NEW ISSUE—BOOK-ENTRY ONLY RATINGS: Moody’s: “Aa3” S&P: “AA-” Fitch: “AA-” See “RATINGS” herein In the opinion of Hawkins, Delafield & Wood LLP, Bond Counsel to the Authority, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein (i) interest on the Series 2018A Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the Series 2018A Bonds is not treated as a preference item in calculating the alternative minimum tax under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed for taxable years beginning prior to January 1, 2018. In addition, in the opinion of Hawkins Delafield & Wood LLP, Bond Counsel, under the Enabling Act, the Series 2018A Bonds, their transfer and the income therefrom (including any profit made from the sale thereof) are at all times free from taxation within the State of Oklahoma. See “TAX MATTERS RESPECTING THE SERIES 2018A BONDS” herein.

OKLAHOMA TURNPIKE AUTHORITY Oklahoma Turnpike System $344,310,000 Second Senior Revenue Bonds Series 2018A

Dated: Date of Delivery Due: January 1, as shown on the inside cover The above-described series of bonds (the “Series 2018A Bonds”) are being issued by the Oklahoma Turnpike Authority (the “Authority”). Proceeds from the sale of the Series 2018A Bonds will be used to provide funds to (i) finance a portion of the capital costs of certain Turnpike Projects and Improvements, hereinafter described, (ii) satisfy the Second Senior Bond Reserve Account Requirement, and (iii) pay the costs related to the issuance of the Series 2018A Bonds. See “PLAN OF FINANCE” herein. The Series 2018A Bonds are being issued pursuant to a Trust Agreement dated as of February 1, 1989, as heretofore amended and supplemented and as supplemented by a Sixteenth Supplemental Trust Agreement dated as of October 1, 2018 (collectively, the “Trust Agreement”) by and between the Authority and BOKF, NA, as successor trustee (the “Trustee”). The Trustee will serve as Bond Registrar and Paying Agent for the Series 2018A Bonds. The Series 2018A Bonds are issuable in fully registered form and when initially issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Series 2018A Bonds. Purchases of beneficial ownership interests in the Series 2018A Bonds will be made in book-entry form only, in $5,000 principal amounts or integral multiples thereof. Beneficial Owners of the Series 2018A Bonds will not receive physical delivery of certificates evidencing their ownership interest in the Series 2018A Bonds so long as DTC or a successor securities depository acts as the securities depository with respect to the Series 2018A Bonds. Interest on the Series 2018A Bonds is payable each January 1 and July 1, commencing January 1, 2019, as more fully described herein. So long as DTC or its nominee is the registered owner of the Series 2018A Bonds, payments of the principal of and interest on the Series 2018A Bonds will be made directly to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. See “THE SERIES 2018A BONDS — Book-Entry-Only System” herein. Maturity Schedule on Inside Cover The Series 2018A Bonds are subject to redemption prior to maturity as described herein. The Series 2018A Bonds are special obligations of the Authority payable solely from the tolls, motor fuel excise tax revenues and other revenues pledged under the Trust Agreement and monies held in a special trust fund established under the Authority’s Enabling Act (the “Turnpike Trust Fund”), subject to prior liens and claims as described in “SECURITY FOR THE BONDS” herein. The Series 2018A Bonds shall not be deemed to constitute a debt of the State of Oklahoma or any political subdivision thereof. Neither the State of Oklahoma nor the Authority shall be obligated to pay the Series 2018A Bonds or the interest thereon except from the sources pledged to the payment thereof under the Trust Agreement and neither the faith and credit nor the taxing power of the State of Oklahoma or any political subdivision thereof is pledged to the payment thereof. The Series 2018A Bonds are offered when, as and if issued and are subject to the receipt of the approving legal opinion of Hawkins Delafield & Wood LLP, New York, New York, Bond Counsel. Certain legal matters will be passed upon for the Authority by its General Counsel, EGL Law, PLLC, and by Kutak Rock LLP, Special Disclosure Counsel, and for the Underwriters by their counsel, McCall, Parkhurst & Horton, L.L.P. It is expected that the Series 2018A Bonds will be available in definitive form for delivery through the facilities of DTC in New York, New York, on or about October 31, 2018.

J.P. Morgan BofA Merrill Lynch Stifel BOK Financial Securities, Inc. Wells Nelson & Associates, LLC

The date of this Official Statement is October 18, 2018 OKLAHOMA TURNPIKE AUTHORITY Oklahoma Turnpike System Maturities, Amounts, Interest Rates and Yields

$344,310,000 Second Senior Revenue Bonds Series 2018A

$123,205,000 Series 2018A Serial Bonds

Maturity Principal Interest CUSIP January 1 Amount Rate Yield Base: 679111 2032 $ 1,230,000 3.625% 3.700% ZB3 2032 10,110,000 5.000 3.160† ZA5 2033 11,890,000 3.750 3.800 ZC1 2034 12,335,000 5.000 3.290† ZD9 2035 12,955,000 5.000 3.360† ZE7 2036 13,600,000 5.000 3.430† ZF4 2037 14,275,000 5.000 3.460† ZG2 2038 14,995,000 4.000 3.920† ZH0 2039 15,595,000 4.000 3.960† ZJ6 2040 16,220,000 5.000 3.600† ZK3

$53,675,000 5.000% Series 2018A Term Bond due January 1, 2043 — Yield 3.630%† (CUSIP 679111–ZL1) $167,430,000 4.000% Series 2018A Term Bond due January 1, 2048 — Yield 4.100% (CUSIP 679111–ZM9)

______†Priced at the stated yield to the January 1, 2027, optional redemption date at par.

CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services (“CGS”), managed on behalf of the American Bankers Association by S&P Capital IQ. This information is not intended to create a database and does not serve in any way as a substitute for services provided by CGS. CUSIP numbers have been assigned by an independent company not affiliated with the Authority or the Underwriters and are included solely for the convenience of the registered and beneficial owners of the applicable Series 2018A Bonds. Neither the Authority nor any Underwriter is responsible for the selection or use of these CUSIP numbers, and no representation is made as to their correctness on the applicable Series 2018A Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2018A Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Series 2018A Bonds. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations, other than as contained in this Official Statement, and if given or made, any such other information or representations must not be relied upon. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2018A Bonds, by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been furnished by the Authority and other sources which are believed to be reliable. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information and this Official Statement is not to be construed as the promise or guarantee of the Underwriters. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the information or opinions set forth herein after the date of this Official Statement. This Official Statement and particularly the information contained under the captions “INTRODUCTION”, “OUTSTANDING OBLIGATIONS OF THE AUTHORITY”, “SCHEDULED ANNUAL DEBT SERVICE REQUIREMENTS”, “SECURITY FOR THE BONDS”, “MOTOR FUEL EXCISE TAX”, “RISK FACTORS”, “LITIGATION”, “Appendix A – Certain Information Relating to the Oklahoma Turnpike Authority and the Oklahoma Turnpike System”, “Appendix F - Report of the Consulting Engineers”, and “Appendix G – Comprehensive Traffic & Revenue Update Summary Report and October 2018 Letter Update of the Traffic Engineers”, contain statements relating to future results and economic performance that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When used in this Official Statement, the words “anticipate”, “believe”, “may”, “will”, “should”, “seeks”, “expect”, “assume”, “estimate”, “projection”, “plan”, “budget”, “forecast”, “intend”, “goal”, and similar expressions identify forward-looking statements. The words or phrases “to date”, “now”, “currently”, and the like are intended to mean as of the date of this Official Statement. Examples of forward- looking statements contained in this Official Statement are statements that concern the Authority’s future revenues, maintenance and operation costs, costs of proposed turnpike expansion projects, traffic projections and liquidity. The forward-looking statements contained herein are based on the Authority’s expectations and are necessarily dependent upon assumptions, estimates and data that it believes are reasonable as of the date made but that may be incorrect, incomplete or imprecise or not reflective of actual results. The Authority does not undertake to update or revise any of the forward-looking statements contained herein, even if it becomes clear that they will not be realized. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. For a discussion of certain risks and possible variations in results, see the information under “RISK FACTORS.” The Authority does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. THE COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. THE COVER PAGE IS NOT A SUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT, INCLUDING ALL APPENDICES ATTACHED HERETO TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SERIES 2018A BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. [This Page Intentionally Left Blank] OKLAHOMA TURNPIKE AUTHORITY Neal A. McCaleb Transportation Building 3500 Martin Luther King Avenue Oklahoma City, OK 73111 (405) 425-3600

Governor Mary Fallin J. Michael (Mike) Patterson Member, Ex Officio Secretary of Transportation

Dana S. Weber David A. Burrage Chair Vice Chair

G. Carl Gibson Kenneth G. Adams Secretary and Treasurer Member

Guy L. Berry E. Gene Love Member Member

Tim J. Gatz Alan Freeman Executive Director Assistant Executive Director and Chief Operating Officer Finance and Administration

Joe Echelle David Machamer Assistant Executive Director Assistant Executive Director Maintenance, Engineering & Construction Pikepass and Toll

Julie Porter Wendy Smith Controller Director of Finance and Revenue

EGL Law, PLLC General Counsel

Bond Counsel Financial Advisor Hawkins Delafield & Wood LLP Hilltop Securities Inc. New York, New York Dallas, Texas

Consulting Engineers Traffic Engineers Olsson Associates CDM Smith Inc. Oklahoma City, Oklahoma Dallas, Texas [This Page Intentionally Left Blank] TABLE OF CONTENTS

Page Page

INTRODUCTION ...... 1 TAX MATTERS RESPECTING THE THE AUTHORITY ...... 3 SERIES 2018A BONDS ...... 24 PLAN OF FINANCE...... 4 Opinion of Bond Counsel ...... 24 OUTSTANDING OBLIGATIONS OF THE AUTHORITY .. 5 Certain Ongoing Federal Tax Requirements and First Senior Bonds ...... 5 Covenants ...... 25 Second Senior Bonds and Parity Indebtedness ...... 5 Certain Collateral Federal Tax Consequences ...... 25 Subordinated Bonds ...... 5 Original Issue Discount ...... 25 Junior Obligations ...... 6 Bond Premium...... 26 Anticipated Additional Indebtedness of the System ...... 6 Information Reporting and Backup Withholding ...... 27 Anticipated Additional Non-System Indebtedness ...... 6 Miscellaneous ...... 27 SCHEDULED ANNUAL DEBT SERVICE LITIGATION ...... 27 REQUIREMENTS ...... 7 LEGAL MATTERS ...... 27 THE SERIES 2018A BONDS ...... 7 CONSULTANTS’ REPORTS ...... 28 Description of the Series 2018A Bonds ...... 7 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 28 Optional Redemption of Series 2018A Bonds ...... 8 FINANCIAL ADVISOR ...... 28 Mandatory Sinking Fund Redemption of LEGALITY OF INVESTMENT ...... 28 Series 2018A Bonds ...... 9 ONGOING DISCLOSURE ...... 28 Redemption Notices and Effect ...... 9 UNDERWRITING ...... 29 Limited Obligations ...... 10 RATINGS ...... 30 Book-Entry-Only System ...... 10 MISCELLANEOUS...... 31 SECURITY FOR THE BONDS ...... 12 General ...... 13 APPENDIX A Certain Information Relating to the Toll Covenant ...... 13 Oklahoma Turnpike Authority and the Reserve Accounts ...... 14 Oklahoma Turnpike System Reserve Maintenance Fund ...... 15 Additional Indebtedness ...... 15 APPENDIX B Audited Financial Statements of the Junior Obligations ...... 17 Authority for the Fiscal Years Ended Flow of Funds ...... 18 December 31, 2017 and 2016. Turnpike Trust Fund ...... 18 APPENDIX C Summary of Certain Provisions of the Trust Amendments Made by Fifteenth Supplemental Agreement Trust Agreement ...... 19 MOTOR FUEL EXCISE TAX ...... 19 APPENDIX D Proposed Form of Opinion of Bond Counsel RISK FACTORS ...... 21 APPENDIX E Form of Continuing Disclosure Agreement General Factors Affecting Authority Revenues ...... 21 Forward-Looking Statements ...... 22 APPENDIX F Report of the Consulting Engineers Legislation ...... 22 APPENDIX G Comprehensive Traffic & Revenue Update Natural Disasters ...... 23 Summary Report and October 2018 Letter Other Risk Factors ...... 23 Update of the Traffic Engineers [This Page Intentionally Left Blank] OKLAHOMA TURNPIKE AUTHORITY Oklahoma Turnpike System

$344,310,000 Second Senior Revenue Bonds Series 2018A

INTRODUCTION

This Official Statement of the Oklahoma Turnpike Authority (the “Authority”), including the cover and Appendices, is provided for the purpose of presenting certain information in connection with the issuance of $344,310,000 aggregate original principal amount of its Oklahoma Turnpike System Second Senior Revenue Bonds, Series 2018A (the “Series 2018A Bonds”).

The Series 2018A Bonds are special obligations of the Authority, authorized by Title 69, Oklahoma Statutes 2011, Sections 1701 to 1734, inclusive, as amended, and Title 47, Oklahoma Statutes 2011, Sections 11-1401 to 11-1405, inclusive, as amended (collectively, the “Enabling Act” or “Act”), and by resolutions of the Authority.

The Series 2018A Bonds will be issued as a series of Second Senior Bonds pursuant to a resolution adopted by the Authority on August 28, 2018, and will be secured under a Trust Agreement dated as of February 1, 1989, as previously amended and supplemented and by a Sixteenth Supplemental Trust Agreement dated as of October 1, 2018 (the “Sixteenth Supplemental Trust Agreement” and collectively, as so supplemented, the “Trust Agreement”), between the Authority and BOKF, NA, Oklahoma City, Oklahoma, as successor trustee (the “Trustee”). A summary of certain provisions of the Trust Agreement is attached hereto as Appendix C. Capitalized terms used herein and not defined elsewhere in this Official Statement have the respective meanings assigned to such terms in Appendix C or, if not defined therein, in the Trust Agreement. See “Summary of Certain Provisions of the Trust Agreement — Definitions” in Appendix C hereto.

As of the date hereof, the Authority has $1,538,275,000 aggregate principal amount of Oklahoma Turnpike System obligations outstanding under the Trust Agreement which constitute Parity Indebtedness, all as more particularly described under “OUTSTANDING OBLIGATIONS OF THE AUTHORITY” herein. Also see “SECURITY FOR THE BONDS — Reserve Accounts” herein.

Proceeds from the sale of the Series 2018A Bonds will be used to provide funds to (i) finance a portion of the capital costs of certain Turnpike Projects and Improvements, hereinafter described, (ii) satisfy the Second Senior Bond Reserve Account Requirement, and (iii) pay the costs related to the issuance of the Series 2018A Bonds. See “PLAN OF FINANCE” herein. As used herein, “turnpike projects” means any projects that that the Enabling Act authorizes the Authority to undertake and “Turnpike Projects” means only those turnpike projects meeting the requirements of the definition of “Turnpike Projects” in the Trust Agreement. See “Summary of Certain Provisions of the Trust Agreement — Definitions” in Appendix C hereto.

The Authority is authorized to issue bonds on a parity with Outstanding Second Senior Bonds for the purpose of paying the cost of additional Turnpike Projects or Improvements or for refunding any Second Senior Bonds. The Authority may issue “Junior Obligations” for the purpose of paying all or part of the cost of other projects, turnpike or otherwise, as authorized by law. The Authority has no Outstanding First Senior Bonds or Subordinated Bonds and is no longer permitted to issue First Senior Bonds or Subordinated Bonds. Any future additional indebtedness of the Authority will be issued either as Second Senior Bonds or Junior Obligations. Second Senior Bonds and any other Indebtedness issued on a parity therewith (herein called “Parity Indebtedness”) are referred to herein as “Second Senior Indebtedness.” First Senior Bonds, Second Senior Bonds and any Parity Indebtedness are referred to herein as “Senior Indebtedness.” Senior Indebtedness and Subordinated Bonds are referred to herein as “Bonds.”

The Series 2018A Bonds will be special obligations of the Authority payable solely from the tolls, motor fuel excise tax revenues and other revenues pledged under the Trust Agreement and certain monies held in a special trust fund established under the Authority’s Enabling Act (the “Turnpike Trust Fund”), subject to prior liens and claims as discussed in “SECURITY FOR THE BONDS” herein. The Series 2018A Bonds shall not be deemed to constitute a debt of the State of Oklahoma or any political subdivision thereof. Neither the State of Oklahoma nor the Authority shall be obligated to pay the Series 2018A Bonds or the interest thereon except from the sources pledged to the payment thereof under the Trust Agreement and neither the faith and credit nor the taxing power of the State of Oklahoma or any political subdivision thereof is pledged to the payment thereof. The Trust Agreement establishes limitations on the Authority’s power to issue additional Bonds and to incur Parity Indebtedness. See “Summary of Certain Provisions of the Trust Agreement — First Senior Bonds,” “— Second Senior Bonds,” “— Refunding Second Senior Bonds” and “— Refunding Subordinated Bonds” in Appendix C hereto.

See Appendix A hereto for certain information relating to the Authority and the Oklahoma Turnpike System and the Driving Forward Program, including the capital improvements thereto and expansion thereof. Appendix A also includes certain selected financial information for the quarter ended June 30, 2018, extracted from internal unaudited accounting records of the Authority. Audited financial statements of the Authority as of and for the fiscal years ended December 31, 2017 and 2016, excerpted from the Oklahoma Turnpike Authority Comprehensive Annual Financial Report for the fiscal years ended December 31, 2017 and 2016, are included in Appendix B hereto. The Report of the Consulting Engineers and the Comprehensive Traffic & Revenue Update Summary Report and October 2018 Letter Update of the Traffic Engineers are included in Appendices F and G, respectively, hereto.

The purchase of the Series 2018A Bonds involves certain investment risks that are discussed throughout this Official Statement. Accordingly, each prospective purchaser of the Series 2018A Bonds should make an independent evaluation of all of the information presented in this Official Statement in order to make an informed investment decision. The discussion of certain risks is not intended to be exhaustive and should be read in conjunction with this entire Official Statement including the Appendices hereto. See “RISK FACTORS” herein.

This Official Statement includes brief descriptions of the Authority, the Oklahoma Turnpike System, the Series 2018A Bonds, the Trust Agreement and related matters. Such descriptions do not purport to be comprehensive or definitive. References to all documents are qualified in their entirety by reference to the complete texts thereof, copies of such documents being available for inspection at the offices of the Authority.

The order and placement of information in this Official Statement, including appendices, are not an indication of relevance, materiality or relative importance, and this Official Statement, including the appendices, must be read in its entirety to make an informed investment decision. The captions and headings in this Official Statement are for convenience purposes only and in no way define, limit or describe the scope or intent, or affect the meaning or construction, of any provision or section of this Official Statement.

2 THE AUTHORITY

Pursuant to the Enabling Act, the Authority is duly created as a body corporate and politic and is constituted an instrumentality of the State of Oklahoma. The Board of Directors of the Authority consists of the Governor, who is a member ex-officio, and six members. All members are appointed by the Governor, by and with the consent of the State Senate. The Governor may remove any member of the Authority, at any time, with or without cause. The current officers and members of the Board of Directors of the Authority, certain information regarding their experience and the dates of expiration of their terms of the office are listed in Appendix A hereto.

Under the Enabling Act the Authority is authorized and empowered to construct, maintain, repair and operate turnpike projects, with their access and connecting roads, at such locations and on such routes as it shall determine to be feasible and economically sound. Until further specifically authorized by the legislature of the State of Oklahoma (the “State Legislature”), the Authority is authorized to construct and operate turnpike projects only at the locations specified in the Enabling Act.

Pursuant to the Enabling Act, the Authority is authorized to seek a judicial determination of the validity of a proposed issuance of turnpike revenue bonds. The Authority from time to time has sought such judicial determinations, especially with respect to new project financings and initiatives of the Authority. The Oklahoma Supreme Court on twelve prior occasions has issued opinions affirming the validity of the Authority’s bonds, most recently in opinions and orders issued in December 2016 and January 2017. The bonds issued to fund the Driving Forward Program, including, but not limited to, the Series 2018A Bonds, have been validated by the Oklahoma Supreme Court and are incontestable in any court in the State of Oklahoma, including the refunding of such bonds. The Authority also has a validation proceeding currently pending before the Oklahoma Supreme Court regarding the financing for the Gilcrease Expressway West project described in Appendix A hereto under the heading “THE AUTHORITY — Non-System Financing Plans.”

See Appendix A hereto for descriptive information regarding each of the turnpikes included in the Oklahoma Turnpike System, as well as turnpikes the Authority expects to construct that are not expected to be included in the Oklahoma Turnpike System. Additional turnpikes have been authorized by the State Legislature, but the Authority, which is solely responsible for determining whether to construct any additional turnpikes, has taken no action with respect to the construction of any additional turnpikes other than with respect to the extension of the Kilpatrick Turnpike and the Eastern Oklahoma County Turnpike as described in “PLAN OF FINANCE” herein and the construction of the Gilcrease Expressway West project as described in Appendix A hereto under the heading “THE AUTHORITY — Non-System Financing Plans.” The State Legislature, notwithstanding any agreement or contract entered into by the Authority, may repeal, alter or amend the authorization for the construction of any turnpike, or the description of the route or location thereof, for which bonds have not been sold at the time of such legislative action. Each turnpike project hereafter constructed by the Authority, whether presently authorized or not, may become a part of the Oklahoma Turnpike System, upon a showing that the turnpike project can generate Net Revenues sufficient to cover Current Expenses and Reserve Maintenance Fund deposits. See “Summary of Certain Provisions of the Trust Agreement  Requirements for Turnpike Projects; Reclassification of General Fund Turnpike Projects” in Appendix C hereto.

In addition, the Authority may enter into arrangements alone or with others for separate statutorily authorized projects that are not Turnpike Projects and will not become part of the Oklahoma Turnpike System. The Authority is currently pursuing a process to enter into such arrangements for the Gilcrease Expressway West Project. See “THE AUTHORITY  Non-System Financing Plans” in Appendix A hereto.

3 PLAN OF FINANCE

Proceeds of the Series 2018A Bonds will be used to (i) finance a portion of the capital costs of certain Turnpike Projects and Improvements described below, (ii) satisfy the Second Senior Bond Reserve Account Requirement, and (iii) pay the costs related to the issuance of the Series 2018A Bonds. The following table sets forth the estimated sources and uses of funds:

Principal of Series 2018A Bonds $344,310,000.00 Plus: Net Original Issue Premium 11,351,273.05 Total Sources: $355,661,273.05

Deposit to Construction Fund $340,000,000.00 Deposit to Second Senior Bond Reserve Account 13,891,437.48 Costs of Issuance1 1,769,835.57 Total Uses: $355,661,273.05 ______1 Includes all costs of issuance, underwriters’ discount of $950,222.24 with respect to the Series 2018A Bonds, fees for legal counsel and other expenses, the payment of which is contingent upon the issuance of the Series 2018A Bonds.

A portion of the proceeds of the Series 2018A Bonds will be used to provide the remaining portion of the funds for the projects described below which are part of the Driving Forward Program. The Driving Forward Program, further described in Appendices A, F and G hereto, includes approximately $1.1 billion of projects of the Authority. The Authority has previously issued its $456,070,000 Second Senior Revenue Bonds, Series 2017A (the “Series 2017A Bonds”) on February 8, 2017, and its $312,840,000 Second Senior Revenue Bonds, Series 2017C (the “Series 2017C Bonds”) on December 21, 2017, to fund portions of such projects.

Muskogee Turnpike (9.5 miles): reconstruction between the Creek Turnpike interchange and State Highway 51 near Coweta, Oklahoma. The projects have been constructed, including safety features and modernization of the toll plaza, and opened to traffic.

Turner Turnpike (22 miles): creation of an “urban turnpike corridor” between just east of Bristow, Oklahoma, and the eastern section of the Turner Turnpike in the vicinity of Tulsa. Projects include additional and wider lanes and lighting. The widening project between Kellyville and Sapulpa is well underway with numerous construction activities ongoing in the nearly 16 mile long construction zone. A major milestone was met in July 2018 with the substantial completion of 3.5 miles of widening near Kellyville. Other portions of the project are progressing well as traffic has switched to widened sections within the work zone.

H.E. Bailey Turnpike (7.5 miles): creation of wider lanes, enhanced safety features, and toll plaza modernization between Bridge Creek and North Meridian Avenue near Newcastle, Oklahoma. The projects have been constructed and opened to traffic.

Kilpatrick Turnpike, SW Expansion (7 miles): extension of the Kilpatrick Turnpike from I-40 to State Highway 152/Airport Road to connect southwest Oklahoma City, Oklahoma, and the urban core of Oklahoma City, Oklahoma. Construction commenced on the Kilpatrick Turnpike extension in January 2018 with the I-40 interchange. Three other projects along the corridor began recently, placing the 7-mile segment entirely under construction from I-40 to SH-152. This project is projected to open to traffic no later than January 1, 2021.

4 Kilpatrick Turnpike, Bridge Widening/Rehabilitation: Widening and rehabilitation of the John Kilpatrick Turnpike bridges over the North Canadian River and the North Canadian River Overflow bridges located six miles north of I-40. The design for the widening and rehabilitation of these bridges is nearing completion and construction is expected to be bid in the fourth quarter of 2018.

Eastern Oklahoma County Turnpike (21 miles): providing a connection between I-40 and I-44 to relieve traffic congestion in the Oklahoma City, Oklahoma, area (eastern Oklahoma County) and produce a drive time reduction to access Tulsa, Oklahoma, from the Oklahoma City Metropolitan area. The Eastern Oklahoma County Turnpike broke ground in December 2017, beginning with the interchange at the Turner Turnpike. Since that time, two additional interchanges, three grading projects and seven bridge projects have been awarded. Seven projects have begun construction and other projects are anticipated to begin along the corridor in the coming months. This project is projected to open to traffic no later than January 1, 2021.

OUTSTANDING OBLIGATIONS OF THE AUTHORITY

First Senior Bonds

The Authority has no Outstanding First Senior Bonds and is no longer permitted to issue First Senior Bonds.

Second Senior Bonds and Parity Indebtedness

As of the date hereof, the Authority has $1,538,275,000 aggregate principal amount of Oklahoma Turnpike System obligations including the Second Senior Bonds described below (the “Outstanding Second Senior Bonds”) and the Second Senior Bond Reserve Account Loan described below constituting Parity Indebtedness outstanding under the Trust Agreement as follows:

Original Principal Obligation Final Maturity Date Issue Outstanding Interest Series 2011A Bonds January 1, 2028 $ 524,010,000 $ 324,815,000 Fixed Rate Series 2011B Bonds January 1, 2031 159,650,000 52,770,000 Fixed Rate Series 2017A Bonds January 1, 2047 456,070,000 456,070,000 Fixed Rate Series 2017B Bonds January 1, 2022 23,930,000 18,985,000 Fixed Rate Series 2017C Bonds January 1, 2047 312,840,000 312,840,000 Fixed Rate Series 2017D Bonds January 1, 2028 275,680,000 264,245,000 Fixed Rate Series 2017E Bonds January 1, 2031 95,835,000 93,550,000 Fixed Rate Reserve Account Loan† December 1, 2027 35,000,000 15,000,000 Variable Rate $1,883,015,000 $1,538,275,000 ______†A 10-year term loan with U.S. Bank National Association (“U.S. Bank”) for $15,000,000. As of December 1, 2017, the U.S. Bank loan agreement was amended and restated to provide for a balloon payment due December 1, 2018. Prior to such date, the Authority expects either to renew such loan or to make other arrangements, which may include the deposit of cash from funds on hand, to insure that the Second Senior Bond Reserve Account Requirement will be met at all times. See “SECURITY FOR THE BONDS — Reserve Accounts” herein.

Subordinated Bonds

The Authority has no Outstanding Subordinated Bonds and is no longer permitted to issue Subordinated Bonds.

5 Junior Obligations

As of the date hereof, the Authority has no Junior Obligations outstanding under the Trust Agreement, but is permitted to issue such obligations as described in Appendix C hereto.

Anticipated Additional Indebtedness of the System

The Series 2018A Bonds are expected to be the final Second Senior Revenue Bonds issued to complete the financing of the projects included in the Driving Forward Program as discussed in Appendix A hereto. The Authority has no plans to issue additional Second Senior Bonds as of the date hereof (and is no longer permitted to issue First Senior Bonds or Subordinate Bonds as described above).

Anticipated Additional Non-System Indebtedness

The Authority intends to incur certain obligations that will not be secured by Net Revenues of the Oklahoma Turnpike System for the purposes of financing a portion of the Gilcrease Expressway West project during 2019. Such project will not be included in the Oklahoma Turnpike System and is expected to be incurred pursuant to a new, separate trust agreement of the Authority, which trust agreement will not have any pledge of or lien on the Net Revenues of the Oklahoma Turnpike System or the funds and accounts securing the payment of the Bonds under the Trust Agreement, but will be secured by the revenues of the Gilcrease Expressway West project and the funds and accounts established pursuant to such separate trust agreement of the Authority. For a summary of the provisions of the Trust Agreement providing for the financing of projects not included in the Oklahoma Turnpike System, see “Summary of Certain Provisions of the Trust Agreement — Requirements for New Turnpike Projects; Reclassification of General Fund Turnpike Projects” in Appendix C hereto. The Authority expects to use certain of the amounts held to the credit of the General Fund that are available in accordance with the Trust Agreement to support the financing of the Gilcrease Expressway West project. See “THE AUTHORITY — Non-System Financing Plans” in Appendix A hereto. Pursuant to the Trust Agreement, the Authority may use moneys held in the General Fund (to the extent not required to be used to make up any shortfall in debt service on Second Senior Bonds or the Second Senior Bond Reserve Account Requirement) for any lawful purpose. See “Summary of Certain Provisions of the Trust Agreement — Use of Moneys in General Fund; Issuance of Junior Obligations” in Appendix C hereto.

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6 SCHEDULED ANNUAL DEBT SERVICE REQUIREMENTS

The following table sets forth the annual amounts required to pay scheduled principal and interest on the Series 2018A Bonds and the Outstanding Second Senior Bonds during each fiscal year ending December 31 (because the Authority transfers moneys to the Trustee prior to each principal and interest payment date, payments on the Series 2018A Bonds and the other Outstanding Second Senior Bonds due on January 1 are shown in the preceding fiscal year ending December 31).

Debt Service Requirements (Column totals may not agree due to rounding)

Period Ending Outstanding Series 2018A Series 2018A Total Dec. 31 Bonds† Principal Interest Debt Service 2018 $ 126,216,285.02 $ -- $ 2,553,487.53 $ 128,769,772.55 2019 125,037,960.00 -- 15,069,762.50 140,107,722.50 2020 122,999,553.76 -- 15,069,762.50 138,069,316.26 2021 123,213,566.26 -- 15,069,762.50 138,283,328.76 2022 122,461,291.26 -- 15,069,762.50 137,531,053.76 2023 122,306,741.26 -- 15,069,762.50 137,376,503.76 2024 122,144,078.76 -- 15,069,762.50 137,213,841.26 2025 121,973,072.50 -- 15,069,762.50 137,042,835.00 2026 121,797,072.50 -- 15,069,762.50 136,866,835.00 2027 121,607,041.26 -- 15,069,762.50 136,676,803.76 2028 95,763,816.26 -- 15,069,762.50 110,833,578.76 2029 95,763,066.26 -- 15,069,762.50 110,832,828.76 2030 93,033,083.76 -- 15,069,762.50 108,102,846.26 2031 60,659,341.26 11,340,000.00 15,069,762.50 87,069,103.76 2032 60,661,491.26 11,890,000.00 14,519,675.00 87,071,166.26 2033 60,659,497.50 12,335,000.00 14,073,800.00 87,068,297.50 2034 60,658,222.50 12,955,000.00 13,457,050.00 87,070,272.50 2035 60,661,872.50 13,600,000.00 12,809,300.00 87,071,172.50 2036 60,662,622.50 14,275,000.00 12,129,300.00 87,066,922.50 2037 60,658,372.50 14,995,000.00 11,415,550.00 87,068,922.50 2038 60,660,422.50 15,595,000.00 10,815,750.00 87,071,172.50 2039 60,659,522.50 16,220,000.00 10,191,950.00 87,071,472.50 2040 60,661,922.50 17,025,000.00 9,380,950.00 87,067,872.50 2041 60,658,322.50 17,880,000.00 8,529,700.00 87,068,022.50 2042 60,662,862.50 18,770,000.00 7,635,700.00 87,068,562.50 2043 60,658,362.50 19,715,000.00 6,697,200.00 87,070,562.50 2044 60,661,112.50 20,500,000.00 5,908,600.00 87,069,712.50 2045 60,661,612.50 21,320,000.00 5,088,600.00 87,070,212.50 2046 60,660,662.50 22,175,000.00 4,235,800.00 87,071,462.50 2047 -- 83,720,000.00 3,348,800.00 87,068,800.00 $2,484,882,851.44 $344,310,000.00 $348,698,125.03 $3,177,890,976.47 ______† Includes debt service on the Series 2011A Bonds, Series 2011B Bonds, Series 2017A Bonds, Series 2017B Bonds, Series 2017C Bonds, Series 2017D Bonds and the Series 2017E Bonds but not the Reserve Account Loan. See “SECURITY FOR THE BONDS—Reserve Accounts” herein.

THE SERIES 2018A BONDS

Description of the Series 2018A Bonds

The aggregate principal amount of the Series 2018A Bonds shall be as set forth on the cover page hereof and the Series 2018A Bonds shall mature on the dates and in the amounts, with interest thereon at the rates, set forth on the inside cover page hereof. See “SECURITY FOR THE BONDS” herein.

The Series 2018A Bonds shall be executed and delivered in fully registered form in denominations of $5,000 or whole multiples thereof not exceeding the aggregate principal amount stated

7 to mature on any given date. The Series 2018A Bonds shall be dated the date of their delivery and the registered owners of the Series 2018A Bonds shall be entitled to receive interest therefrom on January 1 and July 1 of each year. The first interest payment date shall be January 1, 2019. The payment of principal of and interest on the Series 2018A Bonds shall be made in lawful money of the United States of America. BOKF, NA, will serve as Trustee, as well as Bond Registrar and Paying Agent for the Series 2018A Bonds. DTC shall act as Depository for the Series 2018A Bonds. So long as DTC is acting as Depository, the principal of and interest on the Series 2018A Bonds shall be payable as directed by the Depository.

The principal of the Series 2018A Bonds shall be payable at the principal corporate trust office of the Trustee and the interest thereon shall be payable on each interest payment date by check mailed to the persons in whose names the Series 2018A Bonds are registered at the close of business on the regular record date for such interest, which shall be the June 15 or December 15 (whether or not a business day) next preceding such interest payment date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the registered owner on such regular record date, and may be paid to the persons in whose names the Series 2018A Bonds are registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof being given by the Trustee by mail to the registered owners not less than 10 days prior to such special record date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Series 2018A Bonds may be listed and upon such notice as may be required by such exchange, or as more fully provided in the Trust Agreement.

The Series 2018A Bonds are issuable as registered bonds without coupons in the denomination of $5,000 or any whole multiple thereof. At the principal corporate trust office of the Bond Registrar, in the manner and subject to the limitations and conditions provided in the Trust Agreement, Series 2018A Bonds may, upon presentation and surrender, be exchanged for an equal aggregate principal amount of the Series 2018A Bonds of the same maturity, of authorized denominations and bearing interest at the same rate.

The transfer of the Series 2018A Bonds is registrable by the registered owners thereof in person or by their attorneys or legal representatives at the principal corporate trust office of the Bond Registrar but only in the manner and subject to the limitations and conditions provided in the Trust Agreement and upon surrender and cancellation of their Series 2018A Bonds. Upon any such registration of transfer the Authority shall execute and the Bond Registrar shall authenticate and deliver in exchange for such Series 2018A Bond, a new bond or bonds registered in the name of the transferee, of authorized denominations, in an aggregate principal amount equal to the principal amount of such bond, of the same maturity and bearing interest at the same rate. Neither the Authority nor the Bond Registrar shall be required to make any exchange or to register the transfer of any bond during the fifteen (15) days immediately preceding the date of the Authority’s giving notice of redemption or after such bond has been selected for redemption.

Optional Redemption of Series 2018A Bonds

The Series 2018A Bonds are subject to redemption prior to maturity as a whole or in part (in accordance with procedures of DTC, so long as DTC or Cede & Co., as its nominee, is the Owner, and otherwise by lot in such manner as the Trustee in its discretion deems proper), on any Business Day on and after January 1, 2027, subject to applicable notice, at a Redemption Price equal to the principal amount thereof, without premium, plus accrued interest up to but not including the redemption date.

8 Mandatory Sinking Fund Redemption of Series 2018A Bonds

The Series 2018A Term Bonds maturing January 1, 2043 and January 1, 2048 shall be subject to redemption through mandatory sinking fund installments on January 1, 2041, and January 1, 2044, respectively, and each January 1 thereafter. The redemption price shall be 100% of the principal amount of such Series 2018A Bonds to be redeemed plus accrued interest, if any, to the redemption date. Such sinking fund installments shall be sufficient to redeem the following principal amounts of such Series 2018A Bonds in the years indicated:

5.00% January 1, 2043 4.00% January 1, 2048 Series 2018A Term Bond Series 2018A Term Bond Principal Principal January 1 Amount January 1 Amount 2041 $17,025,000 2044 $19,715,000 2042 17,880,000 2045 20,500,000 2043 18,770,000 2046 21,320,000 Stated Maturity 2047 22,175,000 2048 83,720,000 Stated Maturity

Redemption Notices and Effect

So long as DTC is the securities depository for the Series 2018A Bonds, the Trustee must mail redemption notices to DTC at least 30 days before the redemption date. If the Series 2018A Bonds are not held in book-entry-only form, then the Trustee must mail redemption notices directly to bondholders within the same time frame. A redemption of the Series 2018A Bonds is valid and effective even if DTC’s procedures for notice should fail. Beneficial owners should consider arranging to receive redemption notices or other communications from DTC affecting them, including notice of interest payments through DTC participants. Any notice of optional redemption may state that it is conditional upon receipt by the Trustee of money sufficient to pay the Redemption Price or upon the satisfaction of any other condition, or that it may be rescinded upon the occurrence of any other event, and any conditional notice so given may be rescinded at any time before the payment of the Redemption Price if any such condition so specified is not satisfied or if any such other event occurs. All redemptions are final - even if beneficial owners did not receive their notice, and even if that notice had a defect.

If the Trustee gives an unconditional notice of redemption, then on the redemption date the Series 2018A Bonds called for redemption will become due and payable. If the Trustee gives a conditional notice of redemption and holds money to pay the Redemption Price of the affected Series 2018A Bonds and upon the satisfaction of any other conditions provided for in such conditional notice of redemption, then on the redemption date the Series 2018A Bonds called for redemption will become due and payable. In either case, if on the redemption date the Trustee holds money to pay the Series 2018A Bonds called for redemption, thereafter, no interest will accrue on those Series 2018A Bonds, and a bondholder’s only right will be to receive payment of the Redemption Price upon surrender of those Series 2018A Bonds.

If less than all of the Series 2018A Bonds of any one maturity shall be called for redemption, the particular bonds or portions of bonds to be redeemed from such maturity shall be selected in such manner as the Trustee deems fair and appropriate as provided in the Trust Agreement.

On the date fixed for redemption, notice having been mailed in the manner provided in the Trust Agreement, the Series 2018A Bonds or portions thereof called for redemption shall be due and payable at the Redemption Price provided therefor, plus accrued interest to such date. If a portion of the Series

9 2018A Bonds shall be called for redemption, a new Series 2018A Bond or Bonds in a principal amount equal to the unredeemed portion hereof, of the same maturity and bearing interest at the same rate will be issued to the registered owner upon the surrender thereof.

Limited Obligations

The Series 2018A Bonds are special obligations of the Authority payable solely from the tolls, motor fuel excise tax revenues and other revenues pledged under the Trust Agreement and monies held in the Turnpike Trust Fund, subject to prior liens and claims as described in “SECURITY FOR THE BONDS” herein. The Series 2018A Bonds shall not be deemed to constitute a debt of the State of Oklahoma or any political subdivision thereof. Neither the State of Oklahoma nor the Authority shall be obligated to pay the Series 2018A Bonds or the interest thereon except from the sources pledged to the payment thereof under the Trust Agreement and neither the faith and credit nor the taxing power of the State of Oklahoma or any political subdivision thereof is pledged to the payment thereof.

Book-Entry-Only System

The information in this section concerning The Depository Trust Company (“DTC”) and DTC’s book-entry-only system has been obtained from DTC, and the Authority and the Underwriters take no responsibility for the accuracy thereof.

DTC will act as securities depository for the Series 2018A Bonds. The Series 2018A Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Series 2018A Bond certificate will be issued for each maturity of the Series 2018A Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC at the office of the Trustee on behalf of DTC utilizing the DTC FAST system of registration.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of: AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Series 2018A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2018A Bonds on DTC’s records. The ownership

10 interest of each actual purchaser of each Series 2018A Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2018A Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2018A Bonds, except in the event that use of the book-entry system for the Series 2018A Bonds is discontinued.

To facilitate subsequent transfers, all Series 2018A Bonds deposited by Direct Participants with DTC (or the Trustee on behalf of DTC utilizing the DTC FAST system of registration) are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2018A Bonds with DTC (or the Trustee on behalf of DTC utilizing the DTC FAST system of registration) and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2018A Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2018A Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Redemption notices shall be sent to DTC. If less than all the Series 2018A Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2018A Bonds unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2018A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions and dividend payments on the Series 2018A Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Paying Agent on the payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC (nor its nominee), the Paying Agent or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividend payments on the Series 2018A Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

11 DTC may discontinue providing its services as securities depository with respect to the Series 2018A Bonds at any time by giving reasonable notice to the Authority or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2018A Bond certificates are required to be printed and delivered.

The Authority may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series 2018A Bond certificates will be printed and delivered to DTC.

The Authority, Bond Counsel, the Trustee and the Underwriters cannot and do not give any assurances that the DTC Participants will distribute to the Beneficial Owners of the Series 2018A Bonds: (i) payments of principal of or interest on the Series 2018A Bonds; (ii) certificates representing an ownership interest or other confirmation of Beneficial Ownership interests in the Series 2018A Bonds; or (iii) redemption or other notices sent to DTC or its nominee, as the Registered Owners of the Series 2018A Bonds; or that they will do so on a timely basis or that DTC or its participants will serve and act in the manner described in this Official Statement. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

None of the Authority, Bond Counsel, the Trustee or the Underwriters will have any responsibility or obligation to such DTC Participants (Direct or Indirect) or the persons for whom they act as nominees with respect to: (i) the Series 2018A Bonds; (ii) the accuracy of any records maintained by DTC or any DTC Participant; (iii) the payment by any DTC Participant of any amount due to any Beneficial Owner in respect of the principal amount of or interest on the Series 2018A Bonds; (iv) the delivery by any DTC Participant of any notice to any Beneficial Owner which is required or permitted under the terms of the Master Indenture to be given to Registered Owners; (v) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Series 2018A Bonds; or (vi) any consent given or other action taken by DTC as Registered Owner.

In reading this Official Statement, it should be understood that while the Series 2018A Bonds are in the Book Entry system, references in other sections of this Official Statement to Registered Owner should be read to include the Beneficial Owners of the Series 2018A Bonds, but: (i) all rights of ownership must be exercised through DTC and the Book Entry system; and (ii) notices that are to be given to Registered Owners by the Authority or the Trustee will be given only to DTC.

SECURITY FOR THE BONDS

The Series 2018A Bonds are special obligations of the Authority payable solely from the tolls and other revenues pledged under the Trust Agreement and motor fuel excise tax revenues accruing to the Turnpike Trust Fund pledged under the Trust Agreement on a parity with Outstanding Second Senior Bonds, Second Senior Bonds hereinafter issued, and any indebtedness issued on a parity therewith. The Series 2018A Bonds do not constitute a debt or a pledge of the faith and credit of the State of Oklahoma and neither the faith and credit nor the taxing power of the State is pledged to the payment of the principal of or the interest on the Series 2018A Bonds. Nothing in the Series 2018A Bonds or in the Trust Agreement shall be construed as obligating the State of Oklahoma or the Authority to pay the Series 2018A Bonds or the interest thereon, except from revenues of the Oklahoma Turnpike System and other monies pledged under the Trust Agreement, or as pledging the faith and credit or taxing power of the State of Oklahoma or any political subdivision thereof.

12 General

First Senior Bonds. The Authority has no Outstanding First Senior Bonds and is no longer permitted to issue First Senior Bonds.

Second Senior Bonds and Parity Indebtedness. Second Senior Indebtedness consists of Second Senior Bonds and Parity Indebtedness. The Trust Agreement provides that (i) the payment of the principal of and premium, if any, and interest on Second Senior Indebtedness, including the Series 2018A Bonds, is secured equally and ratably by a lien on and pledge of the Net Revenues derived from the ownership and operation of the Oklahoma Turnpike System and monies available therefor in the Turnpike Trust Fund, subject only to the prior lien thereon of the First Senior Bonds (see “SECURITY FOR THE BONDS — Turnpike Trust Fund”), and (ii) the Net Revenues and such monies from the Turnpike Trust Fund are irrevocably pledged to the payment of the principal of and premium, if any, and interest on the Second Senior Indebtedness as the same become due and payable. Any future additional indebtedness of the Authority will be issued either as Second Senior Indebtedness or Junior Obligations. See “— Additional Indebtedness” and “— Junior Obligations” herein.

Subordinated Bonds. The Authority has no Outstanding Subordinated Bonds and is no longer permitted to issue Subordinated Bonds.

Junior Obligations. The Authority may issue Junior Obligations, the payment of the principal of and the interest on which monies held in the General Fund (but not any Net Revenues of the Authority prior to their deposit in the General Fund) only may be pledged. The Authority has no Outstanding Junior Obligations as of the date hereof.

Toll Covenant

The Authority covenants that before any other additional Turnpike Projects are opened, it will fix schedules for tolls for each such turnpike as recommended by the Traffic Engineers.

The Authority has agreed to charge tolls sufficient such that:

(i) Net Revenues in each fiscal year, together with the amount of the motor fuel excise taxes apportioned to the Authority for deposit to the credit of the Turnpike Trust Fund for each such fiscal year, or the amount that would have been so apportioned except for the limitation of the Enabling Act as to the maximum Turnpike Trust Fund balance, as described herein under “MOTOR FUEL EXCISE TAX” and “SECURITY FOR THE BONDS — Turnpike Trust Fund” and in Appendix C under “Summary of Certain Provisions of the Trust Agreement — Second Senior Bonds” (but in no event greater than the maximum annual Turnpike Trust Fund apportionment amount of $3,000,000) will be not less than 120% of the amount of the Debt Service Requirements for each such fiscal year on account of all Senior Indebtedness then outstanding; and

(ii) Net Revenues in each fiscal year will be not less than the sum of 105% of the Debt Service Requirements for such fiscal year on account of all Bonds and Parity Indebtedness then outstanding and 100% of the annual amount required to be deposited in the Reserve Maintenance Fund, any deficiencies at the beginning of such fiscal year in amounts required to be held to the credit of the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account and the amount of Net Revenues required to be generated by the Authority in respect of any Junior Obligations then outstanding if the failure so to generate would cause a default in respect of such Junior Obligations.

13 In each fiscal year, if the schedules of tolls then in effect are not producing Net Revenues in an amount needed to satisfy the conditions in (i) and (ii) above (the “Toll Covenant”), the Authority will request the Traffic Engineers to recommend revisions of the toll schedules to produce the maximum amount of Net Revenues possible. Upon such recommendation, the Authority will revise toll schedules, not necessarily to such maximum amount, but so as to produce an amount of Net Revenues at least in an amount sufficient to satisfy the Toll Covenant.

In order to provide adequate revenues to allow the Authority to meet its maximum annual Debt Service, Current Expenses and Reserve Maintenance Fund deposit requirements, the Authority has covenanted to provide a study as of September 30 of each fiscal year for the twelve month period beginning January 1 of each subsequent fiscal year, reflecting the estimated traffic, revenues, expenses and debt service requirements for such ensuing fiscal year. Such study may be accomplished by Authority personnel and shall reflect the toll increases, if any, and other terms and conditions necessary for the Authority to satisfy the Toll Covenant prospectively for the upcoming fiscal year. If such study reflects a toll increase is necessary to meet the requirements of the preceding sentence, the Authority shall engage a nationally recognized Traffic Engineer to provide a traffic study which outlines the toll increase required to allow the Authority to satisfy the Toll Covenant. Upon such traffic study being presented to the Authority, which traffic study, if required, shall be completed no later than the December 1 preceding each such January 1, the toll increase recommended in the traffic study shall be made effective to the Authority’s toll charges as of the following January.

See “Summary of Certain Provisions of the Trust Agreement — Certain Covenants of the Authority — Toll Covenants” in Appendix C hereto.

Reserve Accounts

The Trust Agreement establishes a First Senior Bond Reserve Account, a Second Senior Bond Reserve Account and a Subordinated Bond Reserve Account with respect to the First Senior Bonds, Second Senior Indebtedness and Subordinated Bonds, respectively. The Authority is required to maintain on deposit with the Trustee to the credit of the respective Reserve Accounts an amount of money, securities or reserve account insurance policy (a) for the First Senior Bonds, Second Senior Bonds or Subordinated Bonds, equal to the lesser of (i) the maximum Principal and Interest Requirements for any bond year on all First Senior Bonds, Second Senior Bonds or Subordinated Bonds, respectively, then outstanding or (ii) ten percent (10%) of the original principal amount of each series of First Senior Bonds, Second Senior Bonds or Subordinated Bonds, respectively, and (b) for Parity Indebtedness, equal to the lesser of (i) the maximum Debt Service Requirements for any bond year on account of such Indebtedness then outstanding or (ii) ten percent (10%) of the original principal amount of such Parity Indebtedness, all as may be specified in the Supplemental Agreement providing for the issuance of such Bonds or Parity Indebtedness. See the definitions of “First Senior Bond Reserve Account Requirement,” “Second Senior Bond Reserve Account Requirement” and “Subordinated Bond Reserve Account Requirement” under “Summary of Certain Provisions of the Trust Agreement — Definitions” in Appendix C herein. The Trust Agreement provides alternative methods of calculating the respective Reserve Account requirements for Bonds or Parity Indebtedness that constitute Variable Rate Indebtedness, Balloon Indebtedness or Optional Tender Indebtedness, as set forth in each of such definitions under “Summary of Certain Provisions of the Trust Agreement — Definitions,” in Appendix C hereto.

The Authority is required to make up any deficiencies in any Reserve Account immediately from available monies other than monies in the Revenue Fund and over a period of not more than 12 months from Net Revenues after making the required deposits to the First Senior Bond Service Account, the Second Senior Bond Service Account and the Subordinated Bond Service Account, as described under “Summary of Certain Provisions of the Trust Agreement — Flow of Funds” in Appendix C hereto.

14 A portion of the Second Senior Bond Reserve Account Requirement in the amount of $15,000,000 is currently on deposit with the Trustee in the form of a bank certificate of deposit issued by U.S. Bank for the benefit of BOKF, NA, as Trustee. The bank certificate of deposit was funded with the proceeds of a loan from U.S. Bank, constituting Parity Indebtedness under the Trust Agreement. The foregoing arrangements were first entered into in 2014 to replace a loan from BBVA Compass Bank for such purpose from 2009 to 2011 which replaced a Second Senior Bond Reserve Account Insurance Policy provided by a municipal bond insurance company which no longer complied with the continuing ratings requirements of such a facility under the Trust Agreement. On December 1, 2014, the loan from BBVA Compass Bank was fully redeemed and the Authority executed a 10-year term loan with U.S. Bank for $15,000,000. As of December 1, 2017, the U.S. Bank loan documents were amended and restated to extend the balloon payment previously due December 1, 2017 to December 1, 2018. Prior to such date, the Authority expects either to renew such loan or to make other arrangements, which may include the deposit of cash from funds on hand, to ensure that the Second Senior Bond Reserve Account Requirement will be met at all times.

Reserve Maintenance Fund

The Trust Agreement establishes a Reserve Maintenance Fund held by a Depositary from which monies shall be applied or held in reserve to pay the cost of resurfacing the Oklahoma Turnpike System, unusual or extraordinary maintenance or repairs, engineering expenses and insurance premiums or self insurance reserves. If monies in the First Senior Bond Service Account, the Second Senior Bond Service Account, the Subordinated Bond Service Account, the Turnpike Trust Fund and available money in the General Fund are insufficient to pay principal and interest when due on Senior Indebtedness or Subordinate Bonds, then the Depositary must apply monies in the Reserve Maintenance Fund not otherwise encumbered and required to be paid out within the next 12 months first to the First Senior Bond Service Account, then to the Second Senior Bond Service Account and then to the Subordinated Bond Service Account, as may be required to make up such deficiency; provided that prior to any amounts in the Turnpike Trust Fund being used to make any payments on account of the Outstanding Second Senior Bonds described under “OUTSTANDING OBLIGATIONS OF THE AUTHORITY” herein and the Series 2018A Bonds, the Authority covenants to use any monies available in the General Fund first and then any monies in the Reserve Maintenance Fund in excess of the requirements of such Reserve Maintenance Fund.

Monies are to be deposited monthly to the Reserve Maintenance Fund in an amount equal to the amount set forth in the Authority’s annual budget to be deposited to the credit of such fund during such month. The Authority need not make a required monthly deposit to the Reserve Maintenance Fund to the extent that monies have either been spent from other available Authority funds or transferred to the Reserve Maintenance Fund for uses authorized by the Reserve Maintenance Fund and shown in the Annual Budget for such fiscal year of the Authority. See “Summary of Certain Provisions of the Trust Agreement — Flow of Funds” and “ Use of Reserve Maintenance Fund” in Appendix C hereto.

Additional Indebtedness

The Authority is authorized under the Trust Agreement to issue from time to time Second Senior Bonds secured by the Trust Agreement for the purpose of paying all or any part of the cost of any additional Turnpike Projects or Improvements, completing payment of the cost of any such Turnpike Project or Improvement or any New Turnpike Project, paying any obligations incurred by the Authority to provide temporary funds for the foregoing purposes and for refunding any Second Senior Bonds or any Subordinated Bonds. Except as to any Credit Facility, or bond insurance policy or Senior Bond Reserve Account Insurance Policy, and any differences in the maturities, interest rates, redemption provisions, purchase provisions or use of monies in various subaccounts in the Senior Bond Sinking Fund, such

15 additional Second Senior Bonds shall be on parity with and entitled to the benefits and security of any series of Second Senior Bonds issued under the Trust Agreement.

Except in the case of Second Senior Bonds issued for completing payment of the cost of any Turnpike Projects or Improvements in the aggregate principal amount not exceeding 5% of the principal amount of Second Senior Bonds previously issued pursuant to the Trust Agreement to pay the cost of such Turnpike Project or Improvement, the Trustee shall not deliver such Second Senior Bonds unless, in the case of any Second Senior Bonds proposed to be delivered in respect of any Turnpike Project for which Second Senior Bonds have not been previously issued, the Authority’s estimate of the revenues for the fifth complete bond year following the Completion Date of such Turnpike Project and in each bond year thereafter for which the Second Senior Bonds then proposed to be delivered shall be outstanding shall be not less than its estimate of the sum for the corresponding bond year of Current Expenses and deposits to the Reserve Maintenance Fund, and for all Second Senior Bonds then being issued:

(I) (A) Net Revenues, together with the amount of the motor fuel excise taxes apportioned to the Authority for deposit to the credit of the Turnpike Trust Fund, or the amount that would have been so apportioned except for the limitation of the Enabling Act as to the maximum Turnpike Trust Fund balance (but not more than the maximum annual Turnpike Trust Fund apportionment amount of $3,000,000 ) as described below under “MOTOR FUEL EXCISE TAX” and “SECURITY FOR THE BONDS — Turnpike Trust Fund” for any 12 consecutive calendar months out of the 18 calendar months immediately preceding the date of the issuance of such Bonds, adjusted as if the schedule of tolls in effect on the date of the issuance of such Bonds had been in effect throughout such 12 calendar months, shall be not less than 120% of the amount of the Debt Service Requirements for the current bond year on account of all Senior Indebtedness then outstanding, and

(B) Net Revenues for such 12 consecutive calendar months, adjusted as if the schedule of tolls in effect on the date of the issuance of such Second Senior Bonds had been in effect throughout such 12 calendar months, shall be not less than the sum of 105% of the amount of the Debt Service Requirements for the current bond year on account of all Bonds and Parity Indebtedness then outstanding and 100% of the amounts required in the current bond year to be deposited in the Reserve Maintenance Fund, the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account, if any, and the amount of Net Revenues required to be generated by the Authority in such bond year in respect of any Junior Obligations then outstanding if the failure so to generate would cause a default in respect of such Junior Obligations, and

(C) For each bond year through the fifth complete bond year after the Completion Date of such Turnpike Project or Improvement, Net Revenues, together with the amount of the motor fuel excise taxes apportioned to the Authority for deposit to the credit of the Turnpike Trust Fund for each such fiscal year, or the amount that would have been so apportioned except for the limitation of the Enabling Act as to the maximum Turnpike Trust Fund balance (but not more than the maximum annual Turnpike Trust Fund apportionment amount of $3,000,000) as described below under “MOTOR FUEL EXCISE TAX” and “SECURITY FOR THE BONDS — Turnpike Trust Fund,” adjusted to reflect any toll schedule in effect on the date of issuance of such Bonds and which the Authority has covenanted to put in effect during such period, shall be not less than 120% of the maximum amount of the Debt Service Requirements for any future bond year on account of all Senior Indebtedness then outstanding and the Second Senior Bonds then being issued, and

16 (D) Net Revenues for the period covered and as adjusted as provided in paragraph (C) above shall be not less than the sum of 105% of the maximum amount of the Debt Service Requirements for any future bond year on account of all Senior Indebtedness and Subordinate Bonds then outstanding and the Second Senior Bonds then being issued and 100% of the maximum amounts required to be deposited in the Reserve Maintenance Fund, the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account, if any, in each bond year during the period covered in paragraph (C) above in respect of Net Revenues and the maximum amount of Net Revenues required to be generated by the Authority in any future bond year in respect of any Junior Obligations then outstanding if the failure so to generate would cause a default in respect of such Junior Obligations, or

(II) (A) Net Revenues, together with the apportionments to the Turnpike Trust Fund as shown in paragraph (I)(A) above, as either may be adjusted or limited as provided in said paragraph (I)(A), for any 12 consecutive calendar months out of the 18 calendar months immediately preceding the date of the issuance of such Second Senior Bonds, shall be not less than 130% of the maximum amount of Debt Service Requirements for any future bond year on account of all Senior Indebtedness then outstanding and the Second Senior Bonds then being issued, and

(B) Net Revenues for such 12 consecutive calendar months, adjusted for such toll schedule in effect on such date of issuance as provided in paragraph (I)(B) above, shall be not less than the sum of 110% of the maximum amount of Debt Service Requirements for any future bond year on account of all Senior Indebtedness and Subordinated Bonds then outstanding and the Second Senior Bonds then being issued and 100% of the sum of the maximum amount required to be deposited in the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account, if any, in any bond year during the period covered in paragraph (I)(C) above in respect of Net Revenues and the average of the previous 5 bond years of amounts required to be deposited to the Reserve Maintenance Fund and the maximum amount of Net Revenues required to be generated by the Authority in each future bond year in respect of any Junior Obligations then outstanding if the failure so to generate would cause a default in respect of such Junior Obligations.

The Trust Agreement contains certain assumptions to be utilized in determining such Debt Service Requirements in the event any Indebtedness of the Authority to be considered as part of the above financial tests constitutes, Variable Rate Indebtedness, Balloon Indebtedness or Optional Tender Indebtedness. See “Summary of Certain Provisions of the Trust Agreement — Second Senior Bonds” in Appendix C hereto. No additional Subordinated Bonds may be issued under the Trust Agreement. See “Summary of Certain Provisions of the Trust Agreement — Refunding Subordinated Bonds” in Appendix C hereto.

Junior Obligations

The Authority may issue Junior Obligations for the payment of the principal of and the interest on which monies held in the General Fund (but not any Net Revenues of the Authority prior to their deposit in the General Fund) only may be pledged. Junior obligations may be issued for the purpose of paying all or any part of the cost of other projects, turnpike or otherwise, as authorized by law. See “Summary of Certain Provisions of the Trust Agreement — Use of Monies in General Fund; Issuance of Junior Obligations” in Appendix C hereto.

17 Flow of Funds

The Authority has agreed to deposit daily, to the extent practicable, in the Revenue Fund all tolls and other revenues derived from its operation and ownership of the Oklahoma Turnpike System and to cause the Depositary thereof to transfer to the Trustee on a monthly basis all monies in the Revenue Fund as of the end of the prior month (less a reserve for Current Expenses not to exceed 20% of the amount of Current Expenses shown in the latest annual budget of the Authority) to enable the Trustee monthly: (1) to deposit to the credit of the Second Senior Bond Service Account an amount equal to 1/6 of the current Interest Requirement and 1/12 of the current Principal Requirement on account of all Second Senior Bonds outstanding and to make the equivalent deposits in respect of Parity Indebtedness outstanding, (2) to deposit to the credit of the Second Senior Bond Reserve Account not less than 1/12 of the amount required to make up any deficiency in such Account, (3) to transfer to the Depositary of the Reserve Maintenance Fund for deposit therein an amount equal to the monthly deposit to said Reserve Maintenance Fund as shown in the Authority’s latest annual budget, and (4) to transfer to the Depositary of the General Fund for deposit therein any balance of such Revenue Fund monies, to be used by the Authority for any lawful purpose including the pledging of such monies to the payment of Junior Obligations as described herein. The Trust Agreement contains requirements for deposits to be made with respect to First Senior Bonds and Subordinated Bonds, but there are no Outstanding First Senior Bonds or Subordinated Bonds and the Authority is no longer permitted to issue any of such Bonds. See “Summary of Certain Provisions of the Trust Agreement — Flow of Funds” in Appendix C hereto.

If the monies in the Second Senior Bond Service Account shall be insufficient to pay at the time the same become due and payable the principal of and interest on all Second Senior Indebtedness, such deficiencies shall be made up from (1) available monies not otherwise pledged or encumbered in the General Fund and the Reserve Maintenance Fund, (2) monies held in the Second Senior Bond Reserve Account, and (3) monies held in the Turnpike Trust Fund.

Turnpike Trust Fund

Under the Enabling Act, the Oklahoma Tax Commission is required each month to determine an amount equal to the motor fuel excise taxes derived from 97.5% of the total gallonage of all fuels consumed during the month in which the tax accrued on all Authority turnpikes and apportion to the Authority, subject to limitations described under “MOTOR FUEL EXCISE TAX” herein, a sum equal to 97% of such amount from all such gasoline tax collections. The remaining 3% of such amount is apportioned to the Oklahoma Tax Commission Fund.

All sums so apportioned to the Authority are required to be segregated and deposited in a separate trust fund held by the Authority, designated the Turnpike Trust Fund. The apportionment of motor fuel excise taxes began in February 1960, and is to continue until all bonds of the Authority and the interest thereon have been paid in full. The balance in the Turnpike Trust Fund as of December 31, 2016, was $45,250,239 and as of December 31, 2017, was $45,493,297.

The motor fuel excise taxes apportioned to the Authority are pledged under the Trust Agreement for the payment of the principal of and interest and redemption premium, if any, on bonds issued after May 1, 1992 (including the Outstanding Second Senior Bonds described under “OUTSTANDING OBLIGATIONS OF THE AUTHORITY” herein and the Series 2018A Bonds).

The Trust Agreement further directs that amounts in the Turnpike Trust Fund in excess of the balance described under “MOTOR FUEL EXCISE TAX” and “SECURITY FOR THE BONDS — Turnpike Trust Fund” herein be first used to pay debt service on bonds issued after May 1, 1992 (including the Outstanding Second Senior Bonds described under “OUTSTANDING OBLIGATIONS

18 OF THE AUTHORITY” herein and the Series 2018A Bonds), prior to the monies apportioned after June 30, 1992, being used.

The Trust Agreement further directs that any motor fuel excise tax monies apportioned after June 30, 1992, to the Turnpike Trust Fund and not necessary in each such month to meet the requirements set forth above, shall be paid over to the Oklahoma Department of Transportation (hereinafter, “ODOT”) in such month.

Prior to any amounts in the Turnpike Trust Fund being used to make any payments on account of the Outstanding Second Senior Bonds described under “OUTSTANDING OBLIGATIONS OF THE AUTHORITY” herein and the Series 2018A Bonds, the Authority covenants to use any monies available in the General Fund first and then any monies in the Reserve Maintenance Fund in excess of the requirements of such Reserve Maintenance Fund. Any such amounts shall be transferred to the appropriate Bond Service Account upon receipt of a resolution of the Authority directing such transfer and, with respect to the use of monies in the Reserve Maintenance Fund, a certificate of the Consulting Engineer certifying that such amount so to be transferred is not required for the purpose for which the Reserve Maintenance Fund has been created. See “Summary of Certain Provisions of the Trust Agreement — Turnpike Trust Fund” in Appendix C hereto. The power of the State Legislature to repeal or modify the motor fuel excise tax levy (as distinguished from the apportionment thereof) is not in any way impaired or infringed by the provisions in the Trust Agreement vesting a contract right in the holders of any bonds issued under the Trust Agreement to the continued apportionment of motor fuel excise taxes until all Bonds issued under the Trust Agreement have been paid in full.

Amendments Made by Fifteenth Supplemental Trust Agreement

The Authority and the Trustee entered into a Fifteenth Supplemental Trust Agreement dated as of August 14, 2018 to clarify certain provisions of the Trust Agreement regarding General Fund turnpike projects. Pursuant to such amended provisions, at the election of the Authority, (i) the cost of construction or acquisition of any General Fund turnpike project is not required to be financed with Junior Obligations or otherwise under the Trust Agreement, but may be financed solely pursuant to a trust agreement, resolution or indenture that is separate from the Trust Agreement, and (ii) the revenues of any such project, financed solely pursuant to a trust agreement, resolution or indenture that is separate from the Trust Agreement, shall not be required to be deposited in the General Fund, but shall be deposited as required or permitted by such separate trust agreement, resolution or indenture; provided, however, that any payment obligations with respect to such project financed under such separate trust agreement, resolution or indenture, will neither be secured by a pledge of, nor payable from, tolls or other revenues derived from the operation or ownership of the Oklahoma Turnpike System (except to the extent payable from the General Fund as provided in the Trust Agreement), and will neither be secured by a pledge of, nor payable from, any moneys on deposit in the Turnpike Trust Fund, but will be payable from and secured by revenues of such project and such other funds as may be provided by such trust agreement, resolution or indenture. Such other amounts may include moneys released from the General Fund in accordance with the terms of the Trust Agreement.

MOTOR FUEL EXCISE TAX

In May 1992, legislation was enacted which made available additional motor fuel excise taxes, if necessary, for payment of debt service requirements on the Authority’s bonds.

Pursuant to the 1992 legislation, the Oklahoma Tax Commission shall determine, on a monthly basis, the motor fuel excise taxes computed on 97.5% of the total gallonage of all fuels consumed during such month on all Oklahoma Turnpike Projects and apportion to the Authority 97% of such amount. The

19 remaining 3% of such amount is apportioned to the Oklahoma Tax Commission Fund. The first use by the Authority of such monies, in an amount not to exceed $3,000,000 per year, shall be for deposit into the Turnpike Trust Fund to maintain a balance therein in an amount equal to 150% of the maximum annual debt service requirements on all Authority revenue bonds issued prior to May 1, 1992 (there are no such bonds outstanding). After such requirement is met, the remaining available monies shall be used, on a monthly basis, to the extent monies are not otherwise available to the Authority, to meet the pro rata monthly debt service requirement. If motor fuel excise taxes apportioned to the Turnpike Trust Fund are not necessary in such month to meet the pro rata monthly requirement for payment of debt service requirements for the month for Bonds issued after May 1, 1992 (including the Outstanding Second Senior Bonds described under “OUTSTANDING OBLIGATIONS OF THE AUTHORITY” herein), such motor fuel excise taxes shall be paid to ODOT. See Note 12 in Appendix B - Audited Financial Statements for a discussion of advances from the Turnpike Trust Fund and the Authority’s obligation to repay certain sums to ODOT after all bonds of the Authority have been paid and are no longer outstanding. During the years ended December 31, 2016 and 2017, the Authority received and subsequently remitted to ODOT $46,250,246 and $46,960,452, respectively, of motor fuel excise taxes. The Authority is authorized to vest in the holders of any of its bonds a contract right to the continuance of the apportionments described herein, provided that no such pledge or vesting shall be deemed to restrict in any way the State’s power to change the rate of the motor fuel excise tax levy or to repeal such levy. The balance in the Turnpike Trust Fund as of December 31, 2016 was $45,250,239 and as of December 31, 2017, was $45,493,297, which is pledged to the Authority’s Bonds.

The historical amount of the motor fuel excise tax per gallon is as follows:

Date Gasoline Diesel 1950 $.0658 $.065 June 1957 .0758 .065 December 1957 .0658 .065 April 1984 .09 .09 July 1985 .10 .10 May 1987 .16 .13 ______Source: The Oklahoma Tax Commission.

The historical receipts of the motor fuel excise tax on the Turnpike Projects for calendar years 2002-2017 are as follows:

Calendar Year Amount Calendar Year Amount 2017 $46,960,452 2009 $41,217,477 2016 46,250,246 2008 41,649,346 2015 44,731,902 2007 41,438,855 2014 42,831,037 2006 40,752,494 2013 41,599,626 2005 39,022,895 2012 41,393,037 2004 38,390,244 2011 40,414,346 2003 35,650,462 2010 40,865,917 2002 32,804,885 ______Source: The Oklahoma Tax Commission.

20 RISK FACTORS

The purchase of the Series 2018A Bonds involves certain investment risks that are discussed throughout this Official Statement. Accordingly, each prospective purchaser of the Series 2018A Bonds should make an independent evaluation of all of the information presented in this Official Statement in order to make an informed investment decision. This discussion of certain risks is not intended to be exhaustive and should be read in conjunction with this entire Official Statement including the Appendices hereto.

General Factors Affecting Authority Revenues

There are factors beyond the control of the Authority that, should they occur, could have a negative impact upon the Authority’s revenues. Because the Authority relies almost exclusively upon its toll collections, concession income and motor fuel excise tax revenues to generate revenues, events affecting automobile travel, such as the availability of fuel, the price of motor fuel, adverse weather conditions or general economic conditions, could adversely affect toll collections and revenues. Further, some operators of bridge and toll facilities have encountered difficulty at times during recent years in obtaining adequate and affordable insurance protection for such facilities. Also, the development of any mass transportation facilities or freeways providing transportation alternatives to the Authority’s facilities could have a negative impact on the Authority’s revenues. Finally, although the Authority has no knowledge of any facilities contemplated to be constructed that would compete with the Authority’s facilities, there can be no assurance that a bridge, tunnel or road facility competing with the Authority’s facilities will not be opened in the future.

The Report of the Consulting Engineers included in Appendix F hereto contains estimates and projections relating to project construction and the Oklahoma Turnpike System’s operating and maintenance costs that are subject to final design, environmental, materials and labor costs that are beyond the control of the Authority or the Consulting Engineers and neither the Authority nor the Consulting Engineers can make any assurances that such estimates and projections in the Report of the Consulting Engineers will be realized.

The traffic projections of the Traffic Engineers are sensitive to changes in, among other assumptions, national, state and local economies, population, household, and employment levels, commuting practices, as well as future levels of activity in the State of Oklahoma. For example, in the event growth in households or employment in the turnpike service area occurs at rates below that projected, traffic levels may be negatively impacted and traffic and revenue projections may not be realized. The Comprehensive Traffic & Revenue Update Summary Report and October 2018 Letter Update included in Appendix G hereto do not guarantee any future events or trends and the forecasts therein are subject to future economic and social conditions and demographic developments that cannot be predicted with certainty. Neither the Authority nor the Traffic Engineers can make any assurances that the growth projections made therein will be realized.

The Authority has sole authority to raise toll rates in the future above the current toll rate schedule to support its debt service requirements. Although the Comprehensive Traffic & Revenue Update Summary Report and October 2018 Letter Update suggests there is capacity to raise rates further, the effect of any future rate increase is unknown. It is possible that any future increase in rates could result in reduced usage of the Oklahoma Turnpike System, resulting in decreased revenues.

21 Forward-Looking Statements

The statements contained in this Official Statement, and in other information provided by the Authority, that are not purely historical, are forward-looking statements, including statements regarding the Authority’s expectations, hopes, intentions or strategies regarding the future and the projections in the Report of the Consulting Engineers and in the Comprehensive Traffic & Revenue Update Summary Report of the Traffic Engineers and October 2018 Letter Update, included in Appendices F and G, respectively, hereto. All forward-looking statements included in this Official Statement are based on information available to the Authority on the date hereof, and the Authority assumes no obligation to update any such forward-looking statements.

The forward-looking statements herein are necessarily based on various assumptions and estimates that are inherently subject to numerous risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, judicial and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate.

Legislation

The power of the State Legislature to repeal or modify the motor fuel excise tax levy (as distinguished from the apportionment thereof) is not in any way impaired or infringed by the provisions in the Trust Agreement vesting a contract right in the holders of any bonds issued under the Trust Agreement to the continued apportionment of motor fuel excise taxes until all Bonds issued under the Trust Agreement have been paid in full. See “SECURITY FOR THE BONDS — Turnpike Trust Fund” and “MOTOR FUEL EXCISE TAX” herein. Any reduction in the motor fuel excise tax levy or repeal of such levy could negatively affect the revenues of the Authority available to pay debt service.

In addition, from time to time members of the House and Senate of the State Legislature have introduced various bills to amend provisions of the Authority’s Enabling Act that, if enacted, would have imposed operational directives or restrictions on the Authority that could have adversely affected the Authority in its management of the Oklahoma Turnpike System, including construction of additions and improvements thereto. For example, in recent Legislative Sessions, there have been attempts to enact legislation requiring free travel or reduced toll rates for certain vehicles as well as free travel for all vehicles on certain segments of the Oklahoma Turnpike System. In another instance, there was an attempt to require that the Authority construct a certain turnpike interchange by a date certain. Most recently, there were attempts to enact legislation requiring a two-thirds vote approval by the members of the House and by the members of the Senate for any issuance of the Authority’s turnpike revenue bonds, with an exception for certain refunding bonds, and any change to a toll amount implemented by the Authority to any existing or proposed turnpike project and legislation that would eliminate the right of bondholders to enforce the Authority’s contractual obligations under the Trust Agreement regarding fixing and revising tolls. In such instances, it has been the Authority’s approach to work with and educate the State Legislature when proposed legislation might have an adverse operational impact or impose obligations that, if enacted, might substantially impair the obligations of the Authority under the Trust Agreement and the rights of the Bondholders thereunder, including the Authority’s toll covenants contained in the Trust Agreement, and could violate the Contract Clauses of the United States and State of Oklahoma Constitutions.

22 Natural Disasters

In the event of a major natural disaster, including, among others, tornados or other extreme weather events, and seismic events such as earthquakes, one or more turnpikes included in the Oklahoma Turnpike System could sustain extensive damage that could potentially necessitate repairs and the closing of such turnpike or turnpikes for an extended period of time. In addition, a major natural disaster could adversely affect the economy of impacted areas of the State of Oklahoma, which could have a negative impact on traffic and on Net Revenues. See, with respect to the Authority’s planning for the impacts of earthquakes, “THE OKLAHOMA TURNPIKE SYSTEM—Earthquake Damage Assessments” in Appendix A hereto.

Further, the Oklahoma Turnpike System could sustain damage as a result of other events, such as terrorist attacks, fires and explosions, spills of hazardous substances, strikes, lockouts, sabotage, wars, blockades, riots, etc. While the Authority has attempted to address the risk of loss through the purchase of insurance, certain of these events may not be covered.

Other Risk Factors

The future financial condition of the Authority also could be adversely affected by, among other things, legislation, regulatory actions, increased competition and/or diminished demand, demographic changes, changes in the local economy, the availability and cost of credit to fund capital expenditures, the availability and cost of materials required to repair and maintain the Oklahoma Turnpike System, the increased use of telecommuting, and a number of other developments or conditions which are unpredictable. Future revenues and expenses of the Authority are subject to conditions which may change in the future to an extent that cannot be determined at this time.

