Study of the National Scope and Potential for Improvement of State Economic Development Highway Programs

Part 4. Case Study - Oklahoma Industrial Access Program

4.1 Program Overview

Oklahoma's Industrial Access Road Program is administered by the Oklahoma Department of Transportation (ODOT). The purpose of this Program is "to encourage and assist local efforts toward industrial development by providing funds for the construction or improvement of direct access facilities (road systems) to specific industrial areas wherein industrial operations are underway or have been committed to be underway by a specific time schedule." Emphasis is placed on projects that effectively help to connect a specific industry or industrial area to the state or local road system.

The program is restricted to funding of roads that are on public property. Funded industrial access roads must be off of the state highway system. The road may connect to state roads, but interchanges and ramps with state highways are not funded under this program. Funds only cover paved surfacing of roads (or railroad tracks). Local governments must cover costs for the right of way, utility relocation, grading and drainage. Railroad spurs may also be funded.

Application is via local governing bodies that submit an application for funding to the ODOT together with a resolution agreeing to pay the local match. This process directly occurs in the case when an existing business requires expansion of access in order to locate or expand in a community, or if a business has already selected a new site in a community, contingent on the community's success in getting funding for the access road.

However, sometimes an outside business, considering the possibility of locating and creating new jobs in Oklahoma, makes direct inquiry to the Oklahoma Dept. of Commerce (ODOC) about possible sites and available incentives. In that case, the ODOC typically calls ODOT to indicate that there is a party considering sites that may need access road assistance, and ODOT writes a letter of general commitment if the business decides to locate in Oklahoma. Then after the company picks a site in Oklahoma, the selected community can make a formal application for program funding. In any case, a local funding match funding is required.

The program is funded by special appropriation of the state legislature, which typically provides ODOT with at least $2.5 million per year for Industrial Access Road Projects by designating funds from general transportation accounts. ODOT has sometimes been provided as much as $10 million per year for this. ODOT can spend more out of general funds if desired. A typical year has around 15-20 projects.

4.2 History and Evolution of the Program.

The Industrial Access Roads Program was started in the 1970's, under Oklahoma Administrative Code, Title 730, Chapter 10. From the outset, the program was designed to give broad flexibility and decision-making latitude to ODOT staff, so that they could be responsive to requests from the Governor's office and Oklahoma Dept. of Commerce. This design allows the program to respond quickly to special situations and needs that sometimes arise when industries consider locating or expanding in Oklahoma. With this flexible process, the program has had little change over the past three decades.

4.3 Program Funding Decisions and Follow-Up.

Oklahoma's Industrial Access Road program has no minimum eligibility criteria, but the program is focused on improving access for industrial projects, though it is not precluded from occasionally investing in a commercial project that has regional significance. All roads must be on public property; a road running onto the property of private office parks or industrial parks is not eligible unless the full right-of-way is turned over to local government ownership. In addition, rail spurs to industrial facilities are eligible. The State of Oklahoma (through ODOT) owns 700 miles of short-line railroad track, so spurs off of those publicly-owned rail lines are also eligible.

Project selection is based on a series of factors that confirm the project's significance and need. These factors, requested on the application form, are:

the industry being served,
private investment for construction or expansion of plant facilities
number of new jobs that will be created;
estimated annual payroll;
number of heavy trucks per day which will serve the industry; and
estimated capital expenditures for construction or expansion of the plant facilities.

Funding requires: (A) a formal application from the local government (city, county or industrial authority) including items listed below, (B) a letter from the industry planning to locate or expand in Oklahoma, verifying the estimates of capital, jobs and payroll, and (C) a resolution from the local government, affirming their responsibility to maintain the road after its completion.

ODOT assesses its success in leveraging private sector investment, and reports that its recent project funding has provided a better than a 10/1 ratio of private investment per dollar of public investment in access roads or highways. In addition, ODOT monitors local maintenance of industrial access roads previously funded under the program. If it is found that a funded facility is not adequately maintained, then ODOT policy is that no future industrial projects are to be approved for that county or community.

