property 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 and su bject to
any reversionary interest or other rest riction considered pru dent by
the municipality.
D. The trustees of a public trust having the State of Oklahoma
as beneficiary shall make and adopt bylaws for the due and orderly
administration and regulation of the affairs of th e public trust.
All bylaws of a public trust hav ing the State of Oklahoma as
beneficiary shall be submitted in writing to the Governor of the
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State of Oklahoma. The Governor must approve the proposed bylaws
before they take effect.
E. No public trust in which the State of Oklahom a is the
beneficiary may be amended without a two-thirds (2/3) vote of
approval of the trustees of the trust; provided, that any amendment
is subject to the approval of the Governor of the State of Oklahoma.
Any amendments shall be sent to the Governor wi thin 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 been a pproved by a two-
thirds (2/3) vote of the govern ing body of the benefi ciary. In the
event a trust has more than one beneficiary, as authorized by this
section, the trust shall not incur an indebtedness or obligation
until the indebtedness or obligation ha s been approved by a two-
thirds (2/3) vote of th e governing body of tw o-thirds (2/3) of the
beneficiaries of the trust. Provided, however, a municipality with
a governing body consisting of fewer than seven (7) members shall be
required to approve the cre ation of an indebtedn ess or obligation
under this subsection by a thre e-fifths (3/5) vote of the governing
body.
G. All bonds described in subsection F of this section, after
December 1, 1976, except bonds sold to the federal government or any
agency thereof or to any agency of the State of Oklahoma, s hall be
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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 newspaper of general circulation in the county
where the principal offic e of the trust is located p rior 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 fou r
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, 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, or three-fourths (3/4) vote o f 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 shall be required.
No bonds shall be sold for less than par value, except upo n 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. In no event shall bonds be sold
for less than sixty-five percent (65%) of p ar value; provided,
however, in no event shall the original purchaser from the issuer of
any bonds issued by any public trust for any purpose receive
directly or indirectly any fees, com pensation or other re muneration
in excess of four percent (4%) of the price paid for the bonds by
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the purchaser of the bonds from the original purchaser; and further
provided, that the average coupon rate thereon shall in no event
exceed fourteen percent ( 14%) per annum. No p ublic trust shall sell
bonds for less than ninety -six percent (96%) of par value until the
public trust has received from the underwriter or financial advisor
or, in the absence of an underwriter or financial advisor, the
initial purchaser of the bonds, an estimated alternative fina ncing
structure or structures showing the estimated total interest and
principal cost of each alternative. At least one alternative
financing structure shall include bonds sold to the public at par.
Any estimates shall be consi dered a public record of th e 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 ma y be imposed by regulations , rules or
rulings of the State Banking Commissioner.
H. Public trusts created pursuant to this section shall file
annually, with their respective beneficiaries, copies of financial
documents and reports suf ficient to demonstrat e the fiscal activity
of such trust, including, b ut not limited to, budgets, financial
reports, bond indentures and audits. Amendments to the adopted
budget shall be approved by the trustees of the public trust and
recorded as such in the official minutes of such trust.
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I. Contracts for construction, l abor, equipment, material or
repairs in excess of Fifty Thousand Dollars ($50,000.00) shall be
awarded by public trusts to the lowest and best competitive bidder,
pursuant to public invi tation to bid, which shall be published in
the manner provided in subs ection G of this section; the
advertisements shall appear in the county where the work, or the
major part of it, is to be done, or the equipment or materials are
to be delivered, or the services are to be re ndered; provided,
however, should the trustee or the trustees 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 Sev enty-five Thousand Dollars
($75,000.00) is necess ary 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 compe titive bids; provided that the provisions of
this subsection shall not apply to contracts of industrial and
cultural trusts. Notwithstanding the provisions of this subsection,
equipment or materials may be purchased by a public trust directly
from any contract duly awarded by this state or any state ag ency
under The Oklahoma Central Purchasing Act, or from any contract duly
awarded by a governmental entity which is the beneficiary of the
public trust. Furthermore, any construction contract issued under
this section may provid e for a local bid preferenc e of not more than
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five percent (5%) of the bid price if the public trust governing
body determines that there is an economic benefit to the local area
or economy. Provided, however, the local bidder or cont ractor must
agree to perform the contract for th e same price and terms as the
bid proposed by the nonlocal bidder or contractor. Any bid
preference granted hereunder must be in accordance with an
established policy adopted by the governing body of the tru st to
clearly demonstrate the economic benefit t o the local area or
economy. Provided, further, 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 clea rly
state that the bid is subject to a local bid der preference law. F or
purposes of this section, "local bid" means the bidding person is
authorized to transact business in this state and maintains a bona
fide establishment for transacting such business w ithin this state.
This provision does not apply to any construction c ontract for which
federal funds are available for expenditure when its provisions may
be in conflict with federal law or regulation
1. When applicable, public trusts shall comply with the Public
Competitive Bidding Act of 1974.