Enforcement of remedies under the Trust Agreement may be limited or restricted by Federal and State laws relating to bankruptcy, fraudulent conveyances, and rights of creditors and by application of general principles of equity applicable to the availability of specific performance or other remedies, and may be substantially delayed in the event of litigation or statutory remedy procedures. The various legal opinions to be delivered concurrently with the delivery of the Series 2018A Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by State and Federal laws, rulings and decisions affecting remedies, and by general principles of equity and by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors.

There can be no assurance that the financial results achieved by the Authority in the future will be similar to historical results. Such future results will vary from historical results and actual variations may be material. Therefore, the historical operating results of the Authority cannot be taken as a representation that the Authority will be able to generate sufficient revenues in the future to make payments under the Trust Agreement sufficient for the full and timely payment of the principal of, premium, if any, and interest on the Series 2018A Bonds.

There is no assurance that the ratings assigned to the Series 2018A Bonds will not be lowered or withdrawn at any time, the effect of which could adversely affect the market price for and marketability of the Series 2018A Bonds. See the information contained herein under the caption “RATINGS.” Bond rating organizations have come under scrutiny by legislators, regulators and investors. Future changes in bond rating criteria or procedures that result in different ratings of the Series 2018A Bonds could have a material adverse effect on the value and marketability of the Series 2018A Bonds.

Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Series 2018A Bonds

23 under Federal or state law or otherwise prevent beneficial owners of the Series 2018A Bonds from realizing the full current benefit of the tax status of such interest. For example, legislation reducing marginal Federal income tax rates if and when proposed or enacted and other such legislation or actions (whether currently proposed, proposed in the future, or enacted) and such decisions could affect the market price or marketability of the Series 2018A Bonds.

There is no guarantee that a secondary trading market will develop for the Series 2018A Bonds. Consequently, prospective purchasers of the Series 2018A Bonds should be prepared to hold their Bonds to maturity. Subject to applicable securities laws and prevailing market conditions, the Underwriters intend but are not obligated to make a market in the Series 2018A Bonds.

Persons who purchase Series 2018A Bonds through broker-dealers become creditors of the broker-dealer with respect to the Series 2018A Bonds. Records of the investors’ holdings are maintained only by the broker-dealer and the investor. In the event of the insolvency of the broker-dealer, the investor would be required to look to the broker-dealer’s estate, and to any insurance maintained by the broker-dealer, to make good the investor’s loss. The Authority and the Paying Agent are not responsible for failures to act by, or insolvencies of, the Securities Depository or any broker-dealer.

Computer hacking, cyber-attacks or other malicious activities could disrupt the Authority’s services. Further, security breaches such as leakage, or loss of confidential or proprietary data and failure or disruption of information technology systems could materially and adversely affect the Authority’s reputation, which could lead to significant capital outlays and decreased performance that insurance may not cover. To mitigate these risks, the Authority continues to monitor these threats and improve its security measures. The Authority has implemented a Security Management Program by the creation of an Information Security Division. This has allowed the Authority to align Information Security Leadership and Information Security Staff. The Authority engages with third party sources to conduct Information Security Assessments annually. The Authority does not believe it has experienced any material cyber security breaches.

The foregoing is intended only as a non-exclusive summary of certain risk factors attendant to an investment in the Series 2018A Bonds. In order for potential investors to identify risk factors and make an informed investment decision, potential investors should be thoroughly familiar with this entire Official Statement, including the Appendices hereto.

TAX MATTERS RESPECTING THE SERIES 2018A BONDS

Opinion of Bond Counsel

In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the Series 2018A Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the Series 2018A Bonds is not treated as a preference item in calculating the alternative minimum tax under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed for taxable years beginning prior to January 1, 2018. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the Authority and others in connection with the Series 2018A Bonds, and Bond Counsel has assumed compliance by the Authority with certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the Series 2018A Bonds from gross income under Section 103 of the Code.

24 In addition, in the opinion of Hawkins Delafield & Wood LLP, Bond Counsel, under the Enabling Act, the Series 2018A Bonds, their transfer and the income therefrom (including any profit made from the sale thereof) are at all times free from taxation within the State of Oklahoma.

Bond Counsel expresses no opinion regarding any other Federal or state tax consequences with respect to the Series 2018A Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and assumes no obligation to update, revise or supplement its opinion to reflect any action hereafter taken or not taken, or any facts or circumstances that may hereafter come to its attention, or changes in law or in interpretations thereof that may hereafter occur, or for any other reason. Bond Counsel expresses no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for Federal income tax purposes of interest on the Series 2018A Bonds, or under state and local tax law.

The opinion to be rendered by Bond Counsel on the date of delivery of the Series 2018A Bonds is expected to be in substantially the form contained in Appendix D hereto.

Certain Ongoing Federal Tax Requirements and Covenants

The Code establishes certain ongoing requirements that must be met subsequent to the issuance and delivery of the Series 2018A Bonds in order that interest on the Series 2018A Bonds be and remain excluded from gross income under Section 103 of the Code. These requirements include, but are not limited to, requirements relating to use and expenditure of gross proceeds of the Series 2018A Bonds, yield and other restrictions on investments of gross proceeds, and the arbitrage rebate requirement that certain excess earnings on gross proceeds be rebated to the Federal government. Noncompliance with such requirements may cause interest on the Series 2018A Bonds to become included in gross income for Federal income tax purposes retroactive to their issue date, irrespective of the date on which such noncompliance occurs or is discovered. The Authority has covenanted to comply with certain applicable requirements of the Code to assure the exclusion of interest on the Series 2018A Bonds from gross income under Section 103 of the Code.

Certain Collateral Federal Tax Consequences

The following is a brief discussion of certain collateral Federal income tax matters with respect to the Series 2018A Bonds. It does not purport to address all aspects of Federal taxation that may be relevant to a particular owner of a Series 2018A Bond. Prospective investors, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the Federal tax consequences of owning and disposing of the Series 2018A Bonds.

Prospective owners of the Series 2018A Bonds should be aware that the ownership of such obligations may result in collateral Federal income tax consequences to various categories of persons, such as corporations (including S corporations and foreign corporations), financial institutions, property and casualty and life insurance companies, individual recipients of Social Security and railroad retirement benefits, individuals otherwise eligible for the earned income tax credit, and taxpayers deemed to have incurred or continued indebtedness to purchase or carry obligations the interest on which is excluded from gross income for Federal income tax purposes. Interest on the Series 2018A Bonds may be taken into account in determining the tax liability of foreign corporations subject to the branch profits tax imposed by Section 884 of the Code.

Original Issue Discount

“Original issue discount” (“OID”) is the excess of the sum of all amounts payable at the stated maturity of a Series 2018A Bond (excluding certain “qualified stated interest” that is unconditionally

25 payable at least annually at prescribed rates) over the issue price of that maturity. In general, the “issue price” of a maturity (a bond with the same maturity date, interest rate, and credit terms) means the first price at which at least 10 percent of such maturity was sold to the public, i.e., a purchaser who is not, directly or indirectly, a signatory to a written contract to participate in the initial sale of the Series 2018A Bonds. In general, the issue price for each maturity of Series 2018A Bonds is expected to be the initial public offering price set forth on the cover page of the Official Statement. Series 2018A Bond Counsel further is of the opinion that, for any Series 2018A Bonds having OID (a “Discount Series 2018A Bond”), OID that has accrued and is properly allocable to the owners of the Discount Series 2018A Bonds under Section 1288 of the Code is excludable from gross income for federal income tax purposes to the same extent as other interest on the Series 2018A Bonds.

In general, under Section 1288 of the Code, OID on a Discount Series 2018A Bond accrues under a constant yield method, based on periodic compounding of interest over prescribed accrual periods using a compounding rate determined by reference to the yield on that Discount Series 2018A Bond. An owner’s adjusted basis in a Discount Series 2018A Bond is increased by accrued OID for purposes of determining gain or loss on sale, exchange, or other disposition of such Series 2018A Bond. Accrued OID may be taken into account as an increase in the amount of tax-exempt income received or deemed to have been received for purposes of determining various other tax consequences of owning a Discount Series 2018A Bond even though there will not be a corresponding cash payment.

Owners of Discount Series 2018A Bonds should consult their own tax advisors with respect to the treatment of original issue discount for federal income tax purposes, including various special rules relating thereto, and the state and local tax consequences of acquiring, holding, and disposing of Discount Series 2018A Bonds.

Bond Premium

In general, if an owner acquires a Series 2018A Bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the Series 2018A Bond after the acquisition date (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates), that premium constitutes “bond premium” on that Series 2018A Bond (a “Premium Bond”). In general, under Section 171 of the Code, an owner of a Premium Bond must amortize the bond premium over the remaining term of the Premium Bond, based on the owner’s yield over the remaining term of the Premium Bond determined based on constant yield principles (in certain cases involving a Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such bond). An owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner’s regular method of accounting against the bond premium allocable to that period. In the case of a tax-exempt Premium Bond, if the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner’s original acquisition cost. Owners of any Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for Federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, amortization of bond premium on, sale, exchange, or other disposition of Premium Bonds.

26 Information Reporting and Backup Withholding

Information reporting requirements apply to interest paid on tax-exempt obligations, including the Series 2018A Bonds. In general, such requirements are satisfied if the interest recipient completes, and provides the payor with, a Form W-9, “Request for Taxpayer Identification Number and Certification,” or if the recipient is one of a limited class of exempt recipients. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to “backup withholding,” which means that the payor is required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a “payor” generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient.

If an owner purchasing a Series 2018A Bond through a brokerage account has executed a Form W-9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, backup withholding does not affect the excludability of the interest on the Series 2018A Bonds from gross income for Federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner’s Federal income tax once the required information is furnished to the Internal Revenue Service.

Miscellaneous

Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Series 2018A Bonds under Federal or state law or otherwise prevent beneficial owners of the Series 2018A Bonds from realizing the full current benefit of the tax status of such interest. In addition, such legislation or actions (whether currently proposed, proposed in the future, or enacted) and such decisions could affect the market price or marketability of the Series 2018A Bonds.

Prospective purchasers of the Series 2018A Bonds should consult their own tax advisors regarding the foregoing matters.

LITIGATION

There is no litigation pending or, to the knowledge of the Authority, threatened in any court questioning the existence of the Authority, the validity of the Series 2018A Bonds, or any proceedings of the Authority taken with respect to the issuance or sale thereof, or seeking to restrain or enjoin the issuance, sale, execution or delivery of the Series 2018A Bonds, or questioning the power of the Authority to collect and pledge revenues to pay the Series 2018A Bonds as provided in the Trust Agreement. The Authority is a party to various legal proceedings, many of which arise in the normal course of the Authority’s operations. These legal proceedings are not, in the opinion of General Counsel to the Authority, likely to have a materially adverse impact on the Authority’s financial position.

LEGAL MATTERS

All legal matters related to the authorization, issuance and delivery of the Series 2018A Bonds are subject to the approval of Hawkins Delafield & Wood LLP, as Bond Counsel. The approving opinion of Bond Counsel to be delivered in connection with the issuance and delivery of the Series 2018A Bonds is expected to be substantially in the form appearing in Appendix D hereto. Certain legal matters will be passed upon for the Authority by its General Counsel, EGL Law, PLLC, and by Kutak Rock LLP, Special Disclosure Counsel, and for the Underwriters by their counsel, McCall, Parkhurst & Horton, L.L.P.

27 CONSULTANTS’ REPORTS

The Engineering Report of Olsson Associates, Oklahoma City, Oklahoma, states that the cost projections set forth in such Report for the costs of maintenance and operation of the existing Oklahoma Turnpike System and the proposed Driving Forward Program Projects are reasonable and provide the basis for maintaining an operationally sound and safe turnpike system. For a more complete analysis of the Consulting Engineers’ conclusions refer to their Report, which is included as Appendix F hereto.

The Authority engaged CDM Smith Inc., Dallas, Texas, to make studies of traffic and revenues for its toll facilities and certain projections. The results of such studies are stated in their Comprehensive Traffic & Revenue Update Summary Report and October 2018 Letter Update which are included as Appendix G hereto in reliance upon the authority of such firm as experts.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The financial statements of the Authority as of December 31, 2017 and 2016 and for the years then ended, included in Appendix B hereto, have been audited by Grant Thornton LLP, independent certified public accountants, as stated in their report appearing in Appendix B.

FINANCIAL ADVISOR

Hilltop Securities Inc., Dallas, Texas, is employed as financial advisor to the Authority in connection with the issuance of the Series 2018A Bonds. The financial advisor’s fee for services rendered with respect to the sale of the Series 2018A Bonds is contingent upon the issuance and delivery of the Series 2018A Bonds. Hilltop Securities Inc., in its capacity as financial advisor, does not assume any responsibility for the information, covenants and representations contained herein or in any of the legal documents or with respect to the Federal income tax status of the Series 2018A Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies.

The financial advisor to the Authority has provided the following sentence for inclusion in this Official Statement. The financial advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the Authority and, as applicable, to investors under the Federal securities laws as applied to the facts and circumstances of this transaction, but the financial advisor does not guarantee the accuracy or completeness of such information.

LEGALITY OF INVESTMENT

The Enabling Act provides that the Series 2018A Bonds are securities in which all public officers and public bodies, agencies and instrumentalities of the State of Oklahoma and its political subdivisions, all banks, trust companies, trust and loan associations, investment companies, and others carrying on a banking business, all insurance companies and associations and others carrying on an insurance business in the State of Oklahoma may legally and properly invest funds, including capital in their control or belonging to them.

ONGOING DISCLOSURE

The Authority and the Trustee will enter into a Continuing Disclosure Agreement dated the date of delivery of the Series 2018A Bonds (the “Continuing Disclosure Agreement”), to provide certain periodic information and notices of certain events to the Municipal Securities Rulemaking Board (“MSRB”), pursuant to the requirements of Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 (17 C.F.R. Part 240, § 240.15c2-12) (the “Rule”) for the benefit of the holders and

28 beneficial owners of the Series 2018A Bonds. The Underwriters’ obligation to accept and pay for the Series 2018A Bonds is conditioned upon delivery to the Underwriters or their agents of a certified copy of the Continuing Disclosure Agreement. The proposed form of the Continuing Disclosure Agreement is attached hereto as Appendix E.

During the past five years, the Authority failed to make a timely filing of an event notice relating to an insured rating change in March 2014 with respect to an issue of its then outstanding bonds based on a rating upgrade of the bond insurer for such bonds, the Authority not having been informed by the rating agencies of such action. Notice of such failure to file and the late filing of an event notice, including specific information regarding such rating change, was filed on December 14, 2016. In addition, the Authority discovered that the trustee, due to an administrative oversight, failed to make a timely filing of an event notice relating to the March 8, 2017, redemption of certain of the Authority’s bonds and caused notice of such redemption to be filed on November 20, 2017.

UNDERWRITING

J.P. Morgan Securities LLC (“JPMS”), and the other underwriters identified on the cover page hereof (the “Underwriters”), have agreed to purchase the Series 2018A Bonds for reoffering to the public. The Series 2018A Bonds are being purchased by the Underwriters at an aggregate purchase price equal to $354,711,050.81 (representing the principal amount thereof less underwriters’ discount of $950,222.24 and plus net original issue premium of $11,351,273.05). The Underwriters will purchase all of the Series 2018A Bonds if any are purchased. The obligation of the Underwriters to accept delivery of the Series 2018A Bonds is subject to various conditions contained in the Contract of Purchase.

The Underwriters intend to offer the Series 2018A Bonds to the public initially at the offering prices set forth on the inside cover of this Official Statement, which may subsequently change without any requirement of prior notice. The Underwriters may offer and sell the Series 2018A Bonds to certain dealers (including dealers depositing Series 2018A Bonds into investment trusts) and others at prices lower than the offering prices set forth on the inside cover of this Official Statement.

JPMS, one of the Underwriters of the Series 2018A Bonds, has entered into negotiated dealer agreements (each, a “Dealer Agreement”) with each of Charles Schwab & Co., Inc. (“CS&Co.”) and LPL Financial LLC (“LPL”) for the retail distribution of certain securities offerings at the original issue prices. Pursuant to each Dealer Agreement, each of CS&Co. and LPL may purchase Series 2018A Bonds from JPMS at the original issue price less a negotiated portion of the selling concession applicable to any Series 2018A Bonds that such firm sells.

One of the Underwriters of the Series 2018A Bonds is BOK Financial Securities, Inc. (“BOKF Securities”). BOKF Securities and BOKF, NA (“BOKF, NA,” which serves as Trustee for the Series 2018A Bonds) are both wholly-owned subsidiaries of BOK Financial Corporation (“BOKF”), a bank holding company organized under the laws of the State of Oklahoma. Thus, BOKF Securities and BOKF, NA are affiliated, but BOKF Securities is not a bank. Affiliates of BOKF Securities may provide banking services or engage in other transactions with the Authority. BOKF and BOKF, NA are not responsible for the obligations of BOKF Securities.

The current business of Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), one of the Underwriters of the Series 2018A Bonds, is being reorganized into two affiliated broker-dealers (i.e., MLPF&S and BofAML Securities, Inc.) in which BofAML Securities, Inc. will be the new legal entity for the institutional services that are now provided by MLPF&S. This transfer is expected to occur on or around October 29, 2018 (the “Transfer Date”). MLPF&S will be assigning its rights and obligations as an Underwriter to BofAML Securities, Inc. in the event that the settlement date for the

29 Series 2018A Bonds occurs on or after the Transfer Date. To the extent that the Series 2018A Bonds settle after the Transfer Date, the Series 2018A Bonds may be distributed by BofAML Securities, Inc. to MLPF&S pursuant to a distribution agreement between BofAML Securities, Inc. and MLPF&S. MLPF&S may in turn distribute the Series 2018A Bonds to investors. As part of this arrangement, BofAML Securities, Inc. may compensate MLPF&S as a dealer for their selling efforts with respect to the Series 2018A Bonds.

The Underwriters and their affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriters and their affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Authority or the State of Oklahoma, for which they received or will receive customary fees and expenses.

In the ordinary course of their various business activities, the Underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority or the State of Oklahoma.

The Underwriters and their affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

RATINGS

Moody’s Investors Service, Inc. (“Moody’s”), S&P Global Ratings (“S&P”) and Fitch Ratings (“Fitch”) have assigned ratings of “Aa3,” “AA-” and “AA-,” respectively, to the Series 2018A Bonds, in each case with a stable outlook. Such ratings reflect only the views of such organizations at the time such ratings are given, and the Authority and the Underwriters make no representation as to the appropriateness of such ratings. An explanation of the significance of such ratings may be obtained only from such rating agencies. The Authority furnished such ratings agencies with certain information and materials relating to the Series 2018A Bonds that have not been included in this Official Statement. Generally, rating agencies base their ratings on the information and materials so furnished and on investigations, studies and assumptions by the rating agencies. There is no assurance that a particular rating will be maintained for any given period of time or that it will not be lowered or withdrawn entirely if, in the judgment of the agency originally establishing such rating, circumstances so warrant. Neither the Underwriters nor the Authority has undertaken any responsibility to bring to the attention of the owners of the Series 2018A Bonds any proposed revision or withdrawal of a rating of the Series 2018A Bonds or to oppose any such proposed revision or withdrawal. Any such revision or withdrawal of such a rating could have an adverse effect on the market price and marketability of the Series 2018A Bonds.

30 MISCELLANEOUS

All projections and any statements made in this Official Statement involving matters of opinion or estimates, whether or not expressly so stated, are intended as such and not as representations of fact. No representation is made that any of such statements will be realized.

References to web site addresses presented herein are for informational purposes only and may be in the form of a hyperlink solely for the reader’s convenience. Unless specified otherwise, such web sites and the information or links contained therein are not incorporated into, and are not part of, this Official Statement.

This Official Statement is not to be construed as a contract or agreement between the Authority and the Owners. This Official Statement is submitted only in connection with the sale of the Series 2018A Bonds and may not be reproduced or used in whole or in part for any other purpose. The Authority has duly authorized this Official Statement.

OKLAHOMA TURNPIKE AUTHORITY

By: /s/ Dana S. Weber Chair

31 [This Page Intentionally Left Blank] APPENDIX A

CERTAIN INFORMATION RELATING TO THE OKLAHOMA TURNPIKE AUTHORITY AND THE OKLAHOMA TURNPIKE SYSTEM

Information contained in this Appendix contains statements relating to future results and economic performance that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. When used in the Official Statement, the words “anticipate”, “believe”, “may”, “will”, “should”, “seeks”, “expect”, “assume”, “estimate”, “projection”, “plan”, “budget”, “forecast”, “intend”, “goal”, and similar expressions identify forward-looking statements. The words or phrases “to date”, “now”, “currently”, and the like are intended to mean as of the date of the Official Statement. Examples of forward-looking statements contained in the Official Statement are statements that concern the Authority’s future revenues, maintenance and operation costs, costs of proposed turnpike expansion projects, traffic projections and liquidity. The forward-looking statements contained herein are based on the Authority’s expectations and are necessarily dependent upon assumptions, estimates and data that it believes are reasonable as of the date made but that may be incorrect, incomplete or imprecise or not reflective of actual results. The Authority does not undertake to update or revise any of the forward-looking statements contained herein, even if it becomes clear that they will not be realized.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. Among these risks and uncertainties are the other risk factors discussed in this Appendix and in the Official Statement to which it is appended; general economic, demographic, competitive, or business conditions; pricing pressures; investment performance; relationships with customers; changes in laws or regulations, and other factors including factors that are not anticipated by the Authority. See “RISK FACTORS” in the Official Statement. All of the forward-looking statements made in this Appendix and in the Official Statement are qualified by these cautionary statements. Prospective investors should not place undue reliance on the forward-looking statements, which speak only as of the date hereof. The Authority does not intend to update or revise any forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied by such statements will not be realized.

All projections and other prospective financial information set forth in this Appendix A and in the Official Statement were not prepared with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information, but, in the view of the Authority’s management, were prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of the Authority. However, all such projections and information are not fact and should not be relied upon as being necessarily indicative of future results, and readers thereof are cautioned not to place undue reliance thereon. Neither the Authority’s independent certified public accountants, nor any other independent certified public accountants, have compiled, examined, or performed any procedures with respect to such projections and other prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability. Neither the Authority’s independent certified public accountants, nor any other independent certified public accountants, have been consulted in connection with the preparation of the projections and other prospective financial information set forth herein, which are solely the product of the Authority, and the independent certified public accountants assume no responsibility for their content. TABLE OF CONTENTS Page

THE AUTHORITY ...... 1 Background ...... 1 Statutory Authority ...... 1 Driving Forward Program ...... 2 Non-System Financing Plans ...... 3 Organization and Management...... 4 Retirement Benefits ...... 6 Risk Management/Insurance ...... 6 Financial Statements ...... 6 THE OKLAHOMA TURNPIKE SYSTEM ...... 7 Turner Turnpike ...... 8 H.E. Bailey Turnpike...... 8 Will Rogers Turnpike ...... 8 Indian Nation Turnpike ...... 8 Cimarron Turnpike ...... 9 Muskogee Turnpike ...... 9 John Kilpatrick Turnpike ...... 9 Cherokee Turnpike ...... 9 Chickasaw Turnpike ...... 10 Creek Turnpike ...... 10 General Condition of the Oklahoma Turnpike System ...... 10 Toll Revenues and Rates ...... 10 2017 Toll Revenues by Turnpike ...... 12 Toll Collection and PIKEPASS ...... 13 Cashless Tolling ...... 14 Violation Enforcement ...... 15 Interoperability ...... 15 2018 Annual Budget ...... 15 Capital Planning Process ...... 16 Current Capital Plan ...... 17 2017-2018 Highlights of Capital Improvements ...... 17 Earthquake Damage Assessments ...... 20 HISTORICAL OPERATING RESULTS OF THE AUTHORITY ...... 21 PROJECTED OPERATING RESULTS OF THE AUTHORITY ...... 22 UNAUDITED INTERIM INFORMATION FOR THE SECOND QUARTER ENDED JUNE 30, 2018 ...... 23 THE AUTHORITY

Background

The Oklahoma Turnpike Authority (the “Authority”) is an instrumentality of the State of Oklahoma (the “State”) and a body corporate and politic created by statute in 1947. The Authority is authorized to construct, maintain, repair and operate turnpike projects at locations authorized by the State Legislature which the Authority determines to be feasible and economically sound and that are approved by the Oklahoma Department of Transportation (“ODOT”). The Authority receives revenues from turnpike tolls, apportionment of motor fuel excise taxes on fuels consumed on turnpike projects and a percentage of the turnpike concession sales. The Authority may issue turnpike revenue bonds for the purpose of paying the costs of Turnpike Projects (as such term is defined in Appendix C) and turnpike revenue refunding bonds for the purpose of refunding any bonds of the Authority then outstanding. Turnpike revenue bonds and turnpike revenue refunding bonds are payable solely from the tolls and other revenues of the Authority pledged as security for such bonds and do not constitute indebtedness of the State.

The Authority is a state tollway authority providing safe, high speed transportation through the State and around population centers. The Authority charges fees and collects revenue from users that yield a return to its investors. The Authority generates revenues to operate and maintain its roads at a high quality level while satisfying interest and principal payments owed to its bondholders.

Statutory Authority

Pursuant to the provisions of Title 69, Oklahoma Statutes 2011, Sections 1701 to 1734, inclusive, as amended, and Title 47, Oklahoma Statutes 2011, Sections 11-1401 to 11-1405, inclusive, as amended (collectively, the “Enabling Act” or “Act”), the Authority is authorized and empowered to construct, maintain, repair and operate turnpike projects, with their access and connecting roads, at such locations and on such routes as it shall determine to be feasible and economically sound. Until further specifically authorized by the State Legislature, the Authority is authorized to construct and operate turnpike projects only at the locations specified in the Enabling Act. The Authority has constructed and is operating the following turnpikes as the Oklahoma Turnpike System:

(1) The Turner Turnpike between Oklahoma City and Tulsa (the “Turner Turnpike”);

(2) The Southwestern (H.E. Bailey) Turnpike between Oklahoma City and Wichita Falls, Texas and the Spur that connects to S.H. 9 (the “H.E. Bailey Turnpike”);

(3) The Northeastern (Will Rogers) Turnpike between Tulsa and Joplin, Missouri (the “Will Rogers Turnpike”);

(4) The Eastern (Indian Nation) Turnpike between Tulsa and Paris, Texas, including all or any part thereof between McAlester and the Red River south of Hugo (the “Indian Nation Turnpike”);

(5) The Cimarron Turnpike between Tulsa and I-35 north of Perry, including a connection to Stillwater (the “Cimarron Turnpike”);

(6) The Muskogee Turnpike between Broken Arrow and I-40 west of Webbers Falls (the “Muskogee Turnpike”); (7) The John Kilpatrick Turnpike in Oklahoma City linking the Turner Turnpike and I-35 with I-40 near Mustang and Sara Road (the “John Kilpatrick Turnpike”);

(8) The Cherokee Turnpike between Tulsa and western Arkansas (the “Cherokee Turnpike”);

(9) The Chickasaw Turnpike between S.H. 7 west of Sulphur to S.H. 3W in Ada (the “Chickasaw Turnpike”); and

(10) The Creek Turnpike in Tulsa linking the Turner Turnpike to the Will Rogers Turnpike (the “Creek Turnpike”).

See “THE OKLAHOMA TURNPIKE SYSTEM” herein for additional descriptive information regarding each of such turnpikes included in the Oklahoma Turnpike System. Additional turnpikes have been authorized by the State Legislature, but the Authority, which is solely responsible for determining whether to construct any additional turnpikes, has taken no action with respect to the construction of any additional turnpikes other than with respect to the extension of the Kilpatrick Turnpike and the Eastern Oklahoma County Turnpike as described under “Driving Forward Program” below. The State Legislature, notwithstanding any agreement or contract entered into by the Authority, may repeal, alter or amend the authorization for the construction of any turnpike, or the description of the route or location thereof, for which bonds have not been sold at the time of such legislative action.

Each turnpike project hereafter constructed by the Authority, whether presently authorized or not, may become a part of the Oklahoma Turnpike System, upon a showing that the turnpike project can generate Net Revenues sufficient to cover Current Expenses and Reserve Maintenance Fund deposits. The Gilcrease Expressway West project described under “Non-System Financing Plans” below is not a Turnpike Project and will not become part of the Oklahoma Turnpike System.

Driving Forward Program

On October 29, 2015, Governor Mary Fallin announced the Driving Forward initiative (“Driving Forward Program”) which includes approximately $1.1 billion of projects to be financed with the proceeds from Turnpike Revenue Bonds issued by the Authority, including those projects described below that were financed in part with proceeds of the Authority’s Series 2017A Bonds and Series 2017C Bonds (hereinafter defined) and are being financed in part with proceeds of the Series 2018A Bonds, which represents the final issuance to finance the Driving Forward Program. The Driving Forward Program has been developed to address the critical need to reconstruct, expand and enhance the surface transportation system in Oklahoma. The new corridors being developed have been examined and discussed for many years in response to growing traffic volumes and congestion. The increased volumes being experienced represent a primary factor in severe injury and fatality accidents and cause significant reductions in access and mobility for the traveling public. Historically, periodic investments in the replacement, enhancement, and expansion of the surface transportation system are necessary to provide modern and safe facilities and infrastructure. The represented Driving Forward Program improvements are predicated on national, regional and local population and traffic growth and are patterned by careful planning and analysis of current and future needs.

Projects Financed With Series 2017A, Series 2017C and Series 2018A Bond Proceeds. The Authority’s Second Senior Revenue Bonds, Series 2017A (the “Series 2017A Bonds”) were issued on February 8, 2017, in the original aggregate principal amount of $456,070,000, the Authority’s Second Senior Revenue Bonds, Series 2017C (the “Series 2017C Bonds”) were issued on December 21, 2017, in the original aggregate principal amount of $312,840,000 and the Series 2018A Bonds are being issued, to

A-2 finance payment of the costs of construction of the projects described below which are part of the Driving Forward Program:

Muskogee Turnpike (9.5 miles): reconstruction between the Creek Turnpike interchange and State Highway 51 near Coweta, Oklahoma. The projects have been constructed, including safety features and modernization of the toll plaza, and opened to traffic.

Turner Turnpike (22 miles): creation of an “urban turnpike corridor” between just east of Bristow, Oklahoma, and the eastern section of the Turner Turnpike in the vicinity of Tulsa. Projects include additional and wider lanes and lighting. The widening project between Kellyville and Sapulpa is well underway with numerous construction activities ongoing in the nearly 16-mile long construction zone. A major milestone was met in July 2018 with the substantial completion of 3.5 miles of widening near Kellyville. Other portions of the project are progressing well as traffic has switched to widened sections within the work zone. Approximately 73% of construction contracts have been let, with approximately 27% remaining to be let by the Authority.

H.E. Bailey Turnpike (7.5 miles): creation of wider lanes, enhanced safety features, and toll plaza modernization between Bridge Creek and North Meridian Avenue near Newcastle, Oklahoma. The projects have been constructed and opened to traffic.

Kilpatrick Turnpike, SW Extension (7 miles): extension of the Kilpatrick Turnpike from I-40 to State Highway 152/Airport Road to connect southwest Oklahoma City, Oklahoma, and the urban core of Oklahoma City, Oklahoma. Construction commenced on the Kilpatrick Turnpike extension in January 2018 with the I-40 interchange. Three other projects along the corridor began recently, placing the 7-mile segment entirely under construction from I-40 to SH-152. This project is projected to open to traffic no later than January 1, 2021. All construction contracts have been let by the Authority.

Kilpatrick Turnpike, Bridge Widening/Rehabilitation: Widening and rehabilitation of the John Kilpatrick Turnpike bridges over the North Canadian River and the North Canadian River Overflow bridges located six miles north of I-40. The design for the widening and rehabilitation of these bridges is nearing completion and construction is expected to be bid in the fourth quarter of 2018.

Eastern Oklahoma County Turnpike (21 miles): providing a connection between I-40 and I-44 to relieve traffic congestion in the Oklahoma City, Oklahoma, area (eastern Oklahoma County) and produce a drive-time reduction to access Tulsa, Oklahoma, from the Oklahoma City Metropolitan area. The Eastern Oklahoma County Turnpike broke ground in December 2017, beginning with the interchange at the Turner Turnpike. Since that time, two additional interchanges, three grading projects and seven bridge projects have been awarded. Seven projects have begun construction and other projects are anticipated to begin along the corridor in the coming months. This project is projected to open to traffic no later than January 1, 2021. Approximately 68% of construction contracts have been let, with approximately 32% remaining to be let by the Authority.

Non-System Financing Plans

The Authority has established a funding partnership with the City of Tulsa, Tulsa County, the Indian Nations Council of Governments, and ODOT to finance construction of the Gilcrease Expressway West project, a 5 mile connection between the U.S. 412 to the north and I-44 to the south, for the purpose of completing the western loop around the Tulsa Metropolitan Area. The Gilcrease Expressway West project is expected to help relieve urban traffic congestion during peak periods and provide a new and more direct route to city attractions and points of interest in the Tulsa urban core.

A-3 The estimated remaining cost to complete the Gilcrease Expressway West Project is expected to be approximately $306 million. The Authority will not issue any Bonds pursuant to the Trust Agreement to fund such contribution. Funding of the cost to complete the project is anticipated to be provided from (a) approximately $71 million of proceeds from ODOT’s Grant Anticipation Notes, Series 2018A, issued in May 2018, (b) total investment from the Authority’s General Fund of approximately $126 million and (c) the use of approximately $109 million in debt financing by the Authority, as described below, secured, in part, by a lien on gross revenues generated by the Gilcrease Expressway West Project when opened to tolled vehicular traffic (the “Gilcrease Financing”).

The Authority’s obligations under the proposed Gilcrease Financing are expected to be incurred pursuant to a new, separate trust agreement of the Authority. The Gilcrease Financing will be payable solely from the tolls and other revenues generated by the Gilcrease Expressway West Project, the funds and accounts established pursuant to the Gilcrease Financing and certain annual transfers expected to be made from the Authority’s General Fund as described below, and will not have any pledge of or lien on the Net Revenues or the funds and accounts securing the payment of the Bonds under the Trust Agreement. The Authority expects to make available funds in the General Fund that may be released from the lien of the Trust Agreement to the extent such funds are available to be released in accordance with the terms of the Trust Agreement. See “Summary of Certain Provisions of the Trust Agreement— Use of Moneys in General Fund; Issuance of Junior Obligations” in Appendix C. The Authority expects that it may transfer up to $4,000,000 on an annual basis from the General Fund to support the requirements of the trust agreement securing the Gilcrease Financing, to the extent such amounts are available to be released from the General Fund in accordance with the terms of the Trust Agreement. Tolls and other revenues of the Gilcrease Expressway West Project will not be Net Revenues of the Oklahoma Turnpike System and are not pledged under the Trust Agreement as security for payment of the Bonds. For a discussion of the financing of turnpikes separately from the Trust Agreement, see “Summary of Certain Provisions of the Trust Agreement—Requirements for New Turnpike Projects; Reclassification of General Fund Turnpike Projects” in Appendix C and “SECURITY FOR THE BONDS—Amendments Made by Fifteenth Supplemental Trust Agreement” in the Official Statement.

The Authority currently expects construction of the Gilcrease Expressway West Project to commence during calendar year 2019, and be completed in 2021.

Organization and Management

The Authority consists of the Governor (ex-officio) and six members serving without pay for eight-year terms from districts established in the State Statute. The Governor may remove any member of the Authority, at any time, with or without cause. The members are appointed to represent defined geographical districts. Authority members have full control over all turnpike operations; however, the Authority must operate in strict compliance with trust agreements that define operating procedures to be followed. The officers and members of the Board of Directors of the Authority, certain information regarding their experience and the dates of expiration of their terms of office are as follows:

Governor Mary Fallin, Member Ex Officio: Term Expires January 2019.

Dana Weber, Chair: Term Expires July 1, 2021. The member appointed from District 4, Ms. Weber was appointed in January 2016 by Governor Mary Fallin. Ms. Weber is the President and Chief Executive Officer of Webco Industries Inc. Ms. Weber resides in Tulsa, Oklahoma.

David A. Burrage, Vice Chair: Term Expires July 1, 2023. The member appointed from District 6, Mr. Burrage was appointed in January 2008 by former Governor Brad Henry. Mr. Burrage is an attorney at the Burrage Law Firm in Durant, Oklahoma. Mr. Burrage resides in Durant, Oklahoma.

A-4 G. Carl Gibson, Secretary and Treasurer: Term Expires July 1, 2023. The member appointed from District 1, Mr. Gibson was appointed in March 2011 by Governor Mary Fallin. Mr. Gibson is the Chief Operating Officer of Inoveon Corporation in Oklahoma City. Mr. Gibson resides in Norman, Oklahoma.

Kenneth G. Adams, Member: Term Expires July 1, 2019. The member appointed from District 2, Mr. Adams was appointed in March 2011 by Governor Mary Fallin. Mr. Adams is Chairman of the Adams Investment Company. Mr. Adams resides in Bartlesville, Oklahoma.

Guy L. Berry, Member: Term Expires July 1, 2020. The member appointed from District 3, Mr. Berry was appointed in June 2017 by Governor Mary Fallin. Mr. Berry is President and Vice Chairman of the Board of American Heritage Bank in Sapulpa, Oklahoma. Mr. Berry resides in Sapulpa, Oklahoma.

E. Gene Love, Member: Term Expires July 1, 2022. The member appointed from District 5, Mr. Love was appointed in March 2011 by Governor Mary Fallin. Mr. Love is Chief Executive Office of Millennium Solutions Group. Mr. Love resides in Lawton, Oklahoma.

Oklahoma Secretary of Transportation J. Michael Patterson serves as the liaison between the Governor and the Authority. Mr. Patterson has also served as Executive Director of ODOT since April 2013.

The following comprise the senior managerial staff of the Authority with a brief biography of each:

Tim Gatz, Executive Director: Mr. Gatz was named Executive Director of the Oklahoma Turnpike Authority in June 2016. He served previously as the Deputy Director of ODOT from May 2013 to June 2016 with more than 25 years of service with that agency. He began his career with ODOT in 1990. In 2000, he became Division Manager of the Project Management Division and in 2006 was promoted to director of ODOT’s Capital Programs and Information Management.

Alan Freeman, Assistant Executive Director of Finance and Administration: Mr. Freeman is a graduate of Oklahoma State University who has been with the Authority since 1979. Beginning in 2015, Mr. Freeman began serving as the Assistant Executive Director of Finance and Administration after leaving the position of Assistant Executive Director of Operations and Capital Planning. He began his career in 1979 serving as Director of Human Resources. From 1988 to 1993, Mr. Freeman served in a dual capacity as Director of Human Resources and Director of Toll Operations, supervising the implementation of the PIKEPASS system.

Joe Echelle, Assistant Executive Director of Maintenance, Engineering & Construction: Mr. Echelle has worked in highway construction and design for 16 years, 14 years with ODOT and most recently with the Authority since 2016. He earned a Bachelor’s Degree in Civil Engineering and a Masters of Business Administration degree at Oklahoma State University. He is a licensed Professional Engineer with the State of Oklahoma as well as a member of the Governors Highway Construction Material Technician Certification Board.

David Machamer, Assistant Executive Director of PIKEPASS and Toll: Mr. Machamer has served in this role since early 2015. Prior to serving in that role, Mr. Machamer served as the Director of Toll Operations from 1993 on. He is a Certified Public Accountant who serves on the Board of Directors of the International Bridge Tunnel and Turnpike Association. He earned a Bachelor of Business

A-5 Administration Degree from the University of Oklahoma in July 1982 and a Masters of Business Administration from the University of Central Oklahoma in December 1994.

Wendy Smith, Director of Finance and Revenue: Ms. Smith has been with the Authority’s Finance Division for over 25 years and has served as the Finance Director since June 2001. She graduated from the University of Central Oklahoma and earned a Bachelor’s of Science Degree in Accounting, and a Bachelor’s of Arts Degree in Psychology. She has been a Certified Public Accountant since 1988 and started her accounting career in the insurance industry.

Julie Porter, Controller: Ms. Porter has been with the Authority’s Controller Division for over 20 years and has served as the Controller for the past 14 years. She came to the Authority as the Assistant Controller with over five years of experience in public accounting as an auditor for a major accounting firm in its Oklahoma City office. She previously served the Authority as one of its independent auditors.

As indicated herein, the Authority has employed Olsson and Associates, Oklahoma City, Oklahoma, as its Consulting Engineers (the “Consulting Engineers”), CDM Smith Inc., Dallas, Texas, as its Traffic Engineers (the “Traffic Engineers”), and Grant Thornton LLP, Oklahoma City, Oklahoma, as its independent certified public accountants. Reference is hereby made to the Report of the Consulting Engineers included in Appendix F to the Official Statement and to the Comprehensive Traffic & Revenue Update Summary Report of the Traffic Engineers relating to the issuance of the Series 2017A and Series 2017B Bonds and the October 2018 Letter Update included in Appendix G to the Official Statement, each as described under the caption “CONSULTANTS’ REPORTS” in the Official Statement. The Authority has also engaged EGL Law, PLLC, Tulsa, Oklahoma, as its outside General Counsel, and Hilltop Securities, Inc., as its financial advisor.

Retirement Benefits

Employees of the Authority participate in the Oklahoma Public Employees Retirement Plan (the “Plan”), a cost sharing multiple-employer public employee retirement system administered by the Oklahoma Public Employee Retirement System (“OPERS”). For additional information relating to the Plan, see “Appendix B  Audited Financial Statements of the Authority as of and for the Fiscal Years Ended December 31, 2017 and 2016  Note 10.” The Authority has no obligation to provide and does not offer or provide post-employment health benefits to its employees. While under certain conditions retirees from the Authority may receive certain healthcare benefits through OPERS, the cost of such post- employment health benefits is not paid, directly or indirectly, by the Authority.

Risk Management/Insurance

The Authority is a member of the State Risk Management Pool. For a discussion of the Authority’s risk management program, see “Appendix B  Audited Financial Statements of the Authority as of and for the Fiscal Years Ended December 31, 2017 and 2016  Note 5.” See also “Schedule 14: Insurance in Force, as of December 31, 2017” in the Statistical Section of the Authority’s Comprehensive Annual Financial Report for the Fiscal Years Ended December 31, 2017 and 2016.

Financial Statements

Audited Financial Statements of the Authority as of and for the Fiscal Years Ended December 31, 2017 and 2016, excerpted from the Oklahoma Turnpike Authority Comprehensive Annual Financial Report for the Fiscal Years Ended December 31, 2017 and 2016, are included in Appendix B to the Official Statement. Also see “UNAUDITED INTERIM INFORMATION FOR THE SECOND QUARTER ENDED JUNE 30, 2018” below in this Appendix A.

A-6 THE OKLAHOMA TURNPIKE SYSTEM

There are presently ten turnpikes being operated within the State, all constructed as fully limited access facilities, and comprising 604.9 miles of the Oklahoma Turnpike System. The following description does not include discussion of the projects that comprise the Driving Forward Program. See “THE AUTHORITY—Driving Forward Program” herein.

Major turnpike systems throughout the United States and their present approximate lengths in miles are as follows:

Total Miles Oklahoma Turnpike Authority 604.9 Florida Turnpike Enterprise 594 New York State Thruway Authority 570 Pennsylvania Turnpike Commission 554 New Jersey Turnpike Authority 321 Illinois Tollway 286 Ohio Turnpike and Infrastructure 241 Kansas Turnpike Authority 236 ITR Concession Company LLC (Indiana) 157 Maryland Transportation Authority 146

The Oklahoma Turnpike System is generally comprised of completely grade-separated facilities. With the exception of the Chickasaw Turnpike, the Turnpikes have four 12-foot driving lanes separated by medians. The Turner, Will Rogers, north end of the H.E. Bailey and the north end of the Muskogee Turnpikes have lanes separated by concrete median barriers. The other sections of the Oklahoma Turnpike System are separated by curbless, grassed medians. Outer shoulders are paved. The driving lanes of the Turner and Will Rogers Turnpikes are designed for a 28,800 pound axle load, the H.E.

A-7 Bailey, Indian Nation, Muskogee and Cimarron Turnpikes for a 41,000 pound axle load, and the John Kilpatrick, Cherokee, Chickasaw and Creek Turnpikes for HS 20 loading.

Turner Turnpike

The Turner Turnpike, 86.0 miles in length, was opened for traffic on May 16, 1953. The Turner Turnpike has a mainline toll barrier near Stroud, and intermediate interchanges at Luther, Chandler, Stroud, Bristow, Wellston, Kellyville and Sapulpa. The Turner Turnpike is designated part of I-44. Restaurant, gasoline and related services are furnished in three concession areas.

H.E. Bailey Turnpike

The H.E. Bailey Turnpike consists of three sections. The first two sections are 86.4 miles in length extending from Oklahoma City to U.S. 277 north of Lawton and from south of Lawton to a junction with U.S. 70 west of Randlett. The third section is the H.E. Bailey Turnpike Norman Spur, which is a four-lane, limited access, urban highway that extends 8.2 miles within Grady County from an interchange of the H.E. Bailey Turnpike to S.H. 9. The Turnpike employs an open or barrier system of toll collection. Toll plazas are located at Newcastle, Chickasha, Elgin, Walters, S.H. 76 and U.S. 62. There are six interchanges on the northern section, three on the southern section, and three on the Spur. Restaurant, gasoline and related services are furnished in two concession areas. The northern section was opened for traffic on March 1, 1964, the southern section on April 23, 1964, and the Spur on October 18, 2001.

Will Rogers Turnpike

The Will Rogers Turnpike, 88.5 miles in length, was opened for traffic on June 28, 1957. The Will Rogers Turnpike has a mainline toll barrier near Vinita, and intermediate interchanges at SH 266 Claremore, Big Cabin, Adair, Vinita, Afton and Miami. The Turnpike is designated part of I-44. Restaurant, gasoline and related services are furnished in one concession area.

Indian Nation Turnpike

The Indian Nation Turnpike was constructed in two stages. The total length of the Indian Nation Turnpike is 105.2 miles. Barrier toll plazas are located at Eufaula, McAlester and Antlers. The northern section (Section A), 41.1 miles in length, was opened for traffic on January 1, 1966. This section extends from a connection with the Bee Line Expressway (U.S. 75) at I-40, south of Henryetta, to U.S. 69, south of McAlester.

The southern section (Section B), 64.1 miles in length, was opened for traffic on August 21, 1970. Section B extends from U.S. 69 to the Hugo Bypass at U.S. 70.

In addition to the terminal interchanges, there are six intermediate interchanges on the Indian Nation Turnpike. Two concession areas provide restaurant, gasoline and related services.

ODOT constructed nine separate toll free projects in connection with Section A and also constructed the 3.1 mile Hugo Bypass and an additional two lanes of roadway, approximately 9 miles in length, from the Hugo Bypass south of Hugo to and across the Red River to a connection with the Texas highway system.

A-8 Cimarron Turnpike

The Cimarron Turnpike, approximately 67.7 miles in length, consists of two parts: (1) a 59.2 mile route beginning just east of the intersection of S.H. 48 and U.S. 64, approximately 7 miles west of the existing 4 lane divided bridge across Keystone Lake, then westerly approximately 31.5 miles to an intersection with S.H. 108, then northwesterly approximately 14 miles to a connection with U.S. 177 and then westerly approximately 15 miles to a connection with I-35, approximately 8 miles northwest of Perry, and (2) an 8.5 mile spur from the main route southwest to a connection with Stillwater and Oklahoma State University by way of Perkins Road and U.S. 177. Toll collections are handled through a main line ramp barrier toll collection system. The Cimarron Turnpike opened to traffic in 1975. Between Tulsa and I-35, toll collections are handled by two barrier type toll plazas. A concession area provides restaurant, gasoline and related services.

Muskogee Turnpike

The Muskogee Turnpike, 53.1 miles in length, consists of two sections and was opened to traffic on October 16, 1969. The northern section, 33.3 miles in length, begins at the southeastern terminus of the Broken Arrow Expressway (part of the Tulsa urban expressway system), approximately 1 mile east of Broken Arrow, and extends in a southeasterly direction to a connection with the 4 mile Muskogee Industrial Expressway, approximately 1 mile north of U.S. 62, which was constructed by ODOT as a four lane divided, grade separated facility and connects the north and south sections of the Muskogee Turnpike. The southern section, 19.8 miles in length, connects to the south end of the Muskogee Industrial Expressway and extends in a southeasterly direction to a connection with I-40 southwest of Webbers Falls. Barrier toll plazas are located at Coweta and on the northern end of the southern section. Seven interchanges and one concession area are provided on the Muskogee Turnpike.

John Kilpatrick Turnpike

The John Kilpatrick Turnpike is 25.3 miles in length and extends along the northern edge of Oklahoma City westward from the junction of I-35 and the Turner Turnpike on the east to I-40 around Mustang and Sara Road to the west. The first phase from the Turner Turnpike to a joint just east of Portland Avenue, was opened to traffic on September 1, 1991. In the second phase, an interim interchange connecting the John Kilpatrick Turnpike with Hefner Parkway was opened in July 1992. In the third phase, direct connections from the Hefner Parkway to and from the East on the John Kilpatrick Turnpike were opened to traffic on January 31, 1993. The John Kilpatrick Turnpike Extension, a four-lane, limited access, urban highway that extends from the terminus of the original John Kilpatrick Turnpike at Hefner Parkway to I-40 between Mustang and Sara Road was built as a part of the Authority’s 1998 Capital Program. This project was opened in segments beginning with the first 2 miles which opened January 12, 2000. The next 5.3 mile section to Northwest Highway opened September 3, 2000, and the remaining section from Northwest Highway to the terminus at I-40 was opened to traffic on January 31, 2001. In 2011, lane capacity was added between MacArthur Boulevard and Eastern Avenue in Oklahoma City.

Cherokee Turnpike

The Cherokee Turnpike (U.S. 412) is located in the northeast corner of the State. The project has a total length of 32.8 miles and extends eastward from the Neosho River southeast of Chouteau to a connection with the existing S.H. 33 west of Flint Creek. The alignment generally parallels existing S.H. 33 and follows the existing highway in several locations. ODOT constructed four lane sections of existing S.H. 33 between U.S. 69 and the east bank of the Neosho River, and from the west bank of Flint Creek to the four lane S.H. 33 west of Siloam Springs, Arkansas thereby creating a four lane access between Tulsa and Siloam Springs, Arkansas. This project opened to traffic on September 1, 1991.

A-9 Chickasaw Turnpike

The Chickasaw Turnpike is a two lane limited access, rural highway located in Murray and Pontotoc Counties. It begins on S.H. 7 west of Sulphur and proceeds northeasterly to a connection with S.H. 1, northeast of Roff, then along S.H. 1 to S.H. 3W in Ada. The total length of this project is 27.1 miles, only 17.3 miles of which is tolled, and it opened to traffic on September 1, 1991. On July 28, 2011, a resolution was passed which granted ODOT a perpetual easement to use a 4-mile portion of the Chickasaw Turnpike. This agreement will not cause any release or extinguishment of the lien of the Trust Agreement on the revenues or rights of the Authority derived from or related to the Chickasaw Turnpike; and the Traffic Engineer has provided the Authority with an analysis of the agreement as described in the preceding sentence, and has concluded that the implementation of this agreement should not result in any material reduction in Net Revenues, as defined in the Trust Agreement.

Creek Turnpike

The Creek Turnpike has been opened in phases. The original Creek Turnpike was approximately 7.6 miles in length, extending from U.S. 75 in Tulsa eastward to U.S. 64. The first section of the original 7.6 miles opened to traffic on March 15, 1992. The Creek West Extension is a four-lane limited access, urban highway that extends from the Turner Turnpike and S.H. 66 to the original Creek Turnpike at U.S. 75. This project was opened to traffic on December 15, 2000. The Creek East & Broken Arrow South Turnpike Extension is an extension to the original Creek Turnpike and opened in stages during 2001 and 2002 with the final stage opening August 16, 2002. It is a four-lane limited access, urban highway which extends 21.2 miles from U.S. 169 to the I-44 interchange of the Will Rogers Turnpike. The Creek Turnpike, now that it is complete, is 34.4 miles in total length and connects the Turner Turnpike at S.H. 66 to the Will Rogers Turnpike. In 2011, lane capacity was added between U.S. 75 and Memorial Drive in Tulsa County.

General Condition of the Oklahoma Turnpike System

Reference is hereby made to the Report of the Consulting Engineers described under the caption “CONSULTANTS’ REPORTS” in the Official Statement.

Toll Revenues and Rates

Gross toll revenues grew by over 52.9% between 2007 and 2017. The current schedule of tolls shown below became effective January 3, 2018, following the first toll increase of March 1, 2017. These two increases followed the adoption by the Board of Directors of the Authority on December 6, 2016 of a resolution establishing increases in the toll rate schedule that had been in effect since August 4, 2009. The new toll rate schedule provides for a 17% toll increase from the 2009 schedule; 12% of such increase was effective March 1, 2017, an additional 2.5% increase was effective January 3, 2018, and the final 2.5% increase is scheduled to be effective July 1, 2019.

Current Toll Schedule. The following tables present the total toll for a trip along the entire length of the respective turnpike for a passenger (2-axle) vehicle and for a 5-axle commercial vehicle. Separate toll rates apply for 3-, 4- and 6-axle vehicles. The first such table shows the current schedule of such tolls for each turnpike, effective January 3, 2018, as described in the preceding paragraph, subject to the additional increase scheduled to be implemented in 2019.

A-10 Tolls Effective January 3, 2018

Full length trip Passenger toll rate Commercial toll rate TURNPIKE PIKEPASS CASH PIKEPASS CASH Turner Turnpike $4.50 $4.75 $18.05 $19.00 Will Rogers Turnpike 4.50 4.75 18.05 19.00 H.E. Bailey Turnpike† 5.10 5.50 15.25 16.50 Indian Nation Turnpike 6.20 7.00 19.95 21.25 Muskogee Turnpike 3.30 3.50 10.25 11.00 Cimarron Turnpike 3.30 3.75 12.45 13.25 John Kilpatrick Turnpike 2.55 2.70 8.65 9.10 Cherokee Turnpike 2.80 3.00 9.55 10.25 Chickasaw Turnpike 0.65 0.75 2.20 2.90 Creek Turnpike 3.00 3.35 9.85 10.40 ______†Does not include toll for Norman Spur. See “THE OKLAHOMA TURNPIKE SYSTEM—H.E. Bailey Turnpike” hereinabove.

2017 Toll Schedule. The following table presents the comparable tolls under the previous toll schedule that became effective March 1, 2017. Such schedule is no longer in effect, but is presented for comparative purposes and because historical revenues since such date that are presented below in this Appendix A were generated based on such schedule.

Tolls Effective March 1, 2017 to January 2, 2018

Full length trip Passenger toll rate Commercial toll rate TURNPIKE PIKEPASS CASH PIKEPASS CASH Turner Turnpike $4.40 $4.50 $17.60 $18.50 Will Rogers Turnpike 4.40 4.50 17.60 18.50 H.E. Bailey Turnpike† 5.05 5.50 15.00 16.00 Indian Nation Turnpike 6.05 6.25 19.40 20.75 Muskogee Turnpike 3.20 3.50 10.00 10.50 Cimarron Turnpike 3.25 3.50 12.15 13.25 John Kilpatrick Turnpike 2.50 2.60 8.40 8.90 Cherokee Turnpike 2.70 3.00 9.30 10.00 Chickasaw Turnpike 0.65 0.75 2.15 2.80 Creek Turnpike 2.95 3.25 9.60 10.20 ______†Does not include toll for Norman Spur. See “THE OKLAHOMA TURNPIKE SYSTEM—H.E. Bailey Turnpike” hereinabove.

A-11 2009 Toll Schedule. The following table presents the comparable tolls under the previous toll schedule that became effective August 4, 2009. Such schedule is no longer in effect, but is presented for comparative purposes and because historical revenues since such date that are presented below in this Appendix A were generated based on such schedule.

Tolls Effective August 4, 2009 to February 28, 2017

Full length trip Passenger toll rate Commercial toll rate TURNPIKE PIKEPASS CASH PIKEPASS CASH Turner Turnpike $3.90 $4.00 $15.70 $16.50 Will Rogers Turnpike 3.90 4.00 15.70 16.50 H.E. Bailey Turnpike† 4.45 4.75 13.30 14.25 Indian Nation Turnpike 5.30 5.50 17.30 18.25 Muskogee Turnpike 2.80 3.00 8.90 9.25 Cimarron Turnpike 2.85 3.00 10.80 11.50 John Kilpatrick Turnpike 2.20 2.30 7.50 7.90 Cherokee Turnpike 2.40 2.50 8.30 8.75 Chickasaw Turnpike 0.55 0.65 1.90 2.50 Creek Turnpike 2.60 2.80 8.55 9.00 ______†Does not include toll for Norman Spur. See “THE OKLAHOMA TURNPIKE SYSTEM—H.E. Bailey Turnpike” hereinabove.

2017 Toll Revenues by Turnpike

Toll revenues of $300.8 million in 2017 represented a 13.5% increase over 2016 toll revenues of $265.1 million and were derived as shown in the chart below.

2017 Toll Revenues by Turnpike 10.2%

24.3% Turner 11.0% Chickasaw Indian Nation Muskogee Cimarron Kilpatrick Cherokee Will Rogers Creek 0.3% H E Bailey 5.5% 20.6%

6.7%

4.5% 3.2%

13.7%

A-12 Toll revenues in 2017 for passenger cars and commercial vehicles by Turnpike are shown in the chart below: Toll Revenue -- Commercial versus Passenger For the Year 2017

100%

80%

60%

40%

20%

0%

r e e k e rs ey n e n e w ck e m n e il io g ro k a i e e r g a t o r o as tr r st u o B a sk a er k a C y T R N u m h ic lp S ll E n i C h i i H ia M C K A W d C T n O Passenger CommercialI

Toll Collection and PIKEPASS

The Authority operates a multi-faceted toll collection system consisting of manual collection, automatic coin machines, and electronic toll collection capabilities. Current statistics for the Authority’s collection system as of December 31, 2017, are listed below:

Average Daily Traffic: 503,797 Passenger: 460,507 Commercial Vehicles: 43,290 Percent of Average Daily Traffic using Electronic Collection based on toll transactions: 75.2%

The electronic toll collection component is based on Radio Frequency Identification (“RFID”) technology. RFID technology was implemented on January 1, 1991 and was given the name PIKEPASS. The Authority provides non-stop, high-speed travel through the entire Oklahoma Turnpike System, via PIKEPASS.

The PIKEPASS system is operated by Authority staff and maintained by TransCore Corporation.

RFID technology enables the traveling public to affix a small electronic “toll tag” to the inside of an automobile windshield. The toll tag is a sticker tag, inside of which are coded unique characters assigned to an individual credit account. To process the encoded tag, an antenna must be installed in the toll lane to read the account-unique code from the tag. The antenna transmits the account code to a microcomputer, located in the toll plaza, for verification. The plaza computer directs the operation of the lane signal equipment and sends the account information to a host computer system to debit the

A-13 customer’s account. The RFID equipment correctly reads and identifies tags with an accuracy rate of 99.98%. As of December 31, 2017, the PIKEPASS program enlists over 700,000 active accounts utilizing over 1,770,000 transponders. During 2017, approximately 75.2% of toll transactions were accomplished through PIKEPASS and 66.0% of Authority toll revenues were collected through PIKEPASS.

The utilization of automatic collection systems creates the potential for abuse. The Authority uses a combination of law enforcement and video enforcement to minimize toll evasion on the Oklahoma Turnpike System, including on the PIKEPASS system. The Oklahoma Highway Patrol enforces the payment of tolls on the Oklahoma Turnpike System. In 1997, the Oklahoma State Legislature enacted the Oklahoma Electronic Toll Collection Act, enhancing the Authority’s video enforcement system. The law provides for a monetary liability on the vehicle’s owner for failure to comply with toll collection regulations. This is accomplished by strategically placing cameras that capture the license plate of vehicles who fail to pay. The owner of the vehicle is sent a notice of toll evasion that identifies the monetary penalty. The violator is given 21 days after receipt of the notice to pay the penalty or future vehicle registration may be withheld by the tax commission.

Cashless Tolling

Early in 2014, Authority management initiated a Strategic Planning Group to examine the benefits, risks and potential issues associated with the future conversion of the turnpikes composing the Oklahoma Turnpike System to a cashless, or all electronic tolling (“AET”) system. The planning group conducted an overview of the Oklahoma Turnpike System’s existing toll collection system as well as an analysis of cashless systems throughout the United States, comparing costs and benefits of various electronic tolling options. This analysis included multiple peer-to-peer meetings with other toll road authorities that have all electronic tolling systems.

Throughout the analysis, the Authority has taken a very deliberate, conservative, and measured approach to its toll collection system. At present, the Authority has only authorized deployment of one “pilot project” involving a single interchange (the Peoria-Elm interchange) on the Creek Turnpike that opened to traffic on January 5, 2017. This site was chosen as the “pilot” due to its high 90% PIKEPASS penetration. Cashless tolling was implemented at such interchange through the use of a “PLATEPAY” System. “PLATEPAY” is a new license plate-based tolling system installed on an overhead gantry at the cashless tolling point. Cameras on the overhead gantries capture a vehicle’s license plate and a toll invoice is mailed to the vehicle’s registered owner. PIKEPASS customers will still use transponders to pay tolls with the “PLATEPAY” System as overhead gantries, including at this interchange, are equipped to read PIKEPASS transponders. This pilot project has assisted the Authority in its understanding of lane issues at interchanges and back-office procedures associated with the “PLATEPAY” System, allowing the Authority to improve processes and procedures. In fiscal year 2017, PLATEPAY revenue constituted 0.3% of the Authority’s toll revenues.

Using the pilot project as its basis of analysis, the Authority’s Strategic Planning Group, working closely with the Authority’s Traffic Engineer, has contracted with a project consultant to oversee the steps necessary to deploy all electronic tolling on its first complete turnpike corridor. The first turnpike corridor to be AET is currently expected to be the southwest extension of the John Kilpatrick described herein under “Driving Forward Program—Projects Financed With Series 2017A, Series 2017C and Series 2018A Bond Proceeds—Kilpatrick Turnpike, SW Extension.” The Authority plans to open this corridor using conventional cash collection methods, and subsequently convert this 7-mile corridor to AET, the first such facility for the Authority. This conversion process, to be undertaken in a deliberate, conservative, and measured approach, is expected to take 18 months to three years, during which time the Authority will focus on the following:

A-14 • Lessons learned from successful AET deployments by other tolling agencies across the country. • Understanding the Authority’s customer base or traffic mix, and issues related to each category of customer, including PIKEPASS users versus cash customers, passenger versus commercial vehicles, and in-state versus out-of-state revenue risks. • A marketing plan to maximize electronic toll collection penetration. • Continuation of work with other tolling authorities to maximize interoperability across the nation. • Review and adoption of necessary legislation related to toll collection and enforcement.

The Oklahoma Turnpike System is made up of both urban and rural facilities, with three of its corridors making up the I-44 corridor in Oklahoma. Consequently, each turnpike has its own characteristics and presents its own unique challenges to the implementation of AET by the Authority. As a result, the Authority recognizes the importance of its taking a very measured and conservative approach to the implementation of AET. The Strategic Planning Group will continue to meet over time to ascertain the risks and operational impact of AET, including but not limited to its impact on the Authority’s toll revenues and collection expenses.

Violation Enforcement

The Authority implemented the internally designed and developed VES III, Violation Processing Software System, in November 2004. The installation of this software system provides increased performance and enhancements to previous versions of the software application resulting in 89% automated decision processing of violation images. This type of performance affords the Authority increased system integrity and processing performance.

Interoperability

Interoperability between the Oklahoma Turnpike Authority and North Texas Tollway Authority became officially functional on August 10, 2014. Interoperability between the Oklahoma Turnpike Authority and the Kansas Turnpike Authority became officially functional on November 1, 2014. In May 2017, the implementation of the Central United States Interoperability HUB added the Texas Department of Transportation, the Central Texas Regional Mobility Authority, the Harris County Toll Road Authority and the Fort Bend County Toll Road Authority to the network of toll agencies interoperable with PIKEPASS.

Total revenues derived from interoperability for 2017 comprised approximately $9.7 million, or 3.2%, of the $300.8 million of toll revenues, an increase from $7.3 million in 2016; interoperable transactions totaled 3.9 million, or 2.1%, of 183.9 million total toll transactions.

2018 Annual Budget

On December 5, 2017, the Authority adopted the 2018 Annual Budget, which included an Operating & Maintenance Budget and a five-year Capital Improvement Plan.

The total amount of the 2018 Operating and Maintenance Budget is $94,889,169. Some of the more significant changes to the budget from the prior year’s budget are highlighted below:

• Increased funding related to the Driving Forward Program, including additional personnel in anticipation of the added lane miles as the new turnpikes open.

A-15 • An increase in personnel for the PIKEPASS Customer Service Center to support the increasing PIKEPASS customer base as well as expanding the store in Tulsa to more fully support the Tulsa Community. • Increased funding for expenses related to PIKEPASS customers as the Authority continues to expand its PIKEPASS usage throughout the system. • Increased funding for the PIKEPASS system’s maintenance to ensure the utmost accuracy for the collection from PIKEPASS customers. • Increased funding related to offering more convenient payment methods. The Authority is anticipating adding the convenience of credit card payments for cash vehicles at certain locations. The Authority also continues its dedication to interoperability, thus allowing PIKEPASS customers to have non-stop travel on other turnpike system roads by use of their PIKEPASS transponder. • Increased funding for increased personnel and software related to cyber security as the Authority continues to increase its commitment to keep customer information safe.

The 2018 Annual Budget is available for viewing at https://www.pikepass.com/about/AnnualBudget.aspx.

Capital Planning Process

The Capital Planning Process was initiated by the Authority in 1994 with the identification of expenditures over the next five years for turnpike maintenance, rehabilitation and improvement. The Capital Plan is updated every year to include the next five years, and the current plan for the years 2018-2022 was presented as a part of the Authority’s annual budget for 2018. The Capital Plan identifies specific capital projects and the funding sources which will be utilized to complete the project. The Capital Plan projects are funded from the Reserve Maintenance and General Funds. In developing the Capital Plan, the Authority identified the maintenance, rehabilitation and improvement needs of its existing system for the next 20 to 30 years and instituted a five-year maintenance and rehabilitation program designed to keep existing turnpikes in good condition thereby maintaining traffic flows and extending the useful life of the turnpikes. The five-year maintenance program is reviewed and updated on an annual basis.

The Capital Plan is prepared as a component of the Authority’s budget in cooperation with the Engineering Division. A major part of the Capital Plan is to identify revenue sources that will be utilized to fund these projects and to insure that resources are utilized in a manner that is consistent with the Authority’s long-term goals. The Capital Plan addresses such issues as revenue sources available to fund the five-year program, limitations impacting the use of these funds for various projects, and the resources that can best be utilized to further the long-range plans and financial goals of the Authority.

Integral to the conclusions and recommendations contained in the Capital Plan are the assumptions made concerning the long term financial and operating goals of the Authority. Certain assumptions are made while preparing the Capital Plan. Assumptions concerning projected revenues, expenditures, and interest earnings of the Oklahoma Turnpike System are provided by in-house staff based upon past experience, the current budget, and revenue studies prepared by the Authority’s Traffic Engineers. Assumptions concerning project costs and the timing of project expenditures are provided by in-house staff based on engineering studies prepared by consultants as well.

A-16 The Capital Plan is based upon the following assumptions:

(1) An ongoing maintenance and rehabilitation program will extend the useful life of the Oklahoma Turnpike System. (2) Financial resources should be managed to build flexibility for the funding of new projects in the future. (3) Financial resources should be managed to maintain a sound financial condition. (4) The Oklahoma Turnpike System must at all times meet the covenants under the Trust Agreement. (5) Financial resources should be managed to build and maintain the credit rating of and investor confidence in the Authority.

A major basis for having a comprehensive capital plan is because of that first assumption—that an ongoing maintenance and rehabilitation program will extend the useful life of the Oklahoma Turnpike System and that accelerating capital investments and renovating the system sooner can significantly reduce maintenance costs.

Along with the cost-savings benefit comes a customer service benefit. Patrons of the Authority pay a premium to drive on the Authority’s roads. For that premium paid, they expect a better than average road—a road in good condition that provides some element of time savings. Implementation of a capital plan emphasizing rehabilitation should help maintain the Oklahoma Turnpike System’s conditions as well as facilitate traffic flows thereby leading to greater traffic growth and in turn, higher revenues.

Current Capital Plan

Total funding to be provided from Authority cash on a pay-as-you-go basis for the Capital Plan for the years 2018-2022 amounts to $ 479,532,808 and includes $147.7 million for Paving Rehabilitation, $47.8 million for Bridge Rehabilitation, $18.1 million in Concession Area redevelopment, $82.9 million in Interchanges and Toll plaza improvements, $31.3 million for safety, positive barrier, surface treatment, striping, and guardrail improvements, $43.0 million for PIKEPASS and toll collection related items, $15.5 million for Highway Patrol related items, $6.0 million for Maintenance Machinery & Equipment, $6.8 million in Building Improvements, $3.0 million in concrete panel lifting, $22.4 million for various other capital projects and $55 million set aside for future Gilcrease Expressway West Project construction (see “THE AUTHORITY—Non-System Financing Plans” herein). These cash-funded amounts and expenditures are separate from the funding being provided from proceeds of the Authority’s revenue bonds, including the Series 2017A Bonds, the Series 2017C Bonds and the Series 2018A Bonds, for the Driving Forward Program as described under “THE AUTHORITY—Driving Forward Program” above in this Appendix A.

2017-2018 Highlights of Capital Improvements

Resurfacing and Pavement Repair. The Authority undertook several roadway rehabilitation/improvement projects during 2017 and 2018. These projects are the following:

Chickasaw Turnpike

• SH-1 Safety Improvements. Design began in 2017; construction to be completed in 2018.

Cimarron Turnpike

• Ramp Pavement – I-35 Interchange. Design awarded in 2016; construction began in 2017.

A-17 Creek Turnpike

• Elm Street Interchange Improvements. Design awarded in 2013; construction completed in 2017.

H.E. Bailey Turnpike

• Pavement Reconstruction – Milepost 101-107. Design awarded in 2015; construction completed in 2017.

Indian Nation Turnpike

• Interchange Improvements and Toll Plaza – SH-9 Toll Plaza. Design awarded in 2013; construction completed in 2017.

Muskogee Turnpike

• Pavement Reconstruction – Milepost 0-9. Design awarded in 2015; construction completed in 2017.

Turner Turnpike

• Pavement Rehabilitation – Milepost 151-156. Design awarded in 2016; construction completed in 2017. • Pavement Rehabilitation – Milepost 161-166. Design awarded in 2016; construction completed in 2017. • Concrete Rehabilitation – near Mileposts 135, 182, 196. Design awarded in 2017; construction to begin in 2018.

Will Rogers Turnpike

• Pavement Rehabilitation – Milepost 316-320. Design awarded in 2016; construction completed in 2017. • Pavement Rehabilitation – Milepost 280-285. Design awarded in 2017; construction to be completed in 2018. • Flint Road Interchange – Design awarded in 2017.

Bridge Rehabilitation. The Authority undertook several bridge rehabilitation/reconstruction projects during 2017. These projects are the following:

Indian Nation Turnpike

• Bridge No. 41.02 (Joint ODOT) – Bridge Rehabilitation. Design awarded in 2016; construction completed in 2018.

Turner Turnpike

• Bridge No. 22.10 – Bridge Replacement. Design awarded in 2016; design on hold; project put on hold.

A-18 Will Rogers Turnpike

• Bridge No. 47.56 – Bridge Reconstruction. Design on hold; project letting pushed out to 2020 in 5-year Capital Plan.

Toll Plazas/Maintenance Facilities. Construction on a project for electrical upgrades for the mainline toll plaza on the Will Rogers Turnpike was completed in 2010. Construction on a project for electrical upgrades for the mainline toll plaza on the Turner Turnpike was completed in 2012. A project to upgrade the toll plaza at Eufaula (Indian Nation Turnpike) is nearing completion. Toll side gate improvements were recently completed along with ramp projects at Wellston (Turner Turnpike) and Elgin (H.E. Bailey Turnpike).

The Authority is in the process of replacing maintenance/OHP facilities that are aging on the Oklahoma Turnpike System. The maintenance facilities at Chickasha (H.E. Bailey Turnpike), McAlester (Indian Nation Turnpike), and Vinita (Will Rogers Turnpike) were recently reconstructed, and a new maintenance facility at Wellston (Turner Turnpike) was completed in 2013. Two new salt storage facilities, one on the Indian Nation Turnpike and one on the Cimarron Turnpike, were constructed in 2014. Projects for additional salt storage facilities and maintenance equipment storage facilities on the Oklahoma Turnpike System are scheduled within the next five years. Projects to build new maintenance/OHP facilities for the Cimarron and Muskogee Turnpikes were completed in 2016. A project for a new maintenance and training facility at Stroud on the Turner Turnpike was completed in 2017. A project to construct a new toll plaza at Coweta (Muskogee Turnpike) was completed in 2017, and a project to construct a new toll plaza at Chickasha (H.E. Bailey Turnpike) was completed early in 2018. Additional toll plaza improvements are scheduled within the next five years of the Capital Plan.

Signing, Striping & Safety Program. Signing, striping and safety improvements are commonly updated within capital plan project extents and scope. Additionally, the Authority continues to update and upgrade these items as stand-alone capital plan projects or maintenance projects. The Authority replaced signs on the Indian Nation Turnpike in 2006, and signs on the Muskogee Turnpike in 2008. A sign rehabilitation project for the Cimarron Turnpike was completed in 2009, and a project for the Cherokee Turnpike for signing and striping was recently completed. The signing program is used to update regulatory, warning, and information signs that were faded or had lost their reflectivity. These signs are informative, aesthetically pleasing, and conform to national standards.

The Consulting Engineer completed a detailed inspection of the overhead sign structures on the Oklahoma Turnpike System in 2008. There were over three hundred seventy (370) structures inspected. The Authority’s maintenance staff continues to address routine maintenance repairs, and the Consulting Engineer inspects additional issues as they arise.

The Authority has completed several cable barrier projects since 2011. Cable barrier was constructed on the Kilpatrick Turnpike from MacArthur to Eastern, and this cable barrier was then relocated to the Kilpatrick Extension from milepost 110 to 119 as part of the mainline widening project in 2013. Cable barrier was constructed on the Creek Turnpike from US-75 to Memorial, and this cable barrier was then relocated to the Creek Extension from milepost 25 to 33 as part of the mainline widening projects in 2013. Projects were completed to add cable barrier on the Cimarron Turnpike from milepost 0 to 15, 20 to 37, and 40 to 58, the Indian Nation Turnpike from milepost 88 to 104, and the H.E. Bailey Turnpike from milepost 10 to 15 in 2013. Projects to add cable barrier to the Creek Turnpike from mileposts 0 to 5 and 12 to 25, the Kilpatrick Turnpike from mileposts 119 to 124 and 131 to 135, and H.E. Bailey Turnpike from mileposts 5 to 10 and 15 to 30 were completed in 2014. A project to add cable barrier on the Cimarron Turnpike from milepost 14 to 20 was completed in 2015. Cable barrier was added to the Norman Spur in 2016. Additional positive barrier projects are scheduled within the next five

A-19 years or will be included with paving projects when positive barrier can be included where needed within project extents.

Service Plazas. The Authority has started a system-wide upgrade of service plazas. The Lone Chimney Service Plaza on the Cimarron Turnpike was reconstructed and opened in early 2009. That plaza now consists of a new store with the food and fuel vendors in the same facility. These new facilities provide highly functional and convenient service plazas for the turnpike patrons. Similar projects at the Chickasha Service Plaza on the H.E. Bailey Turnpike and at the Muskogee Service Plaza on the Muskogee Turnpike were completed in 2011. A project to reconstruct the Will Rogers Archway (formerly called the Vinita Service Plaza) was completed in 2014. Construction on a new service plaza site at McAlester (Indian Nation Turnpike) was completed in 2014. A project to redesign the Walters Service Plaza was completed in 2016. A project to redesign the Stroud Service Plaza is currently underway.