4.4 Supplementary Program Information.

The following text is taken verbatim from Oklahoma DOT documents:

Application Requirements An official request (resolution) from the local unit of government having jurisdiction over the road. The local unit of government must have the authority to sign an agreement with the Department, assuming maintenance of the road upon completion of the project. The resolution must include a statement that the local government entity will maintain the road upon project completion. An indication of local participation in the project. The local government unit must provide any right-of-way, utility relocation, grading and necessary drainage. Our access funds can only be used for surfacing. A map indicating the location of the road. Information from the industry being served indicating the number of new jobs which will be created, the estimated annual payroll, the number of heavy trucks per day which will serve the industry, and the estimated capital expenditures for construction or expansion of the plant facilities. If a new industry is to be served, the letter from the industry should indicate a commitment to locate the new facilities. Selection Criteria for Industrial Access Projects (State Code 730:10-1-14) The purpose of the Industrial Access Road Program is to encourage and assist local efforts toward industrial development by providing funds for the construction or improvement of direct access facilities to specific industrial operations or to officially designated industrial areas wherein industrial operations are underway or have been committed by a specific time schedule. The definition of direct access is based on generally accepted functional classification criteria defining the limits of responsibility of the various governmental jurisdictions for the provision of road systems adequate to respond to their constituents' needs. The responsibility of the state highway system is to provide for the inter and intrastate traffic movement between the various population centers and other major traffic generators through the state. The local road system has the responsibility for the movement of traffic between the state highway system and localized areas of attraction. This local responsibility includes providing adequate roads to serve workers living in the area where the industry is located. The "Industrial Access Road Program' is designed to provide assistance to local industrial development efforts by funding, within practical limitations, access facilities connecting a specific industry or industrial area directly to the state or local road system. Existing general purpose roads serving areas where industry is located do not qualify as industrial access roads. In general, an industrial access road is one where the only justification for its construction or improvement is the existence of a viable industrial operation at either of its termini. Criteria to be considered are as follows: Provides primary, immediate access between the local or state road systems and existing or committed industrial operations and/or areas. Provides circulation within an existing or committed industrial area or park, connecting several specific features or operations within the boundaries of the area or park. State participation requested in relation to other available funding sources (federal programs, other state agencies, local sources, etc.) Magnitude of industrial operation, present and potential. Existing access serving area. Availability of local participation to match state highway funds (either money or services). Right-of-way to be furnished at no cost to Department (including necessary utility adjustments. Program will not be used to enhance private development opportunities. Project to be sponsored by trust, foundation or other public or corporate entity having legal authority to enter into a satisfactory agreement with the Department on such items as cost sharing, design of the proposed project, and to accept responsibility for satisfactory maintenance of the facility upon completion. If facility is not adequately maintained, no future industrial projects will be approved for the county or the area. Not be designated as a part of the state highway system. Minimum cost single project to maximize geographic distribution. Projects to be programmed on a statewide basis. Formal minimum design standards to be approved by Commission setting forth minimum right-of-way widths and other relevant geometric features. No project will be approved for any country or city that is in arrears in their payments to the Department for right-of-way or other underwriter responsibility until satisfactory arrangements have been made for the discharge of the delinquency.

Application Requirements

An official request (resolution) from the local unit of government having jurisdiction over the road. The local unit of government must have the authority to sign an agreement with the Department, assuming maintenance of the road upon completion of the project. The resolution must include a statement that the local government entity will maintain the road upon project completion.
An indication of local participation in the project. The local government unit must provide any right-of-way, utility relocation, grading and necessary drainage. Our access funds can only be used for surfacing.
A map indicating the location of the road.
Information from the industry being served indicating the number of new jobs which will be created, the estimated annual payroll, the number of heavy trucks per day which will serve the industry, and the estimated capital expenditures for construction or expansion of the plant facilities. If a new industry is to be served, the letter from the industry should indicate a commitment to locate the new facilities.