2. A public trust may adop t its own or its beneficiary's
purchasing policies and procedures for all equipment, supplies,
services, and other items not procured pursuant to paragraph 1 of
this subsection. Such policies and procedures may include
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provisions regarding sole source and emergency purchases,
cooperative purchasing, purchasing from a state or its beneficiary's
contract, and any other prov ision necessary to meet the needs of the
trust.
J. Any public trust created pursuant to the provisions of this
section shall have the po wer to acquire lands by use of eminent
domain in the same manner and according to the procedures provided
for in Sections 51 through 65 of Title 66 of the Oklahoma Statutes.
Any exercise of the power of emi nent domain by a public trust
pursuant to the provisions of this section shall be limited to the
furtherance of public purpose projects involving revenue -producing
utility projects of which the public trust retains ownership;
provided, for public trusts in which the State of Oklahoma is the
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 public trust formed pursuant
to this section which has a county as its beneficiary sh all have the
power to acquire, by use of eminent domain, any lands located either
inside the county, or contiguous to the county pursuant to the
limitations imposed pursuant to this section.
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K. Provisions of this section shall not apply to entities
created under Sections 1324.1 through 1324.26 of Title 82 of the
Oklahoma Statutes.
L. Any trust created under Section 176 et seq. of this title,
in whole or in part, to operate, 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 members shall not be elected
officials.
SECTION 2. AMENDATORY 60 O.S. 2021, Section 178, is
amended to read as follows:
A. The instrument or will creating such trust may provide for
the appointment, suc cession, powers, duties, term, manner of removal
and compensation of th e trustee or trustees subject to the
provisions of subsections C and E of this section, and in all such
respects the terms of said instrument or will shall be controlling.
Trustees, of public trusts who are public officers, elected
officials shall serve without compensation, but may be reimbursed
for actual expenses incurred in the performance of their duties as
trustees. Trustees of public trusts operating a hospital who are
not elected officials may receive reasonable compensation and
reimbursement for actual expenses related to the performance of
their duties as trustees. For purposes of this section, reasona ble
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compensation shall not exceed a st ipend per meeting equal to the
regional average for compens ation of members of other governmental
or nonprofit boards. 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 public trust first shall
take the oath of office required of an elected publ ic 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 with
surety as may be specified and approved by the persons co nstituting
a majority of each of the governing bo dies of the beneficiaries of
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 filed with the
Secretary of State in trusts wherein the State o f Oklahoma is the
beneficiary; in the office of t he 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 municipality is the beneficiary.
B. Unless otherwise specified in anot her state law authorizing
the creation of a state -beneficiary public trust, any public trust
that hereafter names th e State of Oklahoma as the beneficiary shall
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have five (5) trustees appointed by the Governor of the State of
Oklahoma with the advice and c onsent of the Senate. 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 shall 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 Governor
shall appoint a successor who shall serve for a term of five (5)
years. Whenever a vacancy on such trust shall occur by death,
resignation or otherwise, the Governor shall fill the same by
appointment and the appointee shall hold office during the unexpired
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 shall provide for the
appointment of a minimum of three trustees, their succession,
powers, duties, term, manner o f removal and compensation subject to
the provisions of subsection E of th is section, and in all such
respects the terms of said the instrument or will shall be
controlling. If the instrument or will makes no provision in regard
to any of the foregoing, t hen the general laws of the state shall
control as to the omissions.
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D. Meetings of trustees of all public trusts shall be open to
the public to the same extent as is required by law for other public
boards and commissions. Such meetings shall also be op en 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 public trust
shall be written and kept in a place, the location of which shall be
recorded in the office of the cou nty clerk of each county, wherein
the trust instrument shall be recorded. Suc h records and minutes
shall be available for inspection by any person during regular
business hours. Every trust created under Sections Section 176 et
seq. of this title shall f ile a monthly report of all expenditures
of bond proceeds with the governing body of e ach beneficiary and
with the Governor, the Speaker of the House of Representatives and
the President Pro Tempore of the S enate in the case of a public
trust having the State of Oklahoma as beneficiary.
E. Trustees of any public trust may be removed from o ffice for
cause, including incompetency, neglect of duty, or malfeasance in
office, by a district court having jurisdicti on. In the case of
persons appointed by the Gove rnor, such persons shall be appointed
for terms not in excess of five (5) years, and s hall be subject to
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removal for cause. In the event of removal of a trustee under this
subsection, a successor trustee sh all be appointed as provided in
the trust instrument. Provided, however, in the event a trustee is
so removed who is also a member of the governing board of a
municipal beneficiary, the successor trustee shall be appointed by
the judge of the court wherei n the removal occurred; said the
successor trustee shall serve only until 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.
F. The provisions of th is section shall be inapplicable to any
public trust created and existing prior to July 1, 1988, if the
instrument or will creating such public trust shall have been held
to be a valid and binding agreement in an opinion of the Supreme
Court of the State o f Oklahoma; and nothing in this section shall
impair or be deemed to impair the trust indenture or existing or
future obligations of such public trust .
SECTION 3. This act shall become effective November 1, 2022.
COMMITTEE REPORT BY: COMMITTEE ON RULES
April 13, 2022 - DO PASS AS AMENDED