Capacity Improvements. In the recent past, the Consulting Engineer performed preliminary traffic studies on the Creek, Kilpatrick, Turner, and Will Rogers Turnpikes in order to evaluate existing and projected levels of service (LOS) for these roadways. It was determined that the Creek Turnpike from U.S. 75 to U.S. 169 and the Kilpatrick Turnpike from Meridian to Eastern needed additional capacity. Construction to widen those turnpikes to 6-lanes as well as add median cable barrier and lighting in those extensions was completed in 2013. Planned widening of the Turner Turnpike from Bristow to the Creek Turnpike from the existing 4-lanes to 6-lanes, along with lighting and other safety enhancements, is included as part of the Driving Forward Program as described under “THE AUTHORITY—Driving Forward Program” hereinabove.

Studies. The Authority continues to study and analyze improvements related to the operation and maintenance of the Oklahoma Turnpike System and facilities. Some of these studies look at improvements of toll plazas, service plazas, traffic safety, and capacity on the Oklahoma Turnpike System.

Earthquake Damage Assessments

Although the Authority designs and constructs its bridges using the same standards developed for use in the State of California, the Authority must be prepared to respond and assess its bridge assets following potentially damaging earthquakes. A seismic event can be challenging due to the uncertainty of its nature and the fact that each event is unique. Because seismic events cannot be foreseen, it is necessary for the Authority to be prepared for collapses and/or extensive damage to structures and be able to take immediate action and perform initial inspections upon the occurrence of an event. The main objective of these inspections is to evaluate the extent of damage and conclude whether a structure is safe and functional, or poses a potential safety risk. The Authority follows a simple protocol that ODOT has developed to determine inspection radii for post-earthquake assessments. The inspection radius, which is centered at the epicenter of a given earthquake, is directly related to the magnitude of an earthquake; as magnitude increases, the inspection radius increases. The table below recommends the inspection radius for a given magnitude range; however, the Division Engineer may opt for a greater response if deemed necessary or appropriate.

Magnitude Range Inspection Radius (miles) 4.4 to 4.7 5 4.8 to 5.3 15 5.4 to 5.8 30 5.9 to 6.2 60 6.3+ 120

A-20 HISTORICAL OPERATING RESULTS OF THE AUTHORITY

The following table presents historical operating results of the Authority for fiscal years ended December 31, 2013-2017:

HISTORICAL OPERATING RESULTS OF THE AUTHORITY

Fiscal Year Ending December 31 ($ in thousands) 2013 2014 2015 2016 2017 Operating Revenue Toll Revenue $232,745 $246,070 $256,051 $265,064 $300,811 Video Processing Center Revenue/Miscellaneous 3,860 3,383 1,248 5,246 6,654 Concession Revenue 1,579 1,627 1,838 2,277 2,390 Total 238,184 251,080 259,137 272,587 309,855 O & M Expense (1) 71,186 76,188 79,074 78,509 83,764 Net Revenues before Interest Income 166,998 174,892 180,063 194,078 226,091 Interest Income 4,526 4,554 4,419 4,427 5,919 Net Revenues 171,524 179,446 184,482 198,505 232,010 Motor Fuel Tax Apportionment (2) 41,600 42,831 44,732 46,250 46,960 Net Revenues Including Motor Fuel Apportionment 213,124 222,277 229,214 244,755 278,970

Refunding 2006 Bonds (3) 32,227 24,065 24,091 25,028 -- Refunding 2007 Bonds 5,620 5,618 5,620 5,616 -- Series 2011A Bonds 49,345 57,199 57,136 57,688 55,201 Series 2011B Bonds 8,151 8,455 8,490 7,008 6,120 Series 2017A Bonds ------17,766 Series 2017B Bonds ------5,564 Series 2017C Bonds ------407 Series 2017D Bonds ------11,797 Series 2017E Bonds ------2,408

Total Debt Service on Second Senior Bonds 95,343 95,337 95,337 95,340 99,263 Net Revenues Available after Debt Service $117,781 $126,940 $133,877 $149,415 $179,707 Reserve Maintenance Deposits $41,585 $47,075 $48,100 $48,293 $41,395 Reserve Fund Credit Facility (4) 1,432 1,432 1,174 1,174 1,176 Senior Lien D/S Coverages 2.20 x 2.30 x 2.38 x 2.54 x 2.78 x Total D/S Coverage 1.77 x 1.85 x 1.91 x 2.06 x 2.31 x Excess of Net Revenues over 105% of all Debt + Res. Maint. Deposits (1.00x) 1.20 x 1.21 x 1.23 x 1.33 x 1.58 x ______(1) O&M Expenses--also includes expenses related to the Variable Rate Indebtedness. (2) Motor Fuel Excise Tax Monies are available to the Authority for the purpose of making debt service payments as required. Future apportionments are projected by the Authority based upon historical information and assumptions of the Authority. All Motor Fuel Excise Taxes that are not required by the Authority to pay debt service are transferred to ODOT on a monthly basis. See “MOTOR FUEL EXCISE TAX” in the Official Statement. (3) 2006 Bonds included only Principal and Interest calculated at the fixed interest rate payable under the related interest rate swap agreements. The 2006 Bonds were redeemed and the related interest rate swap agreements terminated in 2017. (4) Reserve Account Loan amortized over the useful life (pursuant to the Trust Agreement), impacts debt ratios only. See “OUTSTANDING OBLIGATIONS OF THE AUTHORITY--Second Senior Bonds and Parity Indebtedness” in the Official Statement.

A-21 PROJECTED OPERATING RESULTS OF THE AUTHORITY

Total Debt Service on Second Senior Bonds, Net Revenues Available after Debt Service and coverages shown in the table below are estimates. The Authority’s independent certified public accountants provide no assurance and assume no responsibility for this prospective information; see the cautionary third paragraph on the first page of this Appendix A.

PROJECTED OPERATING RESULTS OF THE AUTHORITY Fiscal Year Ending December 31 ($ in thousands) 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Operating Revenue (1) Toll Revenue Existing System $317,432 $324,075 $329,565 $335,104 $339,840 $344,357 $348,720 $352,945 $357,050 $361,054 Toll Revenue Expanded 8,501 10,148 11,948 13,252 13,967 14,347 14,739 Total Toll Revenue 317,432 324,075 329,565 343,605 349,988 356,305 361,972 366,912 371,397 375,793 VPC/Miscellaneous Income/Interop 3,392 3,434 3,476 3,520 3,564 3,608 3,653 3,699 3,745 3,792 Concession Revenue 2,575 2,652 2,732 2,814 2,898 2,985 3,075 3,167 3,262 3,360 Total 323,399 330,161 335,773 349,939 356,450 362,898 368,700 373,778 378,404 382,945

O & M Expense (2) Existing 94,889 99,900 103,896 108,052 112,734 116,869 121,544 126,405 131,462 136,720 O&M - Expanded 3,873 3,921 4,078 4,241 4,411 4,587 4,770 Total 94,889 99,900 103,896 111,925 116,295 120,947 125,785 130,816 136,049 141,491

Net Revenues before Interest Income 228,510 230,261 231,877 238,014 240,155 241,952 242,915 242,962 242,356 241,455

Interest Income 4,560 4,628 4,698 4,768 4,840 4,912 4,986 5,061 5,137 5,214

Net Revenues 233,070 234,889 236,575 242,782 244,995 246,864 247,901 248,023 247,492 246,668

Motor Fuel Tax Apportionment (3) 47,648 48,363 49,088 49,824 50,572 51,330 52,100 52,882 53,675 54,480

Net Revenues Including Motor Fuel App 280,718 283,252 285,663 292,606 295,567 298,194 300,002 300,905 301,168 301,149 A

- Series 2011A Bonds 55,799 55,752 53,053 49,789 32,099 31,586 31,824 31,637 31,437 31,241 2

2 Series 2011B Bonds 2,080 2,080 8,255 7,055 2,925 1,566 1,566 1,566 1,566 1,566 Series 2017A Bonds 19,801 19,801 19,801 19,801 19,801 19,801 19,801 19,801 19,801 19,801 Series 2017 B (refunding 2007) 5,562 4,441 5,556 4,842 0 0 0 0 0 0 Series 2017C Bonds 14,649 14,649 14,649 14,649 14,649 14,649 14,649 14,649 14,649 14,649 Series 2017D Bonds 23,994 23,982 17,353 22,746 44,285 43,698 44,235 44,144 44,052 43,964 Series 2017E Bonds 4,331 4,331 4,331 4,331 8,701 11,006 10,069 10,176 10,292 10,386 Series 2018A Bonds 2,553 15,070 15,070 15,070 15,070 15,070 15,070 15,070 15,070 15,070 Total Debt Service on Second Senior Bonds 128,770 140,108 138,069 138,283 137,531 137,377 137,214 137,043 136,867 136,677 Net Revenues Available after Debt Service $151,948 $143,144 $147,594 $154,323 $158,036 $160,818 $162,788 $163,862 $164,301 $164,472

Reserve Maintenance Deposits $39,169 $42,477 $38,965 $37,359 $39,227 $41,188 $43,248 $45,410 $47,681 $50,065

Reserve Fund Credit Facility (4) 1,405 1,404 1,405 1,402 1,404 1,404 1,406 1,401 1,404 1,404

Senior Lien D/S Coverages 2.16 x 2.00 x 2.05 x 2.10 x 2.13 x 2.15 x 2.17 x 2.18 x 2.18 x 2.18 x

Total D/S Coverage 1.79 x 1.66 x 1.70 x 1.74 x 1.76 x 1.78 x 1.79 x 1.79 x 1.79 x 1.79 x Excess of Net Revenues over 105% of all Debt + Res. Maint. Deposits(1.00x) 1.33 x 1.23 x 1.28 x 1.32 x 1.32 x 1.32 x 1.31 x 1.30 x 1.28 x 1.27 x

(1) Toll Revenue Projections provided by Investment Grade traffic studies performed by the Traffic Engineers. Projections include scheduled toll rate increases in 2018 and 2019 described under “Toll Revenues and Rates” above in this Appendix A. (2) Projected by Authority’s Consulting Engineers. (3) Motor Fuel Excise Tax Monies are available to the Authority for the purpose of making debt service payments as required. Future apportionments are projected by the Authority based upon historical information and assumptions of the Authority. All Motor Fuel Excise Taxes that are not required by the Authority to pay monthly pro-rata debt service are transferred to ODOT on a monthly basis. See “MOTOR FUEL EXCISE TAX” in the Official Statement. (4) Reserve Fund Loan amortized over the useful life (18 years pursuant to the Trust Agreement), impacts debt ratios only. See “OUTSTANDING OBLIGATIONS OF THE AUTHORITY—Second Senior Bonds and Parity Indebtedness” in the Official Statement for a description of Reserve Fund Loan. UNAUDITED INTERIM INFORMATION FOR THE SECOND QUARTER ENDED JUNE 30, 2018

The information contained under this caption has been extracted from the Oklahoma Turnpike Authority Report to Bondholders, Second Quarter 2018 which may be viewed in its entirety at https://www.pikepass.com/pdf/2018%202nd%20QTR%20BHR.pdf. Terms used herein have such meanings as are given to them in such report. All such information is unaudited.

With the two System-wide toll increases that became effective March 1, 2017, and January 3, 2018, respectively, net toll revenues for the second quarter of 2018 reported at $82.7 million, an increase of 5.0% when compared to the same period last year. These toll increases were approved for the purpose of funding the Driving Forward program. Overall, toll transactions for the second quarter remained flat at approximately 47.7 million. Passenger traffic remained consistent while heavy truck traffic reflected a 4.2% increase over the same period last year. Net toll revenue attributable to the interoperable agreements with the North Texas Tollway Authority (“NTTA”) and the Kansas Turnpike Authority (“KTA”) was approximately 3.5% for the second quarter.

Year-to-date revenue fund operating expenses were $42.1 million, operating at 11.2% under the annualized 2018 operating budget. Senior and total debt service ratios remain in compliance with the minimum trust requirements. Total debt service coverage exceeds minimum trust requirements on a rolling twelve-month basis by approximately 46%.

The Driving Forward program continues to progress, with numerous projects now in construction and design. The project to widen the Turner Turnpike between Kellyville and Sapulpa is well underway with numerous construction activities ongoing in the nearly 16-mile long construction zone. A major milestone will be achieved in the third quarter, with the substantial completion of 3.5 miles of widening near Kellyville. Other portions of the project are progressing well, as traffic has switched to widened sections within the work zone. The Eastern Oklahoma County Turnpike broke ground in December 2017, beginning with the interchange at the Turner Turnpike. Since that time, two additional interchanges, three grading projects and seven bridge packages have been awarded. Construction was initiated on four projects and other projects are anticipated to begin along the 22-mile corridor in the coming months. Construction also commenced on the John Kilpatrick Turnpike Southwest Extension in January with the I-40 interchange project. Three other projects along the corridor began recently placing the 6-mile segment entirely under construction from I-40 to SH-152.

After many years of discussion between the Authority, the City of Tulsa, Tulsa County, the Indian Nations Council of Governments (“INCOG”), the Oklahoma Department of Transportation (“ODOT”) and the Federal Highway Administration (“FHWA”) regarding the construction of the Gilcrease Expressway bridge over the Arkansas River in Tulsa, an innovative governmental partnership has been conceived to construct a more complete and operationally efficient toll road segment. The Authority will leverage work that has been accomplished to date in the corridor and resources made available through the partnership to deliver and subsequently operate a connection between Interstate 44 and US Highway 412, including the bridge over the river as a toll facility. As such, a Request for Information (RFI) was issued in the first quarter 2018 to known vendors and financial institutions seeking input related to the financial benefits and project delivery opportunities that might be presented by a form of public-private partnership. The RFI responses were used to develop a procurement plan, which allowed for the issuance of a Request for Qualification (RFQ) in June. The RFQ responses were evaluated in September and a Request for Proposal is expected to be issued to shortlisted firms in the fourth quarter of 2018.

A-23 The Engineering Division is actively engaged on the 2018-2022 Capital Plan projects. Notices to proceed with design were issued for ten new Capital Plan projects, and engineering reports are being submitted.

During the second quarter, the Controller Division staff finalized the preparation of the 2017 Comprehensive Annual Financial Report (CAFR) and distributed the report in compliance with the trust- required deadlines. This 2017 CAFR was submitted to the Government Finance Officers Association of the United States and Canada (GFOA) to apply for the Certificate of Achievement Award for Excellence in Financial Reporting. Members of the Controller Division management staff attended the annual conference of the GFOA in May.

In the second quarter, the Toll Operations Division completed the installations for new lane controller hardware and software for toll collection; this completed the lane controller conversion to the new hardware and software. Design and test plan review were completed in preparation for the system violation enforcement camera upgrade. For this upgrade, installation of cameras at the Britton mainline plaza on the John Kilpatrick Turnpike was completed, while testing commenced at the Will Rogers mainline toll plaza. In addition, safety training was completed for the toll plaza representatives. The focus was on storm weather safety and inattentive driver awareness.

In the second quarter, the Maintenance Division, supplementing labor through supervised inmates and contractors, completed various Oklahoma Turnpike System repairs. With combined efforts, approximately 403,000 linear feet of joints and cracks were sealed and 65,000 square yards of drainage repairs were completed. The Maintenance Division also performed brush and weed control and maintained approximately 23,000 acres of vegetation management.

As of June 30, 2018, the total number of active PIKEPASS tags exceeded 1.8 million, an increase of 3.6% when compared to the same time last year. PIKEPASS patrons continued to take advantage of the PIKEPASS volume discount program with approximately $1.4 million in discounts issued to frequent patrons of the Oklahoma Turnpike System during the second quarter of 2018. The PIKEPASS Division continued to assist customers with questions regarding NTTA and KTA interoperable transactions, PlatePay issues and other general information.

Oklahoma Highway Patrol troopers continued their efforts to achieve safe patron travel through several enforcement programs. In the second quarter of 2018, OHP troopers made approximately 29,000 violator contacts and assisted over 5,000 motorists.

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A-24 A-25 [Remainder of this page intentionally left blank]

A-26 A-27 [This Page Intentionally Left Blank] APPENDIX B

AUDITED FINANCIAL STATEMENTS OF THE AUTHORITY FOR THE FISCAL YEARS ENDED DECEMBER 31, 2017 AND 2016

EXCERPTS FROM THE OKLAHOMA TURNPIKE AUTHORITY COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEARS ENDED DECEMBER 31, 2017 AND 2016

(Note: Because Appendix B was extracted from the Authority’s Comprehensive Annual Financial Report, the page numbers correspond to where the information appears in that document. The entire Comprehensive Annual Financial Report may be viewed at https://www.pikepass.com/pdf/OTA%20CAFR%202017.pdf.) [This Page Intentionally Left Blank]

FINANCIAL SECTION FINANCIAL SECTION

managemenT’s discUssion and analYsis, Years ended december 31, 2017 and 2016

This section of the Oklahoma Turnpike Authority’s (OTA) annual The monies held in restricted cash and investment accounts financial report presents management’s discussion and analysis primarily comprise the Reserve Maintenance Fund, the PIKEPASS of the OTA’s financial performance during the fiscal years that Prepayment Fund, debt service accounts and the Construction ended December 31, 2017 and 2016. Please read it in conjunction Funds. A monthly transfer is made to the Reserve Maintenance with the transmittal letter in the Introductory Section of this Fund from revenues to fund budgeted Capital Plan projects. The report and the OTA’s financial statements, as a whole. required Reserve Maintenance Fund deposit is established by the Consulting Engineer during the annual review and evaluation OVERVIEW OF THE FINANCIAL STATEMENTS of the Turnpike System. Residual funds not needed for other required purposes transfer to the General Fund monthly to be The financial section of this annual report consists of three utilized for programmed projects. Projects relate to the five-year parts: management’s discussion and analysis, the basic financial Capital Plan (the Capital Plan) for Turnpike System maintenance statements with the notes to the financial statements and and rehabilitation, determined annually through the budgeting other supplementary information. The financial statements process. provide both long-term and short-term information about the OTA’s overall financial status. The financial statements also The 2018 portion of the Capital Plan calls for spending include notes that explain and provide more detailed data for approximately $99.2 million for capital projects. Approximately certain items. The statements are followed by a section of other 73.4% of this funding is allocated to road and bridge projects, supplementary information that further explains and supports building projects, and maintenance equipment and vehicles the information in the financial statements. purchases. The remaining approximate 26.6% is allocated to various other projects. The 2018 portion of the Capital Plan will The OTA’s financial statements are prepared in conformity with be funded by current resources and toll revenues. accounting principles generally accepted in the United States of America (GAAP) as applied to government units on an accrual On October 29, 2015, Governor Mary Fallin announced plans basis. Under this basis, revenues are recognized in the period in for “Driving Forward: Investing in Oklahoma’s Future,” a multi- which they are earned, expenses are recognized in the period in million dollar turnpike expansion and improvement plan to which they are incurred and depreciation of assets is recognized be financed through a series of bond issues. In 2017 the OTA in the Statements of Revenues, Expenses, and Changes in Net issued approximately $768.9 million in bonds to fund the Driving Position. The ‘Changes in Net Position’ component depicts Forward Construction Funds. Governor Mary Fallin stated “Driving OTA’s total operating revenues less expenses. Operating Forward is about ensuring safe travel, relieving congestion to revenues include toll transactions and rental fees received from shorten commutes and sustaining economic development for concessionaires operating on the Turnpike System. Expenses years to come.” This program is a continuation of OTA’s mission are closely monitored by division management. All assets and to provide customers with a choice of a safe, convenient, liabilities associated with the operation of the Authority are efficient, user-funded transportation network focusing on fiscal included in the Statements of Net Position. responsibility and promoting economic development. The six major projects include: reconstruction projects for the Muskogee The OTA’s Trust Agreement defines the flow of funds and and H.E. Bailey Turnpikes involving pavement reconstruction and establishes various unrestricted and restricted accounts for the toll plaza reconstruction, pavement reconstruction and capacity OTA. These accounts are referred to as “Funds” for discussion expansion for the Turner Turnpike, a southwest extension for the purposes but are consolidated for the purposes of enterprise John Kilpatrick Turnpike, a new alignment from I-40 to the Turner fund financial statement presentation. The Revenue Fund monies Turnpike referred to as the Eastern Oklahoma County Turnpike provide for the general operations of the Turnpike System; this and a new west extension of the Gilcrease Expressway. fund is directly impacted by fluctuations in operating results. Net Position by Component (Presented in Thousands of Dollars)

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0 2017 2016 2015 Restricted for reserve maintenance Net investment investment in capital in capital assets assets Restricted for fordebt debt service service Restricted for forreserve reserve maintenance maintenance Unrestricted

14 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

Table A-1: Net Position (in millions of dollars) 2017 2016 2015

Current and other assets $ 908.2 $ 240.6 $ 254.9 Noncurrent restricted assets 173.4 140.5 144.0 Capital assets 1,417.9 1,287.6 1,205.0 Total assets 2,499.5 1,668.7 1,603.9

Total deferred outflows 102.0 114.3 124.2

Current liabilities 157.5 199.0 135.3 Noncurrent and other liabilities 1,759.4 992.0 1,056.1 Total liabilities 1,916.9 1,191.0 1,191.4

Total deferred inflows 1.1 4.0 5.8

Net Position: Net investment in capital assets 341.7 341.5 264.3 Restricted 227.1 176.9 201.4 Unrestricted 114.6 69.6 65.2 Total net position $ 683.4 $ 588.0 $ 530.9

As of December 31, 2017, the Driving Forward program continues as compared to $588.0 million and $530.9 million at December to progress, with numerous projects now in construction and 31, 2016 and 2015, respectively. design. The project to widen the Turner Turnpike between Kellyville and Sapulpa is well underway with numerous A significant portion of the current year’s $95.4 million increase construction activities ongoing in the nearly sixteen-mile in total position can be identified in the ‘unrestricted’ category, long construction zone. Construction also commenced on which has increased $45.0 million when compared to December the John Kilpatrick Turnpike Extension with the first stages of 31, 2016; an increase of $49.4 million is also noted when compared the I-40 Interchange project initiated. The Eastern Oklahoma to December 31, 2015. This category includes current and other County Turnpike broke ground in December, beginning with assets less current liabilities. The main contributing factor to the interchange at the Turner Turnpike. After inclusion of the this increase was the systemwide 12.0% toll increase effective Gilcrease Expressway bridge over the Arkansas River in Tulsa as March 1, 2017, increasing unrestricted cash, cash equivalents a component of the Driving Forward program, and many years and investments $35.0 million. Monies held in the Revenue and of discussion between the Authority, the City of Tulsa, Tulsa General Funds totaled approximately $110.4 million at December County, the Indian Nations Council of Governments (“INCOG”), 31, 2017, as compared to $75.4 million and $68.7 million at the the Oklahoma Department of Transportation (“ODOT”) and close of 2016 and 2015, respectively. This fluctuation is also the Federal Highway Administration (“FHWA”), an innovative impacted by the changes in accounts receivable and accounts governmental partnership has been conceived to construct a payable and accrued expenses associated with the joint more complete and operationally efficient segment. The OTA construction projects the OTA has with the ODOT; these joint will leverage work that has been accomplished to date in the projects are funded through its General Fund. corridor and resources made available through the partnership to deliver and subsequently operate a connection between The OTA has steadily demonstrated its commitment to Interstate 44 and US Highway 412, including the bridge over the preservation of and investment in the Turnpike System river, as a toll facility. As such, a Request for Information (RFI) was through its funding of the Reserve Maintenance and General issued in the first quarter 2018 to known vendors and financial Funds through revenues, and when necessary the issuance of institutions seeking input related to the financial benefits and Second Senior Revenue Bonds, to fund certain improvement project delivery opportunities that might be presented in the projects. Reserve Maintenance deposits occur monthly to form of public-private partnership. meet the funding requirements established yearly by the OTA’s Consulting Engineer. These monies must be utilized for capital FINANCIAL ANALYSIS improvements on the Turnpike System. Project outflows do not always occur in the same year the deposits are made. The OTA Net Position also funds certain capital projects from its General Fund account, which is an unrestricted fund. As noted previously, residual The Statements of Net Position report the OTA’s net position and funds not needed for other required purposes are transferred how it has changed. Net position is the difference between the to the General Fund monthly. The General Fund monies are OTA’s assets and deferred outflows and its liabilities and deferred then utilized for programmed projects, determined annually inflows. Total net position is one way to measure the OTA’s through the budgeting process. Transfers made to the General financial health or position. Over time, increases or decreases in Fund for 2017 and 2016 were approximately $69.6 million and net position can serve as one indicator of whether the financial $48.9 million, respectively. position is improving or deteriorating. As shown in Table A-1, the OTA’s net position continues to increase. The OTA’s total net position at December 31, 2017, was approximately $683.4 million,

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A second factor contributing to the $95.4 million increase in total purchases, construction work in progress and capitalized interest. net position were the Series 2017 Bond issuances. The ‘Restricted’ This category is calculated as the investment in capital assets category of OTA’s total net position increased approximately less related debt. $50.2 million, which is composed of the restricted for debt service and reserve maintenance components. The ‘Restricted’ category At December 31, 2017, the Statement of Net Position increase is the result of the unspent proceeds from the 2017A&C reflected deferred outflows and inflows related to pensions of Bonds, programmed for the Driving Forward program. Transfers approximately $4.8 million and $1.1 million, respectively, and a made to the Reserve Maintenance Fund were approximately net pension liability of approximately $6.5 million. On July 1, 2016 $41.4 million, $48.3 million and $48.1 million in 2017, 2016 and the Oklahoma Public Employees Retirement Plan (the OPERS) 2015, respectively. To assist with providing interim financing implemented Governmental Accounting Standards Board (GASB) for identified Turnpike projects, in June 2016, the OTA entered Statement No. 74, “Financial Reporting for Postemployment into a $90.0 million revolving credit agreement with Wells Fargo Benefit Plans Other Than Pensions” (GASB 74). GASB 74 presents Bank, N.A. At December 31, 2016, the OTA had $54.7 million improved information about postemployment benefit plans outstanding on the facility. This debt was retired in February 2017 other than pensions (OPEB). The OPERS administers a health with the issuance of the Series 2017A Bonds. With the issuance insurance subsidy plan, which is considered OPEB in accordance of the Series 2017D Bonds, the variable rate series 2006BEF with the provisions of GASB 74. As a result of the implementation bonds were refunded resulting in the removal of the derivative of GASB 74, the beginning balance of the Plan’s net pension instrument liability and related hedge. liability was restated. The restatement did not have a current year impact on the OTA as implementation of GASB 75, “Accounting While the ‘Net investment in capital assets’ category increased and Financial the reporting for Postemployment Benefits other slightly when compared to December 31, 2016, it did increase than Pensions,” is planned for 2018 as required. $77.4 million when compared to December 31, 2015. These increases in ‘capital assets’ are related to the various activities associated with the Driving Forward projects, including land

Table A-2: Changes in Net Position (in millions of dollars)

2017 2016 2015 Operating revenues: Toll Revenue $ 300.8 $ 265.0 $ 256.1 Concession revenue 2.4 2.3 1.8 Total operating revenues 303.2 267.3 257.9 Operating expenses and depreciation: Toll Operations 19.5 19.3 18.2 Turnpike Maintenance 21.6 20.9 21.9 Engineering 3.2 4.6 4.7 Construction 0.6 N/A N/A Highway Patrol 18.6 20.3 15.4 PIKEPASS Customer Service 18.6 15.1 14.5 General Administration 1.7 1.7 1.6 Information technology 6.2 5.5 4.3 Controller 1.3 1.1 .9 Finance and Revenue 7.0 2.2 1.2 Executive 3.6 3.3 2.8 Authority - - - Depreciation and amortization 87.0 87.9 86.0 Total operating expenses and depreciation 188.9 181.9 171.5 Operating income 114.3 85.4 86.4 Net non-operating (expenses) (18.9) (28.3) (37.5) Change in net position 95.4 57.1 48.9 Total net position, beginning of the year 588.0 530.9 482.0 Total net position, end of the year $ 683.4 $ 588.0 $ 530.9

Changes in Net Position As depicted in Table A-2, the OTA’s total operating revenues at below 183.9 million, a slight 0.7% decline when compared to December 31, 2017, were approximately $303.2 million, a 13.4% 2016 transactions of 185.2 million, but a 3.7% increase when and a 17.6% increase when compared to revenues of $267.3 compared to 2015 transactions of 177.3 million. With the million and $257.9 million for 2016 and 2015, respectively. The effective toll rate increase in early 2017, a decline in transactions notable increase in total operating revenues in the current year was anticipated over the prior year growth. In 2016, transactions resulted from the March 1, 2017, systemwide toll increase of across the Turnpike System increased as a result of lower fuel 12.0%. Year-to-date revenues reported just over 2017 projections prices, the continued impact of opening the urban turnpikes’ of $298.1 million. Total toll transactions for 2017 reported just widening projects in 2014 and interoperability agreements.

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The OTA Is interoperable with the North Texas Tollway Authority PIKEPASS Customer Service operating expenses for 2017 (NTTA) and the Kansas Turnpike Authority (KTA). Interoperability increased to approximately $18.6 million when compared to allows customers with a PIKEPASS transponder to travel on $15.1 million and $14.5 million for 2016 and 2015, respectively. systems in the Dallas area of Texas or on the Kansas Turnpike A substantial portion of this increase is related to the January System. Conversely, customers with eligible transponders implementation of the all electronic tolling process PlatePay on from the NTTA or the KTA can travel the OTA Turnpike System. the Creek Turnpike and the associated back-office processing for In May 2017, these interoperable transactions began to be this new collection method. Also, included in this increase are processed through the implementation of the Central United credit card processing fees from credit card and electronic funds States Interoperability HUB. Total revenues derived from transfer activity in 2017. A factor relating to this increase is the interoperability for 2017 comprised approximately $9.7 million, implementation of interoperability. As customers travel more or 3.2%, of the $300.8 million of toll revenues; interoperable in other locations utilizing their PIKEPASS tag, it necessitates the transactions totaled 3.9 million, or 2.1%, of 183.9 million replenishment of the PIKEPASS account balance more frequently. total toll transactions. As the number of PIKEPASS customers The effect of the increases associated with interoperability were using the Turnpike System grows, there is a similar impact on noted in previous years’ increases. interoperability. Interoperable transactions have reflected a steady growth rate since the late 2014 original implementation, Finance and Revenue operating expenses reflected a significant representing $7.3 million and $5.8 million of total toll revenues increase over the prior year of approximately $4.8 million. in 2016 and 2015, respectively. Generally accepted accounting principles (GAAP) now require bond issuance costs to be recorded in the statement of revenues, The total change in net position for 2017 was $95.4 million expenses and changes in net position rather than capitalized. compared to $57.1 million and $48.9 million in 2016 and 2015, In accordance with GAAP, approximately $5.7 million in bond respectively. The current year increase in net position is primarily issuance costs for the Series 2017A-E Bonds have been reported the result of the March 1, 2017 toll rate increase which provided as operating expenses this year. These increases were offset an additional $35.8 million over the prior year. Other revenues by the decrease in professional services incurred in 2016 for are a component of net non-operating expenses, and have the various investment grade studies conducted by the OTA’s increased collectively over the prior two years by approximately Consulting Traffic Engineer related to the various Driving Forward $5.4 million. The increase in other revenues is partially the result projects and the scheduled toll rate increase. of the implementation of PlatePay, the OTA’s single location of all electronic tolling at the Peoria/Elm location on the Creek For enhanced functional reporting purposes, the Construction Turnpike. This location became operational in early 2017. For this Division function was separated from the Engineering Division sole location, toll gates are cashless; if a traveler does not have in early 2017 and is individually reflected for financial statement a PIKEPASS, the vehicle’s license plate is read electronically and purposes. The decrease in overall expenses for these areas an invoice sent to the registered owner. While the toll revenues relates to the 2016 expenses incurred for various Driving Forward earned through this location are classified as such, the associated feasibility studies and fewer emergency bridge repairs, which are miscellaneous violation and administrative fees associated not capitalizable, in the current year. with this new collection mode are reflected as non-operating. Additionally, fees earned through processing interoperable CAPITAL ASSET AND DEBT ADMINISTRATION transactions for the OTA’s partners and violation processing across the System contribute to the increase in other non- Capital Assets operating revenues. The decrease in interest expense related to the portion of interest expense capitalized in accordance with The OTA has invested approximately $3,203.3 million and GASB 62 also positively impacted net position. $2,992.1 million in capital assets as of December 31, 2017 and 2016, respectively. The primary components of depreciable The change in net position was also impacted by the increase capital assets include ‘Roads and bridges’ and ‘Improvements’; in year-to-date 2017 operating expenses of $101.9 million non-depreciable components include ‘CWIP’ and ‘Land.’ In 2017, as compared to total operating expenses for 2016 and 2015, accumulated depreciation and amortization on capital assets respectively. Highway Patrol operating expenses have decreased increased to $1,785.3 million, a 4.7% increase as compared to approximately $1.7 million from the prior year. Operating the 2016 balance of $1,704.5 million. This is the result of the expenses in the prior year included costs associated with the capitalization of several projects in the ‘Roads and bridges,’ trooper cadet school funded by the OTA in order to increase the ‘Improvements’ and ‘Buildings’ categories. At December 31, number of troopers assigned to the Turnpike System. The 2016 2017 and 2016, net capital assets were $1,417.9 million and cadet school resulted in approximately 30 additional troopers $1,288.0, an increase of 10.1%. When comparing end of year being assigned to the OTA in the fourth quarter of 2016, with 2017 to December 31, 2015, net capital assets increased 17.7%. corresponding overall increases in associated costs; these Net capital assets at end of year 2015 were $1,205.0 (see Table increases are notable when comparing expenses to the prior two A-3). Capital assets are typically planned as components of the years. The additional costs to operate at this staffing level, was Capital Plan, and both 2017 and 2016 also included planning for offset by not funding a cadet school in 2017. In order to maintain capital assets associated with the Driving Forward program. At trooper staffing levels assigned to the turnpikes, the OTA plans December 31, 2017, numerous projects were in progress across to participate in funding for another cadet school in 2018.

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Table A-3: Capital Assets (net of depreciation, in millions of dollars)

Total net capital assets

Capitalized Interest

Equipment

Buildings 2015

2016 Land 2017

Improvements

Construction work in progress

Roads and bridges

0 200 400 600 800 1,000 1,200 1,400 1,600

the Turnpike System, funded as appropriate for each project The Authority also allocated and accumulated capitalized by the Reserve Maintenance, General and Construction Funds. interest for constructed assets. When the project is closed, the The Series 2017A&C Bonds (discussed below) established the capitalized interest associated with the project is also capitalized. current year Construction Funds which are funding the related As a result of the capitalization of qualifying projects, the projects for the Driving Forward program. The increases in non- amortization expense associated with ‘Capitalized interest’ was depreciable capital assets result from the additions associated $4.7 million, $4.6 million, and $4.5 million, for 2017, 2016, and with this program. Additionally, capitalized interest associated 2015, respectively. For additional information regarding the with constructed assets is accumulated with eligible projects OTA’s capital assets, please see the disclosures in the notes to the and capitalized as applicable. financial statements on pages 28 and 36 of this report.

The largest increase in net capital assets is reflected in CWIP, Capital assets were also significantly affected by continued increasing to $308.2 million, or 67.5%, over the 2016 total of purchases of additional right-of-way in 2017; the OTA began $184.0 million and the 2015 total of $64.8 million. The OTA is purchasing property in 2016 to plan for the construction of the improving maintenance facilities across the Turnpike System, Driving Froward projects. By the close of 2017, the ‘Land’ category some of which are jointly shared with the operations of the had increased approximately $37.6 million over 2016. In 2016, Highway Patrol, as well as several pavement reconstruction and land purchases exceeded 2015 balances by approximately $21.1 rehabilitation and bridge replacement projects throughout the million. Accordingly, in total, since 2015, ‘Land’ values have Turnpike System. Additionally, the Driving Forward program increased approximately $58.7 million. Additional acquisitions consisted of $181.4 million with toll plaza modernization and are planned through 2018 to secure all necessary parcels for the reconstruction projects progressing on the Muskogee and planned construction. H.E. Bailey Turnpikes, and capacity improvements and new expansions in progress on the Turner, John Kilpatrick and Eastern Debt Administration Oklahoma County Turnpikes. Future projects will also include additions to the new Gilcrease Expressway. Turnpike bond sales must be approved by the Council of Bond Oversight and must comply with rules and regulations of the Approximately $49.7 million in capital projects were transferred United States Treasury Department and the United States from CWIP to other asset categories. Approximately $7.5 million Securities and Exchange Commission. The OTA’s noncurrent of this transfer increased the ‘Road and bridges’ category. A long-term debt for 2017 included revenue bonds payable and significant portion of this results from the reconstruction a payable to the ODOT; in 2016, the OTA also had a derivative of bridges on the Cimarron and H.E. Bailey Turnpikes. In the instrument liability. At December 31, 2017, the OTA had ‘Improvements’ category, approximately $33.6 million in projects approximately $1,581.3 million in revenue bonds outstanding. At were capitalized from CWIP. A significant portion of this increase December 31, 2017, the variable rate bonds had been defeased. was the result of pavement rehabilitation on the Turner and Will All of the OTA’s bonds are fixed rate bonds, insured and rated Aa3 Rogers Turnpikes. These ‘Improvements’ additions were offset by by Moody’s Investors Service (Moody’s), and AA- by both Fitch annual depreciation of $37.7 million in replaced infrastructure. Ratings (Fitch) and Standard and Poor’s Rating Service (S&P) with a stable rating outlook. The payable to the ODOT at December In the ‘Roads and bridges’ category, in 2015, additions of $9.6 31, 2017 and 2016 was approximately $53.7 million and $53.3 million were capitalized, $8.6 million of which is the Indian Nation million, respectively. road reconstruction. For years 2017 to 2015, annual depreciation of $34.9 million, $34.3 million and $34.0 million, respectively, offset the previous years’ additions.

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Table A-4: Schedule of Outstanding Bonds 2017 2016 2015 2nd Senior Refunding Revenue Bonds - Series 2006B $ - $ 98,150,000 $ 102,235,000 2nd Senior Refunding Revenue Bonds - Series 2006E - 98,150,000 102,235,000 2nd Senior Refunding Revenue Bonds - Series 2006F - 98,150,000 102,235,000 2nd Senior Refunding Revenue Bonds - Series 2007A - 28,980,000 33,225,000 2nd Senior Refunding Revenue Bonds - Series 2011A 362,635,000 401,055,000 437,180,000 2nd Senior Revenue Bonds - Series 2011B 54,325,000 155,860,000 157,285,000 2nd Senior Revenue Bonds - Series 2017A 456,070,000 - - 2nd Senior Refunding Revenue Bonds - Series 2017B 23,930,000 - - 2nd Senior Revenue Bonds - Series 2017C 312,840,000 - - 2nd Senior Refunding Revenue Bonds - Series 2017D 275,680,000 - - 2nd Senior Refunding Revenue Bonds - Series 2017E 95,835,000 - - Total Outstanding Bonds $ 1,581,315,000 $ 880,345,000 $ 934,395,000

On February 8, 2017, the OTA closed on the delivery of $456.1 Proceeds received through these borrowings were deposited million in Series 2017A Second Senior Revenue Bonds and to the 2016A Construction Fund. On February 9, 2017, with the $23.9 million in Series 2017B Second Senior Refunding Revenue proceeds of the 2017A Bonds, the Wells Fargo Line of Credit of Bonds. The Series 2017A&B Bonds were issued to finance a $54.7 million was retired. portion of the capital costs of certain Turnpike projects and improvements and to refund the Series 2007A bonds. These For more detailed information on the OTA’s long-term debt bonds were structured as tax-exempt fixed rate “AA-” bonds. The activity, please refer to the disclosures in the notes to the financial net present value savings recognized through the refunding was statements on pages 37-41 of this report. approximately $1.5 million. The OTA’s total all-in-cost of capital for this transaction was just under 4.0%. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

On December 21, 2017, the OTA closed on the delivery of $312.8 According to the “Oklahoma Economic Report,” a publication million in Series 2017C Second Senior Revenue Bonds, $275.7 of the Office of the State Treasurer, 2017 calendar year gross million in Series 2017D and $95.8 million in Series 2017E Second receipts for the State of approximately $11.5 billion increased Senior Refunding Revenue Bonds. The Series 2017CDE Bonds approximately $667.6 million as compared to the previous were issued to finance a portion of the capital costs of certain calendar year. This increase was a positive contrast to the two Turnpike projects and improvements, to refund the Series previous consecutive calendar years of contraction. For the 2016 2006BEF Bonds and terminate the associated 2006 Swaps and calendar year, gross receipts decreased 3% when compared to partially refund the Series 2011B Bonds. These bonds were to the previous calendar year. Although the previous year did structured as tax-exempt fixed rate “AA-” bonds. The combined show a contraction, 2017 showed across-the-board growth, with net present value savings recognized through the refunding was an encouraging trend line. With the rate of increase generally approximately $9.4 million. The OTA’s total all-in-cost of capital trending higher, monthly receipts during the calendar year for this transaction was just over 3.75%. exceeded the same month of the prior year in all but one month. For the calendar year, growth ranged from 53.4% in The OTA has other long-term debt to fund a portion of the gross production taxes to 2.6% in combined individual and revenue bond reserve requirement related to the second senior corporate income tax receipts. The State will have approximately bonds. In conjunction with the terms of the loan agreement $360.0 million more to appropriate this year. In fact, if revenue with U.S. Bank, the proceeds from this transaction are invested collections are strong through June 2018, Oklahoma may in a certificate of deposit. The loan was amended and restated not have a budget deficit next year. Since the OTA does not with similar terms. On December 1, 2017, the maximum annual receive appropriations, the OTA is not directly affected by these debt service requirements were such that only $15.0 million was fluctuations. The state unemployment rate for December 2017 currently necessary to satisfy reserve requirements. Interest paid was 4.1%, consistent with the national rate and with continued in 2017 on this loan was under $0.3 million. improvement expected.

In 2016, the Authority executed a supplemental agreement to In view of realized and expected labor market conditions and its prevailing Trust Agreement, dated February, 1, 1989, and as inflation, the Federal Open Market Committee (FOMC) over the amended with supplements thereto, with Bank of Oklahoma, N.A. course of 2017 decided to maintain the federal funds rate at 1 as Trustee. This supplement authorized the issuance of a Second 1/4 to 1 1/2 percent. As a result of what has become known Senior Revenue Bond Series 2016A in the principal amount not as the Great Recession, the federal funds rate was held near to exceed $90.0 million. The unregistered Series 2016A Bond was zero for a seven year period in order to stimulate and sustain issued as a single bond to Wells Fargo Bank, N.A. (Wells Fargo) economic recovery. According to the FOMC statement released for the sole purpose of securing the payment obligations of the by the Federal Reserve January 31, 2018, information received Authority under the revolving credit agreement the Authority since December indicates that the labor market has continued entered into with Wells Fargo on June 1, 2016, and as amended, to strengthen, and economic activity has been rising at a solid to provide interim financing for identified Turnpike projects.

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rate. Gains in employment, household spending, and business fixed investment have been solid, and the unemployment rate has stayed low. On a 12-month basis, both overall inflation and inflation for items other than food and energy have continued to run below 2.0%. The December 2017 unemployment rate of 4.1% marks one of the lowest levels experienced within the past 20 years and are below pre-recession levels.

As noted previously, total toll transactions for 2017 reported just above 183.9 million, a slight decrease of 0.7% when compared to 2016 transactions of 185.2 million. Flat traffic growth was anticipated by the OTA’s traffic and revenue consultants, for the year as a resulting factor from the 12.0% toll increase. Although total traffic remained flat, heavy truck traffic increased by 5.5%. When comparing total traffic of 2017 to 2015, the OTA has experienced an overall increase of 3.7% due to the combination of dropping fuel prices and increased traffic on the urban widening projects during 2016. Year-to-date net toll revenues for 2017 were approximately $300.8 million, an increase of 13.5% when compared to the previous year of $265.1 million and a 17.5% increase when compared to 2015 net toll revenues. The 2017 net toll revenues exceeded budgeted projections by 0.9%. In 2018, toll revenues are projected to exceed $310.5 million, receiving a boost from a system wide toll increase of 2.5% which became effective January 3, 2018, following the March 1, 2017 toll increase of 12%. The OTA will continue to closely monitor and adjust revenue expectations and expenses as deemed necessary.

With these economic conditions in mind, the OTA’s 2018 Annual Budget, adopted by the Authority in December, 2017, includes approximately $94.9 million for the Operating and Maintenance budget and $99.2 million for capital projects funded through the Reserve Maintenance Fund and General Fund budgets. The OTA’s 2018 Annual Budget reflects the Authority’s commitment to patron safety and responsiveness to both current economic conditions and patron expectations.

CONTACTING THE OTA’S FINANCIAL MANAGEMENT

This financial report is designed to provide OTA’s bondholders, patrons and other interested parties with a general overview of the OTA’s finances and to demonstrate the OTA’s accountability for the money it receives. Questions about this report or requests for additional financial information should be addressed to the Oklahoma Turnpike Authority’s Controller Division, P. O. Box 11357, Oklahoma City, OK 73136-0357.

20 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

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sTaTemenTs oF neT posiTion, december 31, 2017 and 2016 Assets: 2017 2016 Current assets: Cash and cash equivalents-unrestricted (note 3) $ 98,422,132 $ 63,399,519 Investments-unrestricted (note 3) 11,947,420 12,012,900 Cash and cash equivalents-restricted (note 3) 720,910,996 81,844,153 Investments-restricted (note 3) 59,717,475 60,886,129 Accounts receivable (note 13) 7,912,029 12,252,874 Accrued interest receivable-unrestricted 46,875 46,875 Accrued interest receivable-restricted 238,526 1,720,539 Tag inventory 2,945,346 2,424,382 Materials inventory 5,687,091 5,379,030 Prepaid expenses 331,614 584,407 Total current assets 908,159,504 240,550,808 Noncurrent assets: Cash and cash equivalents-restricted (note 3) 53,374,767 16,880,680 Investments-restricted (note 3) 119,988,595 123,631,475 Total noncurrent cash, cash equivalents and investments 173,363,362 140,512,155 Capital assets: (note 4) Depreciable, net 887,741,183 919,211,373 Land 221,993,945 184,419,417 Construction work in progress 308,200,056 183,956,680 Net capital assets 1,417,935,184 1,287,587,470 Revenue bond issuance costs, net of accumulated amortization of $92,976 in 2016 (note 1) - 48,510 Total noncurrent assets 1,591,298,546 1,428,148,135 Total assets 2,499,458,050 1,668,698,943 Deferred outflows of resources: Unamortized net deferred debit on refunding (note 7) 97,209,151 55,464,000 Accumulated change in fair value of hedging deriative (note 7) - 47,597,366 Related to pensions (note 10) 4,753,522 11,274,058 Total deferred outflows of resources 101,962,673 114,335,424 Liabilities: Current liabilities: Accounts payable and accrued expenses (note 13) 15,561,938 21,654,488 Payable from restricted assets: Accounts payable and accrued expenses payable (note 13) 15,556,294 6,656,785 Accrued interest payable 21,154,834 15,007,200 Unearned revenue 32,193,665 29,149,803 Arbitrage rebate payable to U.S. Treasury - 274,748 Current long-term debt and short-term debt (note 7 and 8) 73,039,991 126,204,991 Total current liabilities 157,506,722 198,948,015 Noncurrent liabilities: Accounts payable and accrued expenses (note 13) 1,416,958 1,542,813 Net pension and opeb liability (note 10) 6,532,125 10,876,456 Long-term debt, net of unamortized net premiums of $174,455,775 and $54,914,380 in 2017 and 2016, respectively (note 7) 1,697,730,784 878,754,389 Payable to Department of Transportation (note 12) 53,705,872 53,262,639 Derivative instrument liability (note 7) - 47,597,366 Total noncurrent liabilities 1,759,385,739 992,033,663 Total liabilities 1,916,892,461 1,190,981,678 Deferred inflows of resources: Related to pensions (note 10) 1,133,782 4,030,068 Net position: Net investment in capital assets 341,664,009 341,524,651 Restricted for debt service 170,853,638 138,213,805 Restricted for reserve maintenance 56,302,038 38,684,010 Unrestricted 114,574,795 69,600,155 Total net position $ 683,394,480 $ 588,022,621 Commitments and contingencies (note 14 and 15) - - See accompanying notes to financial statements

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sTaTemenTs oF revenUes, expenses and changes in neT posiTion, Years ended december 31, 2017 and 2016

2017 2016

Operating revenues: Tolls $ 300,811,854 $ 265,063,859 Concessions 2,390,050 2,276,852 Total operating revenues 303,201,904 267,340,711 Operating expenses: Toll Operations 19,494,627 19,291,059 Turnpike Maintenance 21,622,724 20,844,404 Engineering 3,175,199 4,548,361 Construction 600,194 - Highway Patrol 18,616,184 20,255,789 PIKEPASS Customer Service 18,556,973 15,124,726 Administrative Services 1,742,820 1,718,202 Information Technology 6,208,333 5,540,830 Controller 1,289,977 1,117,163 Finance and Revenue 6,990,086 2,239,774 Executive 3,589,516 3,286,426 Authority 1,483 5,608 Total operating expenses before depreciation and amortization 101,888,116 93,972,342 Operating income before depreciation and amortization 201,313,788 173,368,369 Depreciation and amortization (86,981,592) (87,935,016) Operating income 114,332,196 85,433,353 Non-operating revenues (expenses): Interest earned on investments 5,918,876 4,427,143 Net increase in fair value of investments 2,307,197 1,185,737 Interest expense on revenue bonds outstanding (33,840,900) (39,195,542) Other revenues 6,654,490 5,246,331 Net non-operating expenses (18,960,337) (28,336,331) Change in net position 95,371,859 57,097,022

Total net position, beginning of the year 588,022,621 530,925,599 Total net position, end of the year $ 683,394,480 $ 588,022,621

See accompanying notes to financial statements

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sTaTemenTs oF cash Flows, Years ended december 31, 2017 and 2016

2017 2016 Cash flows from operating activities: Receipts from patrons $ 303,121,425 $ 267,377,965 Receipts from concessionaires 2,427,196 2,332,889 Receipts from other sources 5,821,425 4,672,829 Payments to service providers (59,357,305) (59,650,344) Payments to employees (34,249,681) (34,182,073) Net cash flows provided by operating activities 217,763,060 180,551,266 Cash flows from noncapital financing activities: Proceeds from motor fuel tax apportionment transfers 46,960,452 46,250,246 Payments to the Department of Transportation (ODOT) (46,960,452) (46,250,246) Interest earned and recorded as payable to the ODOT 443,233 351,173 Net cash flows provided by noncapital financing activities 443,233 351,173 Cash flows from capital and related financing activities: Issuance of long-term debt 1,164,355,000 - Transfer to escrow for defeased bonds (419,034,758) - Increase in excess escrow receivable (1,102) - Premiums on issuance of long-term debt 131,098,941 - Payments to terminate swap agreements (41,265,000) - Payment of bond issuance costs (5,659,447) - Increase in bond issuance costs payable 152,000 - Principal payment to retire long-term debt (56,505,000) (54,050,000) Revolving credit agreement (repayment) proceeds (54,700,000) 54,700,000 Interest paid on outstanding debt (46,471,034) (41,452,972) Acquisition and construction of capital assets (194,339,050) (164,203,239) Proceeds from disposal of capital assets 436,348 482,681 Net cash flows provided by (used in) capital and related financing activities 478,066,898 (204,523,530) Cash flows from investing activities: Purchase of investments (44,980,155) (68,938,679) Proceeds from sales and maturities of investments 52,164,366 140,263,930 Interest received 7,400,889 4,438,305 (Decrease) increase in arbitrage funds payable to U. S. Treasury (274,748) 56,273 Net cash flows provided by investing activities 14,310,352 75,819,829 Net increase in cash and cash equivalents 710,583,543 52,198,738

Cash and cash equivalents, January 1 (including $98,724,833 and $89,941,081 for 2017 and 2016 respectively, reported in restricted assets) 162,124,352 109,925,614

Cash and cash equivalents, December 31 (including $774,285,763 and $98,724,833 for 2017 and 2016 respectively, reported in restricted assets) $ 872,707,895 $ 162,124,352

See accompanying notes to financial statements (Continued)

24 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

sTaTemenTs oF cash Flows, Years ended december 31, 2017 and 2016

2017 2016 Reconciliation of operating income to net cash provided by operating activities: Operating income $ 114,332,196 $ 85,433,353 Adjustments to reconcile operating income to net cash provided by operating activities: Utilization of toll credits Depreciation and amortization 86,981,592 87,935,016 Payment of bond issuance costs 5,659,447 - Other non-operating revenue 6,977,506 4,956,831 Changes in assets and liabilities: (Increase) decrease in accounts receivable (1,970,051) 918 Decrease (increase) in prepaid expense 252,793 (27,858) (Increase) decrease in tag inventory (520,964) 165,081 (Increase) in materials inventory (308,061) (311,969) (Increase) in deferred outflow - pensions (3,172,187) (3,264,101) Increase net pension liability 2,452,106 2,061,101 Increase in accounts payable and accrued expenses 4,034,821 1,376,747 Increase in unearned revenue 3,043,862 2,226,147

Total adjustments 103,430,864 95,117,913 Net cash flows provided by operating activities $ 217,763,060 $ 180,551,266

Noncash investing, capital, and financing items: Gain on disposal of capital assets $ 323,016 $ 289,500 Unrealized gain on investments 2,282,955 1,085,935 Increase (decrease) in net deferred debit 41,745,151 (6,038,066) Increase in deferred outflows related to pensions 9,692,723 (3,037,304) (Decrease) increase in net pension liability related to pension deferrals (6,796,437) 4,813,779 (Decrease) in derivative instrument liability (47,597,366) (10,137,076) (Decrease) in deferred inflows related to pensions (2,896,286) (1,776,475)

See accompanying notes to financial statements

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noTes To Financial sTaTemenTs, Years ended december 31, 2017 and 2016

NOTE 1. NATURE OF THE ORGANIZATION AND B. BASIS OF ACCOUNTING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The operations of the Authority are accounted for as an The financial statements of the Oklahoma Turnpike Authority (the enterprise fund on an accrual basis in order to recognize Authority), have been prepared in conformity with accounting the flow of economic resources. Under this basis, revenues principles generally accepted in the United States of America are recognized in the period in which they are earned, (GAAP) as applied to government units. The Authority has expenses are recognized in the period in which they are adopted the pronouncements of the Governmental Accounting incurred, depreciation of assets is recognized, and all assets Standards Board (GASB), which is the accepted standard-setting and liabilities associated with the operation of the Authority body for establishing governmental accounting and financial are included in the Statements of Net Position. The principal reporting principles. The more significant of the Authority’s revenues of the Authority are toll revenues received from accounting policies are described below: patrons. Deposits of prepayments from PIKEPASS patrons A. REPORTING ENTITY are recorded as unearned revenue on the Statements of Net Position and are recognized as toll revenue when earned. The Oklahoma Turnpike Authority is an instrumentality of The Authority also recognizes as operating revenue the the State of Oklahoma (the State) and a body corporate and rental fees received from concessionaires from operating politic created by statute in 1947. The Authority is authorized leases on concession property. Operating expenses for to construct, maintain, repair, and operate turnpike projects the Authority include the costs of operating the turnpikes, at locations authorized by the Legislature of the State administrative expenses, and depreciation on capital assets. of Oklahoma and approved by the State Department of All revenues and expenses not meeting this definition are Transportation. The Authority receives its revenues from reported as non-operating revenues and expenses. turnpike tolls and a percentage of the turnpike concession sales. The Authority may issue Turnpike Revenue Bonds for The prevailing Trust Agreement dated February 1, 1989, the purpose of paying the costs of turnpike projects and and all supplements thereto (the Trust Agreement) require Turnpike Revenue Refunding Bonds for the purpose of that the Authority adopt generally accepted accounting refunding any bonds of the Authority then outstanding. principles for government entities, but it also requires that Turnpike Revenue Bonds are payable solely from the tolls certain funds and accounts be established and maintained. and other revenues of the Authority and do not constitute The Authority consolidates these funds and accounts for indebtedness of the State. the purpose of enterprise fund presentation in its external financial statements. The Authority is a component unit of the State and is C. CHANGES IN ACCOUNTING combined with other similar funds to comprise the Enterprise Funds of the State. The Authority’s governing The Authority adopted the provisions of Governmental body consists of the Governor (ex-officio) and six members Accounting Standards Board (GASB) Statement No. 72 “Fair who are appointed by the Governor, by and with the consent Value Measurement and Application” (GASB 72) for the year of the State Senate. The Governor may remove any member ended December 31, 2016. GASB 72 addresses accounting of the Authority, at any time, with or without cause. The and financial reporting issues related to fair value members are appointed to represent defined geographical measurements. Fair value is defined as the price that would districts and to serve without pay for terms of eight years. be received to sell an asset or paid to transfer a liability in The Authority has full control over all operations, but must an orderly transaction between market participants at the comply with certain bond indentures and Trust Agreements. measurement date. GASB 72 requires a government to The Authority employs an Executive Director to manage the use valuation techniques that are appropriate under the day-to-day operations. circumstances and for which sufficient data are available to measure fair value. GASB 72 also establishes a hierarchy of In evaluating how to define the Authority, for financial inputs to valuation techniques used to measure fair value. reporting purposes, management has determined that See Note 3 for information pertaining to GASB 72 as it relates there are no entities over which the Authority exercises to investments. See Note 7 for information pertaining to significant influence. Significant influence or accountability GASB 72 as it relates to the derivative instrument liability. is based primarily on operational or financial relationships No restatement was necessary for the implementation of with the Authority. Since the Authority does not exercise GASB 72. significant influence or accountability over other entities, it has no component units. D. BUDGET

Operating budgets are adopted on a modified accrual (non-GAAP) basis for Revenue Fund expenses, Reserve Maintenance Fund deposits and General Fund project expenses. Project-length financial plans are established

26 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

for all Reserve Maintenance and General Fund projects and expenses may be funded from these restricted accounts. for all new construction projects. All non-project related, When funds are not sufficiently available in these restricted unexpended budget amounts lapse at calendar year end. accounts, or if expenses do not meet these standards, Expenses are recognized in the period in which they are expenses are funded from unrestricted accounts. The funds paid rather than the period in which they are incurred for and accounts are established as follows: budgetary control purposes. Depreciation is not recognized • The “Senior Bond Interest and Sinking Accounts” are as an expense, but capital outlays are recognized as established as sinking funds for the payment of interest expenses for budgetary control purposes. These expenses are reclassified for the purpose of preparing financial reports and principal of the senior lien revenue bonds. in accordance with GAAP. See additional information regarding legal compliance for budgets in Note 2. • The “Subordinate Bond Interest and Sinking Accounts” are established as sinking funds for the payment of E. CASH, CASH EQUIVALENTS interest and principal of the subordinate lien revenue AND INTEREST bonds. Cash includes amounts in demand deposits. Cash equivalents include all highly liquid deposits with an • The “Senior Bond Reserve Accounts” are established for original maturity of three months or less when purchased. the purpose of paying interest and maturing principal These deposits are fully collateralized or covered by federal in the event that monies held in the “Senior Bond deposit insurance. The carrying amount of the investments Interest and Sinking Accounts” and “Turnpike Trust is fair value. The net change in fair value of investments is Fund,” and monies available in the “General Fund” and recorded on the Statements of Revenues, Expenses and “Reserve Maintenance Fund” are insufficient for such Changes in Net Position and includes the unrealized and realized gains and losses on investments. purpose.

F. INVENTORY • The “Subordinate Bond Reserve Account” is established for the purpose of paying interest and maturing Inventories of PIKEPASS transponders are valued at the principal in the event that monies held in the lower of cost or market using the first-in-first-out method. “Subordinate Bond Interest and Sinking Accounts” These inventories are charged to expense during the and “Turnpike Trust Fund,” and monies available in the period in which they are consumed, in accordance with the “General Fund” and “Reserve Maintenance Fund” are consumption method. insufficient for such purpose. Inventories of turnpike maintenance materials and supplies are valued at the lower of cost or market using the average • The “Turnpike Trust Fund” is established for the purpose cost method. These inventories are charged to expense of depositing and segregating the apportionments of in the period in which the maintenance or repair occurs. motor fuel excise taxes by the Oklahoma Tax Commission derived from fuel consumed on all Authority turnpikes G. RESTRICTED ASSETS and can be used only to compensate for any deficiency in the monies otherwise available for the payment of Certain proceeds of the Turnpike Revenue Bonds are bond interest and principal (see Note 12). restricted by applicable bond covenants for construction or set aside as reserves to ensure repayment of the bonds. • The “Reserve Maintenance Fund” is established for the Certain assets advanced to the Authority monthly from purpose of applying and holding monies in reserve to motor fuel excise taxes are restricted in accordance with pay the cost of resurfacing, extraordinary maintenance the Trust Agreement for the purpose of paying debt interest or repairs, engineering expenses, insurance premiums and principal if other available sources are not sufficient or self-insurance reserves and interest and maturing (see Note 12). Also, certain other assets are accumulated principal if monies in the “Senior Bond Interest and and restricted on a monthly basis in accordance with the Sinking Accounts” and “Subordinate Bond Interest and Trust Agreement for the purpose of paying debt interest Sinking Accounts” are insufficient for such purposes. and principal payments that are due on a semi-annual and annual basis, respectively, and for the purpose of • The “Construction Funds” are established for the maintaining the reserve funds at the required levels. purpose of holding bond proceeds and other financing Payments from these restricted accounts are strictly sources to be used to pay the costs of turnpike governed by the Trust Agreement and are only made in construction or improvements. compliance with the Trust Agreement. Limited types of

2017 2017 27 FINANCIAL SECTION FINANCIAL SECTION

The Authority has also established the following additional Additionally, the Authority allocates and capitalizes funds by policy for the purpose of restricting monies for interest for other constructed assets by applying the cost which the Authority is liable to others: of borrowing rate to qualifying assets. The Authority capitalized approximately $1,823,000 and $2,415,000 • The “Arbitrage Rebate and Interest Fund” is established to CWIP in 2017 and 2016, respectively. Amortization of for the purpose of holding and paying arbitrage capitalized interest is included in depreciation expense. investment earnings to the U.S. Treasury as a result of Approximately $35,499,000 and $40,407,000 in interest investing tax exempt bond proceeds at rates of return expense was incurred in 2017 and 2016, respectively. exceeding the maximum amount that is permitted J. DEFERRED OUTFLOWS OF RESOURCES under the applicable tax code. OTHER THAN PENSIONS

• The “PIKEPASS Prepayment Fund” is established for In addition to assets, the Statements of Net Position also the purpose of receiving and holding prepayments include, deferred outflows of resources, which represents a received from turnpike patrons using the electronic consumption of net position that applies to future periods and will not be recognized as an outflow of resources or vehicle identification method of paying tolls. expense until then; deferred outflows of resources have a positive effect on net position. The unamortized net deferred H. COMPENSATED ABSENCES debit on refunding represents the difference between Vested or accumulated vacation leave is recorded as an the carrying value of refunded debt and its reacquisition expense and a liability as the benefits accrue to employees. price. This amount is deferred and amortized over the The portion that is estimated to be due within one year shorter of the life of the refunded or refunding debt. At is included with the current liabilities. There are no December 31, 2016, the deferred outflows of resources also accumulating sick leave benefits that vest for which any included the accumulated change in fair value of hedging liability must be recognized. derivative results from the Authority’s synthetic fixed rate swap agreements related to the Series 2006B-F bonds I. CAPITAL ASSETS outstanding. Those bonds were refunded and defeased in 2017. See Note 7 for further discussion. All capital assets are stated at cost. Capital assets are defined as assets with initial, individual costs exceeding $5,000 to K. DEFERRED OUTFLOWS AND INFLOWS OF RE- SOURCES RELATED TO PENSIONS $25,000 depending on asset category. Depreciation is computed on the straight-line method over the following estimated useful lives: As mentioned above, deferred outflows of resources are Roads and bridges 30 years the consumption of net position that is applicable to Improvements 5-30 years future reporting periods and have a positive effect on net Buildings 5-30 years position. Deferred inflows of resources are the acquisition Equipment 3-7 years of net position that is applicable to future reporting periods; Capitalized Interest 10-30 Years deferred inflows of resources have a negative effect on net position. For pension reporting purposes, collective A full month’s depreciation is taken the month an asset pension expense includes the differences between is placed in service. When property and equipment are expected and actual experience with regard to economic disposed, depreciation is removed from the respective and demographic factors in the measurement of the total accounts, and any resulting gain or loss is recorded. pension liability and the changes of assumptions about future economic or demographic factors or other inputs. Interest costs incurred on revenue bonds used to finance These amounts are determined at the beginning of the the construction or acquisition of assets are capitalized. current measurement period and amortized over a closed The amount of interest capitalized is calculated by period equal to the average expected remaining service offsetting interest expense incurred from the date of the lives of all employees provided with pensions through the borrowing until completion of the project with interest Oklahoma Public Employees Retirement Plan (the Plan). The earned on invested proceeds over the same period. As portion of these amounts not included in collective pension projects financed by these revenue bonds are finalized, expense is included in collective deferred outflows or inflows the interest cost becomes eligible for capitalization on of resources related to pensions. Similarly, collective pension other qualified assets. The amount of interest capitalized to expense includes the difference between projected and construction work in progress for these projects in 2017 was actual earnings on pension plan investments amortized approximately $17,120,000 (interest expense of $18,173,000 over a closed five-year period. The portion of these amounts offset by earnings of $1,053,000) no interest expense for not included in collective pension expense is included in these bonds was incurred, nor capitalized, in 2016. collective deferred outflows or inflows of resources related to pensions. See Note 10 for further discussion.

28 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

L. PENSIONS P. ESTIMATES

For purposes of measuring the net pension liability, deferred The preparation of financial statements in conformity with GAAP outflows of resources and deferred inflows of resources related requires management to make estimates and assumptions that to pensions and pension expense, information about the affect the reported amounts of assets and liabilities and disclosure fiduciary net position of the Plan and additions to/deductions of contingent assets and liabilities at the date of the financial from the Plan’s fiduciary net position have been determined statements and the reported amounts of revenues and expenses on the same basis as they are reported by the Plan. For this during the reporting period. Actual results could differ from those purpose, benefit payments (including refunds of employee estimates. contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported NOTE 2. LEGAL COMPLIANCE BUDGETS at fair value. See Note 10 for further discussion. On or before October 10 each year the Authority is required M. NET BOND PREMIUMS AND to prepare a preliminary budget of current expenses, monthly BOND ISSANCE COSTS deposits to the Reserve Maintenance Fund, and the purposes Net bond premiums are presented as additions to bonds for which the monies held in the Reserve Maintenance Fund will payable on the Statements of Net Position and are amortized be expended for the ensuing year. Copies of the preliminary over the life of the bonds on a method that approximates the budget must be filed with the bond Trustee and each depository, effective interest method. With the issuance of the Series and mailed to the consulting engineers, traffic engineers and 2017 Bonds, the Authority recognized premium additions of all bondholders who have filed their names and addresses with approximately $131,099,000 in 2017. Amortization expense the Secretary and Treasurer of the Authority. If the Trustee or related to net bond premiums was approximately $6,301,000 the owners of 5% in aggregate principal amount of outstanding and $4,835,000 for 2017 and 2016, respectively. Amortization bonds request the Authority in writing on or before November 1 in expense is a component of interest expense on revenue bonds such a year, the Authority shall hold a public hearing on or before outstanding on the Statements of Revenues, Expenses and November 20. The Authority is required by the Trust Agreement Changes in Net Position. to adopt a final budget on or before December 1 of each year. The budget is prepared by division at the object detail level, and At December 31, 2016, the Statement of Net Position included includes information regarding the preceding year. Project-length capitalized bond issuance costs related to prepaid insurance. financial plans are established for all new construction projects. With the 2017 refunding of the Series 2007A Bonds, the capitalized bond issuance costs were removed from the The Authority may not expend any amount or incur any obligations Statements of Net Position and considered in the calculation for maintenance, repairs and operations in excess of the total of the corresponding net deferred debit related to this amount of the budgeted expenses in the Revenue Fund unless transaction. Depreciation and amortization expense includes the funding source is other than revenues received from the amortization of bond issuance costs of approximately $800 Turnpike System. The Authority may expend additional monies and $10,000 for 2017 and 2016, respectively. from the Reserve Maintenance Fund in excess of the budget of monthly deposits. The Director is authorized to approve all line N. ARBITRAGE REBATE PAYABLE item and inter-division budget transfers. Budget amendments must be approved by the governing body in a manner similar to The Tax Reform Act of 1986 imposed additional restrictive the adoption of the annual budget. There were no occurrences regulations, reporting requirements and arbitrage rebate of budget noncompliance in 2017 or 2016. liability on issuers of tax-exempt debt. This Act requires the remittance to the Internal Revenue Service (IRS) of 90% of the cumulative rebatable arbitrage within 60 days of the end of each five-year reporting period following the issuance of governmental bonds. With the 2017 refunding of the Series 2007A Bonds, the Authority made its final installment payment of rebatable arbitrage related to these bonds in the amount of approximately $282,000. The cumulative arbitrage rebate liability at December 31, 2016 was approximately $275,000; at December 31, 2017, the other outstanding issues currently reflect negative arbitrage, and accordingly, no liability is due.

O. INCOME TAXES

The Authority is an instrumentality of the State of Oklahoma. As such, income earned in exercising its essential government functions is exempt from state or federal income taxes.

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securities, the ownership of stock of any one issuer is limited NOTE 3. DEPOSITS AND INVESTMENTS to no more than 10% or the percentage of its weighting in the S&P 500 Index, whichever is higher, of the total equity assets Deposits. At December 31, 2017 and 2016, the carrying of the portfolio. No securities of common stock in non-public amounts of the Authority’s cash deposits were $17,476,220 and corporations, short sales, letter or restricted stock and buying and $12,756,395 respectively. The bank balances were $18,470,066 selling on margin may be purchased. Fixed income securities with and $13,660,639 respectively. At December 31, 2017 and 2016, a single issuer, with the exception of the U.S. government and its the carrying amount and bank balances of the Authority’s cash fully guaranteed agencies, must not exceed 10% of the portfolio’s equivalents were $855,231,675 and $149,367,957 respectively. market value; total exposure to any one industry shall not exceed Under the terms of the Trust Agreement, all monies deposited 30% of the portfolio’s market value. Corporate debt issues must with the Trustee in excess of the amount insured by the Federal meet or exceed an A credit rating from Moody’s and S&P. No Deposit Insurance Corporation shall be continuously secured fixed income securities of convertible bonds, denominated with collateralized securities held by the Authority’s agent in the foreign debt, private placements, fixed income and interest rate Authority’s name. The Authority has complied with the terms of futures and other specialized investments may be purchased. The the Trust Agreement in 2017 and 2016. Authority has complied with the terms of the Trust Agreement and its investment policy in 2017 and 2016. Investments. The fair values of the Authority’s investments at December 31, 2017 and 2016, were $191,653,490 and Interest Rate Risk. The Trust Agreement also specifically $196,530,504 and, respectively. defines the maturity periods for each of the Authority’s funds and accounts (see Note 1(G)). These maturity limits range from Credit Risk. The Trust Agreement establishes the investment 6 months to 7 years. For funds not pledged as security under the policy for the Authority. Under the terms of the Trust Agreement, Trust Agreement, the average maturity of fixed income securities the Authority can invest in (a) government obligations, federally should not exceed 10 years. The Authority has no other policies issued or guaranteed bonds, debentures or notes; (b) defeased limiting investment maturities. The Authority has complied with municipal obligations; (c) repurchase agreements meeting the terms of the Trust Agreement and its investment policy in certain conditions defined in the Authority’s Trust Agreement; (d) 2017 and 2016. certificates of deposit and time deposits in, or interests in money market portfolios meeting certain conditions defined in the Concentration of Credit Risk. Except as previously noted for Authority’s Trust Agreement; (e) commercial paper; (f) obligations the Prepaid PIKEPASS Fund, there is no limit on the amount and full faith and credit obligations of state or local government the Authority may invest in any one issuer. The Authority’s issuers; (g) shares of stock in a corporation that is a regulated investments in certificates of deposit were 7.8% and 7.7% of investment company and invests all of its assets in government total investments at December 31, 2017 and 2016, respectively. obligations; and/or (h) any unsecured or secured agreement The Authority also has a significant investment in a JPMorgan with the Federal National Mortgage Association (FNMA) or Chase Bank (JPMorgan) repurchase agreement, representing any bank, trust company or national banking association or a 26.6% and 25.9% of total investments at December 31, 2017 corporation meeting certain conditions defined in the Authority’s and 2016, respectively. This repurchase agreement bears a yield Trust Agreement. The Authority’s 2017 and 2016 investments in equal to the rate of 5.991%. If the rating of unsecured senior long- Federal Home Loan Bank (FHLB) debt securities were rated Aaa term debt obligations of JPMorgan falls below A by Moody’s or by Moody’s Investor Services (Moody’s). The Authority’s 2017 S&P, then the repurchase agreement can be collateralized with and 2016 investments in FNMA debt securities were rated Aaa by additional securities, transferred with the consent of the Trustee Moody’s and AAA by Fitch Rating (Fitch). The Authority’s 2017 and to another entity with long-term senior unsecured debt rated 2016 investments in Federal Home Loan Mortgage Corporation at A or better by Moody’s and S&P, or terminated if neither of (FHLMC) debt securities were rated Aaa and AAA by Moody’s the above conditions are met. Certain JPMorgan unsecured and Fitch, respectively. All of the Authority’s investments in U.S. senior long-term debt is rated Aa3 by Moody’s and A+ by S&P. debt instruments are issued or explicitly guaranteed by the Wells Fargo Bank Minnesota, N.A., correspondent custodian, U.S. Government. The Authority also has an investment policy holds the collateral for this agreement directly for the benefit for funds not pledged as security under the Trust Agreement. of the customers of the custodian, Bank of Oklahoma N.A. The Under this policy, which currently applies only to the Prepaid transaction matures every 30 days and is automatically renewed PIKEPASS Fund, these funds can be invested in equity securities, until January 1, 2022. The terms of this repurchase agreement fixed income securities and cash equivalents. The portfolio must are governed by the Master Repurchase Agreement between be invested with a minimum investment in equity securities of JPMorgan and Bank of Oklahoma, N.A., Trustee, as supplemented 30% and a maximum of 50% and a minimum investment in fixed by the letter agreement dated May 23, 2002. income securities of 50% and a maximum of 70%. For equity

30 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

The Authority categorizes its fair value measurements within the fair value hierarchy established by GAAP. The Authority has the following recurring fair value measurements as of December 31, 2017:

Fair Value Measurements as of December 31, 2017

Total Investment Level 1 Level 2 Level 3 Description Investments Concentration %

U.S. Treasuries $ 92,171,795 $ - $ - $ 92,171,795 48.1% FHLB debt securities 2,972,460 - - 2,972,460 1.6% FNMA debt securities - - - - - Open-end funds 16,958,575 - - 16,958,575 8.8% Exchange-traded funds 7,647,750 - - 7,647,750 4.0% Certificates of deposit - 15,000,000 - 15,000,000 7.8% U.S. Treasury SLGS - - 27,300 27,300 - Repurchase agreement - - 50,936,450 50,936,450 26.6% FHLMC debt securities 5,939,160 - - 5,939,160 3.1% Total $ 125,689,740 $ 15,000,000 $ 50,963,750 $ 191,653,490

Fair Value Measurements as of December 31, 2016

Total Investment Level 1 Level 2 Level 3 Description Investments Concentration %

U.S. Treasuries $ 99,636,703 $ - $ - $ 99,636,703 50.7% FHLB debt securities 2,956,620 - - 2,956,620 1.5% FNMA debt securities - - - - - Open-end funds 15,481,808 - - 15,481,808 7.9% Exchange-traded funds 6,462,003 - - 6,462,003 3.3% Certificates of deposit - 15,099,000 - 15,099,000 7.7% U.S. Treasury SLGS - - 27,300 27,300 - Repurchase agreement - - 50,936,450 50,936,450 25.9% FHLMC debt securities 5,930,620 - - 5,930,620 3.0% Total $ 130,467,754 $ 15,099,000 $ 50,963,750 $ 196,530,504

Investments classified in Level 1 of the fair value hierarchy are valued using prices quoted in active markets for those securities.

Investments classified in Level 2 of the fair value hierarchy are valued using significant other observable inputs. For the certificates of deposit in this category this includes quoted prices for similar, but not identical, assets in active markets, as well as quoted prices for similar assets in inactive markets.