Selection Criteria for Industrial Access Projects (State Code 730:10-1-14)

The purpose of the Industrial Access Road Program is to encourage and assist local efforts toward industrial development by providing funds for the construction or improvement of direct access facilities to specific industrial operations or to officially designated industrial areas wherein industrial operations are underway or have been committed by a specific time schedule.
The definition of direct access is based on generally accepted functional classification criteria defining the limits of responsibility of the various governmental jurisdictions for the provision of road systems adequate to respond to their constituents' needs.
The responsibility of the state highway system is to provide for the inter and intrastate traffic movement between the various population centers and other major traffic generators through the state. The local road system has the responsibility for the movement of traffic between the state highway system and localized areas of attraction. This local responsibility includes providing adequate roads to serve workers living in the area where the industry is located.
The "Industrial Access Road Program' is designed to provide assistance to local industrial development efforts by funding, within practical limitations, access facilities connecting a specific industry or industrial area directly to the state or local road system. Existing general purpose roads serving areas where industry is located do not qualify as industrial access roads.
In general, an industrial access road is one where the only justification for its construction or improvement is the existence of a viable industrial operation at either of its termini. Criteria to be considered are as follows:
1. Provides primary, immediate access between the local or state road systems and existing or committed industrial operations and/or areas.
2. Provides circulation within an existing or committed industrial area or park, connecting several specific features or operations within the boundaries of the area or park.
3. State participation requested in relation to other available funding sources (federal programs, other state agencies, local sources, etc.)
4. Magnitude of industrial operation, present and potential.
5. Existing access serving area.
6. Availability of local participation to match state highway funds (either money or services).
7. Right-of-way to be furnished at no cost to Department (including necessary utility adjustments.
8. Program will not be used to enhance private development opportunities.
9. Project to be sponsored by trust, foundation or other public or corporate entity having legal authority to enter into a satisfactory agreement with the Department on such items as cost sharing, design of the proposed project, and to accept responsibility for satisfactory maintenance of the facility upon completion.
10. If facility is not adequately maintained, no future industrial projects will be approved for the county or the area.
11. Not be designated as a part of the state highway system.
12. Minimum cost single project to maximize geographic distribution.
13. Projects to be programmed on a statewide basis.
14. Formal minimum design standards to be approved by Commission setting forth minimum right-of-way widths and other relevant geometric features.
15. No project will be approved for any country or city that is in arrears in their payments to the Department for right-of-way or other underwriter responsibility until satisfactory arrangements have been made for the discharge of the delinquency.

4.5 Examples of Funded Projects.

Oklahoma Industrial Access Road Program Projects FY 2002

County	Business	State Amount	Jobs created	Private Sector Capital Investment
Creek	Reconstruction of the Tulsa-Sapulpa Union Overpass in Sapulpa	$40,000	N/A	N/A
Cleveland	Sysco	$1,500,000	120	$25,000,000
Jackson	Kizziar Feed Lots	$450,000	25	$1,500,000
Ottawa	Reconstruction of Mushroom Road	$400,000	N/A	N/A
Seminole	DISA GOFF, Inc	$175,000	50	$3,200,000
Kay	Conoco Gas to Liquids facility	$125,000	100	$75,000,000
Pottawatomie	Shawnee Industrial Park	$205,000	100+	$11,000,000
Garfield	Advanced Food	$317,000	50+	$4,000,000
McClain	Duke Energy	$60,000	22	$185,000,000
Garvin	Family Dollar	$11,000	25	$300,000
Seminole	SSC's Capitol Improvement Program	$115,000	15	$7,500,000
Carter	Ardmore Airpark	$100,000	15	$25,000,000
Comanche	Fort Sill National Cemetery	$542,000	20	$12,000,000
Harmon	Harmon County Dairy	$285,000	N/A	$4,500,000
Oklahoma	Municipal Solid Waste Transfer Station	$295,000	150	$18,000,000
Cherokee	Cherokee County	$530,000	500	$20,000,000
Lincoln	Stroud Industrial Park	$245,000	50
Kay	Cococo Carbon Fibers Facility	$222,000	80	$70,000,000
Woods	Vantage Assoc., Barton Specialties, and Schwan's	$90,000	50	$1,500,000
Tillman	Vanderlan Dairy	$330,000	25	$6,000,000
Total Funds		$6,037,000	1,397	$469,500,000

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