Investments classified in Level 3 of the fair value hierarchy are valued using unobservable inputs for the asset. The U.S. Treasury SLGS is non-marketable and has a stated interest rate of 0.0%. As of December 31, 2017 and 2016, fair value is considered comparable to par value. As previously noted, for the repurchase agreement, investment value is defined by the agreement and bears a yield equal to the rate of 5.991%. This agreement includes a provision to require collateral if the provider’s long-term debt rating is reduced, and as such, can be affected indirectly by market changes. As of December 31, 2017 and 2016, fair value is considered comparable to the value defined by the terms of the repurchase agreement.

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Schedule of Cash, Cash Equivalents and Investments as of December 31, 2017

Applicable GASB 72 Purchase Date Maturity Date Original Cost Fair Value Interest Rate Level Unrestricted:

General Fund: x x x Blackrock Liq Fedfd-Csh 0.770 % 12/31/2017 Demand $ 69,245,702 $ 69,245,702 1 Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 81,407 81,407 1 FHLB 1.000 2/19/2016 2/26/2021 1,000,000 990,820 1 U.S. Treasury Notes 1.375 5/14/2015 4/30/2020 3,974,063 3,951,120 1 U.S. Treasury Notes 1.500 10/20/2014 8/31/2018 5,065,039 4,994,450 1 U.S. Treasury Notes 0.875 7/5/2016 7/31/2019 1,006,133 985,000 1 U.S. Treasury Notes 1.375 7/14/2014 7/31/2018 998,867 998,730 1 U.S. Treasury SLGS 0.000 11/30/1990 2/21/2021 27,300 27,300 3 81,398,511 81,274,529 Revenue Fund: Blackrock Liq Fedfd-Csh 0.770 12/31/2017 Demand 20,232,684 20,232,684 1

Total unrestricted cash equivalents & investments 101,631,195 101,507,213 Restricted:

Reserve Maintenance Fund: x x x Blackrock Liq Fedfd-Csh 0.770 % 12/31/2017 Demand 25,117,203 25,117,203 1 Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 177,774 177,774 1 FHLB 1.000 2/19/2016 2/26/2021 2,000,000 1,981,640 1 FHLMC 1.250 5/17/2016 8/26/2019 2,000,000 1,988,180 1 FHLMC 1.500 5/31/2016 11/26/2019 3,000,000 2,988,810 1 U.S. Treasury Notes 0.875 2/25/2015 1/15/2018 3,989,844 3,999,520 1 U.S. Treasury Notes 1.375 5/14/2015 4/30/2020 3,974,063 3,951,120 1 U.S. Treasury Notes 1.375 7/6/2016 9/30/2020 4,085,781 3,939,640 1 U.S. Treasury Notes 0.625 7/5/2016 6/30/2018 4,005,781 3,983,600 1 U.S. Treasury Notes 0.875 7/5/2016 7/31/2019 4,024,531 3,940,000 1 U.S. Treasury Notes 1.500 5/14/2015 5/31/2019 2,015,860 1,990,280 1 U.S. Treasury Notes 1.000 5/14/2015 5/15/2018 4,008,906 3,994,520 1 58,399,743 58,052,287

Revenue Bond Reserve Accounts: x x x Blackrock Liq Fedfd-Csh 0.770 12/31/2017 Demand 38,864,328 38,864,328 1 Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 1,733,632 1,733,632 1 U.S. Treasury Bill 0.000 8/16/2017 8/16/2018 1,975,480 1,970,991 1 U.S. Bank CD 1.495 12/1/2017 12/1/2018 15,000,000 15,000,000 2 JP Morgan Chase Repo 5.991 5/23/2002 1/1/2022 50,936,450 50,936,450 3 U.S. Treasury Notes 1.375 7/6/2016 9/30/2020 3,064,336 2,954,730 1 U.S. Treasury Notes 0.625 7/5/2016 6/30/2018 3,004,336 2,987,700 1 U.S. Treasury Notes 0.875 7/5/2016 7/31/2019 3,018,398 2,955,000 1 U.S. Treasury Notes 1.000 5/30/2013 5/31/2018 4,998,047 4,990,050 1 U.S. Treasury Notes 1.375 5/30/2013 5/31/2020 1,983,051 1,974,700 1 U.S. Treasury Notes 1.375 8/16/2017 7/31/2019 2,001,797 1,985,160 1 126,579,855 126,352,741

(Continued)

32 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

Schedule of Cash, Cash Equivalents and Investments as of December 31, 2017

Applicable GASB 72 Applicable Purchase Maturity GASB 72 Purchase Date Maturity Date Original Cost Fair Value Original Cost Fair Value Interest Rate Level Interest Rate Date Date Level Unrestricted: 2011 Bond Service Accounts: General Fund: x x x Invesco Stit Treas-Inst 1.220 % 12/31/2017 Demand $ 49,126,326 $ 49,126,326 1 Blackrock Liq Fedfd-Csh 0.770 % 12/31/2017 Demand $ 69,245,702 $ 69,245,702 1 Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 81,407 81,407 1 2017 Bond Service Accounts: FHLB 1.000 2/19/2016 2/26/2021 1,000,000 990,820 1 Cavanal Hill U.S. Treasury 0.000 12/31/2017 Demand 3,959,565 3,959,565 1 U.S. Treasury Notes 1.375 5/14/2015 4/30/2020 3,974,063 3,951,120 1 Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 26,058,043 26,058,043 1 U.S. Treasury Notes 1.500 10/20/2014 8/31/2018 5,065,039 4,994,450 1 30,017,608 30,017,608 U.S. Treasury Notes 0.875 7/5/2016 7/31/2019 1,006,133 985,000 1 2017A Construction Fund: U.S. Treasury Notes 1.375 7/14/2014 7/31/2018 998,867 998,730 1 U.S. Treasury SLGS 0.000 11/30/1990 2/21/2021 27,300 27,300 3 Blackrock Liq Fedfd-Csh 0.770 12/31/2017 Demand 266,570,321 266,570,321 1 81,398,511 81,274,529 2017C Construction Fund: Revenue Fund: Blackrock Liq Fedfd-Csh 0.770 12/31/2017 Demand 340,000,000 340,000,000 1 Blackrock Liq Fedfd-Csh 0.770 12/31/2017 Demand 20,232,684 20,232,684 1

Turnpike Trust Fund: x x x Total unrestricted cash equivalents & Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 11,259,483 11,259,483 1 investments 101,631,195 101,507,213 U.S. Treasury Bill 0.000 12/21/2017 6/21/2018 992,506 992,526 1 U.S. Treasury Bill 0.000 8/16/2017 8/16/2018 1,975,268 1,970,912 1 Restricted: U.S. Treasury Bill 0.000 12/21/2017 3/22/2018 1,993,305 1,993,336 1 U.S. Treasury Bill 0.000 11/16/2017 11/8/2018 1,969,740 1,967,255 1 Reserve Maintenance Fund: x x x U.S. Treasury Bill 0.000 11/16/2017 5/17/2018 993,082 992,980 1 Blackrock Liq Fedfd-Csh 0.770 % 12/31/2017 Demand 25,117,203 25,117,203 1 U.S. Treasury Notes 1.500 Various 10/31/2019 8,989,492 8,939,250 1 Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 177,774 177,774 1 U.S. Treasury Notes 1.375 7/6/2016 9/30/2020 2,042,891 1,969,820 1 FHLB 1.000 2/19/2016 2/26/2021 2,000,000 1,981,640 1 U.S. Treasury Notes 1.250 12/18/2015 12/15/2018 6,994,805 6,963,950 1 FHLMC 1.250 5/17/2016 8/26/2019 2,000,000 1,988,180 1 U.S. Treasury Notes 0.625 7/5/2016 6/30/2018 2,002,891 1,991,800 1 FHLMC 1.500 5/31/2016 11/26/2019 3,000,000 2,988,810 1 U.S. Treasury Notes 0.875 7/5/2016 7/31/2019 2,012,266 1,970,000 1 U.S. Treasury Notes 0.875 2/25/2015 1/15/2018 3,989,844 3,999,520 1 U.S. Treasury Notes 1.375 7/14/2014 7/31/2018 2,497,168 2,496,825 1 U.S. Treasury Notes 1.375 5/14/2015 4/30/2020 3,974,063 3,951,120 1 U.S. Treasury Notes 1.375 8/16/2017 7/31/2019 2,001,015 1,985,160 1 U.S. Treasury Notes 1.375 7/6/2016 9/30/2020 4,085,781 3,939,640 1 45,723,912 45,493,297 U.S. Treasury Notes 0.625 7/5/2016 6/30/2018 4,005,781 3,983,600 1 U.S. Treasury Notes 0.875 7/5/2016 7/31/2019 4,024,531 3,940,000 1 Prepaid PIKEPASS Fund: x x U.S. Treasury Notes 1 1.500 5/14/2015 5/31/2019 2,015,860 1,990,280 Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 2,805,207 2,805,207 1 U.S. Treasury Notes 1 1.000 5/14/2015 5/15/2018 4,008,906 3,994,520 FHLMC 1.500 8/16/2016 8/28/2024 1,000,000 962,170 1 58,399,743 58,052,287 U.S. Treasury Notes 1.500 12/18/2015 10/31/2019 699,754 695,275 1 U.S. Treasury Notes 1.250 12/18/2015 12/15/2018 699,480 696,395 1 Revenue Bond Reserve Accounts: x x x Vanguard 500 Index (open-end fund) 1.780 5/15/2014 Demand 4,596,196 8,376,933 1 Blackrock Liq Fedfd-Csh 0.770 12/31/2017 Demand 38,864,328 38,864,328 1 Ishares MSCI Emerging Mkts (exchange-traded fund) 1.880 Various Demand 306,646 358,112 1 Invesco Stit Treas-Inst 1.220 12/31/2017 Demand 1,733,632 1,733,632 1 Ishares Morgan Stanley Capital International U.S. Treasury Bill 0.000 8/16/2017 8/16/2018 1,975,480 1,970,991 1 Europe Asia Far East Index (exchange-traded fund) 2.570 Various Demand 697,829 884,500 1 U.S. Bank CD 1.495 12/1/2017 12/1/2018 15,000,000 15,000,000 2 Ishares RSSLL Midcap Index (open-end fund) 1.520 Various Demand 251,621 411,057 1 JP Morgan Chase Repo 5.991 5/23/2002 1/1/2022 50,936,450 50,936,450 3 Ishares RSSLL 2000 ETF (exchange-traded fund) 1.260 Various Demand 322,634 593,069 1 U.S. Treasury Notes 1.375 7/6/2016 9/30/2020 3,064,336 2,954,730 1 Ishares Core S&P Midcap (exchange-traded fund) 1.190 Various Demand 359,926 639,559 1 U.S. Treasury Notes 0.625 7/5/2016 6/30/2018 3,004,336 2,987,700 1 Ishares Core S&P Smallcap 600 (exchange traded fund) 1.200 Various Demand 443,964 960,125 1 U.S. Treasury Notes 0.875 7/5/2016 7/31/2019 3,018,398 2,955,000 1 Metropolitan West T/R Bd-1 (open-end fund) 2.140 10/10/2014 Demand 6,623,566 6,531,975 1 U.S. Treasury Notes 1.000 5/30/2013 5/31/2018 4,998,047 4,990,050 1 SPDR S&P 500 Depository Receipts (exchange-traded U.S. Treasury Notes 1.375 5/30/2013 5/31/2020 1,983,051 1,974,700 1 fund) 1.800 Various Demand 2,286,854 4,212,385 1 U.S. Treasury Notes 1.375 8/16/2017 7/31/2019 2,001,797 1,985,160 1 Vanguard Intrmd Bd Indx-Inst (open-end fund) 2.650 9/28/2017 Demand 1,653,014 1,638,610 1 126,579,855 126,352,741 22,746,691 29,765,372

Total restricted cash equivalents & investments 939,164,456 945,377,952 Cash balance (unrestricted & restricted) - 17,476,220 Total Cash, Cash Equivalents and Investments $ 1,040,795,651 $ 1,064,361,385

2017 2017 33 FINANCIAL SECTION FINANCIAL SECTION

Schedule of Cash, Cash Equivalents and Investments as of December 31, 2016

Applicable GASB 72 Purchase Date Maturity Date Original Cost Fair Value Interest Rate Level Unrestricted: General Fund: Blackrock Liq Fedfd-Csh 0.040 % 12/31/16 Demand $ 40,175,366 $ 40,175,366 1 FHLB 1.010 2/19/16 2/26/21 1,000,000 985,540 1 U.S. Treasury Notes 1.375 5/14/15 4/30/20 3,974,062 3,974,880 1 U.S. Treasury Notes 1.500 10/20/14 8/31/18 5,065,039 5,032,050 1 U.S. Treasury Notes 0.875 7/5/16 7/31/19 1,006,133 988,520 1 U.S. Treasury Notes 1.375 7/14/14 7/31/18 998,867 1,004,610 1 U.S. Treasury SLGS 0.000 11/30/90 2/21/21 27,300 27,300 3 52,246,767 52,188,266 Revenue Fund: Blackrock Liq Fedfd-Csh 0.040 12/31/16 Demand 17,607,201 17,607,201 1

Total unrestricted cash equivalents & invest- ments 69,853,968 69,795,467

Restricted: Reserve Maintenance Fund: Blackrock Liq Fedfd-Csh 0.040 12/31/16 Demand 1,874,862 1,874,862 1 U.S. Treasury Bill 0.000 6/1/16 5/25/17 2,970,450 2,971,197 1 FHLB 1.010 2/19/16 2/26/21 2,000,000 1,971,080 1 FHLMC 1.010 5/17/16 8/26/19 2,000,000 1,989,300 1 FHLMC 1.010 5/31/16 11/26/19 3,000,000 2,984,220 1 U.S. Treasury Notes 0.875 2/25/15 1/15/18 3,989,844 3,998,680 1 U.S. Treasury Notes 1.375 5/14/15 4/30/20 3,974,063 3,974,880 1 U.S. Treasury Notes 1.500 7/6/16 9/30/20 4,085,781 3,955,320 1 U.S. Treasury Notes 0.625 7/5/16 6/30/18 4,005,781 3,975,000 1 U.S. Treasury Notes 0.875 7/5/16 7/31/19 4,024,531 3,954,080 1 U.S. Treasury Notes 1.500 5/14/15 5/31/19 2,015,859 2,009,540 1 U.S. Treasury Notes 1.000 5/14/15 5/15/18 4,008,906 3,999,400 1 37,950,077 37,657,559 Revenue Bond Reserve Accounts: Blackrock Liq Fedfd-Csh 0.040 12/31/16 Demand 9,421,256 9,421,256 1 U.S. Bank CD 0.000 12/1/16 12/1/17 15,000,000 15,000,000 2 JP Morgan Chase Repo 5.991 5/23/02 1/1/22 50,936,450 50,936,450 3 U.S. Treasury Notes 0.875 8/26/14 8/15/17 3,989,375 4,004,160 1 U.S. Treasury Notes 1.500 7/6/16 9/30/20 3,064,336 2,966,490 1 U.S. Treasury Notes 0.625 7/5/16 6/30/18 3,004,336 2,981,250 1 U.S. Treasury Notes 0.875 7/5/16 7/31/19 3,018,398 2,965,560 1 U.S. Treasury Notes 1.000 5/30/13 5/31/18 4,998,047 4,999,050 1 U.S. Treasury Notes 1.375 5/30/13 5/31/20 1,983,051 1,987,700 1 95,415,249 95,261,916

(Continued)

34 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

Schedule of Cash, Cash Equivalents and Investments as of December 31, 2016

Applicable Purchase Maturity Original Fair GASB 72 Interest Rate Date Date Cost Value Level

2006 Variable Rate Debt Service Account:

Cavanal Hill U.S. Treasury 0.010 % 12/31/16 Demand $ 14,742,286 $ 14,742,286 1

2007 Bond Service Account:

Cavanal Hill U.S. Treasury 0.10 12/31/16 Demand 5,017,771 5,017,7771 1

2011 Bond Service Account:

Cavanal Hill U.S. Treasury 0.010 12/31/16 Demand 51,557,775 51,557,775 1

2016 Construction Fund:

Cavanal Hill U.S. Treasury 0.010 12/31/16 Demand 10 10 1 Turnpike Trust Fund: Cavanal Hill U.S. Treasury 0.010 12/31/16 Demand 7,459,424 7,459,424 1 U. S. Treasury Bill 0.875 8/26/14 8/15/17 3,989,375 4,004,160 1 U. S. Treasury Bill 1.500 12/18/15 10/31/19 6,997,539 7,018,060 1 U. S. Treasury Notes 1.000 12/18/15 12/15/17 5,299,379 5,306,360 1 U. S. Treasury Notes 1.500 7/6/16 9/30/20 2,042,890 1,977,660 1 U. S. Treasury Notes 1.250 12/18/15 12/15/18 6,994,805 7,008,750 1 U. S. Treasury Notes 0.625 7/5/16 6/30/18 2,002,891 1,987,500 1 U. S. Treasury Notes 0.625 6/27/12 5/31/17 995,508 1,000,160 1 U. S. Treasury Notes 0.875 7/5/16 7/31/19 2,012,265 1,977,040 1 U. S. Treasury Notes 1.375 7/14/14 7/31/18 2,497,168 2,511,525 1 U. S. Treasury Notes 0.625 7/17/15 6/30/17 4,996,289 4,999,600 1 45,287,533 45,250,239 Prepaid PIKEPASS Fund: Blackrock Liq Fedfd-Csh 0.040 12/31/16 Demand 1,512,006 1,512,006 1 FHLMC 1.570 8/16/16 8/28/24 1,000,000 957,100 1 U.S. Treasury Notes 1.500 12/18/15 10/31/19 699,754 701,806 1 U.S. Treasury Notes 1.000 12/18/15 12/15/17 699,918 700,840 1 U.S. Treasury Notes 1.250 12/18/15 12/15/18 699,480 700,875 1 Vanguard 500 Index (open-end fund) 2.020 5/15/14 Demand 4,596,196 7,010,870 1 Cavanal Hill LTD DUR (open-end fund) 1.490 Various Demand 4,160,842 4,121,063 1 Ishares MSCI Emerging Mkts (exchange-traded fund) 1.890 Various Demand 306,646 266,076 1 Ishares Morgan Stanley Capital International Europe Asia Far East Index (exchange-traded fund) 3.070 Various Demand 697,829 726,243 1 Ishares RSSLL Midcap Index (open-end fund) 1.720 Various Demand 251,621 353,249 1 Ishares RSSLL 2000 ETF (exchange-traded fund) 1.370 Various Demand 322,634 524,567 1 Ishares Core S&P Midcap (exchange-traded fund) 1.600 Various Demand 359,926 557,196 1 Ishares Core S&P Smallcap 600 (exchange-traded fund) 1.220 Various Demand 443,964 859,500 1 Metropolitan West T/R Bd-1 (open-end fund) 2.140 10/10/14 Demand 4,130,562 3,996,626 1 SPDR S&P 500 Depository Receipts (exchange-traded fund) 2.030 Various Demand 2,286,854 3,528,421 1 Great Nations Bank CD 0.900 2/23/15 2/23/17 99,000 99,000 2 22,267,232 26,615,438

Total restricted cash equivalents and investments 272,237,933 276,102,994 Cash balance (unrestricted & restricted) - 12,756,395 Total Cash, Cash Equivalents and Investments $ 342,091,901 $ 358,654,856

2017 2017 35 FINANCIAL SECTION FINANCIAL SECTION

NoteNOTE 4. Capital4. CAPITAL Assets ASSETS

The following schedules summarize the capital assets of the Authority as of December 31, 2017 and 2016:

Beginning Increases Decreases Ending 2017 Balance Balance Capital assets, not being depreciated Land $ 184,419,417 $ 38,048,299 $ (473,771) $ 221,993,945 Construction work in progress 183,956,680 173,914,173 (49,670,797) 308,200,056 Total capital assets, not being depreciated 368,376,097 211,962,472 (50,144,568) 530,194,001 Capital assets, being depreciated: Roads and bridges 1,317,927,282 7,549,750 (156,026) 1,325,321,006 Improvements 930,054,204 33,646,908 (24,894) 963,676,218 Buildings 109,533,837 7,224,766 (1,522,565) 115,236,038 Equipment 119,786,642 6,394,586 (4,770,564) 121,410,664 Capitalized interest 146,443,087 986,406 - 147,429,493 Total capital assets, being depreciated 2,623,745,052 55,802,416 (6,474,049) 2,673,073,419

Less accumulated depreciation for: Roads and bridges (823,054,780) (34,889,792) 150,546 (857,794,026) Improvements (642,250,610) (37,683,430) 23,306 (679,910,734) Buildings (46,416,997) (3,427,516) 1,428,125 (48,416,388) Equipment (104,956,899) (6,320,465) 4,580,250 (106,697,114) Capitalized interest (87,854,393) (4,659,581) - (92,513,974) Total accumulated depreciation (1,704,533,679) (86,980,784) 6,182,227 (1,785,332,236) Total capital assets, being depreciated, net 919,211,373 (31,178,368) (291,822) 887,741,183

Total capital assets, net $ 1,287,587,470 $ 180,784,104 $ (50,436,390) $ 1,417,935,184

Beginning Increases Decreases Ending 2016 Balance Balance Capital assets, not being depreciated Land $ 163,344,822 $ 21,088,178 $ (13,583) $ 184,419,417 Construction work in progress 64,822,036 145,247,064 (26,112,420) 183,956,680 Total capital assets, not being depreciated 228,166,858 166,335,242 (26,126,003) 368,376,097 Capital assets, being depreciated: Roads and bridges 1,298,752,169 19,417,583 (242,470) 1,317,927,282 Improvements 924,444,404 5,767,272 (157,472) 930,054,204 Buildings 109,577,952 - (44,115) 109,533,837 Equipment 117,352,990 4,787,935 (2,354,283) 119,786,642 Capitalized interest 146,003,460 460,954 (21,327) 146,443,087 Total capital assets, being depreciated 2,596,130,975 30,433,744 (2,819,667) 2,623,745,052

Less accumulated depreciation for: Roads and bridges (788,952,157) (34,345,093) 242,470 (823,054,780) Improvements (603,352,868) (39,055,214) 157,472 (642,250,610) Buildings (43,140,907) (3,291,324) 15,234 (46,416,997) Equipment (100,554,787) (6,612,953) 2,210,841 (104,956,899) Capitalized interest (83,254,990) (4,620,730) 21,327 (87,854,393) Total accumulated depreciation (1,619,255,709) (87,925,314) 2,647,344 (1,704,533,679) Total capital assets, being depreciated, net 976,875,266 (57,491,570) (172,323) 919,211,373 Total capital assets, net $ 1,205,042,124 $ 108,843,672 $ (26,298,326) $ 1,287,587,470

36 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

NoteNOTE 5. Risk5. RISK Management MANAGEMENT coverage in place were either maintained at current levels or increased as to overall limits of coverage and reduction of In conjunction with its normal operations, the Authority is self-retained risk to reduce the overall exposure of risk to the exposed to various risks related to the damage or destruction Authority. There were no settlements in excess of insurance of its assets from both natural and man-made occurrences, and coverage in 2017, 2016 or 2015. tort/liability, errors and omissions and professional liability claims. As a result of these exposures, the Authority has developed a NOTE 6. OPERATING LEASES comprehensive risk management program that participates with the State of Oklahoma’s Risk Management Division in a pooled The Authority has entered into various non-cancelable contracts operation for the majority of this coverage. with concessionaires to provide patron services on the Oklahoma Turnpike System. The contracts are generally for five-year terms, As a member of the State of Oklahoma Risk Management pool, the Authority assumes the responsibility for maintaining and with two five-year renewal options. These contracts provide reporting to the pool all real and personal property for which it for the Authority to receive concession revenue, including requires insurance coverage. The Authority is also responsible minimum rentals plus contingent rentals based on sales volume. for providing relevant financial and operational data to the pool The Authority also leases antenna space under non-cancelable for all potential losses. The pool, on the other hand, serves as contracts with a 20-year term. The total cost of leased concession the primary insurer to the Authority with additional layers of areas was $42,490,768 and $39,783,308 at the end of December coverage provided by commercial insurers for coverage in excess 31, 2017 and 2016, and accumulated depreciation totaled of the self-retained levels of risk assumed by the pool and the $11,623,596 and $10,592,011, respectively. As of December 31, governmental immunity provided by state statutes. 2017, total future minimum rental payments approximate: The Authority also carries insurance with private insurers for a Minimum Lease Rentals few high-risk assets under an “all risks” policy. Additional details of this coverage and the corresponding levels of self-retained risk and limits of coverage are noted separately on the “Schedule of 2018 $ 1,090,129 Insurance in Force” in the statistical section of this report. 2019 1,018,820 2020 1,023,343 The self-retention level for property and casualty coverage 2021 1,049,293 for non-bridge property is $10,000 per incident, while the 2022 1,055,497 overall limit of coverage for bridges and non-bridge property Thereafter 12,100,104 is approximately $1,498,602,000. All categories of insurance Total $ 17,337,186

NOTE 7. LONG-TERM DEBT

Revenue Bonds outstanding as of December 31, 2017 Date of Beginning Ending Due Within Issuance Balance Additions Retired Balance One Year Series 2006B-F 8/24/2006 294,450,000 - (294,450,000) - - Series 2007A 6/6/2007 28,980,000 - (28,980,000) - - Series 2011A 10/15/2011 401,055,000 - (38,420,000) 362,635,000 37,820,000 Series 2011B 12/15/2011 155,860,000 - (101,535,000) 54,325,000 1,555,000 Series 2017A 2/8/2017 - 456,070,000 - 456,070,000 - Series 2017B 2/8/2017 - 23,930,000 - 23,930,000 4,945,000 Series 2017C 12/21/2017 - 312,840,000 - 312,840,000 - Series 2017D 12/21/2017 - 275,680,000 - 275,680,000 11,435,000 Series 2017E 12/21/2017 - 95,835,000 - 95,835,000 2,285,000 Total $ 880,345,000 $ 1,164,355,000 $ (463,385,000) $ 1,581,315,000 $ 58,040,000

Other Long-Term Debt outstanding as of December 31, 2017 Date of Beginning Ending Due Within Issuance Balance Additions Retired Balance One Year US Bank Loan 12/01/2017 $ 15,000,000 $ - $ - $ 15,000,000 $ 14,999,991

Revenue Bonds Outstanding as of December 31, 2016

Date of Beginning Additions Retired Ending Due Within Issuance Balance Balance One Year Series 2006B-F 8/24/2006 306,705,000 - (12,255,000) 294,450,000 13,665,000 Series 2007A 6/06/2007 33,225,000 - (4,245,000) 28,980,000 4,420,000 Series 2011A 10/15/2011 437,180,000 - (36,125,000) 401,055,000 38,420,000 Series 2011B 12/15/2011 157,285,000 - (1,425,000) 155,860,000 - Total $ 934,395,000 $ - $ (54,050,000) $ 880,345,000 $ 56,505,000

Other Long-Term Debt outstanding as of December 31, 2016 Date of Beginning Ending Due Within Issuance Balance Additions Retired Balance One Year US Bank Loan 12/01/2016 $ 15,000,000 $ - $ - $ 15,000,000 $ 14,999,991

2017 2017 37 FINANCIAL SECTION FINANCIAL SECTION

Fixed rate debt service requirements as of December 31, 2017: $312,840,000, the Series 2017D Refunding Second Senior Revenue Bonds totaling $275,680,000, the Series 2017E Refunding Second Senior Revenue Bonds totaling $95,835,000. Maturity Total Revenue Bonds - Fixed The Series 2017CDE Bonds were issued for the purposes of January 1 Principal Interest (1) financing a portion of the capital costs of certain Turnpike 2018 58,040,000 41,222,913 projects and improvements (2) satisfying the Second Senior 2019 56,645,000 69,571,284 2020 57,780,000 67,257,959 Bond Reserve Account Requirements, (3) currently refunding the 2021 58,405,000 64,594,554 outstanding principal of the Series 2006BEF Bonds, (4) funding 2022 61,245,000 61,968,566 termination payments relating to interest rate swaps associated 2023-2027 346,295,000 264,387,253 with the Series 2006BEF Bonds, (5) advance refunding certain 2028-2032 286,960,000 179,866,350 maturities of the Series 2011B Bonds and (6) paying the costs 2033-2037 173,080,000 130,223,708 of issuance. The Series 2017CDE Bonds were structured as tax- 2038-2042 215,155,000 88,143,565 exempt fixed rate “AA-” bonds. The Series 2017CDE Bonds are 2043-2047 267,710,000 35,594,615 series bonds due in annual installments; the Series 2017C Bonds Total $ 1,581,315,000 $ 1,002,830,767 begin January 1, 2029 through January 1, 2047; and the Series 2017D Bonds begin January 1, 2018 through January 1, 2028; The Authority issues revenue bonds from time to time for the the Series 2017E Bonds begin January 1, 2023 through January purposes of financing capital improvements and new projects. 1, 2031. Interest is payable semi-annually on January 1 and July In addition, when the market environment indicates favorable 1 of each year, beginning January 1, 2018. Interest rates on the results, the Authority will issue bonds to restructure its debt to Series 2017C Bonds range from 3.0% to 5.0%; the Series 2017D take advantage of these economic factors. In 2017, the Authority range from 4.0% to 5.0%; and the Series 2017E Bonds range issued two new series of Revenue Bonds and was able to also take from 2.85% and 5.0%. advantage of beneficial market conditions and issue Refunding Bonds. As of December 31, 2017, all of the Authority’s bonds The Series 2017D Bonds refunded and defeased by escrow are fixed rate bonds. deposit the outstanding $280,785,000 principal of the Series 2006BEF Bonds; the liability was removed from the Statements Description of Fixed Rate Debt - On February 8, 2017, the of Net Position. Bank of Oklahoma, N.A., serves as the Escrow Authority closed on the delivery of the Series 2017A Second Trustee on the Series 2006BEF Bonds. These bonds remain Senior Revenue Bonds totaling $456,070,000 and the Series outstanding at December 31, 2017 and were fully redeemed 2017B Refunding Second Senior Revenue Bonds totaling January 12, 2018. In conjunction with the defeasance of the $23,930,000. The Series 2017A&B bonds were issued for the Series 2006BEF Bonds, the Authority also terminated its swap purposes of (1) financing a portion of the capital costs of certain agreements corresponding to this variable rate debt. The Turnpike projects and improvements, including payment of termination payments were approximately $41,265,000 and amounts due under the Wells Fargo revolving credit agreement were funded with the proceeds from the Series 2017D Bonds. (short-term debt), (2) currently refunding the outstanding The Series 2006BEF Refunding Bonds were originally issued on principal of the Series 2007A Bonds, (3) satisfying the Second August 24, 2006 for the purposes of refunding the outstanding Senior Bond Reserve Account Requirements and (4) paying the Series 1992F First Senior Revenue Capital Appreciation Bonds costs of issuance. The Series 2017A&B Bonds were structured and certain maturities of the Series 1998A&B Revenue Bonds; as tax-exempt fixed rate “AA-” bonds. The Series 2017A Bonds those Series 1992F and 1998A&B Bonds became fully redeemed are series bonds due in annual installments beginning January 1, as of January 1, 2009. 2032 through January 1, 2047; the Series 2017B Bonds are series bonds due in annual installments beginning January 1, 2018 The Series 2017E Bonds refunded and defeased by escrow through January 1, 2022. Interest commenced on July 1, 2017, deposit certain maturities totaling $101,535,000 of the Series and is payable semi-annually on January 1 and July 1 of each 2011B Bonds; the liability corresponding to these maturities was year. Interest rates on the Series 2017A Bonds range from 3.5% removed from the Statements of Net Position. Bank of Oklahoma, to 5.0% and the Series 2017B Bonds range from 2.0% and 4.0%. N.A., serves as the Escrow Trustee on the Series 2011B Bonds. These bonds remain outstanding at December 31, 2017 and The Series 2017B Bonds refunded and defeased by escrow are anticipated to be redeemed January 1, 2021. See further deposit the outstanding $24,560,000 principal of the Series description of the Series 2011B Bonds below. 2007A Bonds; the liability was removed from the Statements of Net Position. Bank of Oklahoma, N.A., served as the Escrow The Series 2017 Bonds were issued pursuant to the prevailing Trustee on the Series 2007A Bonds which were fully redeemed Trust Agreement, dated February 1, 1989, and as amended March 8, 2017. The Series 2007A Refunding Bonds were originally with supplements thereto (the Trust Agreement), with Bank issued on June 6, 2007 for the purposes of refunding the portion of Oklahoma, N.A., as Trustee. Consistent with the Authority’s of the Series 2002A&B Refunding Bonds that were eligible at other outstanding Bonds, the Series 2017 Bonds are payable that time; those Series 2002A&B Bonds became fully redeemed solely from and secured by a pledge of minimum net revenues, as of January 1, 2012. as defined by the Trust Agreement, from the operation of the Turnpike System. On December 21, 2017, the Authority closed on the delivery of the Series 2017C Second Senior Revenue Bonds totaling

38 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

Other outstanding bonds at December 31, 2017 include the deposit these outstanding bonds, which were fully redeemed as Series 2011A&B Bonds. On October 31, 2011, the Authority of January 12, 2018. The Authority has no outstanding variable closed on the delivery of the Series 2011A Refunding Second rate debt at December 31, 2017. The following information Senior Revenue Bonds totaling $524,010,000. The Series 2011A regarding the original issue of the Series 2006 Bonds is presented Bonds were issued for the purposes of (1) refunding (a) certain for 2016 comparative purposes. maturities of the Series 2002A&B Refunding Bonds and (b) the Series 2006C&D Refunding Bonds and (2) paying the costs of In August 2006, the Authority issued, through a negotiated issuance. These bonds were structured as tax-exempt fixed sale, six separate series of Series 2006 Refunding Second Senior rate “AA-“ bonds. The principal amount of the bonds refunded Revenue Bonds totaling $635,590,000. As part of that sale, and defeased through an escrow deposit was $533,325,000; the on August 24, 2006, the Authority issued variable rate Series liability was removed from the Statements of Net Position. The 2006B-F Refunding Second Senior Revenue Bonds in five sub- Series 2006C&D Bonds were fully redeemed as of October 31, series in the initial aggregate principal of $530,800,000; the 2011 and the Series 2002A&B Bonds were fully redeemed as of individual principal amounts of each Series 2006B-F Bonds January 1, 2012. In conjunction with the defeasance of the Series were dated the date of their original issuance and delivery with 2006C&D Bonds, the Authority terminated the swap agreements anticipated maturity on January 1, 2028, subject to call provisions corresponding to this variable rate debt. Termination payments in accordance with the mandatory amortization installments were approximately $51,298,000 and were funded with proceeds that began on January 1, 2015. The Series 2006B-F Bonds were from the Series 2011A Bonds. The Series 2011A Bonds are series initially issued in a variable rate mode that reset on a weekly basis bonds due in annual installments beginning January 1, 2012 with interest payable on a monthly basis. With the issuance of through January 1, 2028. Interest commenced on January 1, the Series 2011A Bonds, the $106,160,000 Series 2006C Bonds 2012, and is payable semi-annually on January 1 and July 1 of and the $106,160,000 Series 2006D Bonds were refunded to each year, with interest rates ranging from 0.2% to 5.0%. redemption through an escrow deposit. On August 1, 2012, the Series 2006B Bonds were remarketed in a term rate mode and On December 15, 2011, the Authority closed on the delivery purchased by RBC Capital Markets, LLC, with a special mandatory of the Series 2011B Second Senior Revenue Bonds totaling tender on July 31, 2015 which was extended to July 31, 2017. At $159,650,000. The Series 2011B Bonds were issued to provide December 31, 2016 the interest rate for the Series 2006B Bonds funds for the purposes of (1) financing a portion of the capital costs was 68% of 30-day LIBOR plus 38 basis points. On August 1, of certain Turnpike projects including capacity improvements 2013, the Series 2006E Bonds were placed in a term rate mode for the John Kilpatrick and Creek Turnpikes, (2) satisfying the with Wells Fargo Municipal Capital Strategies, LLC, with a special Second Senior Bond Reserve Account Requirements and (3) mandatory tender which was extended to August 1, 2019. of paying the costs of issuance. These bonds were structured as tax- 30-day LIBOR plus 38 basis points. At December 31, 2016, the exempt fixed rate “AA-” bonds. As previously noted, the 2017E interest rate for the Series 2006E Bonds was also 68% of 30-day bonds refunded certain maturities totaling $101,535,000 of the LIBOR plus 38 basis points. At December 31, 2016, the Series outstanding Series 2011B Bonds. The remaining $54,325,000 are 2006F Bonds were outstanding in a daily reset variable rate mode. series bonds due in annual installments January 1, 2018 through Interest was payable on the first business day of each month 2023 and additional maturities due January 1, 2030 and 2031. for all the Series 2006B-F Bonds. The Series 2006B-F Bonds are Interest is payable semi-annually on January 1 of each year, with payable solely from and secured by a pledge of minimum net interest rates ranging from 2.0% to 5.0%. revenues, as defined by the Trust Agreement, from the operation of the Turnpike System. The Series 2011 Bonds were issued pursuant to the prevailing Trust Agreement, with Bank of Oklahoma, N.A., as Trustee. Variable-to Fixed Interest Rate Swaps - On July 28, 2006, Consistent with the Authority’s other outstanding Bonds, the in conjunction with the $530,800,000 Series 2006B-F bonds Series 2011 Bonds are payable solely from and secured by described above, the Authority entered into five separate a pledge of minimum net revenues, as defined by the Trust synthetic fixed rate swap agreements totaling $530,800,000 Agreement, from the operation of the Turnpike System. (the 2006 Swaps), with three separate counterparties, effective as of August 24, 2006. With the October 2011 refunding of the The Authority previously defeased the Series 1989 First Senior Series 2006C&D Bonds, the Authority terminated two of its and Subordinate Lien Revenue Bonds; the liability was removed corresponding swap agreements. This termination selection was from the Statements of Net Position. Bank of New York serves as determined through a competitive solicitation process. The swap Escrow Trustee for these bonds having acquired the trust services agreement with UBS AG was terminated for approximately $25.0 of the previous Escrow Trustee, Bank One Trust Company. Of million, and one swap agreement with Goldman Sachs Mitsui the original issue, only $29,000,000 of these Series 1989 Bonds Marine Derivative Products LP (Goldman Sachs) was terminated remain outstanding at December 31, 2017 and 2016; these bonds for approximately $26.0 million. The terms in the table on page are anticipated to be redeemed January 1, 2022. 40 were effective for the remaining swap agreements that were outstanding at December 31, 2016. The remaining swap Description of Variable Rate Debt – Prior to the issuance of the agreements were terminated with the issuance of the Series Series 2017D Bonds, the Authority had $280,785,000 outstanding 2017D Bonds. The two swaps with the Goldman Sachs were of variable rate Series 2006BEF Bonds. As previously noted, the approximately terminated for approximately $27.4 million and Series 2017D bonds currently refunded and defeased by escrow the J P Morgan swap was terminated for approximately $13.9 million.

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Objective of hedge, nature of hedge risk and type of hedge: The fair value measurement for its derivative instrument liability Authority entered into the 2006 Swaps rather than issuing fixed was classified in Level 2 of the fair value hierarchy, as it was rate bonds as a means to achieve lower borrowing costs. The not exchange-traded. Fair valuation was determined using a Authority issued variable rate bonds with a weekly reset and model that includes readily observable market parameters that entered into swap agreements to obtain the synthetic rate. The were actively quoted and could be validated. Consideration Authority realized just over approximately $40.0 million in net for nonperformance risk was also been incorporated using a present value savings as a result of the refunding. The Authority discount curve based on the municipal AA taxable yield. entered into the 2006 Swaps to manage interest rate exposure that the Authority was subject to as a result of issuing its variable Risks: The Authority monitored the various risks associated with rate bonds. This was a discrete cash flow hedge. the 2006 Swaps Credit Risk: The Authority adopted an interest rate risk management policy to select counterparties with an Derivative Hedging Instruments: The Authority entered into five initial rating of at least AA-/Aa3/AA-by at least two of the three separate interest rate swap agreements with an effective date nationally recognized credit rating agencies and a minimum of August 24, 2006, all of which are associated with the Series capitalization of $50.0 million. A summary of the credit ratings of 2006B-F Bonds. There were no embedded options in these the counterparites is included in the table below. In the event of contracts. The critical terms relating to the 2006 Swaps, including a counterparty downgrade below A-/A3/A- by at least two of the the credit ratings on the counterparties as of December 31, 2016 nationally recognized credit rating agencies, the counterparties are reflected in the table below. would have been subject to post suitable and adequate collateral from the listing of agreed upon acceptable securities. Terms: The following critical terms of the 2006 Swaps and the Series 2006B-F Bonds were identical: a) the notional amount of As of December 31, 2016, the counterparties had a credit rating the 2006 Swaps equaled the outstanding principal amount of that met or exceeded the minimum credit rating requirement. the Series 2006B-F Bonds, b) the re-pricing dates of the 2006 Counterparty Goldman Swaps matched those of the Series 2006B-F Bonds and c) the Ratings JPMorgan Chase Bank NA Sachs amortization of the 2006 Swaps matched the amortization of (S&P/Moody/Fitch) the Series 2006B-F Bonds. The following are the critical terms December 31, 2016 AA-/Aa2/NA A+/Aa3/AA- relating to all the 2006 Swaps outstanding at December 31, 2016: Interest Rate Risk: The Authority implemented a strategy on These terms apply to each of the Series 2006F Swaps the 2006 Swaps associated with the Series 2006B-F Bonds which was designed to provide a synthetic fixed rate, and allow Notional Value $106,160,000 the Authority to avoid additional interest rate risk. However, Fixed Rate 3.86% fluctuating market conditions could have materially impacted Fixed Leg Payer Authority the effectiveness of the hedge. SIFMA Weekly Index until 1/1/2009; Floating Leg Payer then 68% of 30-day LIBOR Basis Risk: Initially remarketing agents for the Series 2006B-F Termination Date 1/1/2028 Bonds were consistently able to obtain rates at or below the SIFMA (formerly BMA) weekly rate index. Since the variable Settlement Monthly rate paid by the counterparties on the interest rate swap was Premium Paid None the SIFMA through January 1, 2009, the hedging relationship provided a synthetic fixed rate on the Series 2006B-F Bonds. SIFMA - The Securities Industry and Financial Markets Association, formerly the BMA- The Bond Market Association Index However, a series of events in 2008 and 2009 related to the LIBOR - The London Interbank Offering Rate downgrade of the Authority’s bond insurer and one of its standby banks produced some basis spread on the Series 2006B-F Fair Value: The Authority’s 2006 Swaps were considered Bonds. Additionally, the variable rate received by the Authority effective cash flow hedges using regression analysis. Therefore, from its counterparties changed over to 68% of 30-day LIBOR the accumulated change in the fair value was reported as a on January 1, 2009. The Authority mitigated this basis spread component of Deferred Outflows of Resources on the Statement by terminating the associated bond insurance, replacing the of Net Position for the year ended December 31, 2016. standby bank, reassigning remarketing agents, and converting the 2006B-F Bonds to other interest rate modes. Since these For December 31, 2016, the Authority has obtained independent changes, the Series B-F bonds consistently traded near the index. market value evaluation of its 2006 Swaps. These fair value The Authority monitored the bonds on a daily basis. estimates were based on expected forward LIBOR swap rates and discounted expected cash flows. The appropriate LIBOR Termination Risk: The Authority had the option to terminate the percentages that related to the swap rates were applied to the 2006 Swaps at any time. As noted previously, two swaps were LIBOR swap curve to derive the expected forward swap rates. terminated in 2011 in conjunction with the refunding of the On December 31, 2016. the recurring fair value of the 2006 Series 2006C&D bonds. The counterparties could only terminate Swaps was approximately $47,597,000. The OTA categorizes in the event of a default such as non-payment, credit downgrade its fair value measurements within the fair value hierarchy of a counterparty, failure to provide collateral, or assign the swap established by GAAP. The hierarchy was based on the valuation to an AA rated provider subject to the Authority’s approval. As inputs used to measure the fair value of the liability. The OTA’s of December 31, 2016, no termination events occurred.

40 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

Rollover Risk: The term of the Series 2006B-F Bonds matched the The Series 2017E Bonds refunded $101,535,000 principal of the related 2006 Swaps, so there was no associated rollover risk. In Series 2011B Bonds. This refunding resulted in an increase to the addition, the Authority had a standby bond purchase agreement Authority’s net deferred debit of approximately $5,665,000. With for the Series 2006F Bonds, effective until May 2018. With the the Series 2017B refunding, the Authority decreased its aggregate Series 2006 B&E Bonds in term rate mode, there was not a standby debt service payments by approximately $13,896,000 from 2018 bond purchase agreement for either bonds. to 2031; the net present value savings of this transaction were approximately $11,406,000. Associated Debt: The net cash flow of the underlying 2006 Swaps compared to the Series 2006B-F Bonds resulted in the following As of December 31, 2017 and 2016, the Statements of Net net cash inflows (outflows): Position reflect a collective net deferred debit of approximately $97,209,000 and $55,464,000, respectively, resulting from For the Year Ended 2006 Swaps accounting losses from the defeasance of debt through its various refundings. The Statements of Revenues, Expenses and December 31, 2006-2015 ($3,628,869) Changes in net Position reflect the amortization of this deferral December 31, 2016 ($10,079) as a component of interest expense of approximately $6,465,000 Other Debt Related Information - The Interest, Sinking and and $6,038,000 for the years ended December 31, 2017 and 2016, Reserve Accounts required by the Trust Agreement have been respectively. established with the Trustee. The balance for the Revenue Reserve Account was approximately $126,353,000 and $95,262,000 as of NOTE 8. SHORT-TERM DEBT December 31, 2017 and 2016, respectively. The Authority has As of June 1, 2016, the Authority executed a supplemental funded the remainder of the debt reserve requirement with a agreement to its prevailing Trust Agreement, with Bank of ten year term loan with US Bank for $15,000,000, the current Oklahoma, N.A. as Trustee. This supplement authorized the remainder of the debt reserve requirement. The proceeds are issuance of a Second Senior Revenue Bond Series 2016A in the invested in a certificate of deposit with US Bank. The loan terms principal amount not to exceed $90,000,000. The unregistered were amended and restated December 1, 2017. The interest Series 2016A Bond was issued as a single bond to Wells Fargo rate on the loan is 90-day LIBOR plus 0.725%. The interest rate Bank, N.A. (Wells Fargo) for the sole purpose of securing the earned on the certificate of deposit is 90-day LIBOR minus 0.2%. payment obligations of the Authority under the revolving credit US Bank debt service requirements as of December 31, 2017: agreement the Authority entered into with Wells Fargo on June 1, 2016, and as amended, to provide interim financing for identified Maturity Other Long-Term Debt (US Bank Loan) Turnpike projects. The principal amount, maturity dates and interest rates of the Series 2016A Bond were in accordance December 1 Principal Interest with the terms of the revolving credit agreement. Proceeds 2018 $ 14,999,991 $ 332,936 received through these borrowings were deposited to the 2019 1 1 2016A Construction Fund for purposes of funding the identified 2020 1 1 2021 1 1 Turnpike projects. In February 2017, the Authority issued the 2022 1 1 Series 2017A Bonds and utilized a portion of the bond proceeds 2023-2027 5 5 to pay amounts due under this revolving credit agreement and $ 15,000,000 $ 332,945 fully redeem the Series 2016A Bond. Under the terms of the revolving credit agreement, minimum The Series 2017B Bonds refunded $24,560,000 principal of the principal borrowings were $250,000 or a whole multiple of Series 2007A Bonds. This refunding resulted in an increase to the $50,000 in excess thereof, with no more than five revolving Authority’s net deferred debit of approximately $176,000. With loans outstanding at any one time. The original commitment the Series 2017B refunding, the Authority decreased its aggregate termination date was December 30, 2016, but was subsequently debt service payments by approximately $1,653,000 from 2018 amended to June 30, 2017. Interest payments were due monthly, to 2022; the net present value savings of this transaction were and the interest rate for each revolving loan was 30-day LIBOR approximately $1,476,000. plus an applicable spread determined by the Authority’s credit rating. Commitment fees were due quarterly and calculated as The Series 2017D Bonds refunded $280,785,000 principal of the product of the remaining available commitment and the the Series 2006BEF Bonds (variable rate) and terminated the applicable spread determined by the Authority’s credit rating. corresponding swaps and reduced the Authority’s risk exposure The applicable spread at December 31, 2016 for interest payments as detailed above. This refunding resulted in an increase to the and commitment fees was 0.25% and 0.09%, respectively. Authority’s net deferred debit of approximately $42,370,000. With the Series 2017D refunding, the Authority increased its aggregate Beginng Additions Retired Ending debt service payments by approximately $3,151,000 from 2018 Balance Balance to 2028; the net present value savings on this transaction were 2017 $ 54,700,000 $ - $ 54,700,000 $ - approximately ($1,976,000). 2016 $ - $ 54,700,000 $ - $ 54,700,000

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Pensions” in 2018. Accordingly, the Authority’s employer allocated NOTE 9. DEFERRED COMPENSATION PLAN portion of this restated OPEB liability is approximately $443,000 as of June 30, 2016 and is a component of the Authority’s net pension The State of Oklahoma offers to its own employees, state agency and opeb liability; GASB 75 will be fully implemented in 2018. employees and other duly constituted authority or instrumentality employees a deferred compensation plan created in accordance Benefits Provided with Internal Revenue Code Section 457 and Chapter 45 of Title 74 of the Oklahoma Statutes. The Oklahoma State Employees The Plan provides retirement, disability, and death benefits to Deferred Compensation Plan, known as SoonerSave, is a voluntary Plan members and beneficiaries. The benefit provisions are plan that allows participants to defer a portion of their salary into established and may be amended by the Oklahoma Legislature. SoonerSave. Participation allows a person to shelter the portion of Retirement benefits are determined at 2% of the average annual their salary that they defer from current federal and state income salary received during the highest thirty-six months’ of the last ten tax. Taxes on the interest or investment gains on this money, while years of participating service, but not in excess of the applicable in SoonerSave, are also deferred. The deferred compensation is annual salary cap, multiplied by the number of years of credited not available to employees until termination, retirement, death service. Employees qualify for full retirement benefits at their or approved unforeseeable emergency. specified normal retirement age or when the employee’s age and years of credited service meet defined thresholds, determined by Under SoonerSave, the untaxed deferred amounts are invested the employee’s date of membership within the Plan. Employees as directed by the participant among various plan investment have the option to Increase the benefit computation factor for options. Effective January 1,1998, a Trust and Trust Fund covering all future service from 2.0% to 2.5%. The election is irrevocable, the plan assets was established pursuant to federal legislation binding for all future employment under the OPERS, and applies enacted in 1996, requiring public employers to establish such only to full years of service. Those who make the election pay the trusts for plans meeting the requirements of Section 457 of the standard contribution rate plus an additional contribution rate Internal Revenue Code. Under terms of the Trust, the corpus or which is actuarially determined. Employees become eligible to income of the Trust Fund may be used only for the exclusive vest fully upon termination of employment after attaining eight benefit of the plan participants and their beneficiaries. Further years of credited service, or the employee’s contributions may be information may be obtained from the Oklahoma State Employees withdrawn upon termination of employment. Deferred Compensation Plan audited financial statements for the year ended June 30, 2017. The Authority believes that it has no Disability retirement benefits are available for members having liabilities in respect to the State’s plan. eight years of credited service whose disability status has been NOTE 10. EMPLOYEE RETIREMENT PLAN certified. Disability retirement benefits are determined in the same manner as retirement benefits, but payable immediately Plan Description without an actuarial reduction. Upon the death of an active employee, the accumulated contributions of the employee are Employees of the Authority are provided with pensions through paid to the employee’s named beneficiary(ies) in a single lump the Oklahoma Public Employees Retirement Plan (the Plan), a sum payment or in monthly payments over the life of the spouse, cost-sharing multiple employer public employee defined benefit if so elected. Upon the death of a retired employee, the Plan will pension plan administered by the Oklahoma Public Employees pay a $5,000 death benefit to the employee’s beneficiary or estate Retirement System (the OPERS). Title 74 of the Oklahoma Statutes, of the employee if there is no living beneficiary, in addition to any Sections 901-932 and 935, as amended, assigns the authority for excess employee contributions or survivor benefits due. management and operation of the Plan to the OPERS Board of Trustees. The OPERS issues a publicly available comprehensive Employees who first became employed by the Authority on or annual financial report (CAFR) that includes financial statements after November 1, 2015, and have no prior participation in the and required supplementary information for the Plan. That annual Plan will participate in a mandatory defined contribution plan. report may be obtained at http://www.opers.ok.gov/websites/ See Note 11 for further discussion. opers/images/pdfs/CAFR- 2017-OPERS.pdf. Contributions OPERS Change In Accounting Principle Employees and the Authority are required to contribute at a rate On July 1, 2016 the OPERS implemented GASB Statement No. 74 set by Oklahoma Statute. The rates for the Plan are established by “Financial Reporting for Postemployment Benefit Plans Other Than the Oklahoma Legislature after recommendation by the OPERS Pensions” (GASB 74). GASB 74 presents improved information Board, based on an actuarial calculation which is performed to about postemployment benefit plans other than pensions (OPEB). determine the adequacy of such contribution rates. The Oklahoma The OPERS administers a health insurance subsidy plan (HISP), Legislature may amend the contribution requirements. The which is considered OPEB in accordance with the provisions of contribution rate for employees was 3.5% during 2017 and 2016. GASB 74. As a result of the OPERS’ implementation of GASB 74, The Authority’s contribution remains at its currently mandated the June 30, 2016 balance of the Plan’s net pension liability was maximum rate of 16.5%. The Authority’s contributions to the restated to separate the net OPEB liability from the net pension Plan for the years ended December 31, 2017 and 2016, were liability. The Authority will implement GASB 75 “Accounting and approximately $3,172,000 and $3,264,000, respectively, and equal Financial Reporting for Postemployment Benefits Other Than to the required contributions for each year.

42 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

Actuarial Assumptions Asset Class Target Allocation Long-Term expecTed reaL raTe The total pension liability as of June 30, 2017 and 2016, was of reTurn determined based on an actuarial valuation prepared as of July 1, U.S. Large Cap Equity 38.0% 5.3% 2017 and July 1, 2016, respectively, using the actuarial assumptions noted below: U.S. Small Cap Equity 6.0% 5.6% U.S. Fixed Income 25.0% 0.7% Actuarial assumptions 2017 2016 International Stock 18.0% 5.6% Investment return compounded annu- Emerging Market Stock ally, net of investement expense and 7.00% 7.25% 6.0% 6.4% including inflation TIPS 3.5% 0.7%

Salary increases, including inflation 3.5% to 9.5% 4.5% to 8.4% Rate Anticipation 3.5% 1.5%

RP-2014 Mortality RP-2000 Mortality Ta- Total 100.0% Table projected to 2025 ble projected to 2010 Mortality rates - active participants by Scale MP-2016 (dis- by Scale AA (disabled The discount rate used to measure the total pension liability was and nondisabled pensioners abled pensioners set pensioners set forward forward 12 years) 15 years) 7.0% for 2017 and 7.25% for 2016. The projection of cash flows used to determine the discount rate assumed that contributions from Assumed inflation rate 2.75% 3.00% employees and employers will be made at the current contribution rate as set out in Oklahoma Statute. Based on those assumptions, Annual post-retirement benefit No No the pension plan’s fiduciary net position was projected through increases 2114 to be available to make all projected future benefit payments

Payroll growth 3.50% 4.00% of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of

Actuarial cost method Entry age Entry age projected benefit payments to determine the total pension liability. The discount rate determined does not use a municipal bond rate. Select period for the termination of 10 years 10 years employment assumptions Sensitivity of the Net Pension Liability

The actuarial assumptions used in the July 1, 2017 valuation are The following presents the Authority’s proportionate share of the net based on the results of the most recent actuarial experience study, pension liability calculated using the discount rate of 7.0% for 2017 which covered the three-year period ending June 30, 2016. The and 7.25% for 2016, as well as what the Authority’s proportionate experience study report is dated April 13, 2017. The actuarial share of the net pension liability would be if it were calculated assumptions used in the July 1, 2016 valuations were based on the using a discount rate that is 1.0% lower or 1.0% higher than the results of the actuarial experience study which covered the three- current rate: year period ending June 30, 2013, with exception of the long-term rate of return which was modified in 2016. December 31, 2017 Current 1.0% Decrease The long-term expected rate of return on pension plan investments Discount 1.0% Increase 8.0% 6.0% was determined using a log-normal distribution analysis in which Rate 7.0% best estimate ranges of expected future real rates of return 2017 $17,996,576 $6,089,096 $(3,993,746) (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by 2016 $22,264,617 $10,433,427 $1,208,878 weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

The target asset allocation and best estimates of geometric real rates Pension Liabilities of return for each major asset class as of June 30, 2017 and 2016, are summarized in the following table: At December 31, 2017 and 2016, the Authority reported a liability of approximately $6,089,000 and $10,433,000, respectively, for its proportionate share of the net pension liability. The annual activity is shown below:

Beginning Ending Additions Reductions GASB74* Balance Balance 2017 $ 10,433,427 $ 5,570,993 $ 9,915,324 - $ 6,089,096

2016 $ 4,001,576 $ 10,215,340 $ 3,340,460 $ 443,029 $ 10,433,427 * OPERS implemented GASB 74 as of June 30, 2016

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Pension Expense Deferred Outflows And Inflows The net pension liability was measured as of June 30, 2017 and The 2017 deferred outflows of resources related to contributions 2016, and the total pension liability used to calculate the net subsequent to the measurement date, as shown in the table pension liability was determined by an actuarial valuation as of below, will be recognized as a reduction of the net pension July 1, 2017 and 2016, respectively. The OPERS has determined that liability in the year ended December 31, 2018; the 2016 amounts the actual contributions made to the Plan during the fiscal year are were recognized as a reduction of the net pension liability in the appropriate as the allocation basis as they are representative of year December 31, 2017. Other amounts reported as deferred future contributions. Contributions are reported using the accrual outflows of resources and deferred inflows of resources related basis of accounting. At June 30, 2017 the Authority’s proportionate to pensions will be recognized in pension expense as follows: share of the net pension liability and corresponding employer pension amounts was approximately 1.13%, an increase from its proportion of 1.10% measured as of June 30, 2016. For the years Year Ended December 31 2017 2016 ended December 31, 2017 and 2016, the Authority recognized 2017 N/A 940,697 2018 728,969 1,115,439 pension expense of approximately $2,452,000 and $2,061,000 2019 1,874,317 2,264,280 respectively. 2020 433,166 1,388,432 2021 (972,366) N/A Pension Plan Fiduciary Net Position Thereafter N/A N/A

Detailed information about the pension plan’s fiduciary net position is available in the separately issued OPERS CAFR, available as previously noted.vable and Payable Balanceste 16. Subsequent Event

deferred ouTfLows of resources and deferred InfLows of resources reLaTed To pensIons

deferred deferred InfLows Deferred Deferred ouTfLows of of resources Outflows of Inflows of resources 2017 2017 Resources 2016 Resources 2016

Differences between expected and actual experience - - $ $ 1,088,903 $ $ 477,957

- - Changes of assumptions 2,703,202 1,738,823 Net difference between projected and actual earnings on pension plan investments - 272,012 7,913,282 3,362,280

Changes in proportion and differences between Authority contributions and propor- tionate share of contributions 222,654 44,879 52 189,831 Authority contributions subsequent to the measurement date 1,555,654 - 1,621,901 -

Total $ 4,753,522 $ 1,133,782 $ 11,274,058 $ 4,030,068

44 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

frozen as security for the Series 1989 Revenue Bonds. All motor NOTE 11. DEFINED CONTRIBUTION PLAN fuel taxes apportioned to the Authority shall be available to fund Oklahoma Legislature enacted legislation requiring that effective debt service and reserves to he extent monies are not otherwise November 1, 2015, a Defined Contribution System be established available to the Authority for such purpose. If such motor fuel by the OPERS for most state employees first employed by a excise taxes apportioned to the Authority are not necessary in participating State employer on or after November 1, 2015. such month, the motor fuel excise taxes shall be paid over to the Employees of the Authority who first become employees on or Oklahoma Department of Transportation (ODOT). During 2017 after November 1, 2015, and have no prior participation in OPERS and 2016, the Authority received and subsequently remitted to must participate in this mandatory Defined Contribution Plan ODOT $46,960,452 and $46,250,246, respectively, of motor fuel (the Plan) created in accordance with Internal Revenue Code (the excise taxes. Code) Section 401(a) and 457(b) and chapter 40 of Title 590 of the Oklahoma Statutes. The Plan is known as Pathfinder. This Plan The amounts frozen at July 1, 1992 (fair value of $45,493,297 and its related Trust(s) are intended to meet the requirements and $45,250,239 at December 31, 2017 and 2016, respectively) of the Internal Revenue Code. Pathfinder is administered by the are invested in interest-bearing obligations in the Turnpike OPERS. The OPERS Board may amend Pathfinder or Trust but no Trust Fund. The interest received thereon ($403,545 and amendment shall authorize or permit any part of the Trust for $419,533 during the years ended December 31, 2017 and Pathfinder to be used or diverted to purposes other than for 2016, respectively) are used to eliminate deficiencies, if any, in the exclusive benefit of the Pathfinder participants and their available monies to meet revenue bond interest and principal beneficiaries. requirements. No deficiencies existed in 2017 or 2016.

Contribution rates are established by Oklahoma Statute and Prior to the issuance of the Series 1989 Revenue Bonds, the may be amended by Oklahoma Legislature. For 2017, employees Authority had not received apportionments from the Oklahoma must make mandatory employee contributions of 4.5% of pre- Tax Commission since 1979 because the maximum amount tax salary to the 401(a) plan and may make additional voluntary that could be retained by the Authority in accordance with the contributions to the 457(b) plan, subject to the maximum Enabling Act was deposited with the prior Trustee. deferral limited allowed under the Code. Employees are vested 100% for all employee contributions. The Authority must make When all Senior and Subordinate Revenue Bonds, together with mandatory contributions of 6% of the employee’s pre-tax salary interest thereon, have been paid, the Authority will be required and 7% if the employee elects to participate in the 457(b) plan. to pay all amounts that have been received from the Oklahoma Employees become vested for employer contributions based on Tax Commission and any interest earned on amounts invested to an established vesting schedule. The amount of the Authority’s the ODOT. The accumulated liability to the ODOT as of December contributions for Pathfinder for the year ended December 31, 2017 and 2016, is $53,705,872 and $53,262,639, respectively, 31, 2017 and 2016 was approximately $131,000 and $52,300 and the annual activity is shown below: respectively.

Additionally, in order to reduce the liabilities of the defined Beginning Ending Additions Retired benefit plan, the Authority is required to contribute the difference Balance Balance between the established 16.5% defined benefit employer 2017 $ 53,262,639 $ 443,233 $ - $ 53,705,872 contribution rate and the amount required to match the participating employees’ contribution in the defined contribution 2016 $ 52,911,466 $ 351,173 $ - $ 53,262,639 plan. The amounts contributed by the Authority for the years ended December 31, 2017 and 2016 to meet this requirement Additions to the liability represent the interest earned on amounts are included with the Authority’s contributions noted in Note 10. invested, net of realized gains and losses on the sale of invest- The Authority reports no liabilities for Pathfinder at December ments. No amounts are due within one year. Nation 31, 2017 and 2016. NOTE 13. DISAGGREGATION OF NOTE 12. ADVANCES FROM MOTOR RECEIVABLE AND PAYABLE BALANCES FUEL TAX TRUST Receivables are primarily comprised of current customer By virtue of the “Enabling Act” of 1971 and amendments thereto, receivables representing 46.5% and 14.5%, and intergovernmental a portion of the motor fuel excise taxes collected on fuels receivables representing 50.0% and 83.3% at December 31, consumed on the turnpikes is made available to the Authority 2017 and 2016, respectively. Remaining current receivables are from the Oklahoma Tax Commission. Prior to July 1, 1992, this comprised of 3.5% and 2.2% other receivables at December 31, amount was not to exceed $3,000,000 during a fiscal year of the 2017 and 2016, respectively. State. In 1992, Title 69, §1730 was amended to remove the cap and allow the Authority to receive the full amount collected in Payable balances are comprised of 60.7% and 65.7% current accordance with the original formula. This amendment stated the accounts payable and accrued expenses to contractors and motor fuel taxes due to the Authority would be apportioned to vendors, 27.5% and 26.0% current intergovernmental payables the Authority on the first day of each calendar month. Beginning and 11.8% and 8.3% in other payables at December 31, 2017 July 1, 1992, the amount of cash and investments on deposit was and 2016 respectively.

2017 2017 45 FINANCIAL SECTION FINANCIAL SECTION

NOTE 14. LITIGATION AND CONTINGENT LIABILITIES

The Authority is a defendant in various litigation. Although the outcome of these matters is not presently determinable, in the opinion of the Authority’s management, the resolution of these matters will not have a material adverse effect on the financial condition of the Authority.

NOTE 15. COMMITMENTS

At December 31, 2017 and 2016, the Authority had commitments outstanding relating to equipment orders and supplies of $12,636,000 and $12,501,000, respectively. At December 31, 2017 and 2016, the Authority had commitments outstanding relating to construction and maintenance contracts of approximately $106,087,000 and $36,501,000, respectively.

46 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

reqUired sUpplemenTarY inFormaTion schedUle oF emploYer proporTionaTe share oF neT pension liabiliTY oklahoma pUblic emploYees reTiremenT planYears ended - december 31, 2017 2017 2016 2015 2014

Authority’s proportion of the net pension liability 1.13% 1.10% 1.11% 1.15% Authority’s proportionate share of the net pension liability $ 6,089,096 $ 10,433,427 $ 4,001,576 $ 2,119,662 Authority’s covered-employee payroll $ 18,598,154 $ 19,446,001 $ 19,529,946 $ 19,482,910 Authority’s proportionate share of the net pension liability as a percentage of its covered employee payroll 32.7% 53.7% 20.5% 10.9% Plan fiduciary net position as a percentage of the total pension liability 94.3% 89.5% 96.0% 97.9%

*The amounts presented for the Authority’s calendar year end (December 31) were determined as of the Plan’s fiscal year end June 30. Information is not available prior to 2014. A 10-year trend will be presented when available.

schedUle oF emploYer conTribUTions oklahoma pUblic emploYees reTiremenT plan Ten Years december 31, 2017 and prior nine Years

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

Required Contributions $ 3,172,188 3,264,101 $ 3,213,707 $ 3,272,118 $ 3,214,259 $ 2,998,737 $ 2,949,127 $ 2,849,167 $ 2,790,452 $ 2,523,127 Contributions Made 3,172,188 3,264,101 3,213,707 3,272,118 3,214,259 2,998,737 2,949,127 2,849,167 2,790,452 2,523,127 Deficiency (Excess) ------

Covered Payroll 17,828,704 19,140,976 19,535,479 19,667,541 19,441,410 18,339,455 18,326,471 18,197,648 18,361,579 17,963,369

Contributions as % 17.8% 17.1% 16.5% 16.6% 16.5% 16.4% 16.1% 15.7% 15.2% 14.0% Notes to Required Supplementary Information, Years Ended December 31, 2017 and 2016 Per Oklahoma Statutes, the Plan has been amended effective November 1, 2015, so that the OPERS has created a defined contribution plan. Employees first employed on or after November 1, 2015 with no prior participation in the Plan will participate in the mandatory defined contribution plan.

The 2.75% inflation rate for 2017 was a decrease from the 2016 inflation rate of 3.0%. The investment rate of return for 2017 is 7.0%, and the 2016 rate of return was adjusted to 7.25% rather than the original 2016 rate of return of 7.5%. For 2017, the expectation of retired life mortality for active participants and nondisabled pensioners was based on the RP-2014 Mortality Table projected to 2025 by Scale MP-2016 (disabled pensioners set forward 12 years) rather than on the RP-200 Mortality Table projected to 2010 by Scale AA (disabled pensioners set forward 15 years), which was used prior to 2017. All other assumptions remained consistent for the years ended December 31, 2017 and 2016.

2017 2017 47 FINANCIAL SECTION FINANCIAL SECTION

schedUle oF bUdgeT compared To acTUal operaTing expense (prepared on a non-gaap bUdgeTarY basis) Year ended december 31, 2017

BUDGETED ACTUAL VARIANCE Expense Description EXPENSES EXPENSES (OVER)/UNDER

Toll Operations: Personnel services $ 13,424,895 $ 12,738,077 $ 686,818 Contractual services 7,851,716 5,795,941 2,055,775 Commodities 367,402 305,369 62,033 Capital outlay and contingencies - - - Total 21,644,013 18,839,387 2,804,626

Turnpike Maintenance: Personnel services 12,083,903 11,546,466 537,437 Contractual services 5,292,138 5,228,625 63,513 Commodities 3,405,765 4,360,646 (954,881) Capital outlay and contingencies - 8,415 (8,415) Total 20,781,806 21,144,152 (362,346)

Construction: Personnel services 182,689 244,660 (61,971) Contractual services - 6,864 (6,864) Commodities - 2,003 (2,003) Capital outlay and contingencies - - - Total 182,689 253,527 (70,838)

Engineering: Personnel services 857,703 824,239 33,464 Contractual services 155,850 170,104 (14,254) Commodities 4,400 6,211 (1,811) Capital outlay and contingencies - - - Total 1,017,953 1,000,554 17,399

Highway Patrol: Contractual services 15,660,946 16,341,415 (680,469) Commodities 1,363,587 834,063 529,524 Capital outlay and contingencies - - - Total 17,024,533 17,175,478 (150,945)

PIKEPASS Customer Service: Personnel services 3,719,134 3,729,644 (10,510) Contractual services 7,253,866 7,673,135 (419,269) Commodities 3,909,291 3,365,259 544,032 Capital outlay and contingencies - - - Total 14,882,291 14,768,038 114,253

Administrative Services: Personnel services 906,126 860,864 45,262 Contractual services 329,875 209,264 120,611 Commodities 144,600 99,896 44,704 Capital outlay and contingencies - - - Total 1,380,601 1,170,024 210,577

48 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

schedUle oF bUdgeT compared To acTUal operaTing expense (prepared on a non-gaap bUdgeTarY basis) Year ended december 31, 2017

BUDGETED ACTUAL VARIANCE Expense Description EXPENSES EXPENSES (OVER)/UNDER

Information Technology: Personnel services $ 1,743,250 $ 1,071,268 $ 671,982 Contractual services 2,508,200 2,575,397 (67,197) Commodities 122,750 192,079 (69,329) Capital outlay and contingencies - 34,587 (34,587) Total 4,374,200 3,873,331 500,869

Controller: Personnel services 1,108,204 938,129 170,075 Contractual services 242,275 356,787 (114,512) Commodities 6,000 6,334 (334) Capital outlay and contingencies - - - Total 1,356,479 1,301,250 55,229

Finance and Revenue: Personnel services 311,672 290,257 21,415 Contractual services 286,952 266,988 19,964 Commodities - 2,548 (2,548) Capital outlay and contingencies - - - Total 598,624 559,793 38,831

Executive: Personnel services 1,558,839 1,643,912 (85,073) Contractual services 1,064,183 1,319,730 (255,547) Commodities 28,675 43,875 (15,200) Capital outlay and contingencies - - - Total 2,651,697 3,007,517 (355,820)

Authority: Contractual services 5,000 1,483 3,517 Commodities 2,169,189 - 2,169,189 Capital outlay and contingencies - - - Total 2,174,189 1,483 2,172,706

Total expenses $ 88,069,075 $ 83,094,534 $ 4,974,541

Adjustments necessary to convert expenses from a budgetary (modified accrual) basis to GAAP basis at year end:

2017 2016 Budgetary basis $ 83,094,534 $ 78,007,620 Increase (decrease) due to: Current expenses reclassified as property and equipment (43,002) (31,405) Non-Revenue Fund operating expenses 20,122,324 17,503,985 Other GAAP adjustments (1,285,740) (1,507,858) GAAP basis $ 101,888,116 $ 93,972,342

2017 2017 49 FINANCIAL SECTION FINANCIAL SECTION

schedUle oF annUal debT service reqUiremenTs as oF december 31, 2017

2011 Series

Year 2011 A Series Revenue 2011 B Series Refunding MATURITY PRINCIPAL INTEREST TOTAL PRINCIPAL INTEREST TOTAL JAN. 1 2018 $ 37,820,000 $ 17,380,681 $ 55,200,681 $ 1,555,000 $ 4,564,933 $ 6,119,933 2019 40,215,000 15,583,981 55,798,981 5,000.00 2,075,320 2,080,320 2020 41,925,000 13,827,356 55,752,356 5,000.00 2,075,220 2,080,220 2021 41,295,000 11,758,063 53,053,063 6,180,000 2,075,108 8,255,108 2022 39,985,000 9,804,400 49,789,400 5,215,000 1,839,983 7,054,983 2023 24,275,000 7,824,275 32,099,275 1,320,000 1,605,333 2,925,333 2024 24,880,000 6,705,925 31,585,925 - 1,565,732 1,565,732 2025 26,350,000 5,474,263 31,824,263 - 1,565,732 1,565,732 2026 27,470,000 4,166,756 31,636,756 - 1,565,732 1,565,732 2027 28,615,000 2,821,756 31,436,756 - 1,565,732 1,565,732 2028 29,805,000 1,435,975 31,240,975 - 1,565,732 1,565,732 2029 - - - - 1,565,733 1,565,733 2030 - - - 24,045,000 1,565,733 25,610,733 2031 - - - 16,000,000 640,000 16,640,000 2032 ------2033 ------2034 ------2035 ------2036 ------2037 ------2038 ------2039 ------2040 ------2041 ------2042 ------2043 ------2044 ------2045 ------2046 ------2047 ------

Totals $ 362,635,000 $ 96,783,431 $ 459,418,431 $ 54,325,000 $ 25,836,023 $ 80,161,023

(Continued)

50 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

schedUle oF annUal debT service reqUiremenTs as oF december 31, 2017

2017 Series

Year 2017 A Series Revenue 2017 B Series Refunding MATURITY PRINCIPAL INTEREST TOTAL PRINCIPAL INTEREST TOTAL JAN. 1 2018 $ - $ 17,766,138 $ 17,766,138 $ 4,945,000 $ 618,994 $ 5,563,994 2019 - 19,801,269 19,801,269 5,020,000 541,550 5,561,550 2020 - 19,801,269 19,801,269 4,000,000 441,150 4,441,150 2021 - 19,801,269 19,801,269 5,235,000 321,150 5,556,150 2022 - 19,801,269 19,801,269 4,730,000 111,750 4,841,750 2023 - 19,801,269 19,801,269 - - - 2024 - 19,801,269 19,801,269 - - - 2025 - 19,801,269 19,801,269 - - - 2026 - 19,801,269 19,801,269 - - - 2027 - 19,801,269 19,801,269 - - - 2028 - 19,801,269 19,801,269 - - - 2029 - 19,801,269 19,801,269 - - - 2030 - 19,801,269 19,801,269 - - - 2031 - 19,801,269 19,801,269 - - - 2032 20,445,000 19,801,269 40,246,269 - - - 2033 21,420,000 18,818,169 40,238,169 - - - 2034 22,270,000 17,971,175 40,241,175 - - - 2035 23,155,000 17,085,650 40,240,650 - - - 2036 24,075,000 16,172,300 40,247,300 - - - 2037 25,035,000 15,209,300 40,244,300 - - - 2038 22,935,000 13,957,550 36,892,550 - - - 2039 27,330,000 12,910,800 40,240,800 - - - 2040 28,660,000 11,578,500 40,238,500 - - - 2041 30,065,000 10,181,500 40,246,500 - - - 2042 31,530,000 8,716,100 40,246,100 - - - 2043 33,075,000 7,166,000 40,241,000 - - - 2044 34,400,000 5,843,000 40,243,000 - - - 2045 35,775,000 4,467,000 40,242,000 - - - 2046 37,205,000 3,036,000 40,241,000 - - - 2047 38,695,000 1,547,800 40,242,800 - - -

Totals $ 456,070,000 $ 459,644,748 $ 915,714,748 $ 23,930,000 $ 2,034,594 $ 25,964,594

2017 2017 51 FINANCIAL SECTION FINANCIAL SECTION

schedUle oF annUal debT service reqUiremenTs as oF december 31, 2017

2017 Series

Year 2017 C Series Revenue 2017 D Series Refunding MATURITY PRINCIPAL INTEREST TOTAL PRINCIPAL INTEREST TOTAL JAN. 1 2018 $ - $ 406,926 $ 406,926 $ 11,435,000 $ 362,388 $ 11,797,388 2019 - 14,649,322 14,649,322 11,405,000 12,588,550 23,993,550 2020 - 14,649,322 14,649,322 11,850,000 12,132,350 23,982,350 2021 - 14,649,322 14,649,322 5,695,000 11,658,350 17,353,350 2022 - 14,649,322 14,649,322 11,315,000 11,430,550 22,745,550 2023 - 14,649,322 14,649,322 33,420,000 10,864,800 44,284,800 2024 - 14,649,322 14,649,322 34,170,000 9,528,000 43,698,000 2025 - 14,649,322 14,649,322 36,415,000 7,819,500 44,234,500 2026 - 14,649,322 14,649,322 38,145,000 5,998,750 44,143,750 2027 - 14,649,322 14,649,322 39,960,000 4,091,500 44,051,500 2028 - 14,649,322 14,649,322 41,870,000 2,093,500 43,963,500 2029 26,210,000 14,649,322 40,859,322 - - - 2030 27,520,000 13,338,822 40,858,822 - - - 2031 28,895,000 11,962,822 40,857,822 - - - 2032 9,895,000 10,518,072 20,413,072 - - - 2033 10,400,000 10,023,322 20,423,322 - - - 2034 10,915,000 9,503,323 20,418,323 - - - 2035 11,360,000 9,057,573 20,417,573 - - - 2036 11,925,000 8,489,573 20,414,573 - - - 2037 12,525,000 7,893,323 20,418,323 - - - 2038 16,405,000 7,360,823 23,765,823 - - - 2039 13,715,000 6,704,623 20,419,623 - - - 2040 14,265,000 6,156,023 20,421,023 - - - 2041 14,830,000 5,585,423 20,415,423 - - - 2042 15,420,000 4,992,223 20,412,223 - - - 2043 16,030,000 4,391,863 20,421,863 - - - 2044 16,825,000 3,590,363 20,415,363 - - - 2045 17,670,000 2,749,113 20,419,113 - - - 2046 18,555,000 1,865,613 20,420,613 - - - 2047 19,480,000 937,863 20,417,863 - - -

Totals $ 312,840,000 $ 286,670,228 $ 599,510,228 $ 275,680,000 $ 88,568,238 $ 364,248,238

(Continued)

52 2017 2017 FINANCIAL SECTION FINANCIAL SECTION

schedUle oF annUal debT service reqUiremenTs as oF december 31, 2017

2017 Series

Year 2017 E Series MATURITY PRINCIPAL INTEREST TOTAL JAN. 1 2018 $ 2,285,000 $ 122,853 $ 2,407,853 2019 - 4,331,292 4,331,292 2020 - 4,331,292 4,331,292 2021 - 4,331,292 4,331,292 2022 - 4,331,292 4,331,292 2023 4,370,000 4,331,292 8,701,292 2024 6,850,000 4,156,492 11,006,492 2025 6,255,000 3,813,992 10,068,992 2026 6,675,000 3,501,243 10,176,243 2027 7,125,000 3,167,493 10,292,493 2028 7,575,000 2,811,243 10,386,243 2029 31,105,000 2,432,493 33,537,493 2030 8,465,000 1,027,243 9,492,243 2031 15,130,000 603,993 15,733,993 2032 - - - 2033 - - - 2034 - - - 2035 - - - 2036 - - - 2037 - - - 2038 - - - 2039 - - - 2040 - - - 2041 - - - 2042 - - - 2043 - - - 2044 - - - 2045 - - - 2046 - - - 2047 - - -

Totals $ 95,835,000 $ 43,293,505 $ 139,128,505

(Continued)

2017 2017 53 FINANCIAL SECTION FINANCIAL SECTION

schedUle oF annUal debT service reqUiremenTs as oF december 31, 2017

Year Total Bonds Other Long-Term Debt MATURITY OUTSTANDING PRINCIPAL INTEREST TOTAL JAN. 1 PRINCIPAL Year US Bank Loan 2018 $ 58,040,000 $ 41,222,913 $ 99,262,913 $ 1,523,275,000 MATURITY PRINCIPAL INTEREST TOTAL 2019 56,645,000 69,571,284 126,216,284 1,466,630,000 Dec. 1 2020 57,780,000 67,257,959 125,037,959 1,408,850,000 2018 $ 14,999,991 $ 332,936 $ 15,332,927 2021 58,405,000 64,594,554 122,999,554 1,350,445,000 2019 1 1 2 2022 61,245,000 61,968,566 123,213,566 1,289,200,000 2020 1 1 2 2023 63,385,000 59,076,291 122,461,291 1,225,815,000 2021 1 1 2 2024 65,900,000 56,406,740 122,306,740 1,159,915,000 2022 1 1 2 2025 69,020,000 53,124,078 122,144,078 1,090,895,000 2023 1 1 2 2026 72,290,000 49,683,072 121,973,072 1,018,605,000 2024 1 1 2 2027 75,700,000 46,097,072 121,797,072 942,905,000 2025 1 1 2 2028 79,250,000 42,357,041 121,607,041 863,655,000 2026 1 1 2 2029 57,315,000 38,448,817 95,763,817 806,340,000 2027 1 1 2 2030 60,030,000 35,733,067 95,763,067 746,310,000 Totals $ 15,000,000 $ 332,945 $ 15,332,945 2031 60,025,000 33,008,084 93,033,084 686,285,000 (This page is intentionally left blank.) 2032 30,340,000 30,319,341 60,659,341 655,945,000 2033 31,820,000 28,841,491 60,661,491 624,125,000 2034 33,185,000 27,474,498 60,659,498 590,940,000 2035 34,515,000 26,143,223 60,658,223 556,425,000 2036 36,000,000 24,661,873 60,661,873 520,425,000 2037 37,560,000 23,102,623 60,662,623 482,865,000 2038 39,340,000 21,318,373 60,658,373 443,525,000 2039 41,045,000 19,615,423 60,660,423 402,480,000 2040 42,925,000 17,734,523 60,659,523 359,555,000 2041 44,895,000 15,766,923 60,661,923 314,660,000 2042 46,950,000 13,708,323 60,658,323 267,710,000 2043 49,105,000 11,557,863 60,662,863 218,605,000 2044 51,225,000 9,433,363 60,658,363 167,380,000 2045 53,445,000 7,216,113 60,661,113 113,935,000 2046 55,760,000 4,901,613 60,661,613 58,175,000 2047 58,175,000 2,485,663 60,660,663 -

Totals $ 1,581,315,000 $ 1,002,830,767 $ 2,584,145,767 $

(Continued)

54 2017 2017 APPENDIX C

SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT

The following statements are brief summaries of certain provisions of the Trust Agreement Capitalized words and terms that are used in this section and that are defined in the Trust Agreement are used herein as so defined. Such statements do not purport to be complete, and reference is made to the Trust Agreement, as amended and supplemented through the Sixteenth Supplemental Trust Agreement, copies of which are available for examination during normal business hours at the principal offices of the Authority and the Trustee.

Definitions (Section 101)

“Accreted Amount” shall mean with respect to Capital Appreciation Bonds of any Series, the amount set forth in a Supplemental Agreement as the amount representing the initial public offering price, plus the accumulated and compounded interest on such Bonds as of any point of time.

“Amortization Requirement,” as applied to the term bonds of any Series and maturity for any fiscal year, shall mean the principal amount fixed or computed for such fiscal year for the retirement of such term bonds by purchase or redemption.

“Amortized Cost,” when used with respect to an obligation purchased at a premium above or discount below par, shall mean as of any subsequent date of valuation, the value obtained by dividing the total premium or discount by the number of days remaining to maturity on any such obligation at the time of such purchase and by multiplying the amount calculated by the number of days having passed since the date of purchase and (i) in the case of an obligation purchased at a premium, by deducting the product obtained from the purchase price, and (ii) in the case of an obligation purchased at a discount, by adding the product obtained to the purchase price.

“Balloon Indebtedness” shall mean Indebtedness twenty-five per centum (25%) or more of the principal of which matures in a single bond year on the same date, which portion of the principal is not required by the documents governing such Indebtedness to be amortized by payment or redemption prior to such date. If any Indebtedness consists partially of Variable Rate Indebtedness and partially of Indebtedness bearing interest at a fixed rate, the portion constituting Variable Rate Indebtedness and the portion bearing interest at a fixed rate shall be treated as separate issues for purposes of determining whether any such Indebtedness constitutes Balloon Indebtedness.

“[B]onds” shall mean the senior bonds and the subordinated bonds issued under the Trust Agreement unless the context otherwise requires.

“bond year” or “fiscal year” shall mean the same as the calendar year or such other annual period commencing and ending on the dates specified in a Supplemental Agreement.

“Business Day” shall mean any day other than a Saturday or Sunday, on which commercial banks (including the Trustee, any Depositary, the Bond Registrar, any Paying Agent and any Credit Bank or Insurer) are open for business in the State and in New York, New York and on which the New York Stock Exchange is open.

“Capital Appreciation Bonds” shall mean bonds the interest on which is compounded and accumulated at the rates and on the dates set forth in a Supplemental Agreement and is payable on the date, if any, on which such bonds become Current Interest Bonds or upon redemption or on the maturity date of such bonds.

“Completion Date” shall mean as to each Turnpike Project or Improvement the date of completion as such date shall be certified as set forth under “Disposition of Construction Fund Balance” below.

“Credit Bank” shall mean as to any particular Series of bonds, the person (other than an Insurer) providing a Credit Facility or a Senior Bond Reserve Account Insurance Policy or a Subordinated Bond Reserve Insurance Policy, as designated in the Supplemental Agreement providing for the issuance of such bonds.

“Credit Facility” shall mean as to any particular Series of bonds, a letter of credit, a line of credit, a guaranty, standby bond purchase agreement or other credit- or liquidity-enhancement facility (other than an insurance policy issued by an Insurer), as described in the Supplemental Agreement providing for the issuance of such bonds.

“Current Expenses” shall mean the Authority’s reasonable and necessary current expenses of maintenance, repair and operation of the Oklahoma Turnpike System (but not for any Junior Obligation projects) and shall include, without limiting the generality of the foregoing, all ordinary and usual expenses of maintenance, repair and operation, which may include expenses not annually recurring, premiums and reserves for insurance, fees or premiums for a Credit Facility or Senior Bond Reserve Account Insurance Policy or a Subordinated Bond Reserve Account Insurance Policy (but not including any amounts payable as interest, whether or not characterized as a fee or premium, on draws, advances or loans), all administrative and engineering expenses relating to maintenance, repair and operation, fees and expenses of the Trustee, the Bond Registrar, the Paying Agents, any Depositary, indexing agents and remarketing agents, legal expenses, advertising expenses, any taxes or assessments lawfully levied on the Oklahoma Turnpike System, any payments to pension or retirement funds, any other expenses required or permitted to be paid by the Authority under the provisions of the Trust Agreement or by law and any expenses incurred by the Authority for any of the foregoing purposes, but shall not include payments made by the Authority in respect of any agreement mentioned in paragraph (C)(2) of Variable Rate Indebtedness under “Second Senior Bonds” below regardless of the type of bonds or Indebtedness such agreement may have been entered into in respect thereof and any reserves for extraordinary maintenance or repair or any expenses for extraordinary maintenance or repair of a type or other expenses specified in “Use of Reserve Maintenance Fund” below or any allowance for depreciation or any deposits or transfers to the credit of the Reserve Maintenance Fund and the General Fund, or any unrealized losses (or any allowances or reserves therefore) from investments or from transactions of the type described in the definition of Qualified Swap herein.

“Current Interest Bonds” shall mean bonds the interest on which is payable on the Interest Payment Dates provided therefor in a Supplemental Agreement which Agreement may also provide that bonds initially issued as Capital Appreciation Bonds may become Current Interest Bonds on the date specified therein.

“Debt Service Requirement” shall mean, for any bond year, the aggregate of (a) the Principal and Interest Requirements on all bonds then outstanding for such bond year and (b) the payments required to be made in respect of Parity Indebtedness for such bond year, employing the methods of calculation set forth in paragraphs (A), (B), and (C) under the caption “Second Senior Bonds” below in the cases of Balloon Indebtedness, Variable Rate Indebtedness and Optional Tender Indebtedness; provided, however, that interest expense on Indebtedness not constituting bonds shall be excluded from the determination of Debt Service Requirement to the extent such interest is to be paid from the proceeds of such Indebtedness

C-2 or from investment (but not reinvestment) earnings thereon if such proceeds shall have been invested in Government Obligations and to extent such earnings may be determined precisely; and provided further that interest expense on credit facilities drawn upon to purchase but not to retire Indebtedness not constituting bonds, except to the extent such interest exceeds the interest payable on the related Indebtedness, shall not be included in the determination of Debt Service Requirement.

“Defeasance Obligations” shall mean (i)(x) the obligations described in clause (i) of the definition of “Government Obligations” (or clause (ii) of such definition, if and to the extent permitted by law), and (y) the obligations described in clause (a)(ii) of the definition of “Investment Obligations”, in each case which are not subject to redemption other than at the option of the holder thereof or (ii) if and to the extent permitted by law, Defeased Municipal Obligations; provided, however, that no amendment to the term “Defeasance Obligations” effected by the Eighth Supplemental Trust Agreement (clause “y” above) shall be effective with respect to the defeasance of bonds or Parity Indebtedness Outstanding hereunder prior to the effective date of such Eighth Supplemental Trust Agreement.

“Defeased Municipal Obligations” shall mean obligations of any state or territory of the United States or any political subdivision thereof which obligations are rated in the rating category not lower than the credit rating assigned to full faith and credit obligations of the United States government by Moody’s Investors Service, Inc. and Standard & Poor’s Corporation and meet the following requirements: (i) the obligations are not subject to redemption or the trustee thereof has been given irrevocable instructions to call such obligations for redemption and the issuer has covenanted not to redeem such obligations other than as set forth in such instructions; (ii) the obligations are secured by cash or Government Obligations (which are not subject to redemption other than at the option of the holder thereof) that may be applied only to interest, principal, and premium payments of such obligations; (iii) the principal of and interest on the Government Obligations (plus any cash in the escrow fund) are sufficient to meet the liabilities of the obligations; (iv) the Government Obligations serving as security for such obligations are held by an escrow deposit agent or trustee; and (v) the Government Obligations are not available to satisfy any other claims, including those against the trustee or escrow deposit agent.

“Depositary” shall mean the Trustee and one or more other banks or trust companies duly authorized to engage in the banking business and designated by the Authority as a depositary of moneys under the Trust Agreement.

“Deposit Day” shall mean the tenth (10th) day of each month (or such other day that may be designated in a Supplemental Agreement as a “Deposit Day” in respect of all bonds and Parity Indebtedness), on which day a withdrawal from the Revenue Fund is required to accomplish the payments and transfers as set forth under “Senior Bond Sinking Fund; Additional Funds and Accounts” below.

“Estimated Average Interest Rate” shall mean, as to any Variable Rate Indebtedness or Qualified Swap and as of any date of calculation, the average interest rate or rates anticipated to be borne by such bonds or Qualified Swap, or by the combination of such arrangements, over the period or periods for which such rate or rates are anticipated to be in effect, all as estimated by the Authority. Notwithstanding the foregoing, in the event that the Qualified Swap Provider fails to maintain a credit rating of at least BBB or the equivalent thereof by at least one Rating Agency, or there is no Qualified Swap related to the Variable Rate Indebtedness, all interest rate assumptions for Variable Rate Indebtedness, shall be assumed to bear interest at the highest of: (i) the actual rate on the Variable Rate Indebtedness on the date of calculation, or if the indebtedness is not yet Outstanding, the initial rate (if established and binding), (ii) if indebtedness has been outstanding for at least twelve months, the average rate over the twelve months immediately preceding the date of calculation, or if no debt is Outstanding for the twelve prior months under the Trust Agreement, the average rate borne by reference to an index comparable, in the opinion of the Authority, for that to be utilized in determining the interest rate for the

C-3 debt to be issued, and (iii) if interest on the indebtedness is excludable from gross income under the applicable provisions of the Internal Revenue Code, the most recently published Bond Buyer “Revenue Bond Index” (or comparable index if no longer published), or (iv) if interest is not so excludable, the interest rate on direct United States Treasury Obligations with comparable maturities; provided, however, that for purposes of the toll covenant set forth in Section 501 of the Trust Agreement measuring actual debt service coverage during any applicable period. Variable Rate Indebtedness shall be deemed to bear interest at the actual average rate per annum applicable during such period.

“Existing Turnpike Projects” shall mean the Turner Turnpike, the H.E. Bailey Turnpike, the Indian Nation Turnpike, the Muskogee Turnpike, the Will Rogers Turnpike and the Cimarron Turnpike.

“Federal Securities” shall mean (1) any bonds or other obligations which as to principal and interest constitute direct obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any of the federal agencies set forth in clause (2) below to the extent unconditionally guaranteed by the United States of America; and (2) bonds, debentures, or other evidences of indebtedness issued or guaranteed by any agency or corporation which has been or may hereafter be created pursuant to an Act of Congress as an agency or instrumentality of the United States of America, or (3) such other obligations as the Enabling Act may from time to time permit moneys held to the credit of the Turnpike Trust Fund to be invested in.

“First Senior Bond Reserve Account” shall mean the special account created in the Senior Bond Sinking Fund as set forth under “Senior Bond Sinking Fund; Additional Funds and Accounts” below.

“First Senior Bond Reserve Account Requirement” as to the first senior bonds shall mean, as of any date of calculation, an amount of money, securities or Senior Bond Reserve Account Insurance Policy equal to the lesser of (i) the maximum Principal and Interest Requirements in any bond year on all first senior bonds then outstanding and (ii) 10% of the original principal amount of each Series of first senior bonds. In computing the First Senior Bond Reserve Account Requirement in respect of any first senior bonds that constitute Variable Rate Indebtedness, the interest rate on such bonds shall be assumed to be the maximum interest rate established in a Supplemental Agreement for such Indebtedness.

In the case of first senior bonds constituting Balloon Indebtedness, the Principal and Interest Requirements shall be adjusted to include the greatest amount established for any bond year under clauses (i) or (ii) under “Second Senior Bonds — (A) Balloon Indebtedness” below.

In the case of first senior bonds constituting Optional Tender Indebtedness for which a Credit Facility shall have been delivered to the Trustee or such other fiduciary authorizing the Trustee or such fiduciary to draw thereon to pay the Purchase Price of any such Indebtedness, the date or dates on which the owners thereof may at their option tender such Indebtedness for payment or purchase shall be disregarded.

“first senior bonds” shall mean the bonds issued pursuant to “First Senior Bonds” set forth below.

“First Senior Bond Service Account” shall mean the special account created in the Senior Bond Sinking Fund as set forth under “Senior Bond Sinking Fund; Additional Funds and Accounts” below.

“General Fund” shall mean the special fund designated the “Oklahoma Turnpike System General Fund” created as set forth under “Senior Bond Sinking Fund; Additional Funds and Accounts” below.

C-4 “General Fund turnpike project” shall mean any project otherwise falling within the definition of a Turnpike Project but which project does not at the time in question meet the requirements for a Turnpike Project or has not been reclassified as a Turnpike Project under “Requirements for New Turnpike Projects; Reclassification of General Fund Turnpike Projects” below.

“Government Obligations” shall mean (i) direct obligations of, or obligations the principal of and the interest on which are unconditionally guaranteed by, the United States government, and (ii) evidences of ownership of a proportionate interest in specified direct obligations of, or specified obligations the timely payment of principal of and the interest on which are unconditionally and fully guaranteed by, the United States of America, (a) which obligations are held by a bank or trust company organized and existing under the laws of the United States of America or any state thereof in the capacity of custodian; (b) the owner of the proportionate interest is the real party in interest and has the right to proceed directly and individually against the obligor of the underlying obligations; and (c) the underlying obligations are held in safekeeping in a special account, segregated from the custodian’s general assets, and are not available to satisfy any claim of the custodian, any person claiming through the custodian, or any person to whom the custodian may be obligated.

“Improvements” shall mean any additions, betterments, improvements and enlargements to the Existing Turnpike Projects, the New Turnpike Projects, and any additional Turnpike Project or Projects constituting a part of the Oklahoma Turnpike System or any major rehabilitation or reconstruction thereof.

“Indebtedness” shall mean (i) bonds, (ii) all other indebtedness of the Authority for borrowed money and (iii) all installment sales and capital lease obligations incurred or assumed by the Authority. Obligations to reimburse Credit Banks for amounts drawn under Credit Facilities to pay the Purchase Price of Optional Tender Indebtedness shall not constitute Indebtedness except to the extent such obligations exceed the Debt Service Requirements on the bonds or any Parity Indebtedness held by or pledged to or for the account of a Credit Bank that shall have paid the Purchase Price of Optional Tender Indebtedness.

“Insurer” shall mean, as to any particular maturity or any particular Series of bonds, the person undertaking to insure such bonds as designated in a Supplemental Agreement providing for the issuance of such bonds.

“Interest Payment Date” shall mean a January 1 or July 1, as the case may be; provided, however, that Interest Payment Date may mean in respect of bonds or Parity Indebtedness constituting Variable Rate Indebtedness or Optional Tender Indebtedness, if so provided in a Supplemental Agreement, such other date or dates provided therein or permitted thereby.

“Interest Period” shall mean each period from the date of the bonds of any Series to and including the day immediately preceding the first Interest Payment Date and thereafter each period from and including an Interest Payment to and including the day immediately preceding the next Interest Payment Date.

“Interest Requirement” for any bond year or any Interest Period, as the context may require, as applied to bonds of any Series then outstanding, shall mean the total of the sums that would be deemed to accrue on such bonds during such bond year or Interest Period if the interest on the Current Interest Bonds of such Series were deemed to accrue daily during such year or Period in equal amounts employing the methods of calculation set forth under paragraphs (A), (B) and (C) under “Second Senior Bonds” below in the cases of Balloon Indebtedness, Variable Rate Indebtedness and Optional Tender Indebtedness; provided, however, that interest expense shall be excluded from the determination of Interest

C-5 Requirement to the extent that such interest is to be paid from the proceeds of bonds or from investment (but not reinvestment) earnings thereon if such proceeds shall have been invested in Government Obligations and to the extent such earnings may be determined precisely. Unless the Authority shall otherwise provide in a Supplemental Agreement, interest expense on Credit Facilities drawn upon to purchase but not to retire bonds, except to the extent such interest exceeds the interest otherwise payable on such bonds, shall not be included in the determination of Interest Requirement. If interest is not payable at a single numerical rate for the entire term of such bonds, then “Interest Requirement” shall have the appropriate meaning assigned thereto by the applicable Supplemental Agreement.

“Investment Obligations” shall mean, to the extent permitted by law:

(a) (i) Government Obligations, (ii) bonds, debentures, notes or other obligations issued or guaranteed by any of the following: Federal Home Loan Banks, Export-Import Bank of the United States, the Federal Financing Bank, the Federal Home Loan Mortgage Association, the Federal Housing Administration, the Farmers Home Administration, the Government National Mortgage Association, the Federal Farm Credit Bank; or for purposes of the definition of Defeasance Obligations, only the following: any obligations issued by an agency of the United States government that is approved by a Rating Agency on its then current list of approved United States government agencies for purposes of defeasance obligations; and (iii) Defeased Municipal Obligations;

(b) repurchase agreements having a maturity of not more than thirty (30) days with respect to the obligations listed in paragraph (a) (i) and (ii) above with (i) financial institutions insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation or (ii); with financial institutions or government bond dealers reporting to, trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York and a member of the Security Investors Protection Corporation (“SIPC”) or with a dealer or parent holding company that is rated in one of the three highest rating categories by Moody's Investors Service, Inc. and Standard & Poor's Corporation (without regard to gradations such as “plus” or “minus”); provided that the fair market value of such agreements, together with the fair market value of the repurchase agreement securities, exclusive of accrued interest, shall be valued daily and maintained at an amount at least equal to the amount invested in the repurchase agreements and (A) the Trustee (who shall not be the provider of the collateral) or a third party acting solely as agent for the Trustee has possession of the repurchase agreement securities and the obligations referred to above; (B) failure to maintain the requisite collateral levels will require the Trustee or its agent to liquidate the securities immediately; (C) the Trustee has a perfected, first priority security interest in the securities; and (D) the securities are free and clear of third-party liens, and in the case of an SPIC broker, were not acquired pursuant to a repurchase or reverse repurchase agreement;

(c) certificates of deposit issued by, and time deposits in, or interests in money market portfolios issued by, any bank, banking association, savings and loan association or trust company organized under the laws of the State, any other state of the United States or of the United States, including the Trustee; provided that such bank, banking association or savings and loan association has combined capital, surplus and undivided profits of at least $50,000,000; and provided further, that such certificates of deposit or time deposits or portfolio interests are (i) insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation for the full face amount thereof and the issuing institution is rated at the time of acquisition by the Trustee or a Depositary hereunder in the highest short- term rating category or in one of the two highest long-term rating categories by Moody's Investors Service, Inc. and Standard & Poor’s Corporation (without regard to gradations such as “plus” or “minus”) or (ii) to the extent not so insured, collateralized by Government Obligations held by the Trustee (who shall not be the provider of such collateral) or by any Federal Reserve Bank or Depositary, as custodian for the issuing institution, and as to which Obligations the Trustee shall nave a perfected first lien, free

C-6 from any third-party liens and having a daily market value of not less than the face amount of such certificates, deposits or portfolio interests plus accrued interest thereon to the date of calculation; and

(d) commercial paper rated at the time of acquisition by the Trustee or a Depositary hereunder in the highest rating category by Moody's Investors Service, Inc. and Standard & Poor’s Corporation (without regard to gradations such as “plus” or “minus”);

(e) obligations of state or local government issuers, the principal of and interest on which, when due and payable, have been insured by an insurer that are rated at the time of acquisition by the Trustee or a Depositary hereunder in the highest rating category by Moody's Investors Service, Inc. and Standard & Poor’s Corporation (without regard to gradations such as “plus” or “minus”);

(f) full faith and credit obligations of state or local government issuers that are rated at the time of acquisition by the Trustee or a Depositary hereunder in the highest rating category by both Moody’s Investors Service, Inc. and Standard & Poor's Corporation (without regard to gradations such as “plus” or “minus”); and

(g) (1) shares of stock in a corporation rated in the highest rating category by Standard & Poor's Corporation and Moody's Investor Service, Inc. (without regard to gradations such as “plus” or “minus”) that (A) is a regulated investment company within the meaning of Section 851(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and meets the requirements of Section 852(a) of the Code for the calendar year; (B) invests all of its assets in (i) Government Obligations or (ii) in obligations the interest on which is excluded from gross income under Section 103(a) of the Code to the extent practicable; and (C) has at least 98% of (I) its gross income derived from interest on, or gained from the sale of or other disposition of, such obligations or (II) the weighted average of its assets is represented by investments in such obligations or (2) money market accounts of the Trustee or any state or federally chartered bank, banking association or trust company that is rated or whose bank holding company parent is rated in the highest short-term rating category or in one of the two highest long-term rating categories by Moody’s Investors Service, Inc. and Standard & Poor's Corporation (without regard to gradations such as “plus” or “minus”); and

(h) any unsecured or secured agreement for the investment of moneys entered into by the Authority or the Trustee with the Federal National Mortgage Association or any bank, trust company or national banking association or a corporation subject to registration with the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956 or any other financial institution whose unsecured obligations uncollateralized long term debt obligations (or obligations guaranteed by its parent entity) have been assigned a rating by Moody's Investor's Service, Inc. and Standard & Poor's Corporation in one of the two highest rating categories (without gradations such as “plus” or “minus”), or which has letter of credit, contract or agreement in support of debt obligations which have been so rated; and

(i) Obligations rated not less than “AA” or equivalent by Moody’s or S&P issued or guaranteed by a regulated public utility corporation incorporated under the laws of any state; and

(j) money market mutual funds registered with the United States Securities and Exchange Commission, that are rated in the highest Rating Category of each of the Rating Agencies that then rates such funds.

“Junior Obligation project” shall mean any Turnpike Project, Improvement, General Fund turnpike project or other project or undertaking that the Authority is authorized to construct or acquire under the Enabling Act, as amended, and that the Authority determines by resolution filed with the

C-7 Trustee to include as a Junior Obligation project and to finance with the issuance of Junior Obligations, subject to the provisions set forth under “Requirements for New Turnpike Projects; Reclassification of General Fund Turnpike Projects.”

“Junior Obligations” shall mean the Indebtedness of the Authority for the payment of the principal of and the interest on which moneys in the General Fund are pledged as set forth under “Use of Moneys in General Fund; Issuance of Junior Obligations” below.

“maximum annual Turnpike Trust Fund apportionment amount” shall mean $3,000,000 or such greater maximum annual amount of motor fuel excise taxes that may be apportioned to the Authority for deposit to the credit of the Turnpike Trust Fund for any fiscal year as may be permitted by the Enabling Act.

“maximum Turnpike Trust Fund balance” shall mean for any fiscal year of the State an amount equal to one and one-half times the maximum amount of principal, including any sinking fund or amortization requirements of, and interest payable on, in any fiscal year of the State all bonds and Parity Indebtedness and Junior Obligations issued in respect of any Turnpike Project or Improvement to which moneys in the Turnpike Trust Fund have been pledged in accordance with the Enabling Act and as set for the under “Use of Turnpike Trust Fund” below or such greater amount as may be permitted by the Enabling Act and above which amount any moneys credited to the Turnpike Trust Fund may be required by the Enabling Act to be transferred by the Authority to the Oklahoma Department of Transportation or any successor thereto.

“Net Revenues” for any particular period shall mean the amount of the excess of the tolls and other revenues of the Oklahoma Turnpike System deposited to the credit of the Revenue Fund pursuant to the provisions of the Trust Agreement, over the Current Expenses during such period but shall not include any money deposited or transferred to the credit of the Revenue Fund as described under “Use of Reserve Maintenance Fund” and “Use of Moneys in General Fund; Issuance of Junior Obligations” below and shall not include payments received by the Authority in respect of any agreement of the type mentioned under clause (C)(2) of Variable Rate Indebtedness under “Second Senior Bonds” below regardless of the type of bonds or Indebtedness it may have been entered into in respect of and any lump sum payment in excess of $50,000 received by the Authority in respect of the sale or other disposition of the turnpike referred to in and subject to the provisions of the second paragraph under “Certain Covenants of the Authority  Covenant Against Sale or Encumbrance; Exceptions” below, and shall not include any unrealized gains or losses (or any allowances or reserves thereof) from investments or from transactions of the type described in the definition of Qualified Swap herein.

“Oklahoma Turnpike System” shall mean (1) the Existing Turnpike Projects, (2) New Turnpike Projects, and (3) all other Turnpike Projects (including additional Turnpike Projects extending any or all of the S.H. 33 Turnpike (U.S. 412), the I-35 to I-40 Turnpike (Ada to Davis Section), the Oklahoma City Outer Loop Expressway (I-35 to Portland Avenue Section) and the Tulsa South Bypass Expressway (U.S. 75 to Memorial Drive Section) which meet the requirements for a Turnpike Project set forth in the first paragraph under “Requirements for New Turnpike Projects; Reclassification of General Fund Turnpike Projects” below and Improvements constructed by the Authority under the Enabling Act, and (4) any General Fund turnpike project reclassified as a Turnpike Project as set forth under “Requirements for New Turnpike Projects; Reclassification of General Fund Turnpike Projects” below, subject to the Authority’s rights as set forth under “Certain Covenants of the Authority  Covenant Against Sale or Encumbrance; Exceptions” below.

“Optional Tender Indebtedness” shall mean any portion of Indebtedness incurred under the Trust Agreement a feature of which is an option on the part of the owners of such Indebtedness to tender

C-8 to the Authority or to the Trustee or to any Depositary, Paying Agent or other fiduciary for such owners, or to an agent of any of the foregoing, all or a portion of such Indebtedness for payment or purchase.

“[O]utstanding” with respect to bonds shall mean all bonds that have been authenticated and delivered by the Trustee or by the Bond Registrar under the Trust Agreement, except:

(i) bonds paid or redeemed or delivered to or acquired by the Trustee or the Bond Registrar for cancellation;

(ii) bonds deemed to have been paid in accordance with Article XIII of the Trust Agreement;

(iii) bonds in exchange for or in lieu of which other bonds have been authenticated and delivered under the Trust Agreement; and

(iv) Optional Tender Indebtedness deemed to have been purchased in accordance with the provisions of the applicable Supplemental Agreement in lieu of which other bonds have been authenticated and delivered under such Supplemental Agreement; provided, however, that in determining whether the owners of the requisite principal amount of outstanding bonds have given any request, demand, authorization, direction, notice, consent or waiver under the Trust Agreement, bonds owned by the Authority or any other obligor upon the bonds shall be disregarded and deemed not to be outstanding, except that the term “obligor upon the bonds” shall not include any Insurer or any Credit Bank unless otherwise provided in a Supplemental Agreement and except that in determining whether the Trustee, a Depositary, the Paying Agents or the Bond Registrar, shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, or waiver, only bonds that the Trustee, Depositary, the Paying Agents or Bond Registrar, as the case may be, knows to be so owned shall be so disregarded. Bonds so owned that have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such bonds and that the pledgee is not the Authority or any other obligor upon the bonds except a Credit Bank or an Insurer.

“Parity Indebtedness” shall mean any Indebtedness incurred as described under “Certain Covenants of the Authority — Limitations on Parity Indebtedness” below and payable on a parity with the Principal and Interest Requirements of the second senior bonds.

“principal” shall mean (i) with respect to any Capital Appreciation Bond, the Accreted Amount thereof (the difference between the stated amount to be paid at maturity and the Accreted Amount being deemed unearned interest) except as used in the Trust Agreement in connection with the authorization and issuance of bonds and with the order of priority of payments of bonds after an event of default, in which case “principal” means the initial public offering price of a Capital Appreciation Bond (the difference between the Accreted Amount and the initial public offering price being deemed interest) but when used in connection with determining whether the owners of the requisite principal amount of bonds then outstanding have given any request, demand, authorization, direction, notice, consent or waiver or with respect to the Redemption Price of any Capital Appreciation Bonds, “principal amount” means the Accreted Amount and (ii) with respect to the principal amount of any Current Interest Bond, the principal amount of such bond payable in satisfaction of an Amortization Requirement, if applicable, or at maturity.

“Principal and Interest Requirements” for any bond year shall mean the sum of the Principal Requirement and the Interest Requirement for such year.

C-9 “Principal Payment Date” shall mean a January 1 upon which the principal of any bond is stated to mature or upon which the principal of any term bond is subject to redemption in satisfaction of an Amortization Requirement; provided, however, that Principal Payment Date may mean, if so provided by a Supplemental Agreement, such other date or dates as may be provided thereby or permitted therein.

“Principal Requirement” for any bond year, as applied to the bonds of any Series, shall mean, if and to the extent for such Series of bonds a Principal Payment Date or Dates shall occur on January 2 or thereafter during such bond year or on January 1 of the next succeeding bond year (each, an “Applicable Principal Payment Date”), then beginning

(i) on the preceding Principal Payment Date, if any, that occurs one year or less before each Applicable Principal Payment Date, or

(ii) one year prior to each Applicable Principal Payment Date if there is no prior Principal Payment Date or if the preceding Principal Payment Date is more than one year prior to the Applicable Principal Payment Dates; the total of the sums that would be deemed to accrue on such bonds during such bond year if

(i) the principal of the Current Interest Bonds of such Series scheduled to mature or be subject to an Amortization Requirement on or prior to the Applicable Principal Payment Date and

(ii) the Accreted Amount of the Capital Appreciation Bonds of such Series, scheduled to become due or be subject to an Amortization Requirement on or prior to the Applicable Principal Payment Date, were each deemed to accrue daily during such year in equal amounts to but not including the Applicable Principal Payment Date.

“Purchase Price” shall mean the purchase price established in any Supplemental Agreement for Optional Tender Indebtedness as the purchase price to be paid for such Indebtedness upon an optional or mandatory tender of all or a portion of such Indebtedness.

“Qualified Swap” shall mean, to the extent from time to time permitted by law, with respect to bonds, any transaction utilizing derivative products, and other financial products intended to hedge interest rate risk, including any option to enter into or terminate any of them, that the Authority deems to be necessary or desirable in connection with any bonds issued prior to, at the same time as, or after entering into such arrangement and containing terms and provisions, and may be with such parties, as determined by the Authority; provided, any Qualified Swap must first be approved by the Oklahoma State Bond Advisor and the Council of Bond Oversight pursuant to the provisions of the Oklahoma Bond Oversight and Reform Act.

“Qualified Swap Provider” shall mean an entity whose senior long term obligations, other senior unsecured long term obligations, financial program rating, counterparty rating, or claims paying ability, or whose payment obligations under an interest rate exchange agreement are guaranteed by an entity whose senior long term debt obligations, other senior unsecured long term obligations, financial program rating, counterparty rating, or claims paying ability, are rated either at least as high as (i) the third highest Rating Category of each Rating Agency then maintaining a rating for the Qualified Swap Provider or (ii) any such lower Rating Categories which each such Rating Agency indicates in writing to the Authority and the Trustee will not, by itself, result in a reduction or withdrawal of its rating on the

C-10 outstanding bonds subject to such Qualified Swap that is in effect prior to entering into such Qualified Swap.

“Rating Agency” shall mean each nationally recognized statistical rating organization then maintaining a rating on the bonds at the request of the Authority.

“Rating Category” shall mean one of the generic rating categories of any Rating Agency without regard to any refinement or gradation of such rating by a numerical modifier or otherwise.

“Redemption Price” shall mean, with respect to bonds or a portion thereof, the principal amount of such bonds or portion thereof plus the applicable premium, if any, payable upon redemption thereof in the manner contemplated in accordance with its terms and the Trust Agreement.

“Reserve Maintenance Fund” shall mean the special fund designated the “Oklahoma Turnpike System Reserve Maintenance Fund” created as set forth under “Senior Bond Sinking Fund; Additional Funds and Accounts” below.

“Second Senior Bond Reserve Account” shall mean the special account in the Senior Bond Sinking Fund as set forth under “Senior Bond Sinking Fund; Additional Funds and Accounts.”

“Second Senior Bond Reserve Account Requirement” (a) as to each Series of second senior bonds and Parity Indebtedness shall mean, as of any date of calculation, an amount of money, securities or Senior Bond Reserve Account Insurance Policy equal to the lesser of (i) the maximum Principal and Interest Requirements in any bond year on all second senior bonds then outstanding and (ii) 10% of the original principal amount of each Series of second senior bonds and (b) as to Parity Indebtedness shall mean an amount of money, securities or Senior Bond Reserve Account Insurance Policy equal to the lesser of (i) the maximum annual Debt Service Requirements on such Parity Indebtedness and (ii) 10% of the original principal amount of such Parity Indebtedness. In computing the Second Senior Bond Reserve Account Requirement in respect of any Second Senior Indebtedness that constitute Variable Rate Indebtedness, the interest rate on such bonds or Indebtedness shall be assumed to be the maximum interest rate established in a Supplemental Agreement for such Indebtedness.

In the case of Second Senior Indebtedness constituting Balloon Indebtedness, the Debt Service Requirements shall be adjusted to include the greatest amount established for any bond year as described in clauses (i) or (ii) under “Second Senior Bonds — (A) Balloon Indebtedness” below.

In the case of Second Senior Indebtedness constituting Optional Tender Indebtedness for which a Credit Facility shall have been delivered to the Trustee or such other authorizing the Trustee or such fiduciary to draw thereon to pay the Purchase Price of any such Indebtedness, the date or dates on which the owners thereof may at their option tender such Indebtedness for payment or purchase shall be disregarded.

“second senior bonds” shall mean the bonds issued as set forth under “Second Senior Bonds” and “Refunding Second Senior Bonds” below.

“Second Senior Bond Service Account” shall mean the special account created in the Senior Bond Sinking Fund as set forth under “Senior Bond Sinking Fund; Additional Funds and Accounts” below.

C-11 “Second Senior Indebtedness” shall mean the principal of (and premium, if any) and the interest on (a) the second senior bonds; (b) all Parity Indebtedness of the Authority and (c) any renewals, amendments, extensions or refundings of any such Second Senior Indebtedness.

“Senior Bond Reserve Account Insurance Policy” shall mean the insurance policy or surety bond or irrevocable letter of credit or guaranty or line of credit deposited in the First Senior Bond Reserve Account or the Second Senior Bond Reserve Account in lieu of or in partial substitution for cash or securities on deposit or to be deposited therein. Such Senior Bond Reserve Account Insurance Policy shall be payable without condition, except the giving of notice as required thereunder, on any Interest or Principal Payment Date (for the Senior Indebtedness in respect of which it was deposited) on which a deficiency, determined in accordance with the respective paragraph (b) set forth under “Application of Moneys in First Senior Bond Reserve Account” or “Application of Moneys in Second Senior Bond Reserve Account” below, exists in the Senior Bond Service Account and has a minimum term of not less than one year. The issuer providing such Policy shall be (A) an insurer that has been assigned either (i) one of the two highest policyholder ratings accorded insurers by A.M. Best & Co. or any comparable nationally recognized service or (ii) for bonds insured by the issuer of such Policy, a rating by Moody’s Investors Service, Inc. and Standard & Poor’s Corporation in one of the two highest rating categories (without regard to gradations such as “plus” or “minus”), or (B) a commercial bank, insurance company or other financial institution the bonds payable or guaranteed by which have been assigned a rating by Moody’s Investors Service, Inc. and Standard & Poor’s Corporation in one of the two highest rating categories (without regard to gradations such as “plus” or “minus”).

“Senior Indebtedness” shall mean the principal of (and premium, if any) and the interest on (a) the first senior bonds and the Second Senior Indebtedness of the Authority and (b) any renewals, amendments, extensions or refundings of any such Senior Indebtedness.

“Series” shall mean either (i) the senior bonds issued at any one time under the provisions described below under “First Senior Bonds,” “Second Senior Bonds” and “Refunding Second Senior Bonds” or (ii) the subordinated bonds issued and delivered at any one time under the provisions described below under “Refunding Subordinated Bonds.”

“State” shall mean the State of Oklahoma.

“Subordinated Bond Reserve Account Insurance Policy” shall mean the insurance policy or surety bond or irrevocable letter of credit or guaranty or line of credit deposited in the Subordinated Bond Reserve Account in lieu of or in partial substitution for cash or securities on deposit or to be deposited therein. Such Subordinated Bond Reserve Account Insurance Policy shall be payable without condition, except the giving of notice required thereunder, on any Interest or Principal Payment Date (for the Series of bonds in respect of which it was deposited) on which a deficiency, determined in accordance with paragraph (b) set forth under “Application of Moneys in Subordinated Bond Reserve Account” below, exists in the Subordinated Bond Service Account and has a minimum term of not less than one year. The issuer providing such Subordinated Bond Reserve Account Insurance Policy shall be (A) an insurer that has been assigned either (i) one of the two highest policyholder ratings accorded insurers by A.M. Best & Co. or any comparable nationally recognized service or (ii) for bonds insured by the issuer of such Policy, a rating by Moody’s Investors Service and Standard & Poor’s Corporation in one of the two highest rating categories (without regard to gradations such as “plus” or “minus”, or (B) a commercial bank, insurance company or other financial institution the bonds payable or guaranteed by which have been assigned a rating by Moody’s Investors Service and Standard & Poor’s Corporation in one of the two highest rating categories (without regard to gradations such as “plus” or “minus”).

C-12 “Subordinated Bond Reserve Account Requirement” as to each Series of subordinated bonds shall mean, as of any date of calculation, an amount of money, securities or Subordinated Bond Reserve Account Insurance Policy equal to the lesser of (i) the maximum Principal and Interest Requirements in any bond year on all subordinated bonds then outstanding and (ii) 10% of the original principal amount of each Series of subordinated bonds. In computing the Subordinated Reserve Account Requirement in respect of any subordinated bonds that constitute Variable Rate indebtedness, the interest rate on such bonds shall be assumed to be the maximum interest rate established in a Supplemental Agreement for such Indebtedness.

In the case of subordinated bonds constituting Optional Tender Indebtedness for which a Credit Facility shall have been delivered to the Trustee or such other fiduciary authorizing the Trustee or such fiduciary to draw thereon to pay the Purchase Price of such Indebtedness, the date or dates on which the owners thereof may at their option tender such bonds for payment or purchase shall be disregarded.

“subordinated bonds” shall mean the bonds designated the “Oklahoma Turnpike Authority Oklahoma Turnpike System Revenue Bonds (Subordinate Lien), Series 1989” in the original principal amount of $173,000,000 issued pursuant to the Trust Agreement, and any refunding subordinated bonds issued as set forth under “Refunding Subordinated Bonds” below.

“Subordinated Bond Service Account” shall mean the special account created as set forth under “Senior Bond Sinking Fund; Additional Funds and Accounts” below.

“Supplemental Agreement” shall mean (a) an agreement between the Authority and the Trustee, supplemental to the Trust Agreement and in conformity with the provisions of Article XI thereof or (b) a resolution adopted by the Authority in conformity with the provisions of the Trust Agreement, providing for the issuance of a Series of bonds and setting forth the provisions and details thereof not inconsistent with the Trust Agreement.

“Turnpike Project” shall mean any turnpike (including express highways, superhighways, or motorways), which meets the requirements set forth in paragraph (a)(1) or (b) under “Requirements for New Turnpike Projects; Reclassification of General Fund Turnpike Projects” below, constructed under the provisions of the Enabling Act by the Authority, and shall embrace all bridges, tunnels, overpasses, underpasses, interchanges, entrance plazas, approaches, free access roads, bridges, and road construction, toll houses, service stations, and administration, storage and other buildings which the Authority may deem necessary for the operation of such turnpike.

“Variable Rate Indebtedness” shall mean any portion of Indebtedness the interest rate on which is not established at the time of incurrence of such Indebtedness at a single numerical rate for the entire term of the Indebtedness.

First Senior Bonds (Section 208)

Completion First Senior Bonds. If and to the extent necessary to provide additional funds for completing payment of the cost of the New Turnpike Projects, additional first senior bonds of the Authority may be issued under and secured by the Trust Agreement, at one time or from time to time, in addition to the Series 1989 First Senior Bonds, in an aggregate principal amount not to exceed $22,000,000. The Series 1991 First Senior Bonds exhausted such authorization for additional first senior bonds in full.

Refunding First Senior Bonds. Series of turnpike revenue refunding first senior bonds of the Authority (herein called “refunding first senior bonds”) may be issued for the purpose of providing funds,

C-13 with any other available funds, for paying interest upon the refunding first senior bonds to a date determined by the Authority, for redeeming prior to their maturity or maturities, including the payment of any redemption premium thereon, or for paying at their maturity or maturities, all or any part of the outstanding first senior bonds of any Series and, if deemed necessary by the Authority, for paying the interest to accrue thereon to the date fixed for their redemption or payment and any expenses in connection with such refunding. Such bonds may be issued as Capital Appreciation Bonds, Current Interest Bonds, Variable Rate Indebtedness, Balloon Indebtedness (provided such Indebtedness matures in not less than 10 years), Optional Tender Indebtedness (provided the Authority delivers to the Trustee a Credit Facility which may be drawn upon to pay the Purchase Price of any such Indebtedness), serial bonds or term bonds or any combination thereof, all as provided in the Supplemental Agreement. Any Credit Facility and any associated reimbursement agreement shall provide for reimbursement by the Authority of Purchase Price Payments over a period of not less than 5 years and shall not contain a provision requiring accelerated payments of the principal portion of any such drawings unless the obligation of the Authority to make such accelerated payments is subordinated to the obligation of the Authority in respect of the subordinated bonds. Except as to any Credit Facility or insurance policy in respect of such bonds or any Senior Bond Reserve Account Insurance Policy, and any difference in the maturities, interest rates, redemption provisions, purchase provisions or use of moneys in various subaccounts in the Senior Bond Sinking Fund, refunding first senior bonds shall be on parity with and be entitled to the same benefits and security as any other first senior bonds issued under the Trust Agreement.

The Trustee shall not deliver such bonds unless

(I) in the determination of a consultant, the proceeds (excluding accrued and capitalized interest) of such refunding first senior bonds and the amount, if any, withdrawn from the First Senior Bond Service Account or the First Senior Bond Reserve Account or any other money deposited with Trustee for such purpose, and the interest that shall accrue upon any Defeasance Obligations acquired as set forth below shall be not less than an amount sufficient to pay the principal of and the redemption premium, if any, on the first senior bonds to be refunded and the interest which will accrue thereon to the respective redemption and maturity dates, and the expenses incident to such refunding, and

(II) (1) during the bond years in which any of the first senior bonds not so refunded are outstanding, the maximum Principal and Interest Requirements for any bond year on account of all first senior bonds outstanding, after the issuance of such refunding first senior bonds and the redemption or provision for payment of the first senior bonds to be refunded, shall not exceed the maximum Principal and Interest Requirements for any such bond year on account of all the first senior bonds outstanding, including the first senior bonds to be refunded, immediately prior to the issuance of such refunding first senior bonds, (2) the present value of the Principal and Interest Requirements on account of all first senior bonds outstanding, after the issuance of such refunding first senior bonds and the redemption or provision for payment of the first senior bonds to be refunded, shall be less than the present value of the Principal and Interest Requirements on account of all first senior bonds outstanding, including the first senior bonds to be refunded, immediately prior to the issuance of such refunding first senior bonds, and (3) the aggregate Principal and Interest Requirements for each bond year on account of the refunding first senior bonds does not exceed 105% of the aggregate Principal and Interest Requirements in the corresponding bond year of the first senior bonds to be refunded. In applying to the foregoing test, if any of the first senior bonds outstanding immediately prior to or after the issuance of the refunding first senior bonds to be issued constitute Balloon Indebtedness, Optional Tender Indebtedness or Variable Rate Indebtedness, the conventions employed in paragraphs (A), (B) and (C), respectively, set forth below under the caption “Second Senior Bonds” shall be applied

C-14 in determining the Principal and Interest Requirements of such first senior bonds and the Principal and Interest Requirements of the refunding first senior bonds to be issued.

Simultaneously with the delivery of such refunding first senior bonds the Trustee may withdraw (a) from the First Senior Bond Service Account such amount, if any, as may have been deposited to the credit of the First Senior Bond Service Account for the payment of the principal of or interest on the first senior bonds to be redeemed or paid and (b) from the First Senior Bond Reserve Account such amount, if any, as will exceed the First Senior Bond Reserve Account Requirement in respect of the first senior bonds outstanding immediately following the issuance of such refunding first senior bonds and the redemption or provision for payment of the first senior bonds being refunded. The amounts so withdrawn, the proceeds (excluding accrued interest but including any premium) of such refunding first senior bonds and any other moneys that shall have been withdrawn from said Accounts or otherwise made available to the Trustee for such purpose, after provision for payment of the expenses incident to such refunding, shall be applied by the Trustee, as follows: the accrued and capitalized interest received as part of the proceeds of such refunding first senior bonds shall be deposited to the credit of the First Senior Bond Service Account and the balance of such proceeds shall be used to pay or defease the first senior bonds being refunded. In addition, there shall be deposited to the credit of the First Senior Bond Reserve Account the amount, if any, required to make the balance to the credit thereof equal to the First Senior Bond Reserve Account Requirement on account of all Series of first senior bonds outstanding immediately after the issuance of the refunding first senior bonds and the redemption or provision for payment of the first senior bonds being refunded.

Second Senior Bonds (Section 209)

One or more Series of second senior bonds of the Authority may be issued from time to time for the purpose of (i) completing payment of the cost of any of the New Turnpike Projects or other Turnpike Projects or Improvements for which Second Senior Indebtedness shall have been previously issued, (ii) paying all or any part of the cost of any additional Turnpike Project or Improvement, or (iii) paying any notes or other obligations incurred by the Authority, or repaying any advances to provide funds for the foregoing purposes. Such bonds may be issued as Current Interest Bonds, Variable Rate Indebtedness, Capital Appreciation Bonds, Optional Tender Indebtedness (provided the Authority delivers to the Trustee a Credit Facility which may be drawn upon to pay the Purchase Price of any such Indebtedness), Balloon Indebtedness (provided such Indebtedness matures in not less than 10 years), serial bonds or term bonds or any combination thereof. Any such Credit Facility and any associated reimbursement agreement shall provide for reimbursement by the Authority of the Purchase Price payments over a period of not less than 5 years and shall not contain a provision requiring accelerated payments of the principal portion of any such drawings unless the obligation of the Authority to make such accelerated payments is subordinated to the obligation of the Authority in respect of the subordinated bonds or during the period in which BIG’s insurance policy in respect of the Series 1989 Subordinate Bonds is in effect the Authority shall have received the prior consent of BIG. No second senior bonds to complete payment of the cost of any New Turnpike Project may be issued without there complying with the tests in clauses (I) or (II) below in this Section. Except as to any Credit Facility or insurance policy in respect of such bonds or any Senior Bond Reserve Account Insurance Policy, and any difference in the maturities, interest rates, redemption provisions, purchase provisions or use of moneys in various subaccounts in the Senior Bond Sinking Fund, any such second senior bonds shall be on parity with and be entitled to the same benefits and security as any other second senior bonds issued under the Trust Agreement.

Except in the case of second senior bonds issued for completing payment of the cost of any Turnpike Project or Improvement in an aggregate principal amount not exceeding 5% of the original principal amount of second senior bonds previously issued to pay the cost of such Project or

C-15 Improvement, the Trustee shall not deliver such bonds unless, in the case of any second senior bonds proposed to be delivered in respect of any Turnpike Project for which first senior bonds have not been previously issued under the Trust Agreement, the Authority’s estimate of the revenues for the fifth complete bond year following the Completion Date of such Turnpike Project and in each bond year thereafter for which the second senior bonds then proposed to be delivered shall be outstanding shall be not less than its estimate of the sum for the corresponding bond year for Current Expenses and deposits to the Reserve Maintenance Fund, and for all additional senior bonds:

(I) (A) the sum of (1) the Net Revenues and (2) the amount of the motor fuel excise taxes apportioned to the Authority under the provisions of the Enabling Act, or as the Enabling Act may be further amended, for deposit to the credit of the Turnpike Trust Fund or the amount of the motor fuel excise taxes that would have been apportioned to the Authority for deposit to the credit of said Fund except for the limitation in the Enabling Act as to the maximum Turnpike Trust Fund balance (provided that such amount may not exceed the maximum annual Turnpike Trust Fund apportionment amount), for any 12 consecutive calendar months out of the 18 calendar months immediately preceding the date of the issuance of such bonds, adjusted to reflect the moneys which would have been received if the schedule of tolls in effect on the date of the issuance of such bonds had been in effect throughout such 12 calendar months, shall be not less than 120% of the amount of the Debt Service Requirements for the current bond year on account of all Senior Indebtedness then outstanding, and

(B) the amount of Net Revenues for such 12 calendar months (as adjusted for such toll schedule in effect on such date of issuance) shall be not less than the sum of 105% of the Debt Service Requirements for such current bond year on account of all bonds and Parity Indebtedness then outstanding and 100% of the amount required to be deposited in such bond year in the Reserve Maintenance Fund, the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account from said Net Revenues and the amount of Net Revenues required to be generated by the Authority in such bond year in respect of Junior Obligations then outstanding if the failure so to generate such Net Revenues would cause a default in respect of such Junior Obligations, and

(C) the sum of (1) Net Revenues and (2) the amount of motor fuel excise taxes apportioned to the Turnpike Trust Fund under the provisions of the Enabling Act, or as the Enabling Act may be further amended, for deposit to the credit of the Turnpike Trust Fund or the amount of motor fuel excise taxes that would have been apportioned to the Authority for deposit to the credit of said Fund except for the limitation in the Enabling Act as to the maximum Turnpike Trust Fund balance (provided that such amount may not exceed the maximum annual Turnpike Trust Fund apportionment amount), for either the first bond year immediately after the Completion Date of such Turnpike Project or Improvement or if prior to the Completion Date all or any portion of the interest on such bonds is not to be paid, the first complete bond year in which all such interest is not to be paid and in either case in each bond year thereafter to and including the fifth complete bond year after such Completion Date, taking into account the schedule of tolls in effect on the date of the issuance of such bonds and any schedule of tolls the Authority has covenanted to put into effect during such bond years, shall be not less than 120% of the maximum amount of the Debt Service Requirements for any future bond year on account of all Senior Indebtedness then outstanding and the second senior bonds then requested to be authenticated and delivered, and

C-16 (D) the amount of Net Revenues for the period for which Net Revenues are covered in paragraph (C) above (as adjusted for any toll schedule in effect on such date of issuance and covenanted to be put into effect during such period) shall be not less than the sum of 105% of the sum of the maximum amount of the Debt Service Requirements for any future bond year on account of the bonds and Parity Indebtedness then outstanding and the second senior bonds then requested to be authenticated and delivered and 100% of the maximum amount required to be deposited to the Reserve Maintenance Fund, First Senior Bond Reserve Account, Second Senior Bond Reserve Account and Subordinated Bond Reserve Account in each bond year for the period in respect of Net Revenues covered in paragraph (C) above and the maximum amount of Net Revenues required to be generated by the Authority in any future bond year in respect of the Junior Obligations then outstanding if the failure so to generate such Net Revenues would cause a default in respect of such Junior Obligations, or

(II) (A) the sum of (1) the Net Revenues and (2) apportionments to the Turnpike Trust Fund as shown in paragraph (I)(A) above, as either may be adjusted or limited as provided in said paragraph (I)(A) for any 12 consecutive calendar months out of the 18 calendar months immediately preceding the date of the issuance of such bonds shall not be less than 130% of the maximum amount of Debt Service Requirements for any future bond year on account of all Senior Indebtedness then outstanding and the second senior bonds then requested to be authenticated and delivered, and

(B) the amount of Net Revenues for such 12 calendar months (as adjusted for such toll schedule in effect on such date of issuance) as provided in paragraph (I)(B) above shall be not less than 110% of the sum of the maximum amount of the Debt Service Requirements for any future bond year on account of all bonds and Parity Indebtedness then outstanding and the second senior bonds then requested to be authenticated and delivered and 100% of the sum of the maximum amounts required to be deposited in the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account in any bond year for the period for which Net Revenues are covered in paragraph (C) above, and the average for the previous five bond years of the amounts required to be deposited to the Reserve Maintenance Fund and the maximum amount of Net Revenues required to be generated by the Authority in any future bond year in respect of the Junior Obligations then outstanding if the failure so to generate such Net Revenues would cause a default in respect of such Junior Obligations.

In case any of such bonds fall within the categories set forth in paragraphs (A), (B) or (C) below, the foregoing requirements and provisions respecting the issuance thereof shall be modified as follows:

(A) Balloon Indebtedness. With respect to any Balloon Indebtedness or Balloon Indebtedness and Variable Rate Indebtedness, the Authority shall adjust the Debt Service Requirements as if the principal amount of such Indebtedness were to be amortized in substantially equal annual installments of principal and interest over a term equal to the lesser of (i) 25 years and (ii) the weighted average estimated useful life of the facilities comprising the portion of the Turnpike Project or Improvement financed or to be financed from the proceeds of such Indebtedness, the fixed interest rate used for such computation being in the case that such Indebtedness also constitutes Variable Rate Indebtedness, the maximum rate established in paragraph (C)(1) below or in all other cases, the greater of (x) the interest rate(s) borne by such Indebtedness and (y) the rate at which it is assumed that the Authority could reasonably expect to borrow or to have borrowed by issuing Senior Indebtedness with such term and level Debt Service Requirements for each bond year.

C-17 (B) Optional Tender Indebtedness. With respect to any Optional Tender Indebtedness then outstanding or proposed to be issued, (1) for purposes of determining the Debt Service Requirements, the options of the owners of such Indebtedness to tender the same for payment prior to their stated maturity or maturities shall be ignored, (2) if such Indebtedness also constitutes Variable Rate Indebtedness or Variable Rate Indebtedness and Balloon Indebtedness, the Authority shall adjust such Debt Service Requirements as provided in paragraphs (A) above and (C) below, as appropriate, (3) such additional bonds are secured by a Credit Facility, the Credit Bank or obligations secured by credit facilities issued by such Credit Bank and shall be rated in one of the three highest rating categories by either Moody’s Investors Service or Standard & Poor’s Corporation, and (4) any obligation the Authority may have, other than its obligation on such Indebtedness, to reimburse any Credit Bank or Insurer shall be subordinated to the obligation of the Authority on the bonds and Parity Indebtedness.

(C) Variable Rate Indebtedness. With respect to any Variable Rate Indebtedness then outstanding or proposed to be issued, for purposes of determining the Debt Service Requirements, (i) the interest rate used in such computation shall be the lower of (1) the maximum interest rate established in the applicable Supplemental Agreement and (2) if and so long as an interest-rate guaranty agreement or an interest-rate protection agreement is in effect with an institution that is rated by Moody’s Investors Service and Standard & Poor’s Corporation in a category that is equal to or higher than the category in which the bonds or Indebtedness are rated, the maximum interest rate to be paid by the Authority on such bonds or Indebtedness in accordance with such agreement and (ii) any obligation the Authority may have to make any payments in respect of any such agreement shall be subordinated to the obligation of the Authority on the bonds and Parity Indebtedness. The conversion of Variable Rate Indebtedness to bear interest at a different variable rate or a fixed rate or rates, in accordance with its terms, shall not constitute a new issuance of bonds under the Trust Agreement.

The proceeds (excluding accrued interest) of such bonds shall be deposited to the credit of the Construction Fund; provided, however, that the Trustee shall deduct from such proceeds and deposit to the credit of the Second Senior Bond Reserve Account such amount, if any, as may be required to make the amount then to the credit of the Second Senior Bond Reserve Account equal to the Second Senior Bond Reserve Account Requirement for all senior bonds and Parity Indebtedness then outstanding; and provided further, that the Trustee shall deduct from such proceeds and apply such amounts as may be necessary to pay such interim construction notes or advances and deposit to the credit of the Second Senior Bond Service Account or transfer to the Depositary designated by the Authority for deposit to a special account in the Construction Fund such amount of interest during construction as is set forth in the resolution of the Authority authorizing the issuance of such bonds. The amount received as accrued interest on such bonds shall be deposited to the credit of the Second Senior Bond Service Account.

Refunding Second Senior Bonds (Section 210)

Series of turnpike revenue refunding second senior bonds of the Authority (herein called “refunding second senior bonds”) may be issued for the purpose of providing funds, with any other available funds, for redeeming prior to their maturity or maturities, including the payment of any redemption premium thereon, or for paying at their maturity or maturities, all or any part of the outstanding bonds of any Series or of Parity Indebtedness and, if deemed necessary by the Authority, for paying the interest to accrue thereon to the date fixed for their redemption or payment and any expenses in connection with such refunding. Such bonds may be issued as Capital Appreciation Bonds, Current Interest Bonds, Variable Rate Indebtedness, Balloon Indebtedness (provided such Indebtedness matures in not less than 10 years), Optional Tender Indebtedness (provided the Authority delivers to the Trustee a Credit Facility which may be drawn upon to pay the Purchase Price of any such Indebtedness), serial bonds or term bonds or any combination thereof, all as provided in the Supplemental Agreement. Any such Credit Facility and any associated reimbursement agreement shall provide for reimbursement by the

C-18 Authority of Purchase Price payments over a period of not less than 5 years and shall not contain a provision requiring accelerated payments of the principal portion of any such drawings unless the obligation of the Authority to make such accelerated payments is subordinated to the obligation of the Authority in respect of the subordinated bonds or during the period in which BIG’s insurance policy in respect of the Series 1989 Subordinate Bonds is in effect the Authority shall have received the prior consent of BIG. Except as to any Credit Facility or insurance policy in respect of such bonds or any Senior Bond Reserve Account Insurance Policy, and any difference in the maturities, interest rates, redemption provisions, purchase provisions or use of moneys in various subaccounts in the Senior Bond Sinking Fund, refunding second senior bonds shall be on parity with and be entitled to the same benefits and security as any other second senior bonds issued under the Trust Agreement.

The Trustee shall not deliver such bonds unless

(I) in the determination of a consultant, the proceeds (excluding accrued interest) of such refunding second senior bonds and the amount if any, withdrawn from the First Senior Bond Service Account, the Second Senior Bond Service Account or the Subordinated Bond Service Account or the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account or the Subordinated Bond Reserve Account or any other money deposited with Trustee for such purpose, and the interest that shall accrue upon any Defeasance Obligations acquired as set forth below shall be not less than an amount sufficient to pay the principal of and the redemption premium, if any, on the bonds or Parity Indebtedness to be refunded and the interest which will accrue thereon to the respective redemption and maturity dates, and the expenses incident to such refunding, and

(II) (A) during the bond years in which any of the bonds and Parity Indebtedness not so refunded is outstanding, the aggregate maximum Debt Service Requirements for all such bond years on account of all bonds and Parity Indebtedness outstanding, after the issuance of such refunding second senior bonds and the redemption or provision for payment of the bonds or Parity Indebtedness to be refunded, shall not exceed the aggregate maximum Debt Service Requirements for all such bond years on account of all the bonds and Parity Indebtedness outstanding, including the bonds or Parity Indebtedness to be refunded, immediately prior to the issuance of such refunding second senior bonds. In applying the foregoing test, if any of the bonds or Parity Indebtedness outstanding immediately prior to or after the issuance of the refunding second senior bonds to be issued constitute Balloon Indebtedness, Option Tender Indebtedness or Variable Rate Indebtedness, the conventions employed in Section 209(A), (B) and (C), respectively, shall be applied in determining the Debt Service Requirements of such bonds or Parity Indebtedness and the Principal and Interest Requirements of the refunding second senior bonds to be issued, or

(B) the Authority shall demonstrate satisfaction of the tests in connection with the issuance of Series of second senior bonds, see “Second Senior Bonds” above, except that in the event any of the refunding second senior bonds constitute Balloon Indebtedness, the Authority shall demonstrate compliance with the provisions of clause (II)(B) above and shall not have the option of demonstrating instead compliance with the provisions of clause (II)(A) above.

Simultaneously with the delivery of such refunding second senior bonds the Trustee may withdraw (a) from the First Senior Bond Service Account, the Second Senior Bond Service Account or the Subordinated Bond Service Account, such amount, if any, as may have been deposited to the credit of the First Senior Bond Service Account, the Second Senior Bond Service Account or the Subordinated Bond Service Account, respectively, for the payment of the principal of or interest on the bonds or Parity

C-19 Indebtedness to be redeemed or paid and (b) from the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account or the Subordinated Bond Reserve Account, such amount, if any, as will exceed the First Senior Reserve Account Requirement, the Second Senior Bond Reserve Account Requirement or the Subordinated Bond Reserve Account Requirement, respectively, in respect of the first senior bonds, Second Senior Indebtedness or subordinated bonds, respectively, outstanding immediately following the issuance of such refunding second senior bonds and the redemption or provision for payment of the bonds or Parity Indebtedness being refunded. The amounts so withdrawn, the proceeds (excluding accrued interest but including any premium) of such refunding second senior bonds and any other moneys that shall have been withdrawn from said Accounts or otherwise made available to the Trustee for such purpose, after provision for payment of the expenses incident to such refunding, shall be applied by the Trustee, as follows: the accrued interest received as part of the proceeds of such refunding second senior bonds shall be deposited to the credit of the Second Senior Bond Service Account and the balance of such proceeds shall be used to pay or defease the bonds or Parity Indebtedness being refunded. In addition, there shall be deposited to the credit of the Second Senior Bond Reserve Account the amount required to make the balance to the credit thereof equal to the Second Senior Bond Reserve Account Requirement on account of all Series of Second Senior Indebtedness outstanding immediately after the issuance of the refunding second senior bonds and the redemption or provision for payment of the bonds or Parity Indebtedness being refunded.

Refunding Subordinated Bonds (Section 212)

Series of turnpike revenue refunding subordinated bonds of the Authority (herein called “refunding subordinated bonds”) may be also issued for the purpose of providing funds for paying interest on the refunding subordinated bonds to a date determined by the Authority for redeeming prior to their maturity or maturities or for paying at their maturity or maturities, all or any part of outstanding subordinated bonds and for paying the interest which will accrue on such bonds to the redemption date or dates and any expenses in connection with such refunding.

Such refunding subordinated bonds may be issued as Capital Appreciation Bonds, Current Interest Bonds, Variable Rate Indebtedness, Optional Tender Indebtedness (provided the Authority delivers to the Trustee a Credit Facility which may be drawn upon to pay the Purchase Price of any such Indebtedness), serial bonds, term bonds or any combination thereof, all as provided in the Supplemental Agreement. Any such Credit Facility and any associated reimbursement agreement shall provide for reimbursement by the Authority of the Purchase Price payments over a period of not less than 5 years and shall not contain a provision requiring accelerated payments of the principal portion of any such drawings unless the obligation of the Authority to make such accelerated payments is subordinated to the obligation of the Authority in respect of the subordinated bonds or during the period in which BIG’s insurance policy in respect of the Series 1989 Subordinate Bonds is in effect the Authority shall have received the prior consent of BIG. Except as to any Credit Facility or insurance policy in respect of such bonds or Subordinated Bond Reserve Account Insurance Policy and as to any differences in the maturities, interest rates, redemption provisions, purchase provisions or use of moneys in various subaccounts in the Subordinated Bond Sinking Fund, refunding subordinated bonds shall be on parity with and be entitled to the same benefit and security as any other subordinated bonds, subject to the prior pledge of Net Revenues and moneys held to the credit of the Turnpike Trust Fund to the payment when due of any Senior Indebtedness.

The Trustee shall not deliver such bonds unless

(I) in the determination of a consultant, the proceeds (excluding accrued and capitalized interest) of such refunding subordinated bonds and the amount withdrawn from the Subordinated Bond Service Account or the Subordinated Bond Reserve Account or any other money deposited

C-20 with the Trustee for such purpose, and the interest that shall accrue upon any Defeasance Obligations acquired as set forth below, shall be not less than an amount sufficient to pay the principal of and the redemption premium, if any, on the subordinated bonds to be refunded and the interest which will accrue thereon to the respective redemption and maturity dates, and the expenses incident to such refunding, and

(II) (1) during the years in which any of the subordinated bonds not so refunded are outstanding or Senior Indebtedness is outstanding, the maximum Principal and Interest Requirements for any bond year on account of all subordinated bonds outstanding, after the issuance of such refunding subordinated bonds and the redemption or provisions for payment of the subordinated bonds to be refunded, shall not exceed the maximum Principal and Interest Requirements for any such bond year on account of all the subordinated bonds outstanding, including the subordinated bonds to be refunded, (2) the present value of the Principal and Interest Requirements on account of all subordinated bonds outstanding, after the issuance of such refunding subordinated bonds and the redemption or provision for payment of the subordinated bonds to be refunded, shall be less than the present value of the Principal and Interest Requirements on account of all subordinated bonds outstanding, including the subordinated bonds to be refunded, immediately prior to the issuance of such refunding subordinated bonds, and (3) the aggregate Principal and Interest Requirements for each bond year thereafter on account of the refunding subordinated bonds does not exceed for the corresponding bond year 105% of the aggregate Principal and Interest Requirements of the subordinated bonds to be refunded. In applying the foregoing test, if any of the subordinated bonds outstanding immediately prior to or after the issuance of the refunding subordinated bonds constitute Optional Tender Indebtedness or Variable Rate Indebtedness, the conventions employed in paragraphs (B) and (C), respectively, above under the caption “Second Senior Bonds” shall be applied with any necessary changes on account of such subordinated bonds being refunded or being issued in determining the Principal and Interest Requirements of such subordinated bonds and the Principal and Interest Requirements of the refunding subordinated bonds to be issued.

Simultaneously with the delivery of such bonds, the Trustee may withdraw (a) from the Subordinated Bond Service Account such amount, if any, as may have been deposited to the credit of the Subordinated Bond Service Account for the payment of the principal of or interest on the subordinated bonds to be refunded or paid and (b) from the Subordinated Bond Reserve Account such amount, if any, as will exceed the Subordinated Bond Reserve Account Requirement in respect of the subordinated bonds outstanding immediately following the issuance of such refunding subordinated bonds and the redemption or provision for payment of the subordinated bonds being refunded, and the Trustee shall apply, after provision for payment of the expenses incident to such refunding, the proceeds of such refunding subordinated bonds (including accrued interest), any money so withdrawn from said Accounts and any other money provided for such purpose, as follows: the accrued and capitalized interest received as part of the proceeds of such refunding subordinated bonds shall be deposited to the credit of the Subordinated Bond Service Account and the balance of such proceeds shall be used to pay or defease the subordinated bonds being refunded. In addition, there shall be deposited to the credit of the Subordinated Bond Reserve Account the amount required to make the balance to the credit thereof equal to the Subordinated Bond Reserve Account Requirement on account of all Series of subordinated bonds outstanding immediately after the issuance of the refunding subordinated bonds and the redemption or provision for payment of the subordinated bonds being refunded.

C-21 Optional Treatment of Interest Rate to be Used in Connection with Variable Rate Indebtedness (Section 215)

Notwithstanding any other provision of the Trust Agreement to the contrary, the Authority, in its sole discretion, may utilize the Estimated Average Interest Rate in calculating the interest rate applicable to Variable Rate Indebtedness for any purpose of the Trust Agreement except payment thereof, including but not limited to calculations under the definitions of Debt Service Requirement, First Senior Bond Reserve Account Requirement, Second Senior Bond Reserve Account Requirement, Subordinated Bond Reserve Account Requirement and for purposes of Article II, including but not limited to, Sections 209(C) and 210(II)(A)(iii) hereof, and for the purpose of any debt service coverage calculation.

Construction Fund (Article IV)

The Trust Agreement establishes a special trust fund designated the “Oklahoma Turnpike System Construction Fund” (the “Construction Fund”) to be held by a Depositary. Different accounts for the New Turnpike Projects or other Turnpike Projects or Improvements may be established with different Depositaries, in which case the provisions of the Trust Agreement apply to each such account as though it were the entire Construction Fund. The moneys in the Construction Fund shall be held in trust and shall be applied to the payment of the cost of any New Turnpike Project, other Turnpike Project and Improvement or of the repair, replacement or reconstruction of any damaged or destroyed New Turnpike Project or other Turnpike Project or shall be applied to the retirement of bonds issued under the provisions of the Trust Agreement and, pending such application, shall be subject to a lien and charge in favor of the owners of the bonds issued and outstanding under the Trust Agreement and for the further security of such owners until paid out or transferred as provided in the Trust Agreement. (Section 401)

Payment of the cost of any New Turnpike Project, other Turnpike Project or Improvement shall be made from the Construction Fund. All payments from the Construction Fund shall be made only upon proper requisition by the Authority to pay such costs. (Sections 402, 403 and 405)

Disposition of Construction Fund Balance. When the construction of each New Turnpike Project, other Turnpike Project or Improvement shall have been completed, as evidenced by a certificate stating the Completion Date and accompanied by an opinion of counsel stating that the Authority has acquired title or rights sufficient for the needs and purposes of such Project or Improvement and all of the property necessary or incident thereto, free from all liens, encumbrances and other defects of title, the balance in the Construction Fund shall be credited to the cost of any other Turnpike Project or Improvement or, if there is no such other Project or Improvement, shall be credited to the cost of acquiring such land, property, rights, rights of way, easements, franchises or interests in or relating to land of any toll turnpike, or shall be transferred by the Depositary to the Trustee for deposit to any fund or account that the certificate shall specify or if such certificate shall not so specify, for deposit to the credit of the First Senior Bond Service Account or the Second Senior Bond Service Account. (Section 410)

Revenue Fund (Section 503)

The Trust Agreement establishes a special trust fund designated the “Oklahoma Turnpike Authority Revenue Fund” (the “Revenue Fund”) into which the Authority has agreed to deposit daily all tolls and other revenues derived from the operation or ownership of the Oklahoma Turnpike System.

The moneys in the Revenue Fund shall be held by a Depositary in trust and applied as provided in the Trust Agreement and, pending such application, shall be subject to a lien and charge in favor of the owners of the bonds and Parity Indebtedness and for the further security of such owners until paid out or withdrawn as herein provided in the Trust Agreement. (Section 506)

C-22 Moneys in the Revenue Fund are to be used first to pay Current Expenses of the Oklahoma Turnpike System. Thereafter, such moneys shall be applied as provided below under “Flow of Funds”.

Senior Bond Sinking Fund; Additional Funds and Accounts (Section 507)

The Trust Agreement creates a special fund designated the “Oklahoma Turnpike System Senior Revenue Bonds Interest and Sinking Fund” (the “Senior Bond Sinking Fund”) containing four separate accounts designated the “First Senior Bond Service Account,” the “First Senior Bond Reserve Account,” the “Second Senior Bond Service Account” and the “Second Senior Bond Reserve Account,” respectively. The Trust Agreement creates another special fund designated “Oklahoma Turnpike System Subordinated Revenue Bonds Interest and Sinking Fund” (the “Subordinated Bond Sinking Fund”) containing two separate accounts designated the “Subordinated Bond Service Account” and the “Subordinated Bond Reserve Account,” respectively. The Trust Agreement creates two other special funds designated the “Oklahoma Turnpike System Reserve Maintenance Fund” (the “Reserve Maintenance Fund”) and “Oklahoma Turnpike System General Fund” (the “General Fund”), respectively.

The moneys in the Senior Bond Sinking Fund and the Subordinated Bond Sinking Fund shall be held by the Trustee and the moneys in the Reserve Maintenance Fund and the General Fund shall be held by a Depositary appointed by the Authority in trust and shall be subject to a lien and charge in favor of the owners of the bonds issued and outstanding and Parity Indebtedness and for the further security of such owners until paid out or transferred as provided in the Trust Agreement.

Flow of Funds (Section 507)

On or before the 10th day of each month or such other Deposit Day as may be required pursuant to a Supplemental Agreement, the Depositary for the Revenue Fund shall withdraw from the Revenue Fund and transfer to the Trustee an amount equal to the amount of all moneys held for the credit of the Revenue Fund on the last day of the preceding month less an amount (to be held as a reserve for Current Expenses) equal to 20% of the amount shown by the Annual Budget to be necessary for Current Expenses for the current fiscal year (unless the Authority establishes by resolution a smaller percentage) and the Trustee shall deposit or transfer, as appropriate, the sum so received to the credit of the following Accounts or Funds in the following order:

(a) deposit to the credit of the First Senior Bond Service Account, such amount thereof (or the entire sum so withdrawn if less than the required amount) as may be required to make the total amount then to the credit of the First Senior Bond Service Account equal to the sum of (i) 1/6 of the amount of the Interest Requirement on the first senior bonds which has accrued and will accrue during the then current Interest Period and (ii) 1/12 of the amount of the Principal Requirement of the first senior bonds which has accrued since the last Applicable Principal Payment Date and which will accrue prior to the next Applicable Principal Payment Date; provided, however, that the amount so deposited on account of interest on each Deposit Day after the delivery of the first senior bonds up to and including the Deposit Day immediately preceding the first Interest Payment Date thereafter shall be that amount which when multiplied by the number of such deposits will be equal to the amount of the Interest Requirement in respect of such bonds during such first Interest Period; and provided, further, that in making such transfer to the Trustee, the Depositary shall take into account any accrued interest deposited from the proceeds of first senior bonds and any amounts specified in an Officer’s Certificate delivered to the Depositary prior to such Deposit Day as credited to the First Senior Bond Service Account or a special account in the Construction Fund, dedicated to pay interest on such bonds and anticipated to be available to pay interest on such bonds or amounts required to be withdrawn from the Turnpike Trust Fund as described above under “Payment Interest on Series 1989 First

C-23 Senior Bonds from Turnpike Trust Fund” on the next Interest Payment Date, and in making the transfer to the Trustee on the Deposit Day immediately prior to any Interest Payment Date, the Depositary shall take into account any investment income realized by the Authority from the investment of moneys to the credit of the First Senior Bond Service Account since the Interest Payment Date last occurring prior to such Deposit Day;

(b) deposit to the credit of the Second Senior Bond Service Account such amount, if any, of any balance remaining after making the deposits under clause (a) above (or the entire balance if less than the required amount) as may be required to make the total amount then to the credit of the Second Senior Bond Service Account equal to the sum of

(1) (i) 1/6 of the amount of the Interest Requirement on the second senior bonds during the then current Interest Period and (ii) 1/12 of the amount of the Principal Requirement of the second senior bonds which has accrued since the last Applicable Principal Payment Date and which will accrue prior to the next Applicable Principal Payment; provided, however, that the amount so deposited on account of interest on each Deposit Day after the delivery of the second senior bonds of any Series under the provisions of the Trust Agreement up to and including the Deposit Day immediately preceding the first Interest Payment Date thereafter of the second senior bonds of such Series shall be that amount which when multiplied by the number of such deposits will be equal to the amount of the Interest Requirement in respect of such bonds during such first Interest Period; and provided, further, that in making such transfer to the Trustee, the Depositary shall take into account any accrued interest deposited from the proceeds of second senior bonds and any amounts specified in an Officer’s Certificate delivered to the Depositary prior to such Deposit Day as credited to the Second Senior Bond Service Account or a special account in the Construction Fund, dedicated to pay interest on such bonds and anticipated to be available to pay interest on such bonds on the next Interest Payment Date, and in making the transfer to the Trustee on the Deposit Day immediately prior to any Interest Payment Date, the Depositary shall take into account any investment income realized by the Authority from the investment of moneys to the credit of the Second Senior Bond Service Account since the Interest Payment Date last occurring prior to such Deposit Day; and

(2) such amount of the Debt Service Requirements as the Authority determines is necessary to accrue in equal monthly installments and to insure the sufficiency of deposits to make timely payment of Parity Indebtedness;

(c) deposit to the credit of the Subordinated Bond Service Account such amount, if any, of any balance remaining after making the deposits under clauses (a) and (b) above (or the entire balance if less than the required amount) as may be required to make the total amount then to the credit of the Subordinated Bond Service Account equal to the sum of (i) 1/6 of the amount of the Interest Requirement on the subordinated bonds during the then current Interest Period and (ii) 1/12 of the amount of the Principal Requirement of the subordinated bonds which has accrued since the last Applicable Principal Payment Date and which will accrue prior to the next Applicable Principal Payment Date; provided, however, that the amount so deposited on account of interest on each Deposit Day after the delivery of the subordinated bonds under the provisions of the Trust Agreement up to and including the Deposit Day immediately preceding the first Interest Payment Date thereafter of the subordinated bonds of such Series shall be that amount which when multiplied by the number of such deposits will be equal to the Interest Requirement in respect of such bonds during such first Interest Period; and provided, further, that in making such transfer to the Trustee, the Depositary shall take into account any accrued interest deposited from the proceeds of subordinated bonds and any amounts specified in an Officer’s Certificate delivered to the Depositary prior to such Deposit Day as credited to the Subordinated Bond

C-24 Service Account or a special account in the Construction Fund, dedicated to pay interest on such bonds and anticipated to be available to pay interest on such bonds on the next Interest Payment Date, and in making the transfer to the Trustee on the Deposit Day immediately prior to any Interest Payment Date, the Depositary shall take into account any investment income realized by the Authority from the investment of moneys to the credit of the Subordinated Bond Service Account since the Interest Payment Date last occurring prior to such Deposit Day;

(d) deposit to the credit of the First Senior Bond Reserve Account, (i) beginning on the Deposit Day of the month next succeeding the month in which moneys have been transferred from the First Senior Bond Reserve Account to the First Senior Bond Service Account, as described under “Application of Moneys in First Senior Bond Reserve Account” below, such amount, if any, of any balance remaining after making the deposit under clauses (a), (b) and (c) above (or the entire balance if less than the required amount) as may be required to make the amount then to the credit of the First Senior Bond Reserve Account equal to the First Senior Bond Reserve Account Requirement and (ii) beginning on the Deposit Day of the month next succeeding a valuation as described under “Valuation” below, in which a loss resulting from a decline in value of investments held to the credit of the First Senior Bond Reserve Account is computed, such amount, if any, of any such balance remaining after making the deposit under said clauses (a), (b) and (c) (or the entire balance if less than the required amount) as may be required to make the amount then to the credit of the First Senior Bond Reserve Account equal to the First Senior Bond Reserve Account Requirement; provided, however, that the amount so deposited in any month need not exceed 1/12 of the amount so transferred or of such loss until the amount then on deposit is equal to the First Senior Bond Reserve Account Requirement;

(e) deposit to the credit of the Second Senior Bond Reserve Account, (i) beginning on the Deposit Day of the month after the month in which moneys have been transferred from the Second Senior Bond Reserve Account to the Second Senior Bond Service Account, as described under “Application of Moneys in Second Senior Bond Reserve Account” below, such amount, if any, of any balance remaining after making the deposit under clauses (a), (b), (c) and (d) above (or the entire balance if less than the required amount) as may be required to make the amount then to the credit of the Second Senior Bond Reserve Account equal to the Second Senior Bond Reserve Requirement and (ii) beginning on the Deposit Day of the month next succeeding a valuation, as described under “Valuation” below, in which a loss resulting from a decline in value of investments held to the credit of the Second Senior Bond Reserve Account is computed, such amount, if any, of any such balance remaining after making the deposit under said clauses (a), (b), (c) and (d) (or the entire balance if less than the required amount) as may be required to make the amount then to the credit of the Second Senior Bond Reserve Account equal to the Second Senior Bond Reserve Account Requirement; provided, however, that the amount so deposited in any month need not exceed 1/12 of the amount so transferred or of such loss until the amount then on deposit is equal to the Second Senior Bond Reserve Account Requirement;

(f) deposit to the credit of the Subordinated Bond Reserve Account, (i) beginning on the Deposit Day after the month in which moneys have been transferred from the Subordinated Bond Reserve Account to the Subordinated Bond Service Account, as described under “Application of Moneys in Subordinated Bond Reserve Account” below, such amount, if any, of any balance remaining after making the deposits under clauses (a), (b), (c), (d) and (e) above (or the entire balance if less than the required amount) as may be required to make the amount then to the credit of the Subordinated Bond Reserve Account equal to the Subordinated Bond Reserve Account Requirement and (ii) beginning on the Deposit Day of the month next succeeding a valuation, as described under “Valuation” below, in which a loss resulting from a decline in value of investments held to the credit of the Subordinated Bond Reserve Account is computed, such

C-25 amount, if any, of any such balance remaining after making the deposits under said clauses (a), (b), (c), (d) and (e) (or the entire balance if less than the required amount) as may be required to make the amount then to the credit of the Subordinated Bond Reserve Account equal to the Subordinated Bond Reserve Account Requirement; provided, however, that the amount so deposited in any month need not exceed 1/12 of the amount so transferred or of such loss until the amount then on deposit in the Subordinated Bond Reserve Account is equal to the current Subordinated Bond Reserve Account Requirement;

(g) transfer to the Depositary therefor who shall deposit to the credit of the Reserve Maintenance Fund, such amount, if any, of any balance remaining after making the payment under clauses (a), (b), (c), (d), (e) and (f) above (or the entire balance if less than the required amount) as may be required to make the amount deposited in such month to the credit of the Reserve Maintenance Fund equal to the amount set forth in the Annual Budget to be deposited to the credit of said Account during such month; and

(h) transfer to the Depositary therefor who shall deposit to the credit of the General Fund, the balance, if any, remaining after making the deposits under clauses (a), (b), (c), (d), (e), (f) and (g) above.

The payments and deposits required as described above shall be cumulative and any deficiency in any month shall be added to the amount otherwise required to be paid or deposited in each month.

Notwithstanding the provisions described in clauses (a) through (f) above, if there shall be to the credit of such Accounts on a Deposit Day the amount required to be so on deposit on the next Interest Payment Date or Principal Payment Date, no further deposits need be made to any such Accounts.

If the Supplemental Agreement authorizing any Series of bonds shall provide that the interest is payable otherwise than semiannually or otherwise than on a January 1 or July 1 or that the principal or Amortization Requirements are payable otherwise than on a January 1 or July 1, then the Authority shall provide in such Supplemental Agreement for such deposits to the Accounts mentioned in clauses (a) through (f) above as shall be necessary to accrue evenly and to ensure the sufficiency of the required deposits to make timely payment of the debt service on such bonds.

Application of Moneys in First Senior Bond Service Account, Second Senior Bond Service Account and Subordinated Bond Service Account (Section 508)

(a) The Trustee shall, immediately preceding each Interest Payment Date, withdraw from the First Senior Bond Service Account and transfer to the Bond Registrar, and the Bond Registrar shall (1) remit by mail to each registered owner the amounts required for paying the interest on such bonds as such interest becomes due and payable and (2) set aside or deposit in trust with the Bond Registrar or any Paying Agent if so required by any Supplemental Agreement, the amounts required for paying the principal of such bonds as such principal becomes due and payable (whether at maturity or upon call for redemption).

(b) The Trustee shall, immediately preceding each Interest Payment Date, withdraw from the Second Senior Bond Service Account and transfer to the Bond Registrar, and the Bond Registrar shall (1) remit by mail to each registered owner of second senior bonds the amounts required for paying the interest on such bonds as such interest becomes due and payable and (2) set aside or deposit in trust with the Bond Registrar or any Paying Agent if so required by any Supplemental Agreement, the amounts required for paying the principal of such bonds as such principal becomes due and payable (whether at maturity or upon call for redemption). Payment of Parity Indebtedness shall be timely made from moneys

C-26 set aside for such purpose in the Second Senior Bond Service Account, and the Trustee shall pay or deposit in trust with the Bond Registrar or any Paying Agent the amounts required for paying such Parity Indebtedness.

(c) The Trustee shall, immediately preceding each Interest Payment Date, withdraw from the Subordinated Bond Service Account and transfer to the Bond Registrar, and the Bond Registrar shall (a) remit by mail to each registered owner of subordinated bonds, the amounts required for paying the interest on such bonds as such interest becomes due and payable and (b) set aside or deposit in trust with the Bond Registrar or any Paying Agent if so required by any Supplemental Agreement, the amounts required for paying the principal of such bonds as such principal becomes due and payable (whether at maturity or upon call for redemption).

(d) In the case of bonds or Parity Indebtedness secured by a Credit Facility, amounts on deposit in the First Senior Bond Service Account, the Second Senior Bond Service Account or the Subordinated Bond Service Account may be applied as provided in the applicable Supplemental Agreement to reimburse the Credit Bank for amounts drawn under such Credit Facility to pay the principal of and premium, if any, and interest on such bonds or Parity Indebtedness, as appropriate.

(e) After providing for the payments specified in the paragraphs above, the moneys in the First Senior Bond Service Account, Second Senior Bond Service Account and the Subordinated Bond Service Account shall be applied to the retirement (by purchase or redemption) in satisfaction of the next respective Amortization Requirements of the first senior bonds, the second senior bonds, and the subordinated bonds, respectively; provided that amounts held in the First Senior Bond Service Account, the Second Senior Bond Service Account and the Subordinated Bond Service Account to retire first senior bonds, second senior bonds and subordinated bonds, respectively, in accordance with the Amortization Requirements therefor and to pay the principal of such bonds at maturity shall be payable on a parity with one another.

Use of Turnpike Trust Fund (Section 509)

The Turnpike Trust Fund is continued and vested in the control of the Authority. If on the fifteenth day of the month preceding any Interest Payment Date and/or Principal Payment Date the moneys held for the credit of the First Senior Bond Service Account, the Second Senior Bond Service Account or the Subordinated Bond Service Account shall be insufficient to pay the maturing principal of and premium, if any, and interest on any first senior bonds then outstanding, Second Senior Indebtedness then outstanding or any subordinated bonds then outstanding, respectively, which will become due and payable on such next Interest Payment Date and/or Principal Payment Date, the Authority will withdraw from the Turnpike Trust Fund and deposit with the Trustee to the credit of the First Senior Bond Service Account, Second Senior Bond Service Account or the Subordinated Bond Service Account, as appropriate, the amounts needed to make up such deficiency.

The moneys at any time held for the credit of the Turnpike Trust Fund are pledged to make up any deficiency in the moneys available for the payment of principal of, interest and redemption premium on the bonds and Parity Indebtedness under the Trust Agreement. The Authority vests in the holders of all first senior bonds and, subject to the prior pledge to the holders of such first senior bonds, in the holders of all Second Senior Indebtedness and, subject to the prior respective pledges to the holders of such first senior bonds and Second Senior Indebtedness, in the holders of all subordinated bonds a contract right to the continuance of apportionments of motor fuel taxes to the Authority and deposited to the credit of the Turnpike Trust Fund in accordance with the Enabling Act and subject to the limitations therein. The Authority covenants to make no pledge of the moneys held for the credit of the Turnpike Trust Fund for the benefit of owners of Indebtedness other than the bonds and Parity Indebtedness to the

C-27 extent moneys held to the credit of the Fund do not exceed 150% of the maximum Debt Service Requirements in any bond year on account of such bonds or Parity Indebtedness or if greater, the actual payments in such bond year in respect of debt service for such year on account of such bonds or Parity Indebtedness. The Authority covenants to make no additional pledge of the moneys held for the credit of the Turnpike Trust Fund to the extent in excess of the above limit unless expressly subordinated to the owners of the subordinated bonds.

If at any time the amount in the Turnpike Trust Fund is less than 150% of the maximum Debt Service Requirements in any bond year on account of any bonds or Parity Indebtedness, all motor fuel taxes then apportioned to said Fund in accordance with the Enabling Act shall not be pledged or drawn upon to satisfy any deficiency in amounts that may be needed to pay debt service on Indebtedness other than bonds or Parity Indebtedness.

Notwithstanding any other provisions of the Agreement and in accordance with the Granting Clause set forth in the Third Supplemental Trust Agreement (the “Granting Clause”), the Authority covenants that the Turnpike Trust Fund created by the Enabling Act is continued and vested in the control of the Authority.

The Authority covenants that for any bonds issued after May 1, 1992 pursuant to the Trust Agreement, if on the fifteenth (15th) day of the month preceding any Interest Payment Date and/or Principal Payment Date the moneys held for the credit of the First Senior Bond Service Account shall be insufficient for the purpose of paying the maturing principal of and premium, if any, and interest on all first senior bonds then outstanding which will become due and payable on such next Interest Payment Date and/or Principal Payment Date, it will withdraw from the Turnpike Trust Fund and deposit with the Trustee to the credit of the First Senior Bond Service Account such amount as may be required to make up such deficiency (or the entire amount then held for the credit of the Turnpike Trust Fund if less than the amount of such deficiency).

The Authority covenants that for any bonds issued after May 1, 1992 pursuant to the Trust Agreement, subject to the prior application of such moneys to the payment of the principal of and premium, if any, and interest on the first senior bonds, if on the fifteenth (15th) day of the month preceding any Interest Payment Date and/or Principal Payment Date the moneys held for the credit of the Second Senior Bond Service Account shall be insufficient for the purpose of paying the maturing principal of and premium, if any, and interest on all Second Senior Indebtedness then outstanding which will become due and payable on such next Interest Payment Date and/or Principal Payment Date, it will withdraw from the Turnpike Trust Fund and deposit with the Trustee to the credit of the Second Senior Bond Service Account such amount as may be required to make up such deficiency (or the entire amount then held for the credit of the Turnpike Trust Fund if less than the amount of such deficiency).

The Authority further covenants that for any bonds issued after May 1, 1992 pursuant to the Trust Agreement, subject to the prior application of such moneys to the payment of the principal of and premium, if any, and interest on the Senior Indebtedness, if on (a) the fifteenth (15th) day of the month preceding any Interest Payment and/or Principal Payment Date for the subordinated bonds the moneys held for the credit of the Subordinated Bond Service Account shall be insufficient for the purpose of paying the maturing principal of and interest on all subordinated bonds then outstanding which will become due and payable on the next Interest Payment Date and/or Principal Payment Date, it will withdraw from the Turnpike Trust Fund and deposit with the Trustee to the credit of the Subordinated Bond Service Account such amount as may be required to make up such deficiency (or the entire balance then held for the credit of the Turnpike Trust Fund if less than the amount of such deficiency).

C-28 The Authority further covenants that the moneys held for the credit of the Turnpike Trust Fund shall be used as provided above for making up any deficiencies in the following Accounts in the following order: First Senior Bond Service Account, Second Senior Bond Service Account and Subordinated Bond Service Account; provided, however, that for all purposes of the Trust Agreement any motor fuel excise taxes, including amounts now in the Turnpike Trust Fund, which pursuant to the Granting Clause are apportioned to the Authority for making up any deficiency in the moneys available for the payment of the principal of and the interest and redemption premium, if any, on bonds issued prior to May 1, 1992, to the extent of one and one-half times the requirement set forth in the Granting Clause shall be used solely to make payments in respect of such bonds and shall not be used to make payment in respect of bonds issued after May 1, 1992 while such bonds issued prior to May 1, 1992 are outstanding.

The moneys at any time held for the credit of the Turnpike Trust Fund are pledged to and charged with making up any deficiency in the moneys available for the payment of the principal of and the interest and the redemption premium on the bonds issued under the provisions of the Trust Agreement and the Fourth Supplemental Trust Agreement and Parity Indebtedness as provided above. The Authority vests in the holders of all first senior bonds issued a contract right to the continuance of apportionments of motor fuel taxes to the Authority and deposited to the credit of the Turnpike Trust Fund in accordance with the Enabling Act and the Granting Clause but subject to the limitations therein provided. Subject to the prior pledge of the Turnpike Trust Fund to the owners of first senior bonds, the Authority vests in the holders of all Second Senior Indebtedness issued a contract right to the continuance of apportionments of motor fuel taxes to the Authority and deposited to the credit of the Turnpike Trust Fund in accordance with the Enabling Act and the Granting Clause but subject to the limitations therein provided. Subject to the prior pledge of the Turnpike Trust Fund to the owners first of the first senior bonds and then to the Second Senior Indebtedness, the Authority vests in the holder of all subordinated bonds issued a contract right to the continuance of apportionments of motor fuel taxes to the Authority and deposited to the credit of the Turnpike Trust Fund in accordance with the Enabling Act and the Granting Clause but subject to the limitations therein provided. The Authority covenants to make no pledge of the moneys held or that may be deposited for the credit of the Turnpike Trust Fund for the benefit of owners of Indebtedness other than the bonds and Parity Indebtedness to the extent provided in the Trust Agreement.

The Authority shall comply with the provisions of the Enabling Act as to the transfer on the date or dates required of any moneys held to the credit of the Turnpike Trust Fund in excess of the maximum Turnpike Trust Fund balance.

Notwithstanding any other provision in the Trust Agreement prior to any amounts in the Turnpike Trust Fund used to make any payments on account of Bonds issued pursuant to the Trust Agreement the Authority covenants to use any moneys available in the General Fund first and then any moneys in the Reserve Maintenance Fund in excess of the requirements of such Reserve Maintenance Fund. Any such amounts shall be transferred to the appropriate Bond Service Account upon receipt of a resolution of the Authority directing such transfer and, with respect to the use of moneys in the Reserve Maintenance Fund, a certificate of the Consulting Engineer certifying that such amount so to be transferred is not required for the purpose for which the Reserve Maintenance Fund has been created.

The Authority further covenants to utilize all available revenues, operating reserves, Turnpike Trust Fund balances, and provide revenues from all other sources available to the Authority for the payment of principal, including any sinking fund or amortization requirements and interest on such bonds before using motor fuel excise taxes apportioned to the Turnpike Trust Fund for bonds issued after May 1, 1992.

C-29 Use of Reserve Maintenance Fund (Section 510)

Moneys in the Reserve Maintenance Fund shall be disbursed by the Depositary for paying (a) the costs of resurfacing the Oklahoma Turnpike System, (b) unusual or extraordinary maintenance or repairs, maintenance or repairs not recurring annually, and renewals and replacements, including major items of equipment, (c) repairs or replacements, as in the case of an emergency, (d) engineering expenses, and (e) set aside in reserve to pay insurance premiums or for self insurance payments. Such disbursements shall be made in the same manner as Construction Fund disbursements.

If the moneys held for the credit of the First Senior Bond Service Account and the Turnpike Trust Fund and available moneys held to the credit of the General Fund, of the Second Senior Bond Service Account and the Turnpike Trust Fund and available moneys held to the credit of the General Fund, or of the Subordinated Bond Service Account and Turnpike Trust Fund and available moneys held to the credit of the General Fund shall be insufficient to pay the principal of and interest on all first senior bonds, Second Senior Indebtedness or subordinated bonds, respectively, at the time such interest and principal become due and payable, then the Depositary shall transfer from any moneys held for the credit of the Reserve Maintenance Fund not otherwise encumbered and required to be paid out of said Fund within the next 12 months (herein called “available moneys”) to the Trustee for deposit to the credit of the First Senior Bond Service Account, Second Senior Bond Service Account or Subordinated Bond Service Account, as appropriate, an amount sufficient to make up any such deficiency; provided, however, in the case of Second Senior Bond Service Account, the available moneys in the Reserve Maintenance Funds shall first be used, if necessary, to make the transfer to the First Senior Bond Service Account as provided above and in the case of the Subordinated Bond Service Account, available moneys in the Reserve Maintenance Fund shall first be used, if necessary, to make the transfer to the First Senior Bond Service Account and the Second Senior Bond Service Account, respectively, as provided above. Any available moneys so transferred from the Reserve Maintenance Fund shall be restored from amounts in the Revenue Fund, subject to the same conditions as are prescribed for deposits to the credit of the Reserve Maintenance Fund as described above under “Flow of Funds.”

Application of Moneys in First Senior Bond Reserve Account (Section 511)

(a) The Authority may meet the First Senior Bond Reserve Account Requirement with cash, a Senior Bond Reserve Account Insurance Policy, eligible Investment Obligations, or any combination thereof, and may make substitutions therefor; provided that in making any transfers pursuant to paragraph (b) below, the Trustee shall first exhaust all such cash and such eligible Investment Obligations (including any proceeds derived from the sale or other disposition thereof) before drawing under any Senior Bond Reserve Account Insurance Policy. Each Senior Bond Reserve Account Insurance Policy must provide that any reimbursement obligation be for a period not less than that required for restoring deficiencies to the First Senior Bond Reserve Account and such obligation shall be subordinated to the Authority’s obligation on the bonds and Parity Indebtedness. The Trustee shall so draw or otherwise request payment on such Policy prior to its expiration or termination or failure to qualify under the definition of “Senior Bond Reserve Account Insurance Policy, unless the Authority shall have furnished a replacement Senior Bond Reserve Account Insurance Policy or sufficient moneys or Investment Obligations to make amounts on deposit to the First Senior Bond Reserve Account equal to the First Senior Bond Reserve Account Requirement.

(b) Moneys held for the credit of the First Senior Bond Reserve Account shall be transferred to the credit of the First Senior Bond Service Account and used for the purpose of paying the interest and maturing principal of all first senior bonds whenever and to the extent that the moneys held for the credit of the First Senior Bond Service Account and the Turnpike Trust Fund and available moneys held for the credit of the General Fund and the Reserve Maintenance Fund shall be insufficient for such purpose. If

C-30 on the Deposit Day immediately preceding each Interest Payment Date and/or Principal Payment Date in each fiscal year (or at such other times as the Trustee in its discretion determines) the moneys held for the credit of the First Senior Bond Reserve Account shall exceed the First Senior Bond Reserve Account Requirement, such excess shall be transferred by the Trustee to the Depositary therefor for deposit to the credit of the Revenue Fund.

(c) If the amount transferred from the First Senior Bond Reserve Account to the First Senior Bond Service Account pursuant to paragraph (b) above shall be less than the amount required to be transferred thereunder, any amount thereafter deposited to the credit of the First Senior Bond Reserve Account shall be immediately transferred to the First Senior Bond Service Account to make up any such deficiency.

(d) Whenever the amount on deposit in the First Senior Bond Reserve Account is less than the First Senior Bond Reserve Account Requirement, the Trustee shall notify the Authority of the amount of the deficiency. Upon such notification, the Authority immediately shall pay from available moneys other than moneys held to the credit of the Revenue Fund an amount equal to the amount of such deficiency; provided, however, that in lieu of the entire amount of such deficiency, the Authority shall pay from moneys held to the credit of the Revenue Fund commencing on the first Deposit Day after the date of such notification and on each Deposit Day thereafter, to the Trustee for deposit to the credit of the First Senior Bond Reserve Account an amount not less than 1/12 of the amount of such deficiency until such deficiency is made up drawing upon funds available in the Revenue Fund.

(e) In the case of first senior bonds entitled to the benefit of a Credit Facility, amounts on deposit in a separate subaccount in the First Senior Bond Reserve Account may be applied as provided in the applicable Supplemental Agreement to reimburse the Credit Bank for amounts drawn under such Credit Facility to pay the principal of and premium, if any, and interest on such bonds and to pay the Purchase Price of Optional Tender Indebtedness.

Application of Moneys in Second Senior Bond Reserve Account (Section 512)

(a) For the purposes of the Trust Agreement, the Authority may meet the Second Senior Bond Reserve Account Requirement with cash, a Senior Bond Reserve Account Insurance Policy, eligible Investment Obligations, or any combination thereof, and may make substitutions therefor; provided that in making any transfers pursuant to paragraph (b) below, the Trustee shall first exhaust all such cash and such eligible Investment obligations (including any proceeds derived from the sale or other disposition thereof) before drawing under any Senior Bond Reserve Account Insurance Policy. Each Senior Bond Reserve Account Insurance Policy must provide that any reimbursement obligation be for a period not less than that required for restoring deficiencies to the Second Senior Bond Reserve Account and such obligation shall be subordinated to the Authority’s obligation on the bonds and Parity Indebtedness. The Trustee shall so draw or otherwise request payment on such Policy prior to its expiration or termination thereof or its failure to qualify under the definition of “Senior Bond Reserve Account Insurance Policy,” unless the Authority shall have furnished a replacement Senior Bond Reserve Account Insurance Policy or sufficient moneys or Investment Obligations to make amounts on deposit to the Second Senior Bond Reserve Account equal to the Second Senior Bond Reserve Account Requirement.

(b) Moneys held for the credit of the Second Senior Bond Reserve Account shall be transferred to the credit of the Second Senior Bond Service Account and used for the purpose of paying the Debt Service Requirements of all Second Senior Indebtedness whenever and to the extent that the moneys held for the credit of the Second Senior Bond Service Account and the Turnpike Trust Fund and available moneys held to the credit of the General Fund and the Reserve Maintenance Fund shall be insufficient for such purpose. If on the Deposit Day immediately preceding each Interest Payment Date

C-31 and/or Principal Payment Date (or at such other times as the Trustee in its discretion determines) the moneys held for the credit of the Second Senior Bond Reserve Account shall exceed the Second Senior Bond Reserve Account Requirement, such excess shall be transferred by the Trustee to the Depositary therefor for deposit to the credit of the Revenue Fund.

(c) If the amount transferred from the Second Senior Bond Reserve Account to the Second Senior Bond Service Account pursuant to paragraph (b) above shall be less than the amount required to be transferred thereunder, any amount thereafter deposited to the credit of the Second Senior Bond Reserve Account shall be immediately transferred to the Second Senior Bond Service Account to make up any such deficiency.

(d) If two or more subaccounts have been established in the Second Senior Bond Reserve Account in the event that second senior bonds constituting Balloon Indebtedness or Optional Tender Indebtedness or second senior bonds entitled to the benefit of a Credit Facility or a Senior Bond Reserve Account Insurance Policy are issued or Parity Indebtedness is incurred and outstanding and a deficiency in the amount of money to the credit of the Second Senior Bond Service Account or a subaccount established under a Supplemental Agreement shall exist with respect to a Series of second senior bonds constituting Optional Tender Indebtedness or Balloon Indebtedness by virtue of the exercise by the owners of Optional Tender Indebtedness of their rights to tender such bonds for payment or purchase or by virtue of an insufficiency of moneys in the Second Senior Bond Service Account to meet the Balloon Indebtedness Principal Requirement, respectively, or, with respect to second senior bonds entitled to the benefit of a Credit Facility or a Senior Bond Reserve Account Insurance Policy by virtue of a draw under such Credit Facility or Policy or with respect to any Parity Indebtedness, the necessary withdrawals shall be made solely from and to the extent of moneys credited to the subaccount corresponding to such Series of second senior bonds or Parity Indebtedness, as the case may be; otherwise, such accounts shall be drawn upon pro rata in accordance with the amounts of principal and interest coming due on Parity Indebtedness or on the second senior bonds of different Series that, on the one hand do not, and, on the other hand, do constitute Balloon Indebtedness or Optional Tender Indebtedness or second senior bonds entitled to the benefit of a Credit Facility or a Senior Bond Reserve Account Insurance Policy, to the extent necessary to remedy such deficiencies.

(e) Whenever the amount on deposit in the Second Senior Bond Reserve Account is less than the Second Senior Bond Reserve Account Requirement, the Trustee shall notify the Authority of the amount of the deficiency. Upon such notification, the Authority immediately shall from any available moneys other than moneys held to the credit of the Revenue Fund pay an amount equal to the amount of such deficiency; provided, however, that in lieu of the entire amount of such deficiency, the Authority shall pay from moneys held to the credit of the Revenue Fund commencing on the first Deposit Day after the date of such notification and on each Deposit Day thereafter, to the Trustee for deposit to the credit of the Second Senior Bond Reserve Account an amount not less than 1/12 of the amount of such deficiency until such deficiency is made up, drawing upon funds available in the Revenue Fund.

(f) In the case of second senior bonds entitled to the benefit of a Credit Facility, amounts on deposit in a separate subaccount in the Second Senior Bond Reserve Account may be applied as provided in the applicable Supplemental Agreement to reimburse the Credit Bank for amounts drawn under such Credit Facility to pay the principal of and premium, if any, and interest on such bonds and to pay the Purchase Price of Optional Tender Indebtedness.

Application of Moneys in Subordinated Bond Reserve Account (Section 513)

(a) For the purposes of the Trust Agreement, the Authority may meet the Subordinated Bond Reserve Account Requirement with cash, a Subordinated Bond Reserve Account Insurance Policy,

C-32 eligible Investment Obligations, or any combination thereof, and may make substitutions therefor; provided that in making any transfers pursuant to paragraph (b) below, the Trustee shall first exhaust all such cash and such eligible Investment Obligations (including any proceeds derived from the sale or other disposition thereof) before drawing under any Subordinated Bond Reserve Account Insurance Policy.

Each Subordinated Bond Reserve Account Insurance Policy must provide that any reimbursement obligation be for a period not less than that required for restoring deficiencies to the Subordinated Bond Reserve Account and such obligation shall be subordinated to the Authority’s obligation on the bonds and Parity Indebtedness. The Trustee shall be authorized to draw or otherwise request payment on such Policy prior to its expiration or termination thereof or its failure to qualify under the definition of “Subordinated Bond Reserve Account Insurance Policy,” unless a replacement Subordinated Bond Reserve Account Insurance Policy or sufficient moneys or Investment Obligations to make amounts on deposit to the credit of the Subordinated Bond Reserve Account equal to the Subordinated Bond Reserve Account Requirement shall have been provided.

(b) Moneys held for the credit of the Subordinated Bond Reserve Account shall be transferred to the credit of the Subordinated Bond Service Account and used for the purpose of paying the Interest Requirement on and the Principal Requirement of all subordinated bonds whenever and to the extent that the moneys held for the credit of the Subordinated Bond Service Account and the Turnpike Trust Fund and available moneys held to the credit of the General Fund and the Reserve Maintenance Fund shall be insufficient for such purpose. If on the Deposit Day preceding each Interest Payment Date and/or Principal Payment Date in each fiscal year (or at such other times as the Trustee in its discretion determines) the moneys held for the credit of the Subordinated Bond Reserve Account shall exceed the Subordinated Bond Reserve Account Requirement, such excess shall be transferred by the Trustee to the Depositary therefor for deposit to the credit of the Revenue Fund.

(c) If the amount transferred from the Subordinated Bond Reserve Account to the Subordinated Bond Service Account shall be less than the amount required to be transferred under such provisions, any amount thereafter deposited to the credit of the Subordinated Bond Reserve Account shall be immediately transferred to the Subordinated Bond Service Account to make up any such deficiency.

(d) Whenever the amount on deposit in the Subordinated Bond Reserve Account is less than the Subordinated Bond Reserve Account Requirement, the Trustee shall notify the Authority of the amount of the deficiency. Upon such notification and subject to the Authority first having restored any deficiencies in the First Senior Bond Reserve Account and the Second Senior Bond Reserve Account, respectively, the Authority immediately shall from any available moneys other than moneys held to the credit of the Revenue Fund pay an amount equal to such deficiency; provided, however, that in lieu of the entire amount of such deficiency, the Authority shall pay, commencing on the first Deposit Day after the date of such notification from moneys held to the credit of the Revenue Fund, and shall pay from moneys held to the credit of the Revenue Fund on the Deposit Day in each month thereafter, to the Trustee for deposit to the credit of the Subordinated Bond Reserve Account an amount not less than 1/12 of the amount of such deficiency until such deficiency is made up, drawing upon funds available in the Revenue Fund.

(e) In the case of subordinated bonds entitled to the benefit of a Credit Facility, amounts on deposit in a separate subaccount in the Subordinated Bond Reserve Account may be applied as provided in the applicable Supplemental Agreement to reimburse the Credit Bank for amounts drawn under such Credit Facility to pay the principal of and premium, if any, and interest on such bonds.

C-33 Use of Moneys in General Fund; Issuance of Junior Obligations (Section 514)

The Authority may use moneys held in the General Fund for any lawful purpose or to transfer or deposit to any Fund or Account any moneys held for the credit of the General Fund; provided, however, that if moneys held for the credit of the First Senior Bond Service Account and the Turnpike Trust Fund, the Second Senior Bond Service Account and the Turnpike Trust Fund and the Subordinated Bond Service Account and the Turnpike Trust Fund shall be insufficient to pay the principal of and interest on all first senior bonds, all Second Senior Indebtedness or all subordinated bonds, respectively, at the time such interest and principal become due and payable, the Depositary shall transfer from any moneys held to the credit of the General Fund and not otherwise pledged or encumbered (herein called “available moneys”) to the Trustee for deposit to the credit of the First Senior Bond Service Account, Second Senior Bond Service Account or the Subordinated Bond Service Account, respectively, an amount sufficient to make up such deficiency.

Such available moneys shall be used to make up any deficiencies in the following Accounts in the following order: First Senior Bond Service Account, Second Senior Bond Service Account and Subordinated Bond Service Account.

Junior obligations may be issued by the Authority for the purpose of paying the cost of any additional Turnpike Project or Improvement or Junior Obligation projects, of refunding outstanding bonds of any Series or of other Indebtedness or Junior Obligations. The Authority may covenant with the holders of any Junior Obligations to add to the conditions, limitations and restrictions of additional senior bonds under the Trust Agreement; provided, however, that the holders of such obligations may not declare such Junior Obligations to be immediately due and payable unless all bonds and Parity Indebtedness shall have been declared immediately due and payable; and provided further that the Authority covenants that the moneys in the General Fund and other revenues pledged to the payment of such Junior Obligations shall not be less than 100% of the debt service requirements for each fiscal year and if insufficient, that the Authority increase applicable charges to provide an amount of such moneys and other revenues sufficient to meet such debt service requirements.

Qualified Swaps (Section 518)

Notwithstanding any other provision of this Agreement to the contrary, scheduled periodic payments under Qualified Swaps that relate to any bonds or Parity Indebtedness may be paid from amounts on deposit in the First Senior Bond Service Account, the Second Senior Bond Service Account or the Subordinated Bond Service Account, as the case may be, and transfers or deposits shall be made by the Trustee to such applicable account at such time or times (each of which shall constitute a Deposit Day under this Agreement) as may be required therefor. Termination and other payments (except scheduled periodic payments) that may be required under Qualified Swaps shall be payable from amounts on deposit in the General Fund. Qualified Swaps shall not have the benefit of the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account or the Subordinated Bond Reserve Account.

Investments (Section 602)

Moneys held for the credit of the Construction Fund (except moneys held to the credit of any special account therein for the payment of interest) shall be invested by the Depositary therefor, from time to time, at the direction of any one of the officers or employees of the Authority who shall be designated by the Authority by resolution for such purpose, the Authority in Investment Obligations, and moneys held to the credit of said special accounts shall (except as otherwise provided in a Supplemental Agreement) be invested by the Depositary therefor in Government Obligations that shall mature or which

C-34 shall be subject to redemption at the option of the holder thereof not later than the respective dates when the moneys held for the credit of said Fund or special accounts will be required.

Moneys held for the credit of the Revenue Fund shall be invested by the Depositary therefor, from time to time, at the direction of any one of the officers or employees of the Authority who shall be designated by the Authority by resolution for such purpose, the Authority in Investment Obligations that shall mature or which shall be subject to redemption at the option of the holder thereof not later than 6 months after the date of such investment.

Moneys held for the credit of the First Senior Bond Service Account, the Second Senior Bond Service Account and the Subordinated Bond Service Account shall, as nearly as may be practicable, be invested and reinvested by the Trustee, from time to time, at the direction of any one of the officers or employees of the Authority who shall be designated by the Authority by resolution for such purpose, the Authority in Government Obligations or in Investment Obligations of the type referred to in clause (a)(1) of the definition of “Investment Obligations” above which shall mature or which shall be subject to redemption at the option of the holder thereof not later than the respective dates when the moneys held for the credit of said Accounts will be required.

Moneys held for the credit of the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account shall, as nearly as may be any practicable, be invested and reinvested by the Trustee, from time to time, at the direction of any one of the officers or employees of the Authority who shall be designated by the Authority by resolution for such purpose, the Authority in Investment Obligations which shall mature or which shall be subject to redemption at the option of the holder thereof not later than the final maturity of the senior bonds and the subordinated bonds, respectively, outstanding.

Moneys held for the credit of the Reserve Maintenance Fund and the General Fund shall be invested by the Depositary therefor, from time to time, at the direction of any one of the officers or employees of the Authority who shall be designated by the Authority by resolution for such purpose, in Investment Obligations which shall mature, or which shall be subject to redemption by the holder thereof at the option of such holder, not later than, with respect to the Reserve Maintenance Fund, three (3) years, and with respect to the General Fund, seven years (with an average portfolio life of no more than five years), after the date of such investment.

Moneys held for the credit of the Turnpike Trust Fund shall be invested by the Authority in Federal Securities maturing not later than 5 years from the date of investment.

Obligations so purchased as an investment of moneys in any such Fund or Account shall be deemed at all times to be a part of such Fund or Account to which was credited the money with which they were purchased. The interest accruing thereon and any profit realized from such investment shall be credited to such Fund or Account, and any loss resulting from the investment of such moneys shall be charged to such Fund or Account.

Absent direction by the Authority, the Trustee and each Depositary may at its discretion invest any moneys held by it in Investment Obligations, subject to the limitations and restrictions on such investment contained above.

Valuation (Section 603)

For the purpose of determining the amount on deposit to the credit of any such Fund or Account, obligations maturing or subject to redemption at the option of the holder thereof in more than 5 years in

C-35 which money in such Fund or Account shall have been invested shall be valued at the market value or the amortized cost thereof, whichever is lower, and obligations maturing or subject to redemption at the option of the holder thereof in 5 years or less in which money in such Fund or Account shall have been invested shall be valued at the amortized cost thereof; provided, however, that if a withdrawal shall be made from the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account, or the Subordinated Bond Reserve Account that shall reduce the market value of the obligations to the credit thereof below the amortized cost thereof, such Account or subaccount therein shall be valued at market value until such deficiency shall have been remedied. Obligations of the type referred to in clause (h) of the definition of “Investment Obligations” above shall, unless otherwise provided in a Supplemental Agreement, be valued at the principal amount invested thereunder.

The Trustee and the Depositaries value the investments in the Funds and Accounts semi-annually as of each April 30 and October 31. In addition, the Investment Obligations in the Senior Bond Sinking Fund and the Subordinated Bond Sinking Fund shall be valued by the Trustee at any time requested by the Authority on reasonable notice (which period of notice may be waived or reduced by the Trustee); provided, however, that the Trustee shall not be required to value such investments more than once in any month.

Certain Covenants of the Authority

Toll Covenants (Section 501 and 501(a)). The Authority covenants that it will continue in effect the present toll schedules for the Oklahoma Turnpike System until revised as set forth below and before any Turnpike Project or part thereof including the projects financed by the Series 1989 Bonds) is opened, it will fix schedules for tolls for each such Project as recommended by the Traffic Engineers.

The Authority (a) will not change the toll schedules or toll facilities for the Oklahoma Turnpike System unless such change will result in producing an amount of Net Revenues in each fiscal year such that (1) Net Revenues, together with the amount of the motor fuel excise taxes apportioned to the Authority under the provisions of the Enabling Act, or as the Enabling Act may be further amended, for deposit to the credit of the Turnpike Trust Fund for each such fiscal year or the amount of motor fuel excise taxes that would have been apportioned to the Authority for deposit to the credit of said Fund for such period except for the limitation in the Enabling Act as to the maximum Turnpike Trust Fund balance (provided that such amount may not exceed the maximum annual Turnpike Trust Fund apportionment amount), will be not less than the sum of 120% of the Debt Service Requirements for each such fiscal year on account of all Senior Indebtedness then outstanding and (2) Net Revenues will not be less than the sum of 105% of the Debt Service Requirements for each such fiscal year on account of all bonds and Parity Indebtedness then outstanding and 100% of the amount to be deposited during such fiscal year to the credit of the Reserve Maintenance Fund, any deficiency at the start of such fiscal year in the amounts required to be held in the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account and the amount of Net Revenues required to be generated in respect of any Junior Obligations then outstanding if the failure so to generate shall cause a default under such obligations, and

(b) if, in the first complete fiscal year following the issuance of the Series 1989 First Senior Bonds and in each fiscal year thereafter, the schedules of tolls then in effect are not producing Net Revenues sufficient to satisfy the requirements of clauses (1) and (2) of paragraph (a) above, the Authority will request the Traffic Engineers to make recommendations as to a revision of the schedules of tolls to produce the maximum amount of Net Revenues possible; provided, however, that such maximum amount produced by such schedules of tolls need not exceed the Net Revenues sufficient to satisfy the requirements of clauses (1) and (2) of paragraph (a) above.

C-36 For purposes of computing the Debt Service Requirements for Balloon Indebtedness for any fiscal year in which all or a portion of the principal of such Indebtedness is payable, the amount of principal of and interest on such Indebtedness due and payable in such year shall be included in such computation unless there shall have been delivered to the Trustee prior to the first day of such fiscal year an Officer’s Certificate stating that there are moneys sufficient to refund or pay the principal of and interest on such Balloon Indebtedness as such principal and interest come due during such fiscal year.

If in such first complete fiscal year following the issuance of the Series 1989 First Senior Bonds and thereafter the amount of the Net Revenues in any fiscal year shall be less than the amounts required to satisfy the requirements of clauses (1) and (2) of paragraph (a) above for such fiscal year, the Authority will, before the 45th day of the following fiscal year, request the Traffic Engineers to make recommendations as to revising such toll schedules in order to produce the maximum amount of Net Revenues possible and implement such recommendations upon receipt; provided, however, that such maximum amount produced by such schedule of tolls need not exceed the amounts required to satisfy the requirements of clauses (1) and (2) of paragraph (a) above.

If the Authority shall comply with all recommendations of the Traffic Engineers in respect of tolls, it will not constitute an event of default under the Trust Agreement even though the amount of the Net Revenues in any fiscal year shall be less than the amounts required to satisfy the requirements of clauses (1) and (2) of paragraph (a) above for such fiscal year. In the event of any such deficiency, the Trustee or the holders of not less than 25% in aggregate principal amount of the bonds then outstanding may, and the Trustee shall, upon the written request of the holders of not less than 25% in aggregate principal amount of the bonds then outstanding and upon being indemnified to its satisfaction, institute and prosecute in a court of competent jurisdiction an appropriate action to compel the Authority to revise the schedules of tolls in order to produce the amount of Net Revenues required to satisfy the requirements of clauses (1) and (2) of paragraph (a) above. The Authority covenants to adopt and charge tolls in compliance with any final order, decree or judgment entered in any such proceeding.

If the Traffic Engineers shall fail to make such recommendations in writing within 120 days after such request, the Trustee shall upon notification by the Authority appoint an independent engineer having a nationwide and favorable repute to make such recommendations, which recommendations shall be reported in writing to the Authority and to the Trustee on or before the first day of the eighth month of such fiscal year.

Copies of all requests for recommendations of the Traffic Engineers, any recommendations from the Traffic Engineers or any revised schedule of tolls, will be filed with the Trustee and mailed by the Authority to all bondholders who shall have filed their names with the Authority for such purpose.

In order to provide adequate revenues to allow the Authority to meet its maximum annual Debt Service, Current Expenses and Reserve Maintenance Fund deposit requirements, the Authority has covenanted in the Third Supplemental Trust Agreement authorizing the Series 1992F First Senior Bonds to provide, beginning September 30, 1992, a study as of September 30 of each Fiscal Year for the twelve month period beginning January 1 of each subsequent Fiscal Year, reflecting the estimated traffic, revenues, expenses and debt service requirements for such ensuing Fiscal Year. Such study may be accomplished by Authority personnel and shall reflect the toll increases, if any, and other terms and conditions necessary for the Authority to satisfy the Toll Covenant prospectively for the upcoming Fiscal Year. If such study reflects a toll increase is necessary to meet the requirements in the preceding sentence, the Authority shall engage a nationally recognized Traffic Engineer to provide a traffic study which outlines the toll increase required to allow the Authority to satisfy the Toll Covenant. Upon such traffic study being presented to the Authority, which traffic study, if required, shall be completed no later

C-37 than the December 1 preceding each January 1, the toll increase recommended in the traffic study shall be made effective to the Authority’s toll charges as of the following January.

For purposes of this paragraph “Toll Covenant” shall mean tolls sufficient such that:

(i) Net Revenues in each fiscal year, together with the amount of the motor fuel excise taxes apportioned to the Authority for deposit to the credit of the Turnpike Trust Fund for each such fiscal year, or the amount that would have been so apportioned except for the limitation of the Enabling Act as to the maximum Turnpike Trust Fund balance (but in no event greater than the maximum annual Turnpike Trust Fund apportionment amount) will be not less than 120% of the amount of the Debt Service Requirements for each such fiscal year on account of all Senior Indebtedness then outstanding; and

(ii) Net Revenues in each fiscal year will be not less than the sum of 105% of the Debt Service Requirements for such fiscal year on account of all Bonds and Parity Indebtedness then outstanding and 100% of the annual amount required to be deposited in the Reserve Maintenance Fund, any deficiencies at the beginning of such fiscal year in amounts required to be held to the credit of the First Senior Bond Reserve Account, the Second Senior Bond Reserve Account and the Subordinated Bond Reserve Account and the amount of Net Revenues required to be generated by the Authority in respect of any Junior Obligations then outstanding if the failure so to generate would cause a default in respect of such Junior Obligations.

Uniformity of Tolls. Tolls will be classified in a reasonable way so that the tolls may be uniform in application to all traffic falling within any reasonable class. No free passage will be permitted on the Oklahoma Turnpike System except to vehicles of members, officers and employees of the Authority while in the discharge of official duties, and vehicles of certain law enforcement officers, ambulances and vehicles of municipal fire departments. (Section 502)

Annual Inspection of Oklahoma Turnpike System. The Authority covenants to cause the Consulting Engineers to inspect the Oklahoma Turnpike System annually and submit to the Authority on or before October 1 a report setting forth their findings whether the Oklahoma Turnpike System has been maintained in good repair, working order and condition and the recommendations of the Consulting Engineers as to the proper maintenance, repair and operation of the Oklahoma Turnpike System during the ensuing fiscal year and the estimated amount of money necessary for such purposes, the insurance to be carried and the amount to be deposited during the ensuing fiscal year to the credit of the Reserve Maintenance Fund to be applied or held in reserve. The Authority covenants to cause the Consulting Engineers to submit a report setting forth their recommendations with respect to the items referred to in the preceding sentence at least 3 months prior to the opening of each Turnpike Project for the period from the opening of each Turnpike Project for traffic until the close of the appropriate fiscal year. If any such report shall set forth that the Oklahoma Turnpike System has not been maintained in good repair, working order and condition, the Authority will promptly restore the Oklahoma Turnpike System to good repair, working order and condition in accordance with the recommendations of the Consulting Engineers. All such reports will be filed with the Trustee and mailed to the Traffic Engineers and all bondholders who have filed their names with the Authority for such purpose. (Section 504)

Annual Budget (Section 505). On or before October 10 in each fiscal year the Authority will prepare a preliminary budget of Current Expenses and of monthly deposits of the Reserve Maintenance Fund for the next fiscal year. The Authority need not make a required monthly deposit to the Reserve Maintenance Fund to the extent that moneys have either been spent from other available funds or transferred to the Reserve Maintenance Fund for uses authorized by the Reserve Maintenance Fund and shown in the Annual Budget for such fiscal year of the Authority. On or before October 20 in each fiscal year the Authority will file such preliminary budget with the Trustee and each Depositary and mail each

C-38 budget to the Consulting Engineers, the Traffic Engineers and all bondholders who have filed their names with the Authority for such purpose. Upon the written request of the Trustee or the owners of 5% in aggregate principal amount of the bonds outstanding, on or before November 1 in any fiscal year, the Authority shall hold a public meeting on or before November 20.

The Authority will adopt the budget on or before December 1 in each fiscal year and file copies thereof with the Trustee and each Depositary and mailed to the Consulting Engineers, the Traffic Engineers and all bondholders who have filed their names with the Authority for such purpose. If the budget shall not have been adopted before the 1st day of any fiscal year, the preliminary budget if approved by the Consulting Engineers or the budget for the preceding fiscal year shall remain in force until the adoption of an annual budget. Notice of such public hearing shall be given at least 10 days prior to the date fixed for such hearing.

The Authority may at any time, with the approval of the Consulting Engineers, and upon notice to, among others, all bondholders who have filed their names with the Authority for such purpose, adopt an amended or supplemental annual budget for the remainder of the then current fiscal year.

The Current Expenses incurred in any fiscal year will not exceed the amount provided for Current Expenses in the annual budget, except amounts that may be paid from the Reserve Maintenance Fund.

Insurance (Sections 707 and 708). The Authority must maintain in consultation with the Consulting Engineers a practical insurance program, with reasonable terms, conditions, provisions and costs, that affords adequate insurance protection. The Authority shall provide builders’ risk insurance for the period of construction of each Turnpike Project or Improvement; insurance against loss caused by damage to or destruction of all or any part of any of the Oklahoma Turnpike System; use and occupancy insurance covering loss of revenues; comprehensive public liability insurance for bodily injury and property damage; war risk insurance covering bridges and other elevated structures of the Oklahoma Turnpike System and such other insurance as the Authority in its discretion may determine. All such insurance policies shall be carried in a responsible insurance company or companies authorized and qualified to assume the risks thereof; provided that the Authority may self-insure against public liability for bodily injury and property damage, loss of tolls or other revenues normally covered by use and occupancy insurance and other risks not enumerated above to the extent permitted by law and up to the levels recommended by a recognized, independent insurance consultant.

The insurance proceeds shall be applied to the repair, replacement or reconstruction of the damaged or destroyed property. If the insurance proceeds are insufficient for such purpose, the deficiency shall be supplied from moneys in the Reserve Maintenance Fund or the General Fund. Any excess insurance proceeds shall be deposited in the Reserve Maintenance Fund. Any insurance proceeds not applied within 18 months after their receipt, unless the Authority cannot so apply them because of circumstances beyond their control or unless the Authority with the consent of (1) a majority in principal amount of all senior bonds and Parity Indebtedness then outstanding and (2) a majority in principal amount of the subordinated bonds then outstanding, otherwise determines, shall be deposited first to the Senior Bond Service Account, second to the Subordinated Bond Service Account and third to the General Fund.

Reports and Audits (Section 711). The Authority covenants to keep an accurate record of the total cost of each of the Turnpike Projects and Improvements constituting a part of the Oklahoma Turnpike System, of the revenues collected and the apportionment of motor fuel excise taxes made to the Authority, of a breakdown of traffic using such Project and of the application of such revenues. Such records shall be open at all reasonable times to the inspection of the Trustee, the bondholders and their agents and representatives.

C-39 The Authority covenants that at least once each quarter it will cause to be filed with the Trustee and mailed to all bondholders who shall have filed their names with the Authority for such purpose, copies of any revisions of any toll schedule during the preceding calendar quarter and a report which shall include a statement of its operations during the preceding calendar quarter, including the revenues, the Current Expenses and the Net Revenues of the Oklahoma Turnpike System for such period and for the same period of the preceding fiscal year, all deposits to and withdrawals from each Fund and Account created by the Trust Agreement, the number of vehicles in each toll class using each such Turnpike Project and the revenues derived from each such class and the number and classification of vehicles given free passage by the Authority, the amount of motor fuel excise taxes apportioned to the Authority, all deposits to and withdrawals from each Fund and Account created during such quarter, the amount on deposit at the end of such quarter in each such Fund and Account, the details of all Indebtedness issued, paid, purchased or redeemed, a balance sheet as of the end of such quarter, any revisions during such quarter of the rentals, rates, fees, tolls and other charges and revenues for the use or services of the Oklahoma Turnpike System and the proceeds received from insurance and from any sale of property.

The Authority covenants that promptly after the close of each fiscal year it will cause an audit to be made of its books and accounts relating to the Oklahoma Turnpike System by an independent firm of certified public accountants and that it will cause a report of such audit, setting forth the findings of such accountants as to whether the moneys received by the Authority have been applied in accordance with the Trust Agreement, whether any obligations for Current Expenses were incurred in the preceding fiscal year in excess of the amount provided in the annual budget and whether the Net Revenues of the Oklahoma Turnpike System for the preceding fiscal year, together with the motor fuel excise taxes apportioned to the Authority have exceeded or were less than the amount for such fiscal year referred to in “Toll Covenants” above, to be prepared and filed with the Authority, the Bond Registrar, each Depositary and the Trustee, and copies thereof to be mailed to all bondholders who shall have filed their names with the Authority for such purpose within 120 days after the close of each fiscal year.

Covenant Against Sale or Encumbrance; Exceptions (Section 713). The Authority may not dispose of or encumber the Oklahoma Turnpike System, except that the Authority may sell any fixtures or movable property upon its determination that it is no longer needed or useful, and the Authority may dispose of real estate comprising a portion, the site or right-of-way of any Turnpike Project or Improvement as the Authority by resolution, with the approval of the Consulting Engineers, determines. The proceeds from any such disposition will be deposited in the Construction Fund or the Reserve Maintenance Fund as such resolution shall provide.

The Authority may lease, grant easements, franchises or concessions for the use of any part of the Oklahoma Turnpike System, and the net proceeds from the lease or concession shall be deposited in the Revenue Fund.

Limitations on Parity Indebtedness (Section 714). The Authority may incur and refund Parity Indebtedness provided that it meets the tests for the issuance of second senior bonds or refunding second senior bonds set forth above under “Second Senior Bonds” or “Refunding Second Senior Bonds,” respectively.

Requirements for New Turnpike Projects; Reclassification of General Fund Turnpike Projects (Section 715). (a)(1) The Authority will not incur any Second Senior Indebtedness in respect of any Turnpike Project as to which the Authority has not previously issued Senior Indebtedness or as to which the Authority has previously issued only Junior Obligations unless the Authority can, in addition to satisfying the conditions to the issuance of such Indebtedness contained under the caption “Second Senior Bonds” above, and it will not otherwise include as part of the Oklahoma Turnpike System any Turnpike Project, unless the Authority can, estimate that the revenues of such Turnpike Project in the fifth complete

C-40 bond year following the completion of construction or the acquisition of such Turnpike Project and in each bond year thereafter will be not less than the Current Expenses and the deposits to the Reserve Maintenance Fund for such Turnpike Project for each such bond year.

(2) The cost of construction or acquisition and all current expenses and deposits in respect of maintenance reserves of any project falling within the definition of a Turnpike Project but not meeting the requirements of the preceding paragraph (such a project being called a “General Fund turnpike project”) may only be paid from available moneys in the General Fund. If the Authority determines to finance such cost of construction or acquisition, the Authority may only finance such cost through the incurrence of Junior Obligations. The revenues of any such project shall be deposited by the Authority to the credit of the General Fund.

Notwithstanding the foregoing, at the election of the Authority, (i) the cost of construction or acquisition of any General Fund turnpike project shall not be required to be financed with Junior Obligations or otherwise under the Trust Agreement, but may be financed solely pursuant to a trust agreement, resolution or indenture that is separate from the Trust Agreement, and (ii) the revenues of any such project, financed solely pursuant to a trust agreement, resolution or indenture that is separate from the Trust Agreement, shall not be required to be deposited in the General Fund, but shall be deposited as required or permitted by such separate trust agreement, resolution or indenture; provided, however, that any payment obligations (including but not limited to operating and maintenance costs and debt service) with respect to such project, financed under such separate trust agreement, resolution or indenture, shall neither be secured by a pledge of, nor payable from, tolls or other revenues derived from the operation or ownership of the Oklahoma Turnpike System (except to the extent payable from the General Fund as provided in the Trust Agreement), and shall neither be secured by a pledge of, nor payable from, any moneys on deposit in the Turnpike Trust Fund, but shall be payable from and secured by revenues of such project and such other funds as may be provided by such trust agreement, resolution or indenture. Such other amounts may include moneys on deposit in the General Fund that are not required to satisfy the requirements of the Trust Agreement regarding the release of amounts held to the credit of the General Fund.1

(b) The Authority may at any time reclassify any General Fund turnpike project as a Turnpike Project and include it as part of the Oklahoma Turnpike System provided that on the proposed effective date of such reclassification, the Authority can estimate that the revenues of such General Fund turnpike project, (i) if five complete bond years following the completion of the construction or acquisition of such project have not elapsed, in the fifth complete bond year following such completion and in each bond year thereafter, will be not less than the Current Expenses and deposits to the Reserve Maintenance Fund for such project for each such bond year or (ii) if five complete bond years following the completion of the construction or acquisition of such project have elapsed, in the current bond year and in each bond year thereafter will be not less than the Current Expenses and the deposits to the Reserve Maintenance Fund for such project for each such bond year. If the Authority reclassifies any such General Fund turnpike project as a Turnpike Project, the revenues of such General Fund turnpike project shall thereafter be deposited in the Revenue Fund. The debt service requirements on any Junior Obligations issued in respect of such General Fund turnpike project shall, notwithstanding such reclassification, be paid from available moneys in the General Fund.

1 The Trust Agreement provision summarized in this italicized paragraph was added to the Trust Agreement pursuant to the amendments of the Trust Agreement contained in the Fifteenth Supplemental Trust Agreement, dated as of August 14, 2018, by and between the Authority and the Trustee.

C-41 (c) The Authority will not incur any Senior Indebtedness in respect of, or be able to reclassify, any other project which it is authorized to construct or acquire under the Enabling Act. The cost of such construction or acquisition, all current expenses and any deposits in respect of maintenance reserves and the debt service in respect of any Junior Obligations incurred in respect thereof shall be paid only from available moneys in the General Fund, and the revenues derived from such project shall be deposited by the Authority to the credit of General Fund.

Covenants with Credit Providers (Section 716). The Authority may make such covenants as it may in its sole discretion determine to be appropriate with any Credit Bank or Insurer that shall agree to insure or to provide a Credit Facility for bonds of any one or more Series that shall enhance the security or the value of such bonds and thereby reduce the Principal and Interest Requirements on such bonds. Such covenants may be set forth in or provided for by the applicable Supplemental Agreement and shall be binding on the Authority, the Trustee, the Bond Registrar, the Paying Agents, the Depositaries and all the owners of bonds the same as if such covenants were set forth in full in the Trust Agreement.

Any provisions of the First Supplemental Trust Agreement dated as of February 1, 1989 referencing to covenants made for the benefit of AMBAC or BIG or any successors thereto shall not be effective with respect to any owners of any bonds not insured by such insurance company and shall not be effective if any such insured bonds are defeased or paid in accordance with the Agreement.

Defaults and Remedies

The Trust Agreement defines “events of default” to include failure to pay principal of and redemption premium on bonds or Parity Indebtedness when due; failure to pay any installment of interest on bonds or Parity Indebtedness when due; or failure to retire bonds or Parity Indebtedness in accordance with the Amortization Requirements therefor. Events of default also include the inability of the Authority to fulfill its obligations under the Trust Agreement; the destruction of any substantial part of the Oklahoma Turnpike System and not promptly repaired, replaced or reconstructed; certain events of bankruptcy, insolvency or receivership involving the Authority; and the Authority’s default in the punctual performance of any of the covenants, conditions, agreements or provisions contained in the bonds or the Trust Agreement remaining unremedied for 30 days after notice to the Authority. (Section 801)

Upon the happening and continuance of any event of default specified in the first sentence of the preceding paragraph in respect of the first senior bonds, determined as if neither the Second Senior Indebtedness nor the subordinated bonds were then outstanding, the Trustee may, and upon the written request of the owners of not less than a majority in aggregate principal amount of the first senior bonds then outstanding shall, by notice in writing to the Authority, declare the principal of all of the first senior bonds then outstanding (if not then due and payable) to be due and payable immediately. Upon the happening and continuance of any event of default specified in the first sentence of the preceding paragraph in respect of the Second Senior Indebtedness, determined as if neither the first senior bonds nor the subordinated bonds were then outstanding, the Trustee may, and upon the written request of the owners of not less than a majority in aggregate principal amount of the Second Senior Indebtedness then outstanding shall, by notice in writing to the Authority, declare the principal of all of the Second Senior Indebtedness then outstanding (if not then due and payable) to be due and payable immediately; provided, however, that the holders of a majority in aggregate principal amount of such Second Senior Indebtedness shall not have the right to request the Trustee to declare the principal amount of the Second Senior Indebtedness to be due and payable immediately as aforesaid, if there shall exist no such event of default in respect of the first senior bonds, determined as if neither the Second Senior Indebtedness nor the subordinated bonds were then outstanding. Upon the happening and continuance of any event of default specified in the first sentence of the preceding paragraph in respect of the subordinated bonds, determined

C-42 as if neither the first senior bonds nor the Second Senior Indebtedness were then outstanding, the Trustee may, and upon the written request of the owners of not less than a majority in aggregate principal amount of the subordinated bonds then outstanding shall, by notice in writing to the Authority, declare the principal of all of the subordinated bonds then outstanding (if not then due and payable) to be due and payable immediately; provided, however, that the holders of a majority in aggregate principal amount of such subordinated bonds shall not have the right to request the Trustee to declare the principal amount of the subordinated bonds to be due and payable immediately as aforesaid, if there shall exist no such event of default in respect of the Senior Indebtedness determined as if no subordinated bonds were then outstanding hereunder. The provisions of this paragraph are subject in all cases to the respective rights of the Trustee to rescind and annul any such declaration in the manner and upon satisfaction of the conditions set forth in the Trust Agreement. (Section 802)

The owners of a majority in principal amount of any first senior bonds, Second Senior Indebtedness or subordinated bonds then outstanding whose rights the Trustee shall have proceeded to enforce in accordance with the Trust Agreement shall have the right by an instrument or concurrent instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all remedial proceedings to be taken under the Trust Agreement, provided that such direction shall not be otherwise than in accordance with law and the provisions of the Trust Agreement. (Section 806)

Except as may otherwise be provided in a Supplemental Agreement, until the Authority has reimbursed a Credit Bank for amounts paid under a Credit Facility to pay the interest on or the principal of any bonds or Parity Indebtedness or to the extent any Insurer has exercised its rights as subrogee for the particular bonds it has insured payment of, such bonds or Parity Indebtedness shall be deemed to be outstanding and such Credit Bank or Insurer shall succeed to the rights and interests of the bondholders or the owners of such Parity Indebtedness to the extent of the amounts paid under the Credit Facility or as specified in the applicable insurance policy until such amount has been reimbursed. (Section 812)

Supplemental Trust Agreements (Article XI)

The Authority and the Trustee may enter into supplements to the Trust Agreement that are not inconsistent with the terms and provisions of the Trust Agreement (a) to cure any ambiguity or formal defect or omission in the Trust Agreement or in any Supplemental Agreement or to correct or supplement any provision that may be inconsistent with any other provision therein, or (b) to grant to or confer upon the Trustee for the benefit of the bondholders and the owners of Parity Indebtedness, any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the bondholders or the Trustee, or (c) to add to the conditions, limitations and restrictions to be observed by the Authority under the Trust Agreement, or (d) to add to the covenants and agreements of the Authority in the Trust Agreement other covenants and agreements or to surrender any right or power reserved to or conferred upon the Authority in the Trust Agreement, or (e) to provide for the issuance of Parity Indebtedness and additional and refunding bonds, to provide for coupon bonds if then permitted, to provide for the issuance of uncertificated (book entry) bonds, and to provide for such other related matters as may be required or contemplated by or appropriate under the Trust Agreement, or (f) to make any other change that, in the opinion of the Authority and the Trustee, would not materially adversely affect the security for the bonds or any Parity Indebtedness, or (g) to make any change that is included in a Supplemental Agreement entered into pursuant to paragraph (e) above providing for the issuance of bonds (the “bonds to be issued”) and applicable to the bonds to be issued and to bonds and Parity Indebtedness thereafter issued and effective at such time as all bonds and Parity Indebtedness outstanding on the date of execution and delivery of such Supplemental Agreement (except the bonds to be issued) are no longer outstanding or the owners of such bonds and Parity Indebtedness have consented to such amendment, or (h) to make any changes that may be required by (1) Moody’s Investors Service or Standard & Poor’s

C-43 Corporation and to the extent necessary to prevent any then current ratings of said services in respect of the bonds from being reduced or withdrawn or (2) any Credit Bank or any Insurer. (Section 1101)

All other Supplemental Agreements require the written consent of the owners of not less than a majority in aggregate principal amount of (1) the first senior bonds then outstanding, (2) the Second Senior Indebtedness then outstanding and (3) the subordinated bonds then outstanding; provided, however, that no Supplemental Agreement shall permit (a) an extension of the maturity of the principal of or the interest on any bond or Parity Indebtedness, or (b) a reduction in the principal amount of any bond or Parity Indebtedness or the redemption premium or the rate of interest thereon, or (c) the creation of a lien upon or a pledge of revenues other than the lien and pledge created by the Trust Agreement, or (d) a preference or priority of any first senior bond over any other first senior bond or bonds, or a preference or priority of any Second Senior Indebtedness over any other Second Senior Indebtedness, or a preference or priority of any subordinated bond over any other subordinated bond or bonds, or (e) a reduction in the aggregate principal amount of the bonds or Parity Indebtedness required for consent to such Supplemental Agreement, or (f) a change in the subordination provisions, or (g) or any changes or modification affecting adversely the security provided by a Credit Facility or a Senior Bond Reserve Account Insurance Policy or a Subordinated Bond Reserve Account Insurance Policy. (Section 1102)

Consent of Credit Banks and Insurers Required. No Supplemental Agreement affecting any Series of bonds secured by a Credit Facility, insurance policy or Senior Bond Reserve Account Insurance Policy or a Subordinated Bond Reserve Account Insurance Policy shall become effective unless and until the appropriate Credit Banks and Insurers shall have consented in writing. (Section 1105)

Subordination (Article XII)

The Trust Agreement provides that upon any payment or distribution of assets of the Authority, upon any dissolution or winding up or total or partial liquidation of the Authority, whether in bankruptcy, insolvency or receivership proceedings, or otherwise, or in the event of any default specified in the first sentence of the first paragraph under “Defaults and Remedies” above on Senior Indebtedness, all first senior bonds shall first be paid or duly provided for to the extent of such payment or distribution before any payment is made upon the indebtedness evidenced by the Second Senior Indebtedness or by the subordinated bonds, and all Senior Indebtedness shall first be paid or duly provided for to the extent of any such payment or distribution before any payment is made upon the indebtedness evidenced be the subordinated bonds; provided, however, that moneys deposited with the Trustee for the payment of or on account of the principal of or premium, if any, or interest on the Second Senior Indebtedness or the subordinated bonds, if at the time of such payment or deposit the Trustee did not have written notice or actual knowledge of any event prohibiting the making of such deposits by the Authority, may be applied to the payment of the indebtedness evidenced by the Second Senior Indebtedness or the subordinated bonds. (Sections 1202 and 1204)

Any payment made under a Credit Facility, bond insurance policy, Senior Bond Reserve Account Insurance Policy or Subordinated Bond Reserve Account Insurance Policy to the holders of the Second Senior Indebtedness or the subordinated bonds having the benefit of such Credit Facility, bond insurance policy, Senior Bond Reserve Account Insurance Policy or Subordinated Bond Reserve Insurance Policy by the appropriate Credit Bank or Insurer shall be retained by such holders for their own account, and no holder of first senior bonds in the case of any such payment made to the holders of the Second Senior Indebtedness or the subordinated bonds or of Senior Indebtedness in the case of any such payment made to the holders of the subordinated bonds, as the case may be, is to have any right with respect to any such payment so made. (Section 1206)

C-44 When Payment by Authority Required To Be Paid to Holders of Senior Indebtedness Not Deemed Payment by Authority (Section 1207). As between the Credit Bank or Insurer whose Credit Facility, bond insurance policy or Senior Bond Reserve Account Insurance Policy, as the case may be, secures any Second Senior Indebtedness and the holder of such Second Senior Indebtedness, any payment made on such Second Senior Indebtedness by the Authority which, under the foregoing subordination provisions, is required to be paid over to the holders of the first senior bonds, shall not constitute a payment on such Second Senior Indebtedness but, instead, shall be treated for all purposes of such Credit Facility, bond insurance policy or Senior Bond Reserve Account Insurance Policy as though such payment had not been made by the Authority. Until the holder of the Second Senior Indebtedness so guaranteed has received from the Authority, or from such Credit Bank or Insurer, moneys which such holder is entitled to retain for its own account, equal in the aggregate to the principal amount of his Second Senior Indebtedness and any accrued and unpaid interest thereon, such Credit Bank or Insurer shall remain liable on its Credit Facility, bond insurance policy or Senior Bond Reserve Account Insurance Policy and, unless otherwise provided in such Credit Facility, bond insurance policy or Senior Bond Reserve Account Insurance Policy or in any Supplemental Agreement relating thereto, shall not be subrogated to any of the rights of the holder of such Second Senior Indebtedness.

As between the Credit Bank or Insurer whose Credit Facility, bond insurance policy or Subordinated Bond Reserve Account Insurance Policy, as the case may be, secures any subordinated bond and the holder of such subordinated bond, any payment made on such subordinated bond by the Authority which, under the foregoing subordination provisions, is required to be paid over to the holders of the Senior Indebtedness, shall not constitute a payment on such subordinated bond but, instead, shall be treated for all purposes of such Credit Facility, bond insurance policy or Subordinated Bond Reserve Insurance Policy as though such payment had not been made by the Authority. Until the holder of the subordinated bond so guaranteed has received from the Authority, or from such Credit Bank or Insurer, moneys which such holder is entitled to retain for its own account, equal in the aggregate to the principal amount of his subordinated bond and any accrued and unpaid interest thereon, such Credit Bank or Insurer shall remain liable on its Credit Facility, bond insurance policy or Subordinated Bond Reserve Account Insurance Policy and, unless otherwise provided in such Credit Facility, bond insurance policy or Subordinated Bond Reserve Insurance Policy or in any Supplemental Agreement relating thereto, shall not be subrogated to any of the rights of the holder of such subordinated bond.

Ability to Alter First Senior Bonds or Second Senior Indebtedness (Section 1208). Unless otherwise provided therefor in a Supplemental Agreement, the holders of the first senior bonds may extend, renew, modify or amend the terms of the first senior bonds or any security therefor and release, sell or exchange such security and otherwise to deal freely with the Authority, all without notice to or consent of the holders of the Second Senior Indebtedness and the holders of the subordinated bonds and without affecting the liabilities and obligations of the Authority or the holders of the Second Senior Indebtedness or the subordinated bonds.

Unless otherwise provided therefor in a Supplemental Agreement, the holders of the Second Senior Indebtedness may, subject to the provisions of the preceding paragraph, extend, renew, modify or amend the terms of the Second Senior Indebtedness or any security therefor and release, sell or exchange such security and otherwise to deal freely with the Authority, all without notice to or consent of the holders of the subordinated bonds and without affecting the liabilities and obligations of the Authority or the holders of the subordinated bonds.

Covenant as to Junior Obligations. The Authority covenants to include provisions substantially identical to the foregoing subordination provisions in each instrument authorizing the issuance of Junior Obligations setting forth the subordination agreement of the holders of such Junior Obligations to the holders of Senior Indebtedness and subordinated bonds and to include in the forms of Junior Obligations

C-45 a statement of the fact that payment thereof is subordinated to the prior payment of the Senior Indebtedness and subordinated bonds. (Section 1209)

Defeasance (Section 1301)

Any Outstanding bond or Parity Indebtedness (or any portion thereof) shall be deemed to have been paid for the purposes of the Trust Agreement when, among other things, (i) there shall have been deposited with the Trustee either moneys in an amount, or Defeasance Obligations the principal of and the interest on which when due, and without reinvestment thereof, will provide moneys in an amount, which, together with the moneys deposited with or held by the Trustee or any Paying Agent, shall be sufficient to pay when due the principal of and premium, if any, and interest due and to become due on said bond or Parity Indebtedness (or portion thereof) on or prior to the redemption date or maturity date thereof, as the case may be, (ii) in case said bond or Parity Indebtedness (or portion thereof) has been selected for redemption in accordance with the provisions hereof prior to its maturity, the Authority shall have given to the Trustee irrevocable instructions to give in accordance with the provisions of the Trust Agreement notice of redemption of such bond or Parity Indebtedness (or portion thereof), and (iii) provisions satisfactory to the Trustee shall have been made for the payment of the Bond Registrar and the Trustee’s fees and expenses, and any Paying Agent’s fees and all fees and expenses payable by the Authority in connection with the defeasance of said Indebtedness.

The provisions of the Trust Agreement relating to defeasance may be modified with respect to bonds of any Series that constitute Variable Rate Indebtedness and/or Optional Tender Indebtedness, with respect to any Parity Indebtedness and with respect to Junior Obligations.

C-46 APPENDIX D

PROPOSED FORM OF OPINION OF BOND COUNSEL

Upon delivery of the Series 2018A Bonds in definitive form, Hawkins Delafield & Wood LLP, Bond Counsel to the Authority, proposes to render its final opinion in substantially the following form:

[Date of Closing]

Oklahoma Turnpike Authority 3500 Martin Luther King Avenue Oklahoma City, Oklahoma 73111

Ladies and Gentlemen:

We have examined a record of proceedings relating to the sale and issuance of $344,310,000 principal amount of Oklahoma Turnpike Authority Oklahoma Turnpike System Second Senior Revenue Bonds, Series 2018A (the “Series 2018A Bonds”).

The Series 2018A Bonds are issued under and pursuant to Title 69, Oklahoma Statutes 2011, Sections 1701 through 1734, as amended, Title 47, Oklahoma Statutes 2011, Sections 11-1401 through 11-1405, as amended, and other applicable law (collectively, the “Enabling Act”), and in accordance with a Trust Agreement, dated as of February 1, 1989, as supplemented by a First Supplemental Trust Agreement, dated March 1, 1989, a Second Supplemental Trust Agreement, dated October 1, 1991, a Third Supplemental Trust Agreement, dated as of May 1, 1992, a Fourth Supplemental Trust Agreement, dated as of October 1, 1992, a Fifth Supplemental Trust Agreement, dated as of May 1, 1998, a Sixth Supplemental Trust Agreement, dated as of July 1, 1998, a Seventh Supplemental Trust Agreement, dated as of May 1, 2002, an Eighth Supplemental Trust Agreement, dated as of July 24, 2006, as amended and restated on August 24, 2006, a Ninth Supplemental Trust Agreement, dated as of June 6, 2007, a Tenth Supplemental Trust Agreement, dated as of October 13, 2011, an Eleventh Supplemental Trust Agreement, dated as of December 11, 2011, a Twelfth Supplemental Trust Agreement, dated as of June 1, 2016, a Thirteenth Supplemental Trust Agreement, dated as of February 1, 2017, a Fourteenth Supplemental Trust Agreement, dated as of December 21, 2017, a Fifteenth Supplemental Trust Agreement, dated as of August 14, 2018, and a Sixteenth Supplemental Trust Agreement, dated as of October 1, 2018, fixing the details of the Series 2018A Bonds (the trust agreement as supplemented, the “Trust Agreement”), each by and between the Oklahoma Turnpike Authority (the “Authority”) and BOKF, NA, as successor trustee. Capitalized terms used herein and not otherwise defined have the meanings set forth in the Trust Agreement.

The Series 2018A Bonds are dated and bear interest from October 31, 2018, or the most recent payment date to which interest has been paid or duly provided for. Interest on the Series 2018A Bonds is payable on each January 1 and July 1 commencing January 1, 2019. The Series 2018A Bonds will mature on the dates and in the principal amounts and will bear interest at the respective rates per annum set forth in the Trust Agreement. The Series 2018A Bonds have been issued for the purposes of providing funds to (i) finance all or a portion of the capital costs of certain Turnpike Projects and Improvements, (ii) satisfy the Second Senior Bond Reserve Account Requirement, and (iii) pay the cost of issuance of the Series 2018A Bonds.

The Trust Agreement, in accordance with and as required by the Enabling Act, provides for the fixing, revising, charging and collecting by the Authority of tolls for the use of the Oklahoma Turnpike System and the different parts or sections thereof and for revising such tolls from time to time in order that such tolls and other revenues will be sufficient to provide funds to pay the cost of operating, maintaining and repairing the Oklahoma Turnpike System and to pay the principal of and the interest on all bonds issued under the Trust Agreement as the same shall become due and payable, and to create reserves for such purposes.

The Internal Revenue Code of 1986, as amended (the “Code”), establishes certain requirements that must be met subsequent to the issuance and delivery of the Series 2018A Bonds in order that interest on the Series 2018A Bonds be and remain excluded from gross income for federal income tax purposes under Section 103 of the Code. We have examined the Arbitrage and Use of Proceeds Certificate, dated the date hereof, of the Authority (the “Arbitrage and Use of Proceeds Certificate”) in which the Authority has made representations, warranties, and covenants relating to the federal tax status of interest on the Series 2018A Bonds, including, but not limited to, certain representations with respect to the use of the proceeds of the Series 2018A Bonds and to the investment of certain funds. The Arbitrage and Use of Proceeds Certificate obligates the Authority to take certain actions necessary to cause interest on the Series 2018A Bonds to be excluded from gross income pursuant to Section 103 of the Code. Non- compliance with the requirements of the Code may require inclusion of interest on the Series 2018A Bonds in gross income for federal income tax purposes retroactive to the date of issuance, irrespective of the date on which such noncompliance occurs or is ascertained.

In rendering the opinion in paragraph 5 hereof, we have relied upon and assumed (1) the material accuracy of the representations, statements of intention and reasonable expectation, and certifications of fact contained in the Arbitrage and Use of Proceeds Certificate with respect to matters affecting the exclusion of interest on the Series 2018A Bonds from gross income for federal income tax purposes under Section 103 of the Code and (2) compliance by the Authority with the procedures and covenants set forth in the Arbitrage and Use of Proceeds Certificate as to such tax matters.

From such examination, we are of the opinion that as of the date hereof and based upon existing statutes, regulations and court decisions:

1. The Series 2018A Bonds have been duly authorized and issued for the purposes stated above.

2. The Trust Agreement has been duly executed and delivered and is a legal, valid and binding trust agreement for the security of the bonds issued thereunder enforceable in accordance with its terms.

3. The Series 2018A Bonds are legal, valid and binding special obligations of the Authority payable solely, in accordance and with the priorities set forth in the Trust Agreement, from such tolls and other revenues over and above the cost of operating, maintaining and repairing the Oklahoma Turnpike System and the motor fuel excise taxes apportioned to the Authority under the provisions of the Enabling Act for deposit in a special trust fund (the “Turnpike Trust Fund”), and such tolls and other revenues and the moneys held to the credit of the Turnpike Trust Fund have been validly pledged, in accordance with the priorities set forth in the Trust Agreement, to the payment of the principal of and premium, if any, and interest on the Series 2018A Bonds.

D-2 4. The Series 2018A Bonds do not constitute a debt of the State of Oklahoma or of any political subdivision thereof or a pledge of the faith and credit of the State of Oklahoma or of any such political subdivision. Neither the State of Oklahoma nor the Authority is obligated to pay the Series 2018A Bonds or the interest thereon except from the funds pledged therefor under the Trust Agreement, and neither the faith and credit nor the taxing power of the State of Oklahoma or of any political subdivision thereof is pledged, or may hereafter be pledged, to the payment of the principal of or the interest on the Series 2018A Bonds.

5. Under existing statutes and court decisions, (i) interest on the Series 2018A Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Code, and (ii) interest on the Series 2018A Bonds is not treated as a preference item in calculating the alternative minimum tax imposed under the Code; such interest, however, is included in the adjusted current earnings of certain corporations for purposes of calculating the alternative minimum tax imposed for taxable years beginning prior to January 1, 2018.

“Original issue discount” (“OID”) is the excess of the sum of all amounts payable at the stated maturity of a Series 2018A Bond (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates) over the issue price of that maturity. We are further of the opinion that, for any Series 2018A Bonds having OID (a “Discount Bond”), OID that has accrued and is properly allocable to the owners of the Discount Bonds under Section 1288 of the Code is excludable from gross income for federal income tax purposes to the same extent as other interest on the Series 2018A Bonds.

6. Under Title 69, Section 1714 of the Enabling Act, the Series 2018A Bonds, their transfer and the income therefrom (including any profit made on the sale thereof) are at all times free from taxation within the State of Oklahoma.

We have examined a fully executed Series 2018A Bond and, in our opinion, the form of said Series 2018A Bond and its execution are regular and proper.

Except as stated above, we express no opinion as to any other federal, state or local tax consequences arising with respect to the Series 2018A Bonds or the ownership or disposition thereof. We render our opinion under existing statutes and court decisions as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any action hereafter taken or not taken, for any facts or circumstances that may hereafter come to our attention, for any changes in law or in interpretations thereof that may hereafter occur, or for any other reason. We express no opinion as to the consequence of any change in law or interpretation thereof, or otherwise, that may hereafter be enacted, arise or occur, and we note that such changes may take place or be proposed from time to time. We express no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel as to the exclusion from gross income for federal income tax purposes of interest on the Series 2018A Bonds, or under state and local tax laws.

The foregoing opinions are qualified only to the extent that the enforceability of the Trust Agreement and the Series 2018A Bonds may be limited by bankruptcy, moratorium, insolvency, reorganization or other laws affecting creditors’ rights or remedies heretofore or hereafter enacted and is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

We express no opinion as to the accuracy, adequacy or sufficiency of any financial or other information which has been or will be supplied to purchasers of the Series 2018A Bonds. Our services did not include financial or other non-legal advice.

D-3 Our opinion is rendered only with regard to the matters expressly opined on above and does not consider or extend to any documents, agreements, representations or any other material of any kind not specifically opined on above. No other opinions are intended nor should they be inferred. This opinion is issued as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law, or in interpretations thereof, that may hereafter occur, or for any other reason whatsoever.

Very truly yours,

D-4 APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT

OKLAHOMA TURNPIKE AUTHORITY OKLAHOMA TURNPIKE SYSTEM SECOND SENIOR REVENUE BONDS, SERIES 2018A

THIS AGREEMENT, dated October 31, 2018, is made between the Authority and the Trustee, each as defined below in Section 1.

In order to permit the Underwriters to comply with the provisions of Rule 15c2-12 in connection with the public offering of the Bonds, the parties hereto, in consideration of the mutual covenants herein contained and other good and lawful consideration, hereby agree, for the sole and exclusive benefit of the Holders, as follows:

Section 1. Definitions; Rules of Construction.

(i) Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Trust Agreement.

“Annual Information” shall mean the information specified in Section 3.

“Authority” shall mean the Oklahoma Turnpike Authority, a body corporate and politic, constituting an instrumentality of the State of Oklahoma and the issuer of the Bonds, and any successor thereto.

“Bonds” shall mean the Authority’s Oklahoma Turnpike System Second Senior Revenue Bonds, Series 2018A, that from time to time remain outstanding within the meaning of the Trust Agreement.

“EMMA” shall mean the Electronic Municipal Market Access System of the MSRB.

“GAAP” shall mean generally accepted accounting principles as prescribed from time to time in the United States.

“Holder” shall mean any registered owner of Bonds and, for purposes of Section 5 of this Agreement only, if registered in the name of DTC (or a nominee thereof) or in the name of any other entity (or a nominee thereof) that acts as a “clearing corporation” within the meaning of the New York Uniform Commercial Code and is a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended, any beneficial owner of Bonds.

“MSRB” shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 15B(b)(1) of the Securities Exchange Act of 1934, as amended.

“Rule 15c2-12” shall mean Rule 15c2-12 (as amended through the date of this Agreement) under the Securities Exchange Act of 1934, as amended, including any official interpretations thereof promulgated on or prior to the effective date hereof.

“SEC” means the United States Securities and Exchange Commission. “Trust Agreement” shall mean the Trust Agreement, dated as of February 1, 1989, as supplemented to the date hereof, by and between the Authority and the BOKF, NA.

“Trustee” shall mean BOKF, NA, as trustee, or any successor trustee under the Trust Agreement.

“Underwriters” shall mean the underwriter or underwriters that have contracted to purchase the Bonds from the Authority upon initial issuance.

(ii) Unless the context clearly indicates to the contrary, the following rules shall apply to the construction of this Agreement:

(a) Words importing the singular number shall include the plural number and vice versa.

(b) Any reference herein to a particular Section or subsection without further reference to a particular document or provision of law or regulation is a reference to a Section or subsection of this Agreement.

(c) The captions and headings herein are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect its meaning, construction or effect.

Section 2. Obligation to Provide Continuing Disclosure.

A. Obligations of the Authority.

(i) The Authority hereby undertakes, for the benefit of Holders, to provide or cause to be provided:

(a) to EMMA, no later than 120 days after the end of each fiscal year, commencing with the fiscal year ending December 31, 2018, the Authority Annual Information relating to such fiscal year;

(b) if not submitted as part of the Authority Annual Information, to EMMA, not later than 120 days after the end of each fiscal year commencing with the fiscal year ending December 31, 2018, audited financial statements of the Authority for such fiscal year when and if they become available and, if such audited financial statements are not available on the date which is 120 days after the end of a fiscal year, the unaudited financial statements of the Authority for such fiscal year; and

(c) to EMMA, in a timely manner, not in excess of ten (10) business days after the occurrence of each event, notices of the following events with respect to the Bonds:

(1) principal and interest payment delinquencies;

(2) non-payment related defaults, if material;

(3) unscheduled draws on debt service reserves reflecting financial difficulties;

(4) unscheduled draws on credit enhancements reflecting financial difficulties;

E-2 (5) substitution of credit or liquidity providers, or their failure to perform;

(6) adverse tax opinions, the issuance by the IRS of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

(7) modifications to the rights of Holders, if material;

(8) Bond calls, if material, and tender offers;

(9) defeasances;

(10) release, substitution, or sale of property securing repayment of the Bonds, if material;

(11) rating changes;

(12) bankruptcy, insolvency, receivership or similar event of the issuer as set forth in Rule 15c2-12;

(13) consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of an obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such action or the termination of a definitive agreement relating to such actions, other than pursuant to its terms, if material; and

(14) appointment of a successor or additional trustee or the change of name of a trustee, if material.

(d) to EMMA, in a timely manner, notice of a failure to provide any Authority Annual Information required by clause A(i)(a) of this Section 2 or any financial statements required by clause A(i)(b) of this Section 2.

(ii) The Authority may satisfy its obligations hereunder by filing any notice, document or information with EMMA, to the extent permitted or required by the SEC.

(iii) The Authority may from time to time designate an agent to act on its behalf in providing or filing notices, documents and information as required hereunder, and revoke or modify any such designation.

B. Obligations of the Trustee.

The Trustee shall notify the Authority upon the occurrence of any of the events listed in Section 2(A)(i)(c) promptly upon becoming aware of the occurrence of any such event. The Trustee shall not be deemed to have become aware of the occurrence of any such event unless an officer in its corporate trust department becomes aware of the occurrence of any such event.

E-3 C. Additional Obligations.

(i) Other Information. Nothing herein shall be deemed to prevent the Authority from disseminating any other information in addition to that required hereby in the manner set forth herein or in any other manner. If the Authority should disseminate any such additional information, the Authority shall not have any obligation hereunder to update such information or to include it in any future materials disseminated hereunder.

(ii) Disclaimer. Each of the Authority and the Trustee shall be obligated to perform only those duties expressly provided for such entity in this Agreement, and neither of the foregoing shall be under any obligation to the Holders or other parties hereto to perform, or monitor the performance of, any duties of such other parties.

Section 3. Annual Information.

A. Annual Information.

The required Annual Information shall consist of at least the following:

(i) Information concerning traffic, revenues, operating expenses, debt service and debt service coverage of the type included in the Authority’s Official Statement, dated October 18, 2018 (the “Official Statement”), under the caption “MOTOR FUEL EXCISE TAX” and in Appendix A of the Official Statement under the captions: “THE OKLAHOMA TURNPIKE SYSTEM—Current Capital Plan”, “HISTORICAL OPERATING RESULTS OF THE AUTHORITY” and “PROJECTED OPERATING RESULTS OF THE AUTHORITY”,

(ii) Statements of toll and other revenues, Current Expenses and Net Revenues for the most recent fiscal year,

(iii) Statements of traffic and operating revenues for the most recent fiscal year,

(iv) Status of the Authority’s improvement and maintenance program, and

(v) Status of the Authority’s debt service coverage for the most recent fiscal year.

B. Incorporation by Reference.

All or any portion of Annual Information may be incorporated therein by cross reference to any other documents which have been filed with (i) EMMA or (ii) the SEC.

C. General Categories of Information Provided.

The requirements contained in this Agreement under Section 3 are intended to set forth a general description of the type of financial information and operating data to be provided; such descriptions are not intended to state more than general categories of financial information and operating data; and where the provisions of Section 3 call for information that no longer can be generated or is no longer relevant because the operations to which it related have been materially changed or discontinued, a statement to that effect shall be provided.

E-4 Section 4. Financial Statements.

The Authority’s annual financial statements for each fiscal year shall be prepared in accordance with GAAP as in effect from time to time. Such financial statements shall be audited by an independent accounting firm.

All or any portion of the Authority’s audited or unaudited financial statements may be incorporated therein by specific cross-reference to any other documents which have been filed with (i) EMMA or (ii) the SEC.

Section 5. Remedies.

If any party hereto shall fail to comply with any provision of this Agreement, then the Trustee or any Holder may enforce, for the equal benefit and protection of all Holders similarly situated, by mandamus or other suit or proceeding at law or in equity, this Agreement against such party and any of its officers, agents and employees, and may compel such party or any of its officers, agents or employees to perform and carry out their duties under this Agreement; provided that the sole and exclusive remedy for breach of this Agreement shall be an action to compel specific performance of this Agreement of such party hereunder and no person or entity shall be entitled to recover monetary damages hereunder under any circumstances, and, provided further, that any challenge to the adequacy of any information provided pursuant to Section 2 shall be brought only by the Trustee or the Holders of 25% in aggregate principal amount of the Bonds at the time outstanding which are affected thereby. The Authority and the Trustee each reserves the right, but shall not be obligated, to enforce the obligations of the other. Failure to comply with any provision of this Agreement shall not constitute a default under the Trust Agreement nor give right to the Trustee or any Holder to exercise any of the remedies under the Trust Agreement, except as otherwise set forth herein.

Section 6. Parties in Interest.

This Agreement is executed and delivered solely for the benefit of the Holders which, for the purposes of Section 5, includes those beneficial owners of Bonds specified in the definition of Holder set forth in Section 1. For the purposes of such Section 5, such beneficial owners of Bonds shall be third-party beneficiaries of this Agreement. No person other than those described in Section 5 shall have any right to enforce the provisions hereof or any other rights hereunder.

Section 7. Amendments.

Without the consent of any Holders (except to the extent expressly provided below), the Authority and the Trustee at any time and from time to time may enter into any amendments or changes to this Agreement for any of the following purposes:

(i) to comply with or conform to Rule 15c2-12 or any amendments thereto or authoritative interpretations thereof by the SEC or its staff (whether required or optional) which are applicable to the Agreement;

(ii) to add a dissemination agent for the information required to be provided hereby and to make any necessary or desirable provisions with respect thereto;

(iii) to evidence the succession of another person to the Authority and the assumption by any such successor of the covenants of the Authority hereunder;

E-5 (iv) to add to the covenants of the Authority for the benefit of the Holders, or to surrender any right or power herein conferred upon the Authority; or

(v) for any other purpose as a result of a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the Authority, or type of business conducted; provided that (1) the Agreement, as amended, would have complied with the requirements of Rule 15c2-12 at the time of the offering of the Bonds, after taking into account any amendments or authoritative interpretations of Rule 15c2-12, as well as any change in circumstances, (2) the amendment or change either (a) does not materially impair the interests of Holders, as determined by bond counsel or (b) is approved by the vote or consent of Holders of a majority in outstanding principal amount of the Bonds affected thereby at or prior to the time of such amendment or change, and (3) the Trustee receives an opinion of bond counsel that such amendment is authorized or permitted by this Agreement.

Annual Information for any fiscal year containing any amended operating data or financial information for such fiscal year shall explain, in narrative form, the reasons for such amendment and the impact of the change on the type of operating data or financial information in the Annual Information being provided for such fiscal year. If a change in accounting principles is included in any such amendment, such Annual Information shall present a comparison between the financial statements or information prepared on the basis of the amended accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information. To the extent reasonably feasible such comparison shall also be quantitative. A notice of any such change in accounting principles shall be sent to EMMA.

Section 8. Termination.

This Agreement shall remain in full force and effect until such time as all principal, redemption premiums, if any, and interest on the Bonds shall have been paid in full or legally defeased pursuant to the Trust Agreement (a “Legal Defeasance”); provided, however, that if Rule 15c2-12 (or successor provision) shall be amended, modified or changed so that all or any part of the information currently required to be provided thereunder shall no longer be required to be provided thereunder, then such information shall no longer be required to be provided hereunder; and provided, further, that if and to the extent Rule 15c2-12 (or successor provision), or any provision thereof, shall be declared by a court of competent and final jurisdiction to be, in whole or in part, invalid, unconstitutional, null and void, or otherwise inapplicable to the Bonds, then the information required to be provided hereunder, insofar as it was required to be provided by a provision of Rule 15c2-12 so declared, shall no longer be required to be provided hereunder. Upon any Legal Defeasance, the Authority shall provide notice of such defeasance to EMMA. Such notice shall state whether the Bonds have been defeased to maturity or to redemption and the timing of such maturity or redemption. Upon any other termination pursuant to this Section 8, the Authority shall provide notice of such termination to EMMA.

Section 9. The Trustee.

(i) Except as otherwise set forth herein, this Agreement shall not create any obligation or duty on the part of the Trustee and the Trustee shall not be subject to any liability hereunder for acting or failing to act as the case may be.

(ii) The Authority shall indemnify and hold harmless the Trustee in connection with this Agreement, to the same extent provided in the Trust Agreement for matters arising thereunder.

E-6 Section 10. Governing Law.

This Agreement shall be governed by the laws of the State of Oklahoma determined without regard to principles of conflict of law.

Section 11. Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall be an original, but which together shall constitute one and the same Agreement.

[Signatures Omitted]

E-7 [This Page Intentionally Left Blank] APPENDIX F

REPORT OF THE CONSULTING ENGINEERS [This Page Intentionally Left Blank]

RREEPPOORRTT OOFF TTHHEE CCOONNSSUULLTTIINNGG EENNGGIINNEEEERR

Consulting Engineer’s Report

October 5, 2018

Prepared by: Olsson Associates 201 NW 63rd Street, Suite 130 Oklahoma City, OK 73116

October 5, 2018

Oklahoma Turnpike Authority 3500 Martin Luther King Avenue Oklahoma City, OK 73111

Turnpike Authority Members:

Olsson Associates is pleased to submit our Report of the Consulting Engineer for the Driving Forward Program. The program was announced on October 29, 2015. The program’s main focus is to enhance the safety of the turnpike system by replacing aging pavement and toll plazas as well as developing new alignments that will provide additional routes around Oklahoma City. The projects are generally described as follows: • Muskogee Turnpike - Pavement Reconstruction • Muskogee Turnpike – Coweta Toll Plaza Reconstruction • H. E. Bailey Turnpike Pavement Reconstruction • H. E. Bailey Turnpike – Chickasha Toll Plaza Reconstruction • Turner Turnpike – Pavement Reconstruction & Capacity Expansion • John Kilpatrick Turnpike – SW Loop Extension & Rehabilitation of the N. Canadian River Bridge and N. Canadian River Overflow Bridge • Eastern Oklahoma County Turnpike – New Alignment from I-40 to the Turner Turnpike

This report summarizes the results and studies undertaken by Olsson in our capacity as Consulting Engineer to the Oklahoma Turnpike Authority. In previous studies and reports, construction costs were identified. The current estimate prepared by Olsson Associates for the entire project including design, construction and construction management is $1,109,000,000 including the rehabilitation of the John Kilpatrick Turnpike bridges mentioned above.

The preliminary engineering for many of the projects are currently on-going. It is anticipated that the entire program, including turnpike system additions, will be completed in 2020.

Olsson believes that these cost projections for the existing turnpike system and the proposed expansion projects are reasonable and provide a basis for maintaining an operationally sound and safe turnpike system.

The Oklahoma Turnpike System has approximately 2,400 lane miles of pavement. Of those, approximately 1,900 were built prior to 1975. In the engineering industry, the typical design life of pavements is 30 years or less without major rehabilitation. Many factors affect the

201 NW 63rd Street, Ste. 130 TEL 405.242.6600 Oklahoma City, OK 73136 FAX 405.242.6601 www.olssonassociates.com

design life such as traffic characteristics and amount of heavy vehicles, type of pavement, and subgrade composition.

The 2017 Consulting Engineer’s Annual Report compiled the pavement inspection results and the OTA’s average PCI for all pavements to be rated 85, which place the OTA’s pavements in the “Very Good” category. In reviewing previous Annual Consulting Engineer reports, the average PCI’s were 83 in 2000. The overall PCI’s for individual turnpikes range from 75 to 93.

There are 798 bridges on the Oklahoma Turnpike System. Of those, 462 are Turnpike-Over (TPO) structures which carry turnpike traffic on the bridge. Of the TPO bridges, 302 are span structures with the remainder being concrete boxes with earth fill between the box and the pavement. There are also 336 Turnpike-Under (TPU) structures. Of the 798 bridges, approximately 530 were built prior to 1975. Bridges are generally designed with a 40-year design life.

The turnpike bridges are inspected annually following the guidelines established by the Federal Highway Administration. In those guidelines are the National Bridge Inventory (NBI) ratings for bridges. The rating ranges from 0 to 9 and the general categories are listed below:

0 5 6 7 8

Closed to Traffic Fair – Structurally Satisfactory – Good – Minor Very Good – No Sound Minor Problems Problems Noted Deterioration

For the bridges carrying OTA traffic (TPO’s), the average rating increased from a 6.9 in 1998 to a 7.0 in 2017.

In order for the OTA to keep their facilities operating at the ratings discussed above, a strong commitment to asset preservation is essential. As such, the proposed 5-year plan in the OTA 2017 Adopted Budget includes more than $451 million in road and bridge projects from a combination of the Reserve Maintenance Fund and General Fund.

201 NW 63rd Street, Ste. 130 TEL 405.242.6600 Oklahoma City, OK 73136 FAX 405.242.6601 www.olssonassociates.com

This report contains: 1. Cost projections for maintenance and operation of the existing Oklahoma Turnpike System through 2018 and Reserve Maintenance Requirements through 2022. 2. Summary of the Oklahoma Turnpike Authority’s 5-year Capital Plan. 3. Descriptions and cost estimates for the proposed expansion projects.

Olsson Associates has been proud to have served the Authority as Consulting Engineer since 2014 and appreciates the opportunity to continue to serve in the development of these and future projects.

Sincerely,

Jimmy Sparks Oklahoma Region Leader, Vice-President

201 NW 63rd Street, Ste. 130 TEL 405.242.6600 Oklahoma City, OK 73136 FAX 405.242.6601 www.olssonassociates.com

Governor Mary Fallin ...... Member Ex-Officio Dana Weber ...... Chairwoman David A. Burrage ...... Vice Chairman G. Carl Gibson ...... Secretary & Treasurer Kenneth Adams ...... Member Guy Berry ...... Member Gene Love ...... Member

ADMINISTRATIVE STAFF

Tim J. Gatz ...... Executive Director Alan Freeman ...... Assistant Executive Director, Finance & Administration David Machamer ...... Assistant Executive Director, Toll & Pikepass Operations Joe Echelle ...... Assistant Executive Director, Maintenance, Engineering and Construction Joni Seymour ...... Director of Information Technology Paul Caesar ...... Director of Information Technology Security Cheryl O’Rourke ...... Director of Administrative Services Mark Kalka ...... Director of Maintenance Darian Butler ...... Director of Engineering Shawn Davis ...... Director of Construction Mary Biswell ...... Director of Toll Operations Marcus Williams ...... Director of PIKEPASS Julie Porter ...... Controller Wendy Smith ...... Director of Finance & Revenue

REPORT OF THE CONSULTING ENGINEER OCTOBER 5, 2018

THE OKLAHOMA TURNPIKE SYSTEM

Description

Oklahoma was the first state west of Pennsylvania to complete a toll road financed exclusively from revenue bonds. The Oklahoma Turnpike Enabling Act, as amended to date, controls the designation, financing, construction and operation of the Oklahoma Turnpike Authority (OTA):

“To construct, maintain, repair and operate turnpike projects and highways, with their access and connecting roads, at such locations and on such routes it shall determine to be feasible and economically sound…”

In addition, the Enabling Act places limitations on the selection of toll road locations. Currently, the Oklahoma Turnpike System, as established by provisions of the Trust Agreement, dated February 1, 1989, is comprised of the ten toll roads described below:

The Cherokee Turnpike was authorized by the State Legislature in 1987 and opened to traffic in 1991. It is a 32.9-mile four-lane limited-access rural turnpike designated as US 412 from Locust Grove to Siloam Springs in northeastern Oklahoma. The Cherokee Turnpike has interchanges at Locust Grove, Scenic 412 and Kansas and a service station and restaurant with free restrooms at milepost 18. The average daily traffic on the Cherokee Turnpike is approximately 8,000. Approximately thirteen percent of the total vehicles are trucks.

The Chickasaw Turnpike was authorized by the State Legislature in 1987 and opened to traffic in 1991. It is a two-lane turnpike extending 17.1 miles from SH 7 west of Sulphur to SH 1 near Ada. The Chickasaw Turnpike has interchanges at SH 7, US 177 and Roff. The average daily traffic on the Chickasaw is approximately 2,900. Approximately twenty percent of the total vehicles are trucks.

The Cimarron Turnpike was authorized by the State Legislature in 1965 and opened to traffic in 1975. It is a four-lane limited-access rural turnpike of two connecting sections. The main route extends 59.2 miles from I-35/US-64 east of Enid to Tulsa. A spur adjoins the main route and extends 8.5 miles to Stillwater and Oklahoma State University. The average daily traffic on the Cimarron Turnpike is approximately 7,500. Approximately sixteen percent of the total vehicles are trucks. The Cimarron Turnpike has interchanges at Stillwater, Morrison and Hallett and a service station and restaurant with free restrooms at Lone Chimney.

The Creek Turnpike was authorized by the State Legislature in 1987 and opened to traffic in 1992. It is a four-lane limited-access urban turnpike extending 7.6 miles from US-75 to US-64 and US-169 (Mingo Valley Expressway) in Tulsa. The Creek Turnpike has interchanges at Elm Street, Riverside Parkway, Yale Avenue, and Memorial Drive. The average daily traffic on the entire Creek Turnpike is approximately 22,800. The average daily traffic on the original Creek Turnpike is approximately 48,200, with over 55,000 traveling from Yale to Memorial daily. Approximately four percent of the total vehicles are trucks.

The West Creek Extension was opened to traffic on December 15, 2000. The West Creek extends from the Turner Turnpike to the original Creek Turnpike (US-75). There are interchanges at SH-66, Hickory Road and 49th West Avenue. Approximately 19,500 vehicles travel the West Creek daily.

The Broken Arrow South Loop (BASL) Turnpike extends 12.9 miles from US-169 to north of the Muskogee Turnpike and was opened on November 20, 2001. The BASL has interchanges at US- 169, S. 129th E. Avenue, S. 145th E. Avenue, S. 193rd E. Avenue, E. 101st St. South, SH-51, Muskogee Turnpike and E. 71st St. South. Approximately 17,400 vehicles per day use the BASL with a peak of nearly 25,000 vehicles traveling from 129th Avenue to US-169.

The East Creek Turnpike Extension extends 8.3 miles from East 71st Street to the Will Rogers Turnpike and was opened on August 16, 2002. There are interchanges at 51st Street, 31st Street, 11th Street, US-412, and Pine Street. Approximately 11,000 vehicles per day travel this section of the turnpike.

The H. E. Bailey Turnpike was authorized by the State Legislature in 1955 and opened to traffic in 1964. It is a four-lane limited-access turnpike extending 86.4 miles in two sections. The northern section runs from Oklahoma City to US-277 north of Lawton. Then south section stretches from US-277 south of Lawton to US-70 near the Texas State line. The H. E. Bailey Turnpike has interchanges at the Norman Spur, Chickasha, Cyril, Elgin, and Walters and service stations and/or restaurants with free restrooms at Chickasha and Walters. The average daily traffic on the H. E. Bailey Turnpike is approximately 13,800. Approximately ten percent of the total vehicles are trucks.

The H. E. Bailey Norman Spur extends 8.2 miles from the H. E. Bailey Turnpike to the junction of SH-62 and SH-9. It was opened on October 18, 2001. There is an interchange at SH-76. The average daily traffic on the Norman Spur is approximately 6,800. Approximately four percent of the total vehicles are trucks.

The State Legislature authorized the Indian Nation Turnpike in 1955. The north section opened to traffic in 1966 and the south section opened in 1970. It is a four-lane limited-access turnpike extending 105.2 miles in two continuous sections. The north section stretches from US 75/I-40 near Henryetta to US 69 near McAlester. The south section begins at the end of the north section and ends near Hugo at US 70. The Indian Nation Turnpike has interchanges at Eufaula, Ulan, US-270, McAlester, Daisy, and Antlers and service stations and/or restaurants with free restrooms at Eufaula and Antlers. The average daily traffic on the Indian Nation Turnpike is approximately 6,200. Approximately twenty percent of the total vehicles are trucks.

The John Kilpatrick Turnpike was authorized by the State Legislature in 1987 and opened to traffic in 1991. The original section extends 9.5 miles from I-35 to Lake Hefner Parkway/Portland Avenue. The Kilpatrick Extension was authorized in 1998 and opened to traffic on January 31, 2001. It is a four-lane limited-access urban turnpike extending 15.8 miles from the Lake Hefner interchange to S.W. 15th Street near Mustang. The average daily traffic on the John Kilpatrick Turnpike is approximately 41,500 with a peak volume of approximately 67,000 occurring between Western & May. The interchanges on the John Kilpatrick Turnpike are at I- 40, N.W. 10th, S.H. 66, Wilshire Boulevard, S.H. 3, Council Road, Rockwell Avenue, MacArthur Avenue, Meridian, Hefner Parkway, May Avenue, Pennsylvania Avenue, Western Avenue, Broadway Extension, and Eastern Avenue. Approximately three percent of the total vehicles are trucks.

The Muskogee Turnpike was authorized by the State Legislature in 1965 and opened to traffic in 1969. It is a four-lane limited-access turnpike extending 53.1 miles from Tulsa to I-40 near Webbers Falls. The Muskogee Turnpike has interchanges at Coweta, Porter, Muskogee and US- 64 near Webbers Falls and a service station and restaurant with free restrooms at Muskogee. The average daily traffic on the Muskogee Turnpike is approximately 17,500. Approximately ten percent of the total vehicles are trucks.

The Turner Turnpike was authorized by the State Legislature in 1947 and opened to traffic in 1953. It is a four-lane limited-access highway extending 86 miles from Tulsa to Oklahoma City. The average daily traffic on the Turner Turnpike is approximately 28,500. Approximately twenty percent of the total vehicles are trucks. There are interchanges at Sapulpa, Kellyville, Bristow, Stroud, Chandler, Wellston and Luther. There are service stations and/or restaurants with free restrooms at Heyburn, Stroud, and Chandler.

The Will Rogers Turnpike was authorized by the State Legislature in 1953 and opened to traffic in 1957. It is a four-lane limited-access rural turnpike extending 88.5 miles from Tulsa to the Missouri state line. The average daily traffic on the Will Rogers Turnpike is approximately 21,500. Approximately twenty-seven percent of the total vehicles are trucks. There are interchanges at Claremore, SH-266, Adair, Big Cabin, Afton, Vinita, and Miami and service stations and/or restaurants with free restrooms at Vinita.

A map of the entire Oklahoma Turnpike System is on the following page.

MAINTENANCE AND OPERATION COSTS

Routine Maintenance and Operations

Annual expenses for routine maintenance and operation of the Oklahoma Turnpike System for the period of 1979 through 2017 are shown in Table 1. Based on historical trends, future maintenance and operation expenses for the existing turnpike system have been projected for the period of 2018 through 2022. These projections are also shown in Table 1 and Chart 1.

Table 1

ROUTINE MAINTENANCE AND OPERATION EXPENSES

Year Expenses Year Expenses Year Expenses 1979 $ 9,980,000 1994 $ 34,151,000 2009 $ 63,245,000 1980 $ 11,250,000 1995 $ 31,236,000 2010 $ 65,655,000 1981 $ 12,910,000 1996 $ 31,325,000 2011 $ 65,713,000 1982 $ 14,930,000 1997 $ 33,229,000 2012 $ 75,014,000 1983 $ 14,000,000 1998 $ 34,144,000 2013 $ 70,077,000 1984 $ 15,710,000 1999 $ 27,175,000 2014 $ 75,599,000 1985 $ 16,390,000 2000 $ 38,483,000 2015 $ 81,762,000 1986 $ 17,730,000 2001 $ 41,797,000 2016 $ 81,761,897 1987 $ 17,730,000 2002 $ 46,024,000 2017 $ 88,069,080 1988 $ 19,379,000 2003 $ 48,773,000 2018 $ 92,730,000 1989 $ 20,863,000 2004 $ 48,129,000 2019 $ 96,343,000 1990 $ 19,828,000 2005 $ 55,679,000 2020 $ 103,974,000 1991 $ 26,219,000 2006 $ 57,074,000 2021 $ 107,957,000 1992 $ 26,334,000 2007 $ 61,168,000 2022 $ 112,005,388 1993 $ 28,560,000 2008 $ 62,869,000 Routine maintenance and operation expenses have increased at approximately 5.9% since the 5-year capital plan was started in 1994. That period also includes the 1998 Urban Corridor Completion Projects which added nearly 50 miles of new alignment which were fully opened in 2002. The other major addition to the system in this time is the completion of approximately 16 miles of six-lane, lighted roadway on the Creek and Kilpatrick Turnpikes.

The maintenance and operation expenses also include projections for the Driving Forward Program projects that are expected to be completed in 2020.

The ten existing turnpike have approximately 2,400 lane miles of pavement, 800 bridges and overpasses, 270 building structures and 33,000 acres of Right-of-Way. Daily maintenance is performed in each area to ensure the safety of the OTA customers as well as keeping the facilities aesthetically pleasing. The OTA Maintenance division has approximately 180 employees to carry out this function. Some of the routine maintenance tasks include the repair of roadway surfaces such as crack sealing, asphalt surface repairs, concrete slab replacements and patches, slab jacking with mud or urethane, and occasionally surface sealants. Bridges are inspected annually and the common routine maintenance items are joint seals and concrete spalls on the substructure and superstructure elements. Drainage structures are also inspected annually for debris that may block the structure and also for erosion that may pose a safety and/or structural problem. The safety to the traveling public is the greatest concern and roadway striping, safety markers, guardrails, signs, crash attenuators and right-of-way fences are evaluated constantly by OTA and its consultants. In addition to these functions, OTA provides trash removal, mowing, brush control and beautification along the entire turnpike system.

Chart 1

Operation & Maintenance Cost

Special Maintenance (Reserve Maintenance Fund)

Annual expenditures for special maintenance projects for the Oklahoma Turnpike System are shown for the period from 1979 to 2017 as well as projections for 2018 to 2022 are shown in Table 2 and Chart 2. These projects have generally consisted of rehabilitation projects for pavements and bridges.

Olsson has inspected turnpike bridges, pavements, drainage and facilities since 2014. These inspections have been utilized by Olsson and OTA staff to prioritize planned improvements to the turnpike system. The commitment by the OTA in its 5-year capital Plan from 1994 to the present has allowed the turnpike system to operate at high-level structurally namely in pavement and bridge conditions. As the Consulting Engineer, Olsson must certify the minimum amount of special maintenance required per year as shown in Table 2 as the Reserve Maintenance Fund. Table 2 also shows the commitment above that amount spent and pledged to spend through 2014 by the OTA. The projections are for roadway surfaces, bridges, and facility improvements to keep OTA’s facilities operating above the desired ratings criteria.

Chart 2

Table 2

Reserve Maintenance Requirements and General Fund Contributions and Projections

RESERVE TOTAL YEAR MAINTENANCE GENERAL FUND MAINTENANCE FUND 1979 $ 2,390,000 $ 2,390,000 1980 $ 8,020,000 $ 8,020,000 1981 $ 6,710,000 $ 6,710,000 1982 $ 8,060,000 $ 8,060,000 1983 $ 7,110,000 $ 7,110,000 1984 $ 7,780,000 $ 7,780,000 1985 $ 23,750,000 $ 23,750,000 1986 $ 19,480,000 $ 19,480,000 1987 $ 18,090,000 $ 18,090,000 1988 $ 9,070,000 $ 9,070,000 1989 $ 8,950,000 $ 8,950,000 1990 $ 10,600,000 $ 10,600,000 1991 $ 14,600,000 $ 14,600,000 1992 $ 10,980,000 $ 10,980,000 1993 $ 7,800,000 $ 7,800,000 1994 $ 12,720,000 $ 15,505,000 $ 28,225,000 1995 $ 20,805,000 $ 37,272,000 $ 58,077,000 1996 $ 14,569,000 $ 24,425,000 $ 38,994,000 1997 $ 17,624,150 $ 27,994,370 $ 45,618,520 1998 $ 12,928,460 $ 14,805,930 $ 27,734,390 1999 $ 19,137,970 $ 19,597,740 $ 38,735,710 2000 $ 21,948,000 $ 22,552,500 $ 44,500,500 2001 $ 23,065,705 $ 15,593,655 $ 38,659,360 2002 $ 12,799,289 $ 13,690,310 $ 26,489,599 2003 $ 8,053,892 $ 26,093,076 $ 34,146,968 2004 $ 24,467,193 $ 21,748,557 $ 46,215,750 2005 $ 19,946,187 $ 54,126,969 $ 74,073,156 2006 $ 37,922,503 $ 11,090,814 $ 49,013,317 2007 $ 41,025,368 $ 17,209,712 $ 58,235,080 2008 $ 39,641,766 $ 30,411,521 $ 70,053,287 2009 $ 25,958,629 $ 26,245,651 $ 52,204,280 2010 $ 30,887,250 $ 10,449,722 $ 41,336,972 2011 $ 38,116,391 $ 50,898,765 $ 89,015,156 2012 $ 38,694,420 $ 27,619,080 $ 66,313,500 2013 $ 41,585,000 $ 27,393,719 $ 68,978,719 2014 $ 47,088,640 $ 22,446,264 $ 69,534,904 2015 $ 48,570,600 $ 24,030,135 $ 72,600,735 2016 $ 48,293,000 $ 26,100,000 $ 74,393,000 2017 $ 41,394,500 $ 49,176,803 $ 90,571,303 2018 $ 39,169,300 $ 60,074,402 $ 99,243,702 2019 $ 42,476,450 $ 61,970,506 $ 104,446,956 2020 $ 38,965,000 $ 48,804,361 $ 87,769,361 2021 $ 37,359,000 $ 57,288,224 $ 94,647,224 2022 $ 39,227,000 $ 54,198,566 $ 93,425,566 OKLAHOMA TURNPIKE AUTHORITY 5-YEAR CAPITAL PLAN

In November 1994, the Authority adopted a 5-year Capital Improvement Program for improvements to the existing assets of the turnpike system. In development of this plan, the OTA and its Consulting Engineer, focused on a program to extend the life of its current facilities. The focus was on the older pavements on the system, namely the asphalt on the Turner and Will Rogers Turnpikes and bridges system-wide that needed repairs beyond routine maintenance. The Authority has been committed to a capital improvement plan that has routinely committed more funds than required by the Reserve Maintenance Requirements set forth by the Consulting Engineer.

The Capital Plan is prepared annually as a component of the OTA’s Annual Budget in cooperation with the OTA Engineering Division and the Consulting Engineer. A major part of the plan is to identify revenue sources that will be utilized to fund various projects and to insure that the resources are utilized in a manner consistent with the Authority’s long-term goals. The plan addresses such issues as:

• What revenue sources are available to fund the program? • Are there limitations that can impact the use of these funds? • How can resources best be utilized to further the long-range plans and financial goals of the OTA?

The assumptions made concerning the long-term financial and operating goals of the OTA along with the recommendations of the Consulting Engineer lead to the conclusions and recommendations contained in the 5-year Capital Plan. It is assumed that the revenue projections from the Traffic Engineer will remain consistent and that the projected funds will be available for the proposed project improvements. Future construction costs are also assumed to continually increase at historical percentages. All aspects such as proposed projects and costs are a collaborative effort of OTA’s Engineering, Maintenance and Executive Divisions and the Consulting Engineer.

The Capital Plan is based on the following assumptions:

1. An ongoing maintenance and rehabilitation program will extend the useful life of the turnpike system; 2. Financial resources should be managed to build flexibility for the funding of new projects in the future; 3. Financial resources should be managed to maintain a sound financial condition; 4. The system must at all times meet the covenants under the Trust Agreement and; 5. Financial resources should be managed to build and maintain credit rating and investor confidence;

Again, the main goal is to build a successful plan to extend the useful life of the current assets of the OTA through on-going rehabilitation and maintenance.

Turnpike Pavements

The Oklahoma Turnpike System has approximately 2,400 lane miles of pavement. Of those, approximately 1,900 were built prior to 1975. In the engineering industry, the typical design life of pavements is 30 years or less without major rehabilitation. Many factors affect the design life such as traffic characteristics and amount of heavy vehicles, type of pavement, and subgrade composition.

The OTA’s General Engineering Consultant has inspected the turnpike pavements annually since 1998 by performing “windshield” surveys while driving along the shoulder recording surface distresses present. In that time, an extensive pavement history has been built by evaluating the Pavement Condition Index (PCI). The PCI is a rating that has been established by the US Army Corps of Engineers and is universally accepted as a measurement of pavement condition. The PCI ratings are as follows:

PCI Condition 0 - 10 Failed 11 - 25 Very Poor 26 - 40 Poor 41 - 55 Fair 56 - 70 Good 71 - 85 Very Good 86 - 100 Excellent

The 2017 Consulting Engineer’s Annual Report compiled the pavement inspection results and the OTA’s average PCI for all pavements to be rated 85, which place the OTA’s pavements in the “Very Good” category. In reviewing previous Annual Consulting Engineer reports, the average PCI’s were 83 in 2000.

The overall PCI’s for individual turnpikes range from 75 to 93. The PCI’s for the two oldest turnpikes, the Turner and Will Rogers, as well as the Creek and John Kilpatrick are:

• Creek – 89 • Turner - 87

• John Kilpatrick - 88 • Will Rogers - 86

The result of the PCI increase is mainly due to routine mill and overlays to the Turner and Will Rogers Turnpike pavements. The OTA has also reconstructed concrete pavements on portions of the Cimarron and Muskogee Turnpikes and entirely on the Chickasaw Turnpike. OTA has also performed joint restoration projects on the Cherokee, Creek and Kilpatrick Turnpikes. The OTA has applied asphalt overlays to portions of the Cimarron and Indian Nation Turnpikes where the existing concrete pavement was structurally sound but has roughness issues due to faulting or undulating pavements. As seen, the OTA’s commitment to the 5-year plan has successfully extended the life of the turnpike pavements.

Turnpike Bridges

There are 798 bridges on the Oklahoma Turnpike System. Of the TPO bridges, 302 are span structures with the remainder being concrete boxes with earth fill between the box and the pavement. There are also 336 Turnpike-Under (TPU) structures. Of the 798 bridges, approximately 530 were built prior to 1975. Bridges are generally designed with a 40-year design life.

The turnpike bridges are inspected annually following the guidelines established by the Federal Highway Administration. In those guidelines are the National Bridge Inventory (NBI) ratings for bridges. The rating ranges from 0 to 9 and the general categories are listed below:

0 5 6 7 8

Closed to Traffic Fair – Structurally Satisfactory – Good – Minor Very Good – No Sound Minor Problems Problems Noted Deterioration

For the bridges carrying OTA traffic (TPO’s), the average rating increased from a 6.9 in 1998 to a 7.0 in 2017. That rating increase was due to rehabilitation efforts such as new decks, repairs to the beams, piers, pier caps and abutments and in some cases, replaced rusted beams with new weathering steel or concrete beams.

The 2017 inspections resulted in the following NBI ratings:

TPO Decks TPU Decks TPO TPU TPO TPU Superstructure Superstructure Substructure Substructure

7.0 6.8 7.5 6.8 7.2 7.0

Routine maintenance and an extensive and commitment to an aggressive rehabilitation schedule has resulted in the OTA’s bridges meeting the goal of extending useful life.

Although Oklahoma has not yet experienced severe or catastrophic seismic events, the Authority must be prepared to respond and assess its bridge assets following potentially damaging earthquakes. A seismic event can be challenging due to the uncertainty of its nature and the fact that each event is unique. Because seismic events cannot be foreseen, it is necessary for the OTA to be prepared for collapses and/or extensive damage to structures and be able to take immediate action.

The OTA is following a simple protocol that ODOT has developed to determine inspection radii for post-earthquake assessments. The inspection radius, which is centered at the epicenter of a given earthquake, is directly related to the magnitude of an earthquake; as magnitude increases, the inspection radius increases. The table below recommends the inspection radius for a given magnitude range; however, the Division Engineer may opt for a greater response if deemed necessary.

The Authority will assemble all available resources and perform an initial inspection. The main objective of these inspections is to evaluate the extent of damage and conclude whether a structure is safe and functional, or poses a potential safety risk. 5-Year Plan Summary

As seen in the summaries of the major assets of the turnpike system, the 5-year plan has successfully met the goals as intended by the Authority. However, the system is an aging system and will require a continual and aggressive rehabilitation plan. The proposed 5-year plan in the OTA 2018 Adopted Budget includes nearly $480 million in road and bridge projects from a combination of the Reserve Maintenance Fund and General Fund.

Proposed Capital Plan Funding Sources CAPITAL PLAN FUNDING SOURCES Totaling $479,532,808 For the years 2018 to 2022

General Fund Reserve Approx. 59% Maintenance Approx. 41%

DRIVING FORWARD PROGRAM

On October 29, 2015, the Driving Forward Program was announced. The program consists of projects to be financed with the proceeds from revenue bonds issued by the Oklahoma Turnpike Authority over the next three to four years.

The Driving Forward initiative has been developed to address the critical need to reconstruct, expand and enhance the transportation system in Oklahoma. The new corridors being developed have been examined and discussed for many years in response to growing traffic volumes and congestion. The increased traffic volumes represent a primary factor in severe injury and fatality accidents and cause significant reductions in access and mobility for the traveling public. Left unaddressed, conditions will only worsen and continue to compound across the region.

Historically, periodic investments in the replacement, enhancement, and expansion of the transportation system are necessary to provide modern and safe facilities and infrastructure. The represented Driving Forward improvements are predicated on national, regional and local population and traffic growth and are patterned by careful planning and analysis of current and future needs. Oklahoma has effectively invested in expanding and improving our transportation network many times in support of the public need for safe passage and to provide for the more efficient movement of goods and services across the state and the country.

The program’s main focus is to enhance the safety of the turnpike system by replacing aging pavement and toll plazas as well as developing new alignments that will provide additional routes around Oklahoma City. The projects are generally described as follows:

• Muskogee Turnpike Pavement Reconstruction - Completed

• Muskogee Turnpike – Coweta Toll Plaza Reconstruction - Completed

• H. E. Bailey Turnpike Pavement Reconstruction - Completed

• H. E. Bailey Turnpike – Chickasha Toll Plaza Reconstruction - Completed

• Turner Turnpike – Pavement Reconstruction & Capacity Expansion

• John Kilpatrick Turnpike – SW Loop Extension

• Eastern Oklahoma County Turnpike – New Alignment from I-40 to the Turner Turnpike

• John Kilpatrick Turnpike – Rehabilitation & Widening to 6-lanes of the North Canadian River Bridges and the North Canadian River Overflow Bridges.

Improvements to Existing Facilities

Turner & Muskogee Turnpike Improvements

Exhibit 1 – Turner and Muskogee Turnpike Improvements Muskogee Turnpike Improvements The Muskogee Turnpike was authorized by the State Legislature in 1965 and opened to traffic in 1969. It is a four-lane limited-access turnpike extending 53.1 miles from Tulsa to I-40 near Webbers Falls. The Muskogee Turnpike has interchanges at Coweta, Porter, Muskogee and US- 64 near Webbers Falls.

OTA Project MU-MC-42 – Pavement Reconstruction • Project Type: Reconstruction of existing pavement • Project Overview • Location: Pavement from Tulsa terminus near State Highway 51 extending southeast approximately 9 miles • ADT: 19,000 vehicles per day with 10% Trucks

• Total Cost of Construction: $28,500,000 • Schedule – Construction started May 31, 2016 and final inspection for construction was held on October 26, 2017.

Design and Construction Considerations: The Muskogee Turnpike has been open to traffic since 1969 and has seen a steady increase in traffic counts including continual increases in truck traffic. The OTA has attempted to address the pavement distresses in this section previously with very subpar results. This led to the decision to reconstruct the pavement from the Tulsa terminus to the Coweta interchange (SH- 51).

The final design recommended removal of the existing pavement and base throughout the project. This required excavation to approximately 25” depth. The existing base materials were chemically modified to a depth of 9” the a 12” layer of aggregate base was used to facilitate drainage under the pavement. The final surface course is 12 ½ of dowel jointed concrete pavement. The shoulders will undergo the same construction methodology as the mainline pavement.

OTA Project MU-MC-43 – Coweta Toll Plaza Reconstruction • Project Type: Modernization of Coweta Toll Plaza • Project Overview • Location: Coweta Toll Plaza near milepost 13 • ADT: 19,000 vehicles per day with 10% Trucks

• Total Cost of Construction: $13,300,000 • Schedule – Construction started August 1, 2016 and the new toll plaza was opened to traffic on September 6, 2017

Design and Construction Considerations: The primary objective of this project was to identify the most feasible toll plaza alternative while maximizing the method of toll collection and minimizing long term operational costs. Above all, the primary goal will be to provide safety to the personnel, traveling public along with providing a maximum return on the capital expenditure.

Upon the completion of the engineering study, the final design included PIKEPASS lanes in the middle of the plaza and cash lanes to the outside of the mainline. This design provided the safest cash collection alternative from a traffic prospective by keeping the PIKEPASS lanes aligned with the mainline and having cash customers depart from the mainline. The design also provided for segregation of the toll plaza and SH-51 ramp movements from the mainline turnpike traffic. Additional advantages to this design include cash lanes merging with the ramp lanes prior to merging into the mainline which is traveling at highway speed. Also, the alternative provides for one gantry for the PIKEPASS crossing all lanes of mainline.

The new toll plaza is located north of SH-51. Aside from the toll collection configuration discussed above, a toll equipment building and utility building are provided, outside the cash toll booth lanes. An access road will be provided for the employees and service personnel to the cash toll booths. The eastbound ingress-ramp and egress-ramp connection to SH-51 will be relocated further to the west (approximately 100 feet). The layout of the new toll plaza is shown below in Exhibit 2.

Exhibit 2 – Coweta Toll Plaza Configuration

Turner Turnpike Improvements The Turner Turnpike was authorized by the Oklahoma State Legislature in 1947 and opened to traffic in 1953. It is a four-lane limited-access highway extending 86 miles from Tulsa to Oklahoma City. The average daily traffic on the Turner Turnpike is approximately 27,700. Approximately twenty-one percent of the total vehicles are trucks. There are interchanges at Sapulpa, Kellyville, Bristow, Stroud, Chandler, Wellston and Luther.

• Project Type: Reconstruction of existing pavement and capacity expansion to 6 lanes. Project will also include lighting and other future safety enhancements.

• Project Overview • Location: East of Bristow to Tulsa Terminus • Length: 18 miles • ADT: 28,500 vehicles per day with 21% Trucks

• Estimated Total Cost of Improvements: $282.5 million • Schedule: Construction began in August 2017. Thirteen (13) construction packages have been let with three (3) more to be bid.

General: The Turner Turnpike is a vital turnpike corridor that connects Oklahoma’s two largest metro areas. In the past five years on this section of the Turner Turnpike (Shown in Exhibit 1), there have been 15 fatalities and 514 collisions. Safety enhancements and convenience of travel of this road is a priority to OTA. Pavement reconstruction, capacity expansion and safety enhancements will begin east of Bristow near milepost 203 and extend east to the Tulsa terminus of the turnpike through the Creek Turnpike West (State Highway 364) junction of the Turner Turnpike. The project will create an “urban turnpike corridor” with lighting, wider shoulders and additional lanes. The design will allow for the future creation of truck-specific and HOV lanes for quick and safe access.

Design and Construction Considerations: The OTA completed a corridor expansion study in 2012 to determine expansion options from Bristow, to Sapulpa. In this study, a traffic study was conducted to determine the need for the improvements. Environmental investigations were run concurrently with the traffic study. The study also included conceptual design options for future expansion including the mainline and three interchanges (Bristow, Kellyville and Sapulpa). Preliminary costs for construction, right-of- way acquisition and utility relocations were used as a basis of comparison between the options. Due to the vitality of the Turner Turnpike as it relates to the overall transportation system in Oklahoma, one of the major considerations was to keep 2 lanes of travel in each direction open during construction. To date, the design of the initial 3 sections of the Turner Turnpike Expansion is complete. The construction packages that have been have included grading, drainage, pavement and bridges in each section. The new section will consist of a 13 foot inside shoulder, 3-12 foot lanes and a 12’ outside shoulder. Acquisition of the additional right-of-way needed along with relocation of utilities is essentially complete for all sections in construction. The final section of expansion, which extends from the Creek Turnpike to the east end of the turnpike currently in design. The construction for this section is expected to be bid later in 2018. The status of the of the Turner projects is shown below in Exhibit 3.

Exhibit 3 – Turner Turnpike Project Status H. E. Bailey Turnpike Improvements

Exhibit 4 – H. E. Bailey Turnpike Improvements H. E. Bailey Turnpike Improvements The H. E. Bailey Turnpike was authorized by the State Legislature in 1955 and opened to traffic in 1964. It is a four-lane limited-access turnpike extending 86.4 miles in two sections. The northern section runs from Oklahoma City to US-277 north of Lawton. Then south section stretches from US-277 south of Lawton to US-70 near the Texas State line. The H. E. Bailey Turnpike has interchanges at the Norman Spur, Chickasha, Cyril, Elgin, and Walters.

OTA Project HEB-MC-59 –Chickasha Toll Plaza

• Project Type: Relocation & Reconstruction of the Chickasha Toll Plaza

• Project Overview • Location: Near milepost 66 • ADT: 12,000 vehicles per day with 13% Trucks

• Total Estimated Cost of Construction: $15,000,000 • Schedule – Construction started August 22, 2016 and anticipated opening is January 2018

Design and Construction Considerations: As part of the preliminary engineering, the OTA tasked the engineer with finding a new location for the toll plaza. The Chickasha Toll Plaza could be located anywhere between the US-81 interchange in Chickasha and the Cyril/Fletcher Interchange without affecting the current tolling operations.

A location near milepost 66 was selected as the best option for the new toll plaza location. The existing terrain was one of the flattest options between US-62 and the Cyril/Fletcher exit. The project required borrow to meet the new typical section, but several sources nearby were located thus reducing the amount of hauling. The impacts to drainage were minimized due to the plaza being located near the crest of a curve. The new typical section allows drainage to run between the toll lanes and the PIKEPASS lane, minimizing the need for drainage structures. Expansion to the east was viable option due to additional ROW along that side and the existing utilities being located on the west side.

Much like the considerations discussed above for the Coweta Toll Plaza, the Chickasha Toll Plaza is being built with PIKEPASS lanes in the middle and cash lanes to the outside. The layout of the Chickasha Toll Plaza is shown below.

Exhibit 5 – Chickasha Toll Plaza Configuration OTA Project HEB-MC-61 – Pavement Reconstruction • Project Type: Reconstruction of existing pavement • Project Overview • Location: Pavement from OKC terminus extending southwest approximately 6 miles • ADT: 15,000 vehicles per day with 10% Trucks

• Total Estimated Cost of Construction: $20,300,000 • Schedule – Construction started July 25, 2016 and was opened to traffic on August 2, 2017

Design and Construction Considerations: The H. E. Bailey Turnpike has been open to traffic since 1965 and has required very little major restoration efforts in that time. The roadway consists of a divided, open-section roadway with 2 lanes in each direction. The Bailey has with a 15-foot-wide median with a longitudinal concrete barrier. The existing pavement consists of 9” of plain-jointed concrete pavement. The major distresses on the Bailey are faulting and cracking. The shoulders are typically 4” to 6” of asphalt with numerous failures. The current shoulders are not adequate to handle traffic during construction or maintenance operations.

The proposed new pavement typical section consists of 10” dowel-jointed concrete pavement over 4” of cement-treated base for the mainline lanes and the shoulders. These dowels will help alleviate faulting in the future by establishing adequate load transfer between adjacent pavement slabs. The full-depth pavement on the shoulders will allow for traffic to be located on the shoulder temporarily for maintenance and during emergency situations. During construction, it was necessary to construct crossovers at each end of the project. Traffic was placed head to head with a temporary concrete barrier between the lanes. The speed was reduced to 65 mph in the work zone and the lanes were 11’ wide to allow for most loads to continue to travel the turnpike. The eastbound exit ramp to US-62 southbound was closed for a short duration when the existing eastbound lanes were being reconstructed. New Turnpike Facilities

Exhibit 6 – John Kilpatrick SW Loop & Eastern Oklahoma County Turnpike Project Locations

John Kilpatrick Turnpike SW Loop Turnpike • Project Type: New construction • Project Overview • Location: Connecting the John Kilpatrick Turnpike at I-40 extending southeasterly to State Highway 152/Airport Road • Length: Approximately 7 miles

• Estimated Cost: $238.7 million

Overview: As shown in Exhibit 7, this project will be an extension of the John Kilpatrick Turnpike that will connect SW Oklahoma City and the metro area at-large with the urban core. It will increase access and offer another route for Will Rogers World Airport.

The facility will be a four-lane, limited access, urban highway located in Canadian County and Oklahoma County. The route connects to the existing John Kilpatrick Turnpike at I-40 then extends south to a point south of SW 44th Street then extends east where it connects with State Highway 152 near Council Road.

The new route will extend the circumferential route on the west side of the Oklahoma City metropolitan area. This route will help alleviate congestion at the I-40 & I-44 interchange. The facility has interchanges at I-40, a half interchange at SW 15th Street, a split diamond interchange at Sara Road and SW 29th Street and a full interchange at Morgan Road. When warranted by future traffic demands, the roadway is being designed to accommodate widening to the inside much like the existing Kilpatrick Turnpike.

A toll plaza is currently planned to be located between County Line Road and Morgan Road. The plaza will be constructed much like the existing plazas on the Kilpatrick Turnpike with PIKEPASS lanes in the middle of the plaza and cash collection located to the outside of the plaza.

The SW Loop will be constructed in five construction packages which are the interchange at I-40 and the interchange at SH-152 and the mainline will be broken into 2 segments. All 4 of these projects are currently in construction. The toll plaza will be bid separately and is scheduled to be bid in Fall 2018.

The status of the John Kilpatrick Turnpike SW Loop is shown below in Exhibit 7.

Exhibit 7 – John Kilpatrick Turnpike SW Loop Project Status Eastern Oklahoma County Turnpike • Project Type: New construction • Project Overview • Location: Eastern Oklahoma County connecting to I-40 on the south and the Turner Turnpike (I-44) on the north • Length: Approximately 19 miles • Estimated Cost: $418.9 million Overview: As shown in Exhibit 8, this project will allow for a connection from Eastern Oklahoma County to vital intersections for travel. The facility will offer a safer and more efficient alternative connection between the Turner Turnpike (I-44) and Interstate 40. The route will provide a drive-time reduction to access Tulsa from the Oklahoma City Metro and assist in alleviating growing congestion in the Oklahoma City area along the Interstate 35 corridor. The facility will be a four-lane, limited access, urban highway located in Eastern Oklahoma County. The route will connect to I-40 on the south then extends north to the Turner Turnpike (I-44) along the vicinity of Luther Road.

The new route will create a north-south freeway to east of the Oklahoma City Metro that will help alleviate congestion along I-35 from I-240 extending north to the I-40 Crosstown The facility has interchanges at I-40, SE 29th Street, Reno Avenue, NE 23rd Street (US-62), Britton Road and the Turner Turnpike (I-44). This project will coincide with improvements that the Oklahoma Department of Transportation is making along I-40 to the west of the Eastern Oklahoma County Turnpike which will help alleviate traffic congestion along I-40 leading to the turnpike.

The Eastern Oklahoma County Turnpike will be constructed in sixteen (16) construction packages. To date 13 of these packages have been awarded and are in construction.

The status of the Eastern Oklahoma County is shown below in Exhibit 8.

Exhibit 8 – Eastern Oklahoma County Turnpike Project Status John Kilpatrick Turnpike – North Canadian River and Overflow Bridges • Project Type: Bridge Widening and Rehabilitation • Project Overview • Location: John Kilpatrick Turnpike approximately 6 miles north of I-40 • Estimated Cost: $58.5 million Overview: As the Driving Forward program was approaching the end of the design and right-of-way acquisition phase and the construction bids continued to come in below estimates, it was decided to add these projects to the current program. The main spans over the North Canadian River are 3,100-foot-long twin bridges and the overflow bridges, which are immediately south of the main channel are 2,000-foot-long twin bridges. The John Kilpatrick Turnpike has seen tremendous traffic growth since the extension of the turnpike was completed in 2001. As traffic continues to grow, the OTA will eventually be looking to expand capacity along this section of the JKT much like the section from Broadway Extension to MacArthur Avenue. With these long bridges already expanded to 6-lanes, it will alleviate some traffic control issues when the mainline is eventually expanded as well as addressing some ride issues with the bridges that have been evident since completion of the bridges in 2001. The design for the widening and rehabilitation of these bridges is nearing completion and construction is expected to be bid in Fall 2018.

Driving Forward Program Cost Summary The table below depicts the current costs for the Driving Forward Program as of September 2018. As noted above, the projects on the H. E. Bailey and Muskogee Turnpikes are completed. Several Turner Turnpike projects are in construction and the remaining section will be bid in Summer 2018 upon completion of right-of-way acquisition and environmental clearance. The Eastern Oklahoma County Turnpike and SW John Kilpatrick Turnpike alignments are in construction. The only remaining project to be bid on the JKT is the toll plaza. The EOC has all grading, interchange and bridge contracts awarded and the surfacing packages and toll plazas will be bid later this year. The current estimate is inclusive of all major aspects of the program. Olsson believes that the estimate contains conservative assumptions for all remaining work to be bid based mainly on the competitive construction bids evident to data. The OTA and its Driving Forward team will continue evaluating strategies to lower the overall program cost while producing a safe and efficient roadway that enhances transportation in Oklahoma over the upcoming months.

Driving Forward Program Estimate as of September 2018

Engineering & Construction Administration Right-of-Way Utility Relocations Toll Facilities Inspection Construction Total Driving Forward $ 28,109,506 $ - $ - $ - $ - $ - $ 28,109,506 Program Management H. E. Bailey Turnpike $ 3,282,023 $ - $ - $ - $ 650,185 $ 32,289,389 $ 36,221,597 Improvements Muskogee Turnpike $ 3,112,449 $ - $ - $ - $ 1,098,000 $ 41,796,719 $ 46,007,168 Improvements Turner Turnpike - $ 22,300,000 $ 9,800,000 $ 5,200,000 $ - $ 21,300,000 $ 223,900,000 $ 282,500,000 Pavement Eastern Oklahoma $ 31,200,000 $ 57,600,000 $ 21,900,000 $ 20,700,000 $ 24,200,000 $ 263,300,000 $ 418,900,000 County Turnpike SW Kilpatrick Extension $ 16,400,000 $ 29,700,000 $ 10,400,000 $ 8,600,000 $ 18,800,000 $ 154,800,000 $ 238,700,000

JKT Bridges $ 2,200,000 $ - $ - $ - $ 6,000,000 $ 50,300,000 $ 58,500,000

Grand Totals $ 106,603,978 $ 97,100,000 $ 37,500,000 $ 29,300,000 $ 72,048,185 $ 766,386,108 $ 1,108,938,271

Cost includes overall program management, design and construction oversight, OTA Consulting Engineer's oversight and audit of the program, utility relocation coordination and right-of-way program management and environmental reconnaissance Denotes projects in which engineering and construction are complete [This Page Intentionally Left Blank] APPENDIX G

COMPREHENSIVE TRAFFIC & REVENUE UPDATE SUMMARY REPORT AND OCTOBER 2018 LETTER UPDATE OF THE TRAFFIC ENGINEERS [This Page Intentionally Left Blank]

12400 Coit Road, Suite 400 Dallas, TX 75251 tel: 214 346-2800 fax: 972 239-5340

October 5, 2018

Wendy J. Smith, CPA Director of Finance and Revenue Oklahoma Turnpike Authority 3500 Martin Luther King Boulevard Oklahoma City, OK 73136

Subject: OTA System Comprehensive Traffic and Revenue Update

Dear Ms. Smith: As Traffic Engineers for the Oklahoma Turnpike Authority (OTA), CDM Smith is pleased to provide you with a traffic and revenue (T&R) letter update for the Oklahoma Turnpike Authority System (OTA System). It is our understanding that this letter is intended to support the issuance of the upcoming Series 2018A bonds scheduled for closing in November 2018. As shown in Figure 1, the OTA System consists of ten turnpikes that serve different functions for their respective regions and for the State of Oklahoma. The original six turnpikes – Turner, Will Rogers, H.E. Bailey, Muskogee, Indian Nation, and Cimarron – serve mostly as intercity connectors within Oklahoma and interstate connections for their respective regions. The Cherokee and Chickasaw Turnpikes mimic the functionality of the original six turnpikes as intercity and interstate connectors, while the Creek and Kilpatrick Turnpikes serve the dual purposes of regional connectors, as well as intra-city connectors for the metropolitan areas of Tulsa and Oklahoma City, respectively.

Background CDM Smith completed the Oklahoma Turnpike Authority System Comprehensive Traffic & Revenue Update report in January 2017 (the "January 2017 Study"). The study included a comprehensive assessment of economic conditions, demographic growth projections and other key factors influencing forecasted T&R on OTA System facilities. The January 2017 Study also included an independent review of demographic projections in the Oklahoma City and Tulsa areas as well as comprehensive traffic count and travel time data collection efforts. In addition to updated long-term T&R forecasts for the OTA System, the January 2017 Study also included T&R forecasts for two new turnpikes currently under development: the Southwest John Kilpatrick Turnpike Extension (SWJKT) and the Eastern Oklahoma County Turnpike (EOC).

Wendy J. Smith October 5, 2018 Page 2

Since the completion of the January 2017 Study, the following new information has become available, which has warranted changes to the long-term T&R forecasts: • OTA System transaction impacts of the first two (of three) planned systemwide toll rate increases, which went into effect on March 1, 2017 and January 3, 2018, respectively • Transaction and revenue data through July 2018 • The anticipated opening date of the SWJKT and EOC projects was changed from January 1, 2020 to January 1, 2021 This letter incorporates the above new information and includes updates to the OTA System T&R forecasts for years 2018 through 2046.

Figure 1. Oklahoma Turnpike Authority System

Wendy J. Smith October 5, 2018 Page 3

Transaction and Revenue Growth Trends One of the key driving factors in the development of long-term T&R forecasts for the OTA System is historical transaction and revenue growth trends. Since the completion of the January 2017 Study, several months of additional turnpike data have become available including data from both before and after the implementation of the 2017 and 2018 systemwide toll rate increases. The updated forecasts included in this report incorporate the most recent OTA System data available .

Historical Revenue Growth Figure 2 shows the historical revenue growth through 2017 for the OTA System since the opening of the Turner Turnpike in 1953. Since 1990, revenue on the OTA System has increased at an average annual rate of 6.7 percent, due in part to periodic toll rate increases and expansions of the turnpike system. As a result of the toll rate increase that went into effect in March 2017, revenue on the system increased by 13.5 percent between 2016 and 2017.

Figure 2. OTA System Historical Revenue Growth

Wendy J. Smith October 5, 2018 Page 4

Transaction Growth Figure 3 summarizes the average annual transaction growth by facility for March-July 2018 compared to March-July 2016. As shown in the figure, only four of OTA’s ten turnpikes have seen positive growth in transactions since 2016, and the growth at some of those locations has been very modest. The remaining six turnpikes have all seen reductions in total transactions of approximately one to two percent per year compared to 2016. However, these types of changes were not entirely unexpected. The implementation of systemwide toll rate increases in March 2017 and January 2018 was anticipated to generate a diversion of some vehicles away from OTA’s facilities. However, the OTA System overall has maintained a small positive growth in transactions between 2016 and 2018.

4%

3%

2%

1%

0%

-1%

-2% Average Annual Transation Growth Transation Annual Average -3%

Figure 3. OTA System 2016-2018 Average Annual Transaction Growth (March-July)

Impacts of Toll Rate Increase As stated previously, two systemwide toll rate increases went into effect on March 1, 2017 and January 3, 2018. Figure 4 summarizes the average annual revenue growth by facility for March- July 2018 compared to March-July 2016. As illustrated in the figure, the rate increases have resulted in noticeable revenue increases across all turnpikes, despite reductions in transactions at several locations. Systemwide, revenue has grown by an average of approximately ten percent per year since 2016, and most turnpikes have seen annual revenue increases in the range of seven to Wendy J. Smith October 5, 2018 Page 5

thirteen percent per year. Of the system’s biggest revenue generating facilities, the highest growth in revenue has been observed on Creek Turnpike, due to a combination of the rate increase and growth in commercial vehicle traffic.

14%

12%

10%

8%

6%

4%

2% Average Annual Revenue Growth Revenue Annual Average 0%

Figure 4. OTA System 2016-2018 Average Annual Revenue Growth (March-July)

Growth in PIKEPASS Share Beginning in the latter part of 2016, PIKEPASS usage among commercial vehicles began to demonstrate noticeable increases. While PIKEPASS share among passenger car users has seen relatively small growth and is currently approximately 75 percent systemwide, PIKEPASS share for commercial vehicles systemwide has grown from approximately 60 to 68 percent since July 2016. One possible explanation for this trend is that it is a reaction to the toll rates increase, which was originally announced in September 2016 and expected to be implemented in January 2017. Because of the rate discount offered to PIKEPASS users, cash-paying commercial vehicles may be incentivized to offset the costs of the rate increase by switching to PIKEPASS. This behavioral reaction is somewhat commonplace across the US where there is a differential in rates between tag and non-tag transactions. Wendy J. Smith October 5, 2018 Page 6

Figure 5. Recent Growth in PIKEPASS Share

Driving Forward Projects On October 29, 2015, Governor Mary Fallin and the OTA announced the Driving Forward program, which includes six major projects to improve and expand the OTA System. The Driving Forward program includes two new turnpike projects (the SWJKT and EOC) that will add 24 new centerline miles to the OTA System. The locations of the SWJKT and EOC projects are shown in Figure 6. The proposed SWJKT project extends the John Kilpatrick Turnpike from its current terminus at I-40 in western Oklahoma City to SH 152 near Will Rogers World Airport. The turnpike extension will provide high-speed connectivity and allow for improved travel times for trips in the southwestern portion of the Oklahoma City region. It will also provide improved access between the Will Rogers World Airport and western portions of the greater Oklahoma City area. The proposed EOC project will provide a high-speed, controlled access route between I-40 and I- 44 in the eastern Oklahoma City region. The proposed corridor extends from I-40 east of the intersection with I-240 to I-44 near Luther. The project will serve local traffic as well as provide a potential alternative route for vehicles traveling between the Moore/Norman area and Tulsa that are currently using I-35 and I-44. Wendy J. Smith October 5, 2018 Page 7

Figure 6. Future OTA System (Including SWJKT and EOC)

Updated Traffic and Revenue Forecasts The updated long-term (2018-2046) T&R forecasts for each OTA System facility are shown in Table 1 and Figure 7. The transaction projections have been updated based on the recent transaction and revenue data and input assumptions provided by OTA that have become available since the completion of the January 2017 Study. The projections extend from 2018 through 2046 and include revenue forecasts for each of the ten current OTA System turnpikes as well as the proposed SWJKT and EOC projects. As shown in Table 1, the estimated annual revenue generated by the OTA System (including SWJKT and EOC) is expected to increase from $317.4 million in 2018 to $380.1 million by 2028 and $411.7 million by 2038. The Turner Turnpike is expected to continue to be the highest revenue generating facility throughout the forecast period, providing approximately 23 percent of all anticipated toll Wendy J. Smith October 5, 2018 Page 8

revenues. The combined I-44 turnpikes (Turner, Will Rogers and H.E. Bailey) are expected to generate 52 percent of the revenues generated through 2046. The urban turnpikes (Kilpatrick and Creek) are anticipated to generate 25 percent of all revenues, while the two new turnpikes (SWJKT and EOC) comprise four percent of the total revenue forecasted.

Table 1. Updated OTA System Annual Toll Revenue Forecasts by Facility Annual Turnpike Revenue (millions) Year Indian John Turner Will Rogers H.E. Bailey Muskogee Cimarron Cherokee Chickasaw Creek SWJKT EOC Nation Kilpatrick TOTAL 2018 $77.26 $65.19 $32.82 $17.87 $20.98 $13.74 $10.01 $1.01 $43.56 $35.01 -- -- $317.43 2019 $78.77 $66.52 $33.43 $18.10 $21.31 $13.96 $10.13 $1.03 $44.80 $36.03 -- -- $324.08 2020 $79.69 $67.62 $34.00 $18.29 $21.61 $14.15 $10.21 $1.05 $46.00 $36.97 -- -- $329.57 2021 $80.71 $68.52 $34.50 $18.45 $21.91 $14.29 $10.24 $1.06 $47.65 $37.78 $3.23 $5.28 $343.61 2022 $81.71 $69.40 $35.00 $18.59 $22.17 $14.43 $10.27 $1.08 $48.73 $38.48 $3.81 $6.33 $349.99 2023 $82.68 $70.25 $35.48 $18.73 $22.41 $14.55 $10.29 $1.10 $49.74 $39.12 $4.45 $7.50 $356.31 2024 $83.63 $71.09 $35.95 $18.86 $22.65 $14.68 $10.31 $1.11 $50.73 $39.72 $4.89 $8.36 $361.97 2025 $84.54 $71.89 $36.41 $18.99 $22.88 $14.80 $10.33 $1.13 $51.68 $40.29 $5.11 $8.86 $366.91 2026 $85.43 $72.68 $36.85 $19.13 $23.10 $14.92 $10.34 $1.15 $52.62 $40.85 $5.22 $9.13 $371.40 2027 $86.29 $73.43 $37.28 $19.26 $23.32 $15.04 $10.36 $1.16 $53.54 $41.38 $5.34 $9.40 $375.79 2028 $87.11 $74.16 $37.69 $19.39 $23.53 $15.16 $10.38 $1.18 $54.45 $41.91 $5.46 $9.68 $380.08 2029 $87.90 $74.85 $38.08 $19.51 $23.73 $15.27 $10.40 $1.19 $55.33 $42.39 $5.58 $9.98 $384.22 2030 $88.66 $75.52 $38.46 $19.64 $23.93 $15.39 $10.41 $1.21 $56.17 $42.85 $5.71 $10.28 $388.21 2031 $89.38 $76.16 $38.82 $19.75 $24.10 $15.49 $10.43 $1.22 $56.92 $43.26 $5.84 $10.59 $391.95 2032 $90.06 $76.76 $39.16 $19.85 $24.26 $15.58 $10.44 $1.24 $57.58 $43.64 $5.97 $10.91 $395.45 2033 $90.71 $77.33 $39.49 $19.94 $24.41 $15.66 $10.45 $1.25 $58.17 $43.98 $6.10 $11.24 $398.71 2034 $91.31 $77.87 $39.79 $20.03 $24.54 $15.74 $10.45 $1.26 $58.69 $44.28 $6.24 $11.58 $401.77 2035 $91.88 $78.37 $40.07 $20.10 $24.66 $15.80 $10.46 $1.27 $59.14 $44.56 $6.37 $11.94 $404.62 2036 $92.41 $78.83 $40.34 $20.17 $24.76 $15.87 $10.47 $1.28 $59.55 $44.81 $6.50 $12.21 $407.18 2037 $92.90 $79.26 $40.58 $20.23 $24.86 $15.92 $10.47 $1.28 $59.90 $45.04 $6.61 $12.49 $409.53 2038 $93.35 $79.66 $40.80 $20.28 $24.95 $15.97 $10.48 $1.29 $60.21 $45.25 $6.72 $12.77 $411.72 2039 $93.75 $80.01 $41.00 $20.33 $25.03 $16.01 $10.48 $1.30 $60.49 $45.44 $6.84 $13.07 $413.73 2040 $94.11 $80.33 $41.18 $20.37 $25.10 $16.06 $10.49 $1.30 $60.73 $45.61 $6.96 $13.37 $415.59 2041 $94.43 $80.61 $41.33 $20.42 $25.16 $16.09 $10.49 $1.31 $60.94 $45.76 $7.08 $13.67 $417.29 2042 $94.70 $80.85 $41.47 $20.45 $25.22 $16.13 $10.50 $1.31 $61.13 $45.90 $7.20 $13.99 $418.84 2043 $94.93 $81.05 $41.58 $20.49 $25.27 $16.16 $10.50 $1.32 $61.29 $46.03 $7.32 $14.31 $420.26 2044 $95.12 $81.21 $41.67 $20.52 $25.32 $16.19 $10.51 $1.32 $61.44 $46.15 $7.45 $14.64 $421.53 2045 $95.26 $81.33 $41.73 $20.55 $25.37 $16.22 $10.52 $1.33 $61.57 $46.26 $7.58 $14.97 $422.68 2046 $95.35 $81.41 $41.77 $20.58 $25.41 $16.25 $10.52 $1.33 $61.68 $46.36 $7.71 $15.32 $423.70 Wendy J. Smith October 5, 2018 Page 9

Figure 7. Updated OTA System Annual Toll Revenue Forecasts by Facility

Conclusion and Recommendations While the state and national economies, and population and employment growth, specifically along OTA corridors, are critical to the transactions and revenue on OTA System facilities, the following are other critical parameters that could potentially have a material impact on the OTA System T&R: • The planned toll rate increase in July 2019 • PIKEPASS usage by both passenger car and commercial vehicle customers • Growth in commercial vehicle traffic • Construction schedule of the SWJKT and EOC projects In summary, based on the evaluation of the new information that has become available since the completion of the January 2017 Study, CDM Smith recommends that the updated OTA System traffic and revenue forecasts included in Table 1 in this letter be used to support the issuance of the upcoming Series 2018A bonds.

Wendy J. Smith October 5, 2018 Page 10

I trust that this information addresses your current needs. Should any questions arise, please do not hesitate to contact me.

Sincerely,

Justin R. Winn, P.E. Project Manager CDM Smith Inc.

DISCLAIMER CDM Smith used currently accepted professional practices and procedures in the development of these traffic and revenue forecasts. However, as with any forecast, it should be understood that differences between forecasted and actual results may occur, as caused by events and circumstances beyond the control of the forecasters. In formulating the forecasts, CDM Smith reasonably relied upon the accuracy and completeness of information provided (both written and oral) by the Oklahoma Turnpike Authority (OTA). CDM Smith also relied upon the reasonable assurances of independent parties and is not aware of any material facts that would make such information misleading.

CDM Smith made qualitative judgments related to several key variables in the development and analysis of the traffic and revenue forecasts that must be considered as a whole; therefore, selecting portions of any individual result without consideration of the intent of the whole may create a misleading or incomplete view of the results and the underlying methodologies used to obtain the results. CDM Smith gives no opinion as to the value or merit of partial information extracted from this report.

All forecasts and projections reported herein are based on CDM Smith’s experience and judgment and on a review of information obtained from multiple agencies, including OTA. These forecasts and projections may not be indicative of actual or future values and are therefore subject to substantial uncertainty. Future developments, economic conditions, and travel behavior advances in automotive technology cannot be predicted with certainty and may affect the forecasts or projections expressed in this report, such that CDM Smith does not specifically guarantee or warrant any estimate or projection contained within this report.

While CDM Smith believes that the projections or other forward-looking statements contained within the report are based on reasonable assumptions as of the date of this letter, such forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the results predicted. Therefore, following the date of that study, CDM Smith will take no responsibility or assume any obligation to advise of changes that may affect its assumptions contained within the report, as they pertain to socioeconomic and demographic forecasts, proposed residential or commercial land use development projects and/or potential improvements to the regional transportation network.

CDM Smith is not, and has not been, a municipal advisor as defined in federal law (the Dodd Frank Bill) to OTA and does not owe a fiduciary duty pursuant to Section 15B of the Exchange Act to OTA with respect to the information and material contained in this report. CDM Smith is not recommending and has not recommended any action to OTA. OTA should discuss the information and material contained in this report with any and all internal and external advisors that it deems appropriate before acting on this information.

JANUARY 2017 SUMMARY REPORT OF THE TRAFFIC ENGINEERS

(Note: This Summary Report was extracted from the Comprehensive Traffic & Revenue Update of the Traffic Engineers. The entire document, including all appendices, may be viewed at https://www.pikepass.com/pdf/sysreport.pdf) [This Page Intentionally Left Blank] OKLAHOMA TURNPIKE AUTHORITY SYSTEM COMPREHENSIVE TRAFFIC & REVENUE UPDATE SUMMARY REPORT January 2017

8140 Walnut Hill Lane, Suite 1000 Dallas, TX 75231 tel: 214 346-2800 fax: 214 987-2017

January 23, 2017

Wendy Smith Director of Finance and Revenue Oklahoma Turnpike Authority PO Box 11357, 3500 North Martin Luther King Avenue Oklahoma City, OK 73111-4295

Re: OTA System Comprehensive Traffic and Revenue Update

Dear Ms. Smith:

CDM Smith is pleased to submit this OTA System Comprehensive Traffic and Revenue update report. The purpose of this study was to conduct an update of the revenue projections for the current OTA System facilities and undertaken a comprehensive analysis of two new planned projects for the Southwest Kilpatrick Extension and Eastern Oklahoma County Turnpike. The report summarizes the results of the study and includes the transactions and toll revenue projections over a thirty-year period. Our project team, including Michael Copeland, Justin Winn, Maneesh Mahlawat, and others, gratefully acknowledge the assistance and cooperation received from OTA staff as well as others contacted over the course of the study. CDM Smith sincerely appreciates the opportunity to have participated in this important project.

Respectfully submitted,

Christopher Mwalwanda Vice President CDM Smith Inc.

Table of Contents

Table of Contents ...... i List of Figures ...... iii List of Tables ...... v Disclaimer ...... vii Section 1 – Introduction ...... 1-1 The Oklahoma Turnpike System ...... 1-1 Driving Forward Program ...... 1-3 Structure of Study and Report...... 1-4 Section 2 – OTA System Historical Trends ...... 2-1 Historical Revenue Growth ...... 2-1 Recent Revenue Growth ...... 2-8 Commercial Vehicle Growth...... 2-9 PIKEPASS Usage ...... 2-15 Weekday vs Weekend Usage...... 2-21 Section 3 – Oklahoma City Area Traffic Characteristics...... 3-1 Traffic Count Program ...... 3-1 Historical Traffic Counts ...... 3-8 Speed and Travel Time ...... 3-9 Regional Trip Patterns ...... 3-12 Stated Preference Survey ...... 3-18 Section 4 – Socio-Economic Characteristics ...... 4-1 Historical and Forecasted Population ...... 4-1 Historical and Forecasted Employment ...... 4-2 Additional Economic Factors ...... 4-4 Independent Demographic Review ...... 4-6 Section 5 – Traffic Forecasting Methodology ...... 5-1 OTA System ...... 5-1 SWJKT and EOC Projects...... 5-3 General Assumptions ...... 5-7 Section 6 – Revenue Forecasts ...... 6-1 Input Assumptions ...... 6-1 Toll Sensitivity Analysis ...... 6-2 Corridor Share Analysis ...... 6-4 Travel Time Savings Analysis ...... 6-7 Estimated Annual Revenue ...... 6-9 Sensitivity Tests ...... 6-12

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List of Figures

1-1 Oklahoma Turnpike Authority System ...... 1-1 1-2 Southwest Kilpatrick Extension ...... 1-3 1-3 Eastern Oklahoma County Turnpike ...... 1-4 2-1 OTA System Historical Revenue Growth ...... 2-2 2-2 Turner Turnpike Historical Revenue Growth ...... 2-3 2-3 Will Rogers Turnpike Historical Revenue Growth ...... 2-3 2-4 H.E. Bailey Turnpike Historical Revenue Growth ...... 2-4 2-5 Indian Nation Turnpike Historical Revenue Growth ...... 2-4 2-6 Muskogee Turnpike Historical Revenue Growth ...... 2-5 2-7 Cimarron Turnpike Historical Revenue Growth ...... 2-5 2-8 Cherokee Turnpike Historical Revenue Growth ...... 2-6 2-9 Chickasaw Turnpike Historical Revenue Growth ...... 2-6 2-10 John Kilpatrick Turnpike Historical Revenue Growth ...... 2-7 2-11 Creek Turnpike Historical Revenue Growth ...... 2-7 2-12 OTA System Recent Revenue Growth ...... 2-8 2-13 OTA System Commercial Vehicle Revenue Share – 2015 ...... 2-9 2-14 Turner Turnpike Historical Commercial Vehicle Shares ...... 2-10 2-15 Will Rogers Turnpike Historical Commercial Vehicle Shares ...... 2-10 2-16 H.E. Bailey Turnpike Historical Commercial Vehicle Shares ...... 2-11 2-17 Indian Nation Turnpike Historical Commercial Vehicle Shares ...... 2-11 2-18 Muskogee Turnpike Historical Commercial Vehicle Shares ...... 2-12 2-19 Cimarron Turnpike Historical Commercial Vehicle Shares ...... 2-12 2-20 Cherokee Turnpike Historical Commercial Vehicle Shares ...... 2-13 2-21 Chickasaw Turnpike Historical Commercial Vehicle Shares ...... 2-13 2-22 John Kilpatrick Turnpike Historical Commercial Vehicle Shares ...... 2-14 2-23 Creek Turnpike Historical Commercial Vehicle Shares ...... 2-14 2-24 OTA System PIKEPASS Share Growth ...... 2-15 2-25 Turner Turnpike PIKEPASS Share Growth ...... 2-16 2-26 Will Rogers Turnpike PIKEPASS Share Growth ...... 2-16 2-27 H.E. Bailey Turnpike PIKEPASS Share Growth ...... 2-17 2-28 Indian Nation Turnpike PIKEPASS Share Growth ...... 2-17 2-29 Muskogee Turnpike PIKEPASS Share Growth ...... 2-18 2-30 Cimarron Turnpike PIKEPASS Share Growth ...... 2-18 2-31 Cherokee Turnpike PIKEPASS Share Growth ...... 2-19 2-32 Chickasaw Turnpike PIKEPASS Share Growth ...... 2-19 2-33 John Kilpatrick Turnpike PIKEPASS Share Growth ...... 2-20 2-34 Creek Turnpike PIKEPASS Share Growth ...... 2-20 2-35 Weekday vs Weekend Traffic ...... 2-21 3-1 Traffic Count Screenlines – SWJKT Study Area ...... 3-2 3-2 Traffic Count Locations – SWJKT Study Area ...... 3-2

iii

3-3 Traffic Count Screenlines – EOC Study Area ...... 3-3 3-4 Traffic Count Locations – EOC Study Area ...... 3-3 3-5 Daily Traffic Profile – SWJKT Screenline 1 ...... 3-4 3-6 Daily Traffic Profile – SWJKT Screenline 2 ...... 3-4 3-7 Daily Traffic Profile – SWJKT Screenline 6 ...... 3-5 3-8 Daily Traffic Profile – EOC Screenline 1 ...... 3-5 3-9 Daily Traffic Profile – EOC Screenline 2 ...... 3-6 3-10 Daily Traffic Profile – EOC Screenline 3 ...... 3-6 3-11 Daily Traffic Profile – EOC Screenline 4 ...... 3-7 3-12 Daily Traffic Profile – EOC Screenline 5 ...... 3-7 3-13 INRIX Traffic Data Collection and Distribution Process ...... 3-9 3-14 Average Travel Speeds – AM Peak Period ...... 3-10 3-15 Average Travel Speeds – PM Peak Period ...... 3-11 3-16 Average Travel Speeds – Midday Period ...... 3-11 3-17 Origin-Destination Analysis Locations ...... 3-12 3-18 Trip Patterns: Location 1 – I-35 South of Purcell ...... 3-13 3-19 Trip Patterns: Location 2 – I-44 Southwest of Oklahoma City ...... 3-13 3-20 Trip Patterns: Location 3 – I-40 West of Yukon ...... 3-14 3-21 Trip Patterns: Location 7 – Turner Turnpike East of Luther ...... 3-14 3-22 Trip Patterns: Location 12 – I-40 Near McLoud ...... 3-15 3-23 Trip Patterns: Location 16 – I-35 South of I-40 ...... 3-15 3-24 Trip Patterns: Location 19 – I-235 North of I-40...... 3-16 3-25 Trip Patterns: Location 21 – I-35 North of I-44 ...... 3-16 3-26 Trip Patterns: Location 23 – John Kilpatrick Turnpike South of SH 3 ...... 3-17 3-27 Trip Patterns: Trip Patterns: Location 34 – SH 152 West of Will Rogers Airport ...... 3-17 3-28 Distribution of Survey Postcards ...... 3-19 4-1 Historical Unemployment Rates ...... 4-3 4-2 Consumer Price Index for All Urban Consumers ...... 4-4 4-3 Historical Fuel Prices ...... 4-5 4-4 SWJKT and EOC Demographic Review Areas ...... 4-7 5-1 Travel Demand Modeling Process ...... 5-4 5-2 Southwest Kilpatrick Extension Screenline Validation Results ...... 5-5 5-3 Eastern Oklahoma County Turnpike Screenline Validation Results ...... 5-5 6-1 Toll Sensitivity Results – OTA System ...... 6-3 6-2 Toll Sensitivity Results – Southwest Kilpatrick Extension ...... 6-3 6-3 Toll Sensitivity Results – Eastern Oklahoma County Turnpike ...... 6-4 6-4 Corridor Share Analysis Screenlines – Southwest Kilpatrick Extension ...... 6-5 6-5 Corridor Share Analysis Screenlines – Eastern Oklahoma County Turnpike ...... 6-5 6-6 Travel Time Comparison – Southwest Kilpatrick Extension ...... 6-8 6-7 Travel Time Comparison – Eastern Oklahoma County Turnpike ...... 6-8 6-8 Combined Revenue Forecast...... 6-12

iv

List of Tables

2-1 OTA System Expansions ...... 2-1 2-2 OTA System Historical Toll Rate Increases ...... 2-2 3-1 Historical Traffic Counts – Oklahoma City Area...... 3-8 3-2 Stated Preference Survey Results ...... 3-19 4-1 Population Trends and Projections (thousands) ...... 4-2 4-2 Employment Trends and Projects (thousands) ...... 4-3 4-3 Historical and Forecasted Mean Household Income (2009$) ...... 4-5 4-4 Revised Demographic Forecast – SWJKT Project Area ...... 4-7 4-5 Revised Demographic Forecast – EOC Project Area ...... 4-7 6-1 Corridor Share Analysis – Southwest Kilpatrick Extension ...... 6-6 6-2 Corridor Share Analysis – Eastern Oklahoma County Turnpike ...... 6-6 6-3 OTA System Revenue Forecast ...... 6-10 6-4 SWJKT and EOC Revenue Forecasts ...... 6-11 6-5 Revenue Sensitivity to Demographic Growth ...... 6-13 6-6 Revenue Sensitivity to Value of Time ...... 6-14

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Disclaimer

CDM Smith used currently-accepted professional practices and procedures in the development of these traffic and revenue estimates. However, as with any forecast, it should be understood that differences between forecasted and actual results may occur, as caused by events and circumstances beyond the control of the forecasters. In formulating the estimates, CDM Smith reasonably relied upon the accuracy and completeness of information provided (both written and oral) by Oklahoma Turnpike Authority (OTA). CDM Smith also relied upon the reasonable assurances of independent parties and is not aware of any material facts that would make such information misleading.

CDM Smith made qualitative judgments related to several key variables in the development and analysis of the traffic and revenue estimates that must be considered as a whole; therefore, selecting portions of any individual result without consideration of the intent of the whole may create a misleading or incomplete view of the results and the underlying methodologies used to obtain the results. CDM Smith gives no opinion as to the value or merit of partial information extracted from this report.

All estimates and projections reported herein are based on CDM Smith’s experience and judgment and on a review of information obtained from multiple agencies, including OTA. These estimates and projections may not be indicative of actual or future values, and are therefore subject to substantial uncertainty. Future developments cannot be predicted with certainty, and may affect the estimates or projections expressed in this report, such that CDM Smith does not specifically guarantee or warrant any estimate or projection contained within this report.

While CDM Smith believes that the projections or other forward-looking statements contained within the report are based on reasonable assumptions as of the date of the report, such forward- looking statements involve risks and uncertainties that may cause actual results to differ materially from the results predicted. Therefore, following the date of this report, CDM Smith will take no responsibility or assume any obligation to advise of changes that may affect its assumptions contained within the report, as they pertain to socioeconomic and demographic forecasts, proposed residential or commercial land use development projects and/or potential improvements to the regional transportation network.

CDM Smith is not, and has not been, a municipal advisor as defined in Federal law (the Dodd Frank Bill) to OTA and does not owe a fiduciary duty pursuant to Section 15B of the Exchange Act to OTA with respect to the information and material contained in this report. CDM Smith is not recommending and has not recommended any action to OTA. OTA should discuss the information and material contained in this report with any and all internal and external advisors that it deems appropriate before acting on this information.

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Section 1 Introduction

This comprehensive traffic and revenue study summarizes CDM Smith’s current efforts to update the toll revenue forecasts for the Oklahoma Turnpike Authority System (OTA System) as well as evaluate two newly proposed projects: the Southwest John Kilpatrick Extension (SWJKT) and the Eastern Oklahoma County Turnpike (EOC). The work effort associated with this endeavor includes the development of a system-wide review and update of toll revenue estimates for all existing OTA facilities and the development of long-term revenue forecasts for both the SWJKT and EOC projects. The Oklahoma Turnpike Authority System The OTA System consists of ten turnpikes that serve different functions for their respective regions and for the State of Oklahoma, as shown in Figure 1-1. The original six turnpikes – Turner, Will Rogers, H.E. Bailey, Muskogee, Indian Nation, and Cimarron – serve mostly as intercity connectors within Oklahoma and interstate connections for their respective regions. The Cherokee and Chickasaw Turnpikes mimic the functionality of the original six turnpikes as intercity and interstate connectors, while the Creek and Kilpatrick Turnpikes serve the dual purposes of regional connectors, as well as intra-city connectors for the metropolitan areas of Tulsa and Oklahoma City, respectively.

Figure 1-1. Oklahoma Turnpike Authority System

1-1 Section 1 • Introduction

The OTA was authorized by the Oklahoma Legislature in 1947, specifically created to develop a turnpike running from Oklahoma City to Tulsa. The new road, which was later named the Turner Turnpike, was completed and opened in 1953. The process was seen as so successful in developing and delivering a high quality highway independent of the ODOT funding stream that the legislature expanded the OTA from its original four-county area to cover the entire state, and at the same time authorized a new northeastern turnpike. The new road, named the Will Rogers Turnpike, was opened in 1957.

The completed Turner Turnpike and Will Rogers Turnpike were operated by OTA successfully and were immediately recognized as providing significant mobility to the state and to the larger region. As such, the two turnpikes were designated as I-44 of the interstate highway system, although they have remained part of the OTA System. OTA funds all operations and maintenance expenses on both turnpikes. The Turner Turnpike is 86 miles long, and the Will Rogers Turnpike is 88.5 miles long.

The continued success of the new turnpike system drove its expansion throughout the decade of the 1960s. The H.E. Bailey Turnpike opened in 1964, extending I-44 almost to the Texas state line. This turnpike has a distinct 60.6-miles northern section and a 24.4-mile southern section, separated by a 16.7-mile non-tolled section running through Lawton. The 41-mile long northern section of the Indian Nation Turnpike opened in 1966, followed by the completion of the 55.9-mile Muskogee Turnpike in 1969. Continuing its expansion program into the 1970s, OTA completed the 63.6-mile southern section of the Indian Nation Turnpike in 1970. With this new section, the total length of the turnpike was extended to almost 105 miles. This was followed by the completion of the 58.7-mile Cimarron Turnpike in 1975.

No new turnpikes were constructed on the system until the 1990s. The 32.5-mile long Cherokee Turnpike opened in 1991 as the first new turnpike in 16 years. It was followed later that same year by the openings of the first nine miles of the John Kilpatrick Turnpike and by the 17-mile long Chickasaw Turnpike. Other projects in the 1990s included the first 7.4-mile section of the Creek Turnpike, which opened in 1992.

In 1991, OTA implemented its electronic tolling system, PIKEPASS. PIKEPASS enables motorists to pay tolls through a pre-paid account, which is debited as their vehicle passes toll points at highway speeds. PIKEPASS users receive a five percent discount for each toll, and an additional five percent volume discount is available for motorists with at least twenty toll transactions per month. Since 2014, PIKEPASS has been interoperable with both the North Texas Toll Authority and the Kansas Turnpike Authority.

The most recent additions to the OTA System include the opening of several sections of Kilpatrick Extensions in 2000 and 2001, several extensions to the Creek Turnpike east and west from 2000 to 2002, and the H.E. Bailey Spur in 2001. The extensions brought the total length of the Kilpatrick Turnpike to 25 miles from I-35 to I-40. The Creek Turnpike extensions completed its route around the southern and eastern sides of Tulsa from the Turner Turnpike to the Will Rogers Turnpike, extending for 35.6 miles. The 7.8-mile H.E. Bailey Spur connects the turnpike to SH 9 for improved access to the Norman area. The current OTA System includes ten turnpikes totaling more than 600 centerline miles of roadway.

1-2 Section 1 • Introduction

Driving Forward Program On October 29, 2015, Governor Mary Fallin and the OTA announced the Driving Forward program, which includes six major projects to improve and expand OTA’s system of turnpikes. Two of these projects (the Southwest Kilpatrick Extension and the Eastern Oklahoma County Turnpike) are new facilities that will add a combined 24 centerline miles to OTA’s network of turnpikes. Southwest Kilpatrick Extension Figure 1-2 shows the planned alignment of the Southwest Kilpatrick Extension in southwestern Oklahoma City. The proposed project extends the John Kilpatrick Turnpike from its current terminus at I-40 in western Oklahoma City to SH 152 near Will Rogers World Airport. The turnpike extension will provide high-speed connectivity and allow for improved travel times for trips in the southwestern portion of the Oklahoma City region. It will also provide improved access between the Will Rogers World Airport and western portions of the greater Oklahoma City area.

Figure 1-2. Southwest Kilpatrick Extension

Eastern Oklahoma County Turnpike The proposed Eastern Oklahoma County Turnpike would provide a high-speed, controlled access route between I-40 and I-44 in the eastern Oklahoma City region. The proposed corridor extends from I-40 east of the intersection with I-240 to I-44 near Luther. The project would serve local traffic as well as provide a potential alternative route for vehicles traveling between the Moore/Norman area and Tulsa that are currently using I-35 and I-44. The anticipated alignment of the Eastern Oklahoma County Turnpike is depicted in Figure 1-3.

1-3 Section 1 • Introduction

Figure 1-3. Eastern Oklahoma County Turnpike

Structure of Study and Report The purpose of this study was to develop updated toll revenue forecasts for the existing OTA System and long-term forecasts for both the SWJKT and EOC projects. The following outlines the general structure of the report: Section 2 – OTA System Historical Trends This section provides information regarding the historical and existing traffic and revenue performance of OTA System turnpikes. The information in this section provides a historical overview of OTA System trends and characteristics, which were used as a primary input when developing the updated traffic and revenue forecasts. Section 3 – Oklahoma City Area Transportation Demand Profile This section describes the travel demand data that was collected in the Oklahoma City region as part of developing revenue forecasts for the SWJKT and EOC projects. The data collected includes traffic counts at specific locations around the project corridors and comprehensive travel speed information for the region. This section also includes a summary of the origin-destination data collected in the region to analyze trip patterns as well as the stated preference survey that was conducted to determine users’ average values of travel time savings.

1-4 Section 1 • Introduction

Section 4 – Socio-Economic Characteristics This section provides a description of the historical and expected future demographic growth in the Oklahoma City area and from a statewide perspective. This included an analysis of population and employment as well as several key economic indicators within the state. Research and Demographic Solutions (RDS) performed an independent review and update of the official Oklahoma City area demographic forecasts developed by the Association of Central Oklahoma Governments (ACOG). Section 5 – Traffic Forecasting Methodology This section describes the databases utilized as part of the analysis and highlights the methodologies implemented to develop the models used to project future year traffic on the existing OTA System and proposed turnpikes. A series of multi-variate regression models were used to estimate traffic on the existing OTA System. For forecasting traffic on the newly proposed projects, ACOG’s travel demand model for the Oklahoma City region was calibrated to current traffic conditions to ensure that it accurately reflected the observed traffic characteristics along the existing corridors. Section 6 – Revenue Forecasts This section provides the toll sensitivity analyses performed as part of the study, the key input assumptions used in the development of revenue forecasts, and the resulting toll revenue forecasts. Also presented are the planned/proposed tolling configurations and a series of sensitivity tests undertaken to reflect variance to several key influential factors such as demographic growth and value of time.

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Section 2 OTA System Historical Trends

This section provides background information regarding the historical trends of revenue growth for each turnpike in the OTA System. This section also includes a summary of the historical trends of several other key traffic characteristics such as commercial vehicle shares and PIKEPASS shares used as input in the development of the future toll revenue forecasts. Historical Revenue Growth Historical revenue generated by the OTA System and each of its ten turnpikes through 2015 is shown in Figures 2-1 through 2-11. Historically, the interstate turnpikes (Turner, Will Rogers and H.E. Bailey) have generated the majority of OTA’s annual toll revenue, and in 2015 accounted for approximately 55 percent of total OTA System revenue. However, OTA’s two urban projects (John Kilpatrick and Creek) have grown steadily since opening in the early 1990s and now generate 24 percent of the OTA’s annual toll revenue. OTA’s five rural turnpikes (Indian Nation, Muskogee, Cherokee, Cimarron, and Chickasaw) generated 21 percent of total revenue in 2015.

Since 1990, revenue on the OTA System has increased at an average annual rate of 6.5 percent, due in part to periodic toll rate increases and expansions of the turnpike system (as shown in Tables 2- 1 and 2-2). Since the most recent toll rate increase was implemented in 2009, revenue on the system has increased at an average annual rate of 2.4 percent.

Table 2-1. OTA System Expansions Facility Opened Length (mi) Turner Turnpike 1953 86.0 Will Rogers Turnpike 1957 88.5 H.E. Bailey Turnpike 1964 86.4 Norman Spur 2001 8.2 Indian Nation 1966 41.1 Southern Segment 1970 64.1 Cimarron Turnpike 1975 67.7 Muskogee Turnpike 1969 53.1 John Kilpatrick Turnpike 1991 9.5 Extension 2001 15.8 Cherokee Turnpike 1991 32.8 Chickasaw Turnpike 1991 27.1 Creek Turnpike 1992 7.4 Creek West Extension 2000 4.9 Creek East & Broken Arrow 2002 22.1

2-1 Section 2 • OTA System Historical Trends

Table 2-2. OTA System Historical Toll Rate Increases Rate Increase Year Passenger Cars Commercial Vehicles 1968 14% 14% 1975 13% 13% 1979 17% 35% 1991 25% 30% 1993 10% 25% 1995 10% 4% 2001 16% 30% 2009 16% 16%

Figure 2-1. OTA System Historical Revenue Growth

2-2 Section 2 • OTA System Historical Trends

Figure 2-2. Turner Turnpike Historical Revenue Growth

Figure 2-3. Will Rogers Turnpike Historical Revenue Growth

2-3 Section 2 • OTA System Historical Trends

Figure 2-4. H.E. Bailey Turnpike Historical Revenue Growth

Figure 2-5. Indian Nation Turnpike Historical Revenue Growth

2-4 Section 2 • OTA System Historical Trends

Figure 2-6. Muskogee Turnpike Historical Revenue Growth

Figure 2-7. Cimarron Turnpike Historical Revenue Growth

2-5 Section 2 • OTA System Historical Trends

Figure 2-8. Cherokee Turnpike Historical Revenue Growth

Figure 2-9. Chickasaw Turnpike Historical Revenue Growth Note: Chickasaw Turnpike was closed due to construction for six months in 2006.

2-6 Section 2 • OTA System Historical Trends

Figure 2-10. John Kilpatrick Turnpike Historical Revenue Growth

Figure 2-11. Creek Turnpike Historical Revenue Growth

2-7 Section 2 • OTA System Historical Trends

Recent Revenue Growth The OTA System has seen very strong revenue growth on most of its facilities over the last few years. Figure 2-12 illustrates the average annual growth in revenue on each of the OTA’s ten turnpikes from 2013 through 2016 for the January-July period. The OTA’s two biggest revenue generating facilities, Turner and Will Rogers, have grown at an average annual rate of 3.8 percent and 3.5 percent respectively. H.E. Bailey, the third turnpike in the I-44 corridor, has also grown at a rate of 3.8 percent. The highest growth on the system, however, has been seen on the Kilpatrick and Creek Turnpikes in the Oklahoma City and Tulsa urban areas. Revenue on the John Kilpatrick Turnpike has grown at an average rate of 10.1 percent since 2013, while revenue on the Creek Turnpike has grown at 6.1 percent. Both of these facilities have benefited from recent expansions as well as continued strong economic development in Oklahoma City and Tulsa. The OTA’s rural turnpikes have also seen substantial growth in recent years. The Muskogee, Cherokee, and Chickasaw turnpikes have all grown at average annual rates over four percent since 2013. The Indian Nation the Cimarron turnpikes are the only OTA facilities that have grown at rates less than 3.5 percent, but they have still seen positive growth trends of 1.6 percent and 1.2 percent, respectively.

Figure 2-12. OTA System Recent Revenue Growth

2-8 Section 2 • OTA System Historical Trends

Commercial Vehicle Growth Growth in commercial vehicle traffic is a significant contributor to OTA System revenue growth due to the much higher toll rates paid by this market. For several of OTA’s turnpikes, the commercial traffic accounts for a significant portion of total turnpike revenue. Figure 2-13 illustrates the total share of revenue generated by commercial vehicles on each turnpike in 2015. As shown in the figure, both the Turner and Will Rogers turnpikes draw over 50 percent of their revenue from commercial vehicles. Commercial vehicles generate almost forty percent of total system revenue, and account for over twenty percent of revenue on all but two of OTA’s turnpikes. The John Kilpatrick Turnpike and Creek Turnpike both lie in urban areas that generate significant amounts of passenger car traffic. As a result, less than ten percent of total revenue on each is generated by commercial vehicles. This is consistent with what has been observed on other urban turnpikes across the country.

Figures 2-14 through 2-23 show the growth in commercial vehicle transaction and revenue shares over the last twenty years for each turnpike. Along the I-44 turnpikes (Turner, Will Rogers and H.E. Bailey), the commercial vehicle share has declined slightly, indicating a higher growth in passenger car traffic along these routes. Most of the rural turnpikes have exhibited a consistent and stable vehicle mix, with the primary exception being the Chickasaw Turnpike, where the commercial traffic share has grown from five percent to over twenty percent since 1995. On the two urban turnpikes, Kilpatrick and Creek, commercial vehicle share has remained consistently between two and four percent since 1995.

Figure 2-13. OTA System Commercial Vehicle Revenue Share – 2015

2-9 Section 2 • OTA System Historical Trends

Figure 2-14. Turner Turnpike Historical Commercial Vehicle Transaction and Revenue Share

Figure 2-15. Will Rogers Turnpike Historical Commercial Vehicle Transaction and Revenue Share

2-10 Section 2 • OTA System Historical Trends

Figure 2-16. H.E. Bailey Turnpike Historical Commercial Vehicle Transaction and Revenue Share

Figure 2-17. Indian Nation Turnpike Historical Commercial Vehicle Transaction and Revenue Share

2-11 Section 2 • OTA System Historical Trends

Figure 2-18. Muskogee Turnpike Historical Commercial Vehicle Transaction and Revenue Share

Figure 2-19. Cimarron Turnpike Historical Commercial Vehicle Transaction and Revenue Share

2-12 Section 2 • OTA System Historical Trends

Figure 2-20. Cherokee Turnpike Historical Commercial Vehicle Transaction and Revenue Share

Figure 2-21. Chickasaw Turnpike Historical Commercial Vehicle Transaction and Revenue Share

2-13 Section 2 • OTA System Historical Trends

Figure 2-22. John Kilpatrick Turnpike Historical Commercial Vehicle Transaction and Revenue Share

Figure 2-23. Creek Turnpike Historical Commercial Vehicle Transaction and Revenue Share

2-14 Section 2 • OTA System Historical Trends

PIKEPASS Usage One key consideration in the development of OTA System revenue forecasts is the share of transactions paid using the PIKEPASS method of payment. Implemented in the early 1990s, PIKEPASS is the OTA’s electronic toll collection system that allows vehicles equipped with transponders to pass through tolling locations without the need to stop and make cash payments. At most tolling locations on the OTA System, dedicated PIKEPASS-only lanes allow these customers to maintain highway speeds and pay their tolls without slowing down. To encourage usage of this payment method, OTA offers a five percent discount on toll rates for PIKEPASS customers. Additionally, PIKEPASS tolling operates as a point-to-point toll system along many of OTA’s facilities, whereas as cash payment is operated using a traditional barrier system. This generates additional savings for PIKEPASS users because their toll is more closely aligned to their actual distance traveled along each turnpike.

Figures 2-24 through 2-34 summarize the growth in PIKEPASS share on the OTA System and for each of its ten individual turnpikes. Since its implementation, the total share of transactions paid via PIKEPASS on all turnpikes has continued to increase year over year. Total systemwide PIKEPASS share is currently over seventy percent, but varies significantly between turnpikes. The highest observed PIKEPASS shares are seen on the Kilpatrick and Creek turnpikes, both of which have been above eighty percent over the last five years. As of 2015, only the Indian Nation and Chickasaw turnpikes had PIKEPASS shares that were below fifty percent.

Figure 2-24. OTA System PIKEPASS Share Growth

2-15 Section 2 • OTA System Historical Trends

Figure 2-25. Turner Turnpike PIKEPASS Share Growth

Figure 2-26. Will Rogers Turnpike PIKEPASS Share Growth

2-16 Section 2 • OTA System Historical Trends

Figure 2-27. H.E. Bailey Turnpike PIKEPASS Share Growth

Figure 2-28. Indian Nation Turnpike PIKEPASS Share Growth

2-17 Section 2 • OTA System Historical Trends

Figure 2-29. Muskogee Turnpike PIKEPASS Share Growth

Figure 2-30. Cimarron Turnpike PIKEPASS Share Growth

2-18 Section 2 • OTA System Historical Trends

Figure 2-31. Cherokee Turnpike PIKEPASS Share Growth

Figure 2-32. Chickasaw Turnpike PIKEPASS Share Growth

2-19 Section 2 • OTA System Historical Trends

Figure 2-33. John Kilpatrick Turnpike PIKEPASS Share Growth

Figure 2-34. Creek Turnpike PIKEPASS Share Growth

2-20 Section 2 • OTA System Historical Trends

Weekday vs Weekend Usage Another key factor considered as part of the revenue forecasting process is the relationship between weekday and weekend demand along the turnpikes. Because most travel demand models are built around average weekday volumes, it is important to understand how the demand on the weekend compares to typical weekday levels. This relationship was shown to vary significantly across the ten OTA System turnpikes. Figure 2-35 summarizes the average weekend traffic on each turnpike as a percentage of the average weekday traffic. As shown in the figure, the I-44 turnpikes generate a fairly consistent amount of traffic throughout the week, with weekend averages being approximately 90 percent of weekday volumes. Two turnpikes, Cimarron and Cherokee, generated, on average, more traffic on the weekend than on weekdays. OTA’s urban facilities, Kilpatrick and Creek, are used as daily commuting corridors much more than the other turnpikes and have demonstrated average weekend volumes on these two turnpikes area much lower than those observed during the average weekday.

Figure 2-35. Weekend vs. Weekday Traffic

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Section 3 Oklahoma City Area Traffic Characteristics

This section provides background information about the existing traffic conditions for the roadway infrastructure in and around the planned SWJKT and EOC corridors. The information in this section provides a historical overview of traffic in the greater Oklahoma City area that was used as input to the traffic and revenue forecasting process. A comprehensive data collection effort was undertaken for the study area, which included the collection of traffic counts, travel time data analysis, the evaluation of origin-destination patterns and the completion of a stated preference survey. Traffic Count Program CDM Smith conducted a comprehensive traffic count program that included multiple screenlines for each study corridor, as shown in Figures 3-1 through 3-4. The screenlines were developed to analyze the total corridor traffic trends and were used to ensure that the travel demand model outputs used in the traffic forecasting process reflected current traffic characteristics within the study area. CDM Smith engaged GRAM Traffic NTX to perform a series of 48-hour traffic counts in March 2016. The 48-hour counts were collected only during interior weekdays (Tuesday, Wednesday and Thursday) to avoid the weekend-related traffic fluctuations on Mondays and Fridays to generate data that was most representative of average weekday travel within the study area.

From the traffic counts, CDM Smith was able to determine average traffic volumes near the SWJKT and EOC corridors, as well as the AM peak, PM peak and midday period traffic profiles. This information was then used to validate the travel demand model. Figures 3-5 through 3-12 show daily traffic profiles of each screenline in the two project areas. As shown in Figures 3-5 through 3- 7, traffic in the SWJKT project area experienced its highest volumes during the AM peak period in the northbound and eastbound directions, with the reverse being seen during the PM peak period. Traffic profiles for the EOC study area, as shown in Figures 3-8 through 3-12, do not indicate very strong directionality during the peak periods for northbound/southbound movements. However, Screenlines 3 and 4 show that traffic volumes peaked in the westbound direction during the morning hours and in the eastbound direction during evening, which is expected due to commuting traffic into and out of the central Oklahoma City area.

3-1 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-1. Traffic Count Screenlines – SWJKT Study Area

Figure 3-2. Traffic Count Locations – SWJKT Study Area

3-2 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-3. Traffic Count Screenlines – EOC Study Area

Figure 3-4. Traffic Count Locations – EOC Study Area

3-3 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-5. Daily Traffic Profile – SWJKT Screenline 1

Figure 3-6. Daily Traffic Profile – SWJKT Screenline 2

3-4 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-7. Daily Traffic Profile – SWJKT Screenline 6

Figure 3-8. Daily Traffic Profile – EOC Screenline 1

3-5 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-9. Daily Traffic Profile – EOC Screenline 2

Figure 3-10. Daily Traffic Profile – EOC Screenline 3

3-6 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-11. Daily Traffic Profile – EOC Screenline 4

Figure 3-12. Daily Traffic Profile – EOC Screenline 5

3-7 Section 3 • Oklahoma City Area Traffic Characteristics

Historical Traffic Counts The Oklahoma Department of Transportation (ODOT) records the Average Annual Daily Traffic (AADT) volumes at several locations across the statewide roadway network. CDM Smith obtained AADT for several locations throughout the Oklahoma City region for a twenty-year period between 1995 and 2015. The historical counts in Table 3-1 show the historical growth in traffic on major routes in the study area. As shown in the table, nearly all of the locations in the study area have had positive growth in AADT over the twenty years from 1995 to 2015, with some of the highest growth seen along I-35 in central Oklahoma City and along SH 74 in the northern areas of the of the region.

Table 3-1. Historical Traffic Counts – Oklahoma City Area Annual Growth Facility Location 1995 2000 2005 2010 2015 1995-2015 IH 35 Near SH 9 38,100 40,300 43,900 42,600 42,700 0.6% IH 35 Between IH 240 and SH 9 80,900 93,900 79,500 97,400 111,500 1.6% IH 35 South of IH 240 88,900 98,600 101,800 134,100 141,500 2.4% IH 35 South of SH 40 87,200 89,000 104,200 136,800 144,400 2.6% IH 35 South of 63rd St. 52,900 61,000 60,900 66,300 67,300 1.2% IH 35 South of Turner Turnpike 60,700 68,000 64,200 76,200 82,000 1.5% IH 35 North of E2nd St. 41,300 41,700 49,800 48,100 58,300 1.7% IH 44 South of SW 134th St. 32,500 40,200 40,800 40,200 42,100 1.3% IH 44 South of SH 152 107,200 105,100 111,700 107,700 132,300 1.1% IH 44 North of W 23rd St. 135,000 146,600 131,800 130,500 167,600 1.1% IH 44 West of US 77 73,500 73,100 81,600 92,900 100,200 1.6% IH 44 West of IH 35 56,300 54,800 56,700 54,400 53,200 -0.3% IH 40 West of SH 92 37,200 36,800 37,100 40,200 42,900 0.7% IH 40 East of John Kilpatrick 45,300 61,400 69,000 60,300 64,000 1.7% IH 40 East of IH 44 108,900 101,300 102,300 96,900 125,600 0.7% IH 40 West of IH 35 84,000 89,300 84,500 108,000 113,900 1.5% IH 40 East of E Grand Blvd. 71,400 76,100 77,900 87,300 83,800 0.8% IH 40 East of S Douglas Blvd. 35,600 36,800 42,900 41,200 44,900 1.2% IH 240 East of IH 44 74,800 77,400 73,700 92,600 97,700 1.3% IH 240 West of IH 35 80,500 92,100 73,800 100,400 106,600 1.4% IH 240 East of IH 35 55,100 66,800 57,500 65,400 80,100 1.9% IH 240 East of S Sooner Rd. 35,100 40,500 36,200 34,300 35,600 0.1% IH 235 South of IH 44 75,300 76,900 65,200 80,600 81,500 0.4% IH 235 North of NE 13th St. 68,000 75,900 72,400 93,200 94,000 1.6% IH 235 North of IH 40 65,200 69,200 73,600 80,700 85,100 1.3% US 77 North of IH 44 74,500 74,400 74,900 96,200 105,700 1.8% US 77 North of John Kilpatrick 43,600 40,200 44,500 41,600 52,500 0.9% SH 74 South of SH 3 82,000 108,100 101,200 114,400 116,000 1.7% SH 74 North of NW Grand Blvd. 70,000 76,100 91,100 103,000 107,900 2.2% SH 74 South of John Kilpatrick 35,300 48,300 52,500 77,400 81,100 4.2% SH 74 North of John Kilpatrick 9,511 15,057 20,700 20,321 20,141 4.3% SH 3 West of SH 74 54,000 49,200 49,200 46,800 47,400 -0.6% SH 3 South of John Kilpatrick 11,300 11,400 16,500 18,900 21,900 3.4%

3-8 Section 3 • Oklahoma City Area Traffic Characteristics

Speed and Travel Time The evaluation of a toll facility’s future traffic and revenue requires knowledge of the current travel time characteristics of the major roadways within the project area. For the current study, travel time data was collected by two methods. The primary source was historical travel data obtained from INRIX, Inc., a traffic data company based in Washington State that maintains an archive of travel speed data for thousands of roadways across the United States accumulated from global positioning system (GPS)-enabled devices along the highway network. INRIX is a Data as a Service (DaaS) company that monitors traffic flow along approximately 260,000 miles of major freeways, highways, urban and rural arterials, and side streets in the United States. This data provides historical as well as real-time traffic data seven days a week, 24 hours a day in as little as five- minute increments for all metro areas with a population of more than one million. They were engaged to provide a series of travel speed data for several roadways within the study area.

INRIX obtains its data via crowd sourcing and collects travel speed information from various probes, including anonymous cell phones/smartphones and vehicles equipped with GPS devices (trucks, delivery vans, transit vehicles, etc.). The collected data is then processed in real-time to create traffic speed information along most of the major roadways. The real-time travel speed data is normalized to account for parameters that affect traffic flow conditions such as weather forecasts, school schedules, special events, accidents, seasonal variation, and road construction. The procedure adopted by INRIX to obtain and distribute the crowd-sourced traffic data is illustrated in Figure 3-13.

Figure 3-13. INRIX Traffic Data Collection and Distribution Process Source: INRIX, Inc.

3-9 Section 3 • Oklahoma City Area Traffic Characteristics

Figures 3-14 through 3-16 show the locations for which travel time data was obtained and the average speeds observed at those locations. Major routes throughout the corridor were selected for analysis to provide a profile of the fluctuation in operating speed throughout the corridor and the relationship between demand and congestion levels. The data illustrated in Figures 3-14 through 3-16 represents the average travel speeds as measured by INRIX in the spring of 2016.

The figures illustrate the typical travel speeds in each direction along major routes for the AM and PM peak periods as well as the midday period. As expected, the slowest travel speeds during the peak periods are observed along I-35, with the most congestion occurring in the northbound direction during the AM peak period and in the southbound direction during the PM peak period. Additionally, the data indicates that regular congestion is occurring along several other key commuter routes into the central Oklahoma City area.

Figure 3-14. Average Travel Speeds – AM Peak Period

3-10 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-15. Average Travel Speeds – PM Peak Period

Figure 3-16. Average Travel Speeds – Midday Period

3-11 Section 3 • Oklahoma City Area Traffic Characteristics

Regional Trip Patterns In the Oklahoma City area, an analysis of the origin-destination (O/D) patterns was undertaken by CDM Smith to investigate the travel patterns of the potential future users of the SWJKT and EOC turnpikes. To determine these patterns, CDM Smith engaged the services of StreetLight Data, Inc. to provide O/D data for several key locations as shown in Figure 3-17. StreetLight uses the same base data utilized by INRIX to track daily trip movements throughout the country. The available data is comprehensive enough that trip patterns for specific roadways and locations can be analyzed.

Figures 3-18 through 3-27 show the trip patterns for travelers passing through several key locations within the Oklahoma City area. In each figure, the trip patterns of an individual origin location are shown. For each specific origin, the percentage of those trips that also passed through other locations in the Oklahoma City are highlighted. The trip pattern data provided by StreetLight was used in the model validation effort to ensure that the model accurately replicates existing travel patterns throughout the Oklahoma City region. Additionally, the data revealed several details about how traffic is moving through the Oklahoma City region. For example, as shown in Figure 3- 18, approximately six percent of all traffic on I-35 south of Purcell is traveling north of the Turner Turnpike. For the western portion of the region, Figure 3-26 indicates that twelve percent of travelers on the western segment of John Kilpatrick Turnpike also utilize I-40 west of Yukon as part of their trip.

Figure 3-17. Origin-Destination Analysis Locations

3-12 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-18. Trip Patterns: Location 1 – I-35 South of Purcell

Figure 3-19. Trip Patterns: Location 2 – I-44 Southwest of Oklahoma City

3-13 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-20. Trip Patterns: Location 3 – I-40 West of Yukon

Figure 3-21. Trip Patterns: Location 7 – Turner Turnpike East of Luther

3-14 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-22. Trip Patterns: Location 12 – I-40 Near McLoud

Figure 3-23. Trip Patterns: Location 16 – I-35 South of I-40

3-15 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-24. Trip Patterns: Location 19 – I-235 North of I-40

Figure 3-25. Trip Patterns: Location 21 – I-35 North of I-44

3-16 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-26. Trip Patterns: Location 23 – John Kilpatrick Turnpike South of SH 3

Figure 3-27. Trip Patterns: Location 34 – SH 152 West of Will Rogers Airport

3-17 Section 3 • Oklahoma City Area Traffic Characteristics

Stated Preference Survey A stated preference survey was conducted by Resource Systems Group (RSG), a subconsultant to CDM Smith, to capture the potential willingness-to-pay for travelers currently making trips within the corridor.

An important element of this survey includes the estimation of the potential willingness-to-pay that travelers in the area served by the new turnpikes will likely exhibit from imposing a toll along those routes. This behavioral characteristic provides a gauge to help determine likely market shares that will be captured by the SWJKT and EOC corridors. The most common method used to quantify the willingness-to-pay of a potential user group is a stated preference survey. Survey results facilitate the development of toll sensitivity curves and value of time parameters estimated through trade- off variable testing. This survey focused on the SWJKT and EOC corridors and was conducted in mid-2016.

The stated preference survey was conducted using an internet-based self-interview technique. Postcards with links to the online survey were mailed to 20,000 residents within the study area. The distribution area of the postcard invitations is shown in Figure 3-28. Additionally, email invitations to participate in the survey were sent to 20,000 PIKEPASS account holders within the study area. All survey invitees were provided with a unique anonymous password to access the web-based survey to prevent multiple responses.

Based on the data collected by the survey, RSG was able to estimate values of time (VOTs) for travelers in the SWJKT and EOC study areas. VOTs were estimated using a utility function that included household income and travel time savings as variables. Table 3-2 illustrates the mean VOTs for work and non-work trips in both the SWJKT and EOC study areas. VOTs in each corridor increase with income, with work trips having a slightly higher travel time savings value than non- work trips. Additionally, VOTs in the SWJKT study area were found to be somewhat higher than those for respondents near the EOC corridor.

3-18 Section 3 • Oklahoma City Area Traffic Characteristics

Figure 3-28. Distribution of Survey Postcards

Table 3-2. Stated Preference Survey Results Household Southwest Kilpatrick Extension Eastern Oklahoma County Turnpike Income Work Trips Non-Work Trips Work Trips Non-Work Trips $10,000 $9.65 $8.69 $8.64 $7.87 $20,000 $11.11 $10.00 $9.95 $9.05 $30,000 $11.96 $10.77 $10.71 $9.74 $42,500 $12.69 $11.42 $11.36 $10.34 $62,500 $13.49 $12.15 $12.08 $11.00 $87,500 $14.20 $12.79 $12.72 $11.57 $112,500 $14.73 $13.26 $13.19 $12.00 $137,500 $15.15 $13.64 $13.56 $12.34 $175,000 $15.65 $14.09 $14.02 $12.76 $200,000 $15.93 $14.35 $14.27 $12.98

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Section 4 Socio-Economic Characteristics

The historical and projected statewide demographic characteristics within the OTA System, SWJKT and EOC study areas were reviewed to support the traffic and revenue forecasting process. This section provides a summary of the historical and projected future growth across the state and also discusses the independent demographic forecast update conducted by Research and Demographic Solutions (RDS) for the greater Oklahoma City area. The demographics evaluated ranged from the macro level (the entire state of Oklahoma) to the corridor level (Oklahoma City, Tulsa, and select counties). The demographic information is used by the trip generation model to estimate total trips for the travel demand model and serves as the foundation to support the development of the potential toll demand for the planned SWJKT and EOC projects. Historical and Forecasted Population Population growth is the largest factor influencing travel demand, particularly in metropolitan areas. Table 4-1 shows the historical population trends for the State of Oklahoma, the Oklahoma City MSA, the Tulsa MSA, and several counties in both the Oklahoma City and Tulsa areas. The total statewide population has increased at an average annual rate of 0.9 percent from 1990 to 2015, adding 759,000 more residents to the state. A similar growth trend was observed in the Tulsa region, but Oklahoma City saw a higher growth of 1.3 percent annually over that same period.

Oklahoma and Tulsa counties are the largest in the state in terms of population with approximately 773,000 and 976,000 residents, respectively, in 2015. Both counties experienced average annual population growths of 1.0 percent from 1990 to 2015. The fastest growing counties during that time period were Canadian County in the Oklahoma City area and Rogers County in the Tulsa area. Those two counties grew at average annual rates of 2.3 percent and 2.0 percent, respectively. In terms of total population, the Oklahoma metropolitan area added 378,000 new residents between 1990 and 2015, with the Tulsa area adding 234,000.

Also included in Table 4-1 are population forecasts obtained from Woods & Poole Economics, Inc. as an independent source for 2020 and 2035. Based on these independent forecasts, the total population of Oklahoma is expected to increase from 3.91 million in 2015 to 4.1 million by 2020 and 4.6 million by 2035, corresponding to an average annual growth rate of 0.8 percent. The Oklahoma City and Tulsa areas are expected to grow at average annual rates of 1.1 percent and 0.8 percent, respectively. The Oklahoma City area is expected to reach a total population of 1.7 million by 2035, while the Tulsa area is anticipated to reach a population of just over 1.3 million.

4-1 Section 4 • Statewide Socio-Economic Characteristics

Table 4-1. Population Trends and Projections (thousands) Average Growth Location 1990 2000 2005 2010 2015 2020 2035 1990- 2015- 2015 2035 State of Oklahoma 3,149 3,454 3,549 3,759 3,908 4,076 4,586 0.9% 0.8% Canadian County 75 88 99 116 132 144 185 2.3% 1.7% Cleveland County 175 209 230 257 273 293 355 1.8% 1.3% Grady County 42 46 49 52 54 57 65 1.1% 0.9%

Area Logan County 29 34 37 42 46 50 62 1.8% 1.5% McClain County 23 28 30 35 38 42 54 2.0% 1.8% Oklahoma City City Oklahoma Oklahoma County 600 662 683 721 773 809 918 1.0% 0.9% Tulsa County 763 861 883 940 976 1,017 1,140 1.0% 0.8% Osage County 42 45 46 47 48 51 60 0.6% 1.1% Creek County 61 68 68 70 71 73 79 0.6% 0.5% Rogers County 55 71 80 87 91 99 125 2.0% 1.6% Tulsa Area Tulsa Wagoner County 48 58 64 73 77 81 96 1.9% 1.1% Oklahoma City Metro Area 973 1,098 1,161 1,258 1,351 1,430 1,680 1.3% 1.1% Tulsa Metro Area 914 1,022 1,046 1,109 1,148 1,195 1,337 0.9% 0.8% Historical and Forecasted Employment Employment statistics are typically used as relative indicators of trip attractions to a study area. The magnitude of employment growth influences the potential for an increase in the demand for transportation infrastructure within the region. The historical employment trends in Oklahoma are shown in Table 4-2. Between 1990 and 2015, total employment in the state increased at an average annual rate of 1.4 percent. The Oklahoma City area’s employment grew at an average annual rate of 1.6 percent over that same period, while the Tulsa area grew at a rate of 1.3 percent annually. Oklahoma and Tulsa counties were the largest employment generators within the state in 2015, with employment totals of 587,000 and 601,000 jobs, respectively.

Figure 4-1 shows the historical unemployment rates in the Oklahoma City metropolitan statistical area (MSA), the State of Oklahoma and the United States. Since 1990, unemployment rates in Oklahoma have been consistently below the nationwide average. Although unemployment rose from 2008 to 2010 due to the economic recession, it has fallen to pre-recession levels in recent years. By 2015, unemployment rates had fallen below five percent in the Oklahoma City MSA and statewide.

Table 4-2 also shows the employment forecasts generated by Woods & Poole Economics, Inc. as an independent source for 2020 and 2035. The Oklahoma City MSA is expected to continue to be the largest employment center in the state and is forecasted to add an additional 232,000 jobs by 2035. Oklahoma City employment is expected to increase from 848,000 in 2015 to 1,080,000 in 2035 at an annual growth rate of 1.2 percent. In the Tulsa area, employment is anticipated to increase from 694,000 to 865,000 by 2035, representing an average annual growth rate of 1.1 percent and an additional 171,000 jobs. Total employment in the state is expected to reach 2.9 million jobs by 2035, representing an average annual growth rate of 1.1 percent.

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Table 4-2. Employment Trends and Projections (thousands) Average Growth Location 1990 2000 2005 2010 2015 2020 2035 1990- 2015- 2015 2035 State of Oklahoma 1,655 1,994 2,041 2,133 2,316 2,476 2,894 1.4% 1.1% Canadian County 26 35 39 44 53 59 76 2.9% 1.8% Cleveland County 61 88 104 115 130 141 171 3.1% 1.4% Grady County 17 20 22 22 24 25 29 1.3% 1.0%

Area Logan County 10 14 17 21 24 27 33 3.6% 1.5% McClain County 7 10 11 13 14 16 21 2.6% 1.8% Oklahoma City City Oklahoma Oklahoma County 435 517 517 534 587 627 732 1.2% 1.1% Tulsa County 431 533 539 553 601 643 751 1.3% 1.1% Osage County 10 12 18 19 20 22 26 2.8% 1.2% Creek County 21 29 29 29 33 35 41 1.7% 1.1% Rogers County 20 33 38 41 48 53 66 3.6% 1.7% Tulsa Area Tulsa Wagoner County 11 14 13 13 15 16 18 1.2% 1.0% Oklahoma City Metro Area 568 698 725 763 848 911 1,080 1.6% 1.2% Tulsa Metro Area 503 616 624 643 694 742 865 1.3% 1.1%

Figure 4-1. Historical Unemployment Rates

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Additional Economic Factors Consumer Price Index The consumer price index for all urban consumers (CPI-U) is the most widely used measure of inflation and serves as a key economic indicator. The CPI-U determines the aggregate price level of a specific market basket of goods and services that are consumed by typical urban households. This is derived by calculating the average going price of each item in a defined market basket. Food, clothing, housing, transportation (including tolls) and entertainment are all included in this basket. Income taxes and investment items such as stocks and bonds are not included. The Bureau of Labor and Statistics of the U.S. Department of Labor calculates the CPI-U every month.

Figure 4-2 illustrates the historical trends for CPI-U growth from 1990-2016 for Oklahoma and the United States. As shown in the graph, CPI-U growth in Oklahoma has closely mirrored nationwide trends. This indicates that the inflation rate in Oklahoma is consistent with the rate of inflation seen nationwide. In Oklahoma, CPI-U has grown at an average annual rate of less than two percent since 2012. Annual CPI-U growth has been less than one percent in Oklahoma for 2016, which is slightly lower than the national average.

Figure 4-2. Consumer Price Index for All Urban Consumers

Household Income Household income is another key factor used in determining a traveler’s willingness-to-pay tolls to utilize a roadway. Table 4-3 summarizes the average historical household income at selected locations in Oklahoma and projected growth from the Woods & Poole data. As shown in the table, across the state, household income grew at an average annual rate of 2.0 percent between 1990 and 2015, and is anticipated to grow 1.5 percent per year through 2035. Similar trends and forecasts were also evident for both the Oklahoma City and Tulsa areas.

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Table 4-3. Historical and Forecasted Mean Household Income (thousands, 2009$) Average Growth Location 1990 2000 2005 2010 2015 2020 2035 1990- 2015- 2015 2035 State of Oklahoma $61.1 $74.6 $82.2 $88.7 $99.4 $106.1 $132.1 2.0% 1.4% Canadian County 68.5 84.8 85.8 94.1 104.8 110.3 131.1 1.7% 1.1% Cleveland County 62.8 80.2 83.3 89.0 94.8 99.8 118.4 1.7% 1.1% Grady County 51.7 66.3 72.6 80.6 90.1 95.8 115.9 2.3% 1.3%

Area Logan County 57.4 72.3 83.2 91.2 106.1 112.7 136.2 2.5% 1.3% McClain County 58.9 72.9 77.1 89.2 100.1 106.1 127.6 2.1% 1.2% Oklahoma City City Oklahoma Oklahoma County 68.6 84.4 96.2 100.7 117.8 125.4 157.0 2.2% 1.4% Tulsa County 68.2 86.2 95.4 99.7 113.8 120.9 148.7 2.1% 1.4% Osage County 49.0 66.0 71.3 74.7 81.2 85.8 101.2 2.0% 1.1% Creek County 55.0 67.6 73.7 83.8 89.1 96.0 119.8 2.0% 1.5% Rogers County 63.6 81.1 79.7 92.3 100.9 107.5 130.2 1.9% 1.3% Tulsa Area Tulsa Wagoner County 59.9 70.3 73.9 79.9 83.2 87.8 102.5 1.3% 1.1% Oklahoma City Metro Area 65.9 81.7 90.1 95.5 108.9 115.4 141.3 2.0% 1.3% Tulsa Metro Area 66.9 82.7 91.5 96.4 108.8 115.8 142.9 2.0% 1.4% Fuel Prices Another factor that can potentially influence travel behavior is vehicle fuel price. Historically, some amount of correlation has been noted between the price of motor vehicle fuel and overall roadway demand trends. Figure 4-3 illustrates the historical trends in gasoline price in Oklahoma since 1992. After remaining fairly constant throughout the 1990s, prices began to rise steadily throughout the 2000s, eclipsing $4.00 per gallon by 2008. In recent years, however, gas prices have fallen and are currently below $2.50 per gallon in Oklahoma. It should also be noted the traffic on the OTA System has been largely inelastic to fluctuations in fuel price over the long term.

Figure 4-3. Historical Fuel Prices

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Independent Demographic Review Both the SWJKT and EOC projects lie within the greater Oklahoma City area, which is the largest metropolitan area in the state. Given the significant role that demographics play in the traffic and revenue forecasting process, an independent socioeconomic review was necessary to undertake a more detailed review of the demographics along each project corridor. Base MPO Forecasts The base demographic forecasts used in the independent demographic review were those developed by the Association of Central Oklahoma Governments (ACOG) as part of their Encompass 2035 metropolitan transportation plan (MTP). ACOG serves as the metropolitan planning organization for the greater Oklahoma City region, which includes Oklahoma, Cleveland, Canadian and Logan counties. As the region’s current long-range MTP, Encompass 2035 details current and forecast conditions for population, employment, planned roadway network improvements, and system performance over a 30-year period from 2005 to 2035. Based on its identified system needs, it provides a guide to multimodal transportation system investments for the long-term, and guides the development of short-range implementation of projects through the regional Transportation Improvement Program (TIP). Demographic Forecast Update CDM Smith engaged Research and Demographic Solutions (RDS) in early 2016 to perform an independent socioeconomic review and to update the demographic forecasts in each project area. The goal of the socioeconomic review was to update the original 2035 forecasts in the area (from ACOG) at the traffic analysis zone (TAZ) level to create a more refined demographic profile within the surrounding areas near the two new projects. The TAZ locations that were reviewed and updated by RDS are shown in Figure 4-4.

The updated forecasted demographics reflect changes to the socioeconomic trends that RDS suggests based on their detailed review of development activity within the project areas. Tables 4- 4 and 4-5 summarize the demographic forecast revisions recommended by RDS for both the SWJKT and EOC project areas. Adjustments were made the forecasts to account for current and planned development in the study area and to align the base forecasts with 2010 census data. For the forecast year of 2035, the RDS revised population is 10.5 percent higher than the base forecast in the SWJKT project area and 6.7 percent higher in the EOC project area. For employment, the 2035 forecasts were increased by 3.3 percent in the SWJKT area and decreased by 11.9 percent in the EOC area.

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Figure 4-4. SWJKT and EOC Demographic Review Areas

Table 4-4. Revised Demographic Forecast – SWJKT Project Area Population Employment Source 2015 2035 2015 2035 Base 524,345 626,813 301,927 364,282 RDS Revised 576,227 692,751 300,276 376,162 Total Change 9.9% 10.5% -0.5% 3.3%

Table 4-5. Revised Demographic Forecast – EOC Project Area Population Employment Source 2015 2035 2015 2035 Base 371,242 466,471 119,728 169,287 RDS Revised 380,274 497,952 105,169 149,083 Total Change 2.4% 6.7% -12.2% -11.9%

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Section 5 Traffic Forecasting Methodology

This section describes the travel demand estimation methodologies used to develop future year demand forecasts for the OTA System, SWJKT, and EOC. This effort included a multivariate regression analysis to evaluate the existing OTA System and the development of a travel demand model to evaluate the SWJKT and EOC projects. OTA System Future year demand for the OTA System was estimated using a series of analyses including a multivariate regression analysis of historical traffic and revenue trends, an econometric analysis of the I-44 turnpike corridor, and analysis of Oklahoma City and Tulsa area travel demand using local metropolitan planning organization (MPO) models. The resulting output of these three analysis methodologies were used as collaborative factors to develop future year forecasts for each of the OTA System’s ten turnpikes. Systemwide Multivariate Regression Analysis Long-term demand forecasts for the OTA System were developed utilizing the historical traffic and revenue trends in conjunction with key socioeconomic variables that were correlated to the transactions and toll revenues. The identification of these key socioeconomic variables was to a large extent dependent on the availability of data and the reliability of the projection sources that could be used. Multivariate regression models were developed for each turnpike to test for relationships between turnpike usage and socioeconomic characteristics at the local, state, and national levels.

The multivariate regression models used to establish the relationship between the long-term transaction trends and the local socioeconomic characteristics were developed taking into account the quality of the socioeconomic inputs and the effectiveness of independent variables. Multivariate regression analysis is an econometric modeling technique used to determine the statistical relevancy of multiple independent and quantifiable variables to the dependent variable – namely, traffic demand along the respective OTA turnpikes. The analysis is an industry standard, well-recognized, and widely used modeling process to forecast long-term growth trends.

The multivariate regression application was used to forecast the turnpike traffic (dependent variable) as a function of projections of the identified independent/explanatory variables. This approach provides a mechanism to weight the influence that the identified independent variables’ future growth may have on the corridor traffic volumes. A separate multivariate regression equation was developed for each turnpike and separated by user type (passenger and commercial vehicles) to determine their respective traffic volume growth. Econometric Analysis of I-44 Corridor Three of OTA’s turnpikes (Turner, Will Rogers, and H.E. Bailey) make up a large proportion of I-44 within Oklahoma. Because I-44 is a major route for interstate commercial traffic, the revenue

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performance of these three turnpikes is directly influenced by national economic trends that affect commercial vehicle traffic demand. To evaluate the impacts of national economic growth on turnpike revenue, an econometric analysis of travel demand along the I-44 corridor was undertaken. The econometric analysis consisted of statistically testing, selecting, and applying correlative relationships between the transactions on the three OTA turnpikes (dependent variable) and independent variable(s), and deriving forecasts of demand growth on these corridors over the thirty-year analysis time horizon.

The econometric growth modeling and analysis began with a collection of pertinent socioeconomic input data and historical transactions for each turnpike. The transaction data was regression tested against geographically-specific independent socioeconomic data to derive demand growth forecasts. Socioeconomic variables that were tested included: population, employment, real gross regional product (GRP), real per capita income, fuel prices, airport enplanements, and real retail sales. Sources from which both historical and forecast socioeconomic data were collected include: the United States Census Bureau; the Bureau of Economic Analysis (BEA); the Bureau of Labor Statistics (BLS); the Energy Information Administration (EIA); the Oklahoma Department of Commerce Data Center; Woods & Poole 2016 Complete Economic and Demographic Data Source (Woods & Poole); and Moody’s Analytics (Moody’s).

In terms of areas of influence, the combined I-44 corridor serves both local as well longer distance movements. Hence, geographies in the vicinity of the three corridors, as well as more distant ones, were tested in various combinations in the regression analysis. Since the corridor areas evaluated as part of this study within Oklahoma are not economically isolated, but instead are interconnected with the economies external to the state, the influence of out-of-state socioeconomic trends was also evaluated. Numerous states such as Texas, Illinois and Ohio, and the overall national economy were included as testable areas of influence. These socioeconomic data were evaluated for the purposes of determining the potentially influential factors on traffic demand growth for the OTA’s three I-44 facilities.

The compiled independent variables were tested against each other for significant statistical correlation. As expected, the geographically-applicable socioeconomic independent variables that were tested mostly exhibited high correlations with each other (because all the tested socioeconomic variables within a given geographic grouping are intuitively interrelated to a greater or lesser degree), which in some cases result in likely multicollinearity error in a multivariate regression equation. Therefore, only one socioeconomic independent variable was deemed statistically necessary to identify the correlative relationship with the corridor traffic and to develop the forecasted growth profiles for the respective turnpikes. Depending on the corridor and vehicle category, the chosen independent socioeconomic variable for the final regression- based estimates was either employment or population, under different combinations of statewide geographies ranging from Oklahoma, Missouri or Texas.

The results of the regression analysis were used to develop baseline long-term demand growth projections for the I-44 turnpikes. Further adjustments were then made to the baseline growth forecasts, taking into account issues such as network changes, toll rate increases, revenue collection approaches, and known construction timeframes.

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Urban Analysis Using MPO Forecasts Although the multivariate regression analysis of the historical OTA System observed transaction and revenue data provided the primary basis for the long-term revenue forecast, local MPO transportation plans in the Oklahoma City and Tulsa areas were also evaluated as an additional resource. This additional effort was particularly useful when analyzing the two urban turnpikes (John Kilpatrick and Creek turnpikes) which lie in the Oklahoma City and Tulsa areas, respectively. Oklahoma City Area The Association of Central Oklahoma Governments (ACOG) serves as the MPO for the greater Oklahoma City area. The most recent long-range plan developed by ACOG, Encompass 2035, included long-range traffic forecasts for major roadways in the Oklahoma City metropolitan planning area. CDM Smith obtained the Encompass 2035 travel demand model as part of the current study. The ACOG model was used to estimate traffic growth trends for the John Kilpatrick Turnpike based upon ACOG’s 2035 demographic forecast. The growth rates observed in the ACOG model were used in conjunction with the results of the multivariate regression model to develop thirty-year demand forecasts for the John Kilpatrick Turnpike. Tulsa Area The local MPO for the Tulsa region is the Indian Nations Council of Governments (INCOG). INCOG developed long-range traffic forecasts for the Tulsa area as part of its most recent long-range plan developed by ACOG, Connections 2035. The Connections 2035 travel demand model was obtained by CDM Smith as part of this analysis. The INCOG model and demographic forecast were used to estimate traffic growth trends for the Creek Turnpike through INCOG’s 2035 forecast year. The growth rates observed in the INCOG model provided a supplemental resource to the multivariate regression results when developing thirty-year traffic forecasts for the Creek Turnpike. SWJKT and EOC Projects Future year revenue forecasts for the SWJKT and EOC projects were developed using an updated and validated travel demand model for the greater Oklahoma City area. The travel demand model validation process included database modifications and updates to the roadway network and socio-economic characteristics in the SWJKT and EOC study areas. Figure 5-1 illustrates the travel demand process used by CDM Smith for developing the toll revenue forecasts for the SWJKT and EOC projects. Roadway Network Update The base model used for this analysis was the Oklahoma City regional travel demand model developed by ACOG. The complete model (including networks, demographic forecasts and trip tables) was provided in Cube format to CDM Smith (including networks, demographic forecasts and trip tables). The base year network from the model was reviewed for consistency with existing conditions and validated based on the comprehensive data collected within the project areas as described in Section 3. The validated networks were then used to develop the forecasted traffic for both the SWJKT and EOC projects.

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Figure 5-1. Travel Demand Modeling Process

Model Validation Process CDM Smith used traffic counts collected in the spring of 2016 to validate the model and adjust the network characteristics where needed. The model validation process involved comparing the 2015 base year traffic assignment output volumes along each project corridor to the observed traffic count data. Additionally, output travel times and speeds from the travel demand model were compared to the actual travel speed information collected along project corridors. Model volumes were also compared to average daily traffic (ADT) counts available from OTA to test the base year travel demand model’s ability to replicate existing turnpike traffic. Finally, the origin-destination patterns from the base year model were analyzed to ensure that they accurately reflected the travel patterns observed from the origin-destination data obtained for the region.

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Travel demand modeling practitioners in the United States use “NCHRP 255: Highway Traffic Data for Urbanized Area Project Planning and Design,” published by the Transportation Research Board to check the reasonableness of model validation. As shown in Figures 5-2 and 5-3, the percentage difference between the model volumes and traffic for both projects is within acceptable ranges for each screenline.

Figure 5-2. Southwest John Kilpatrick Extension – Screenline Validation Results

Figure 5-3. Eastern Oklahoma County Turnpike – Screenline Validation Results

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Modeling Methodology Professional practices and procedures were used in the development of the revenue forecasts for SWJKT and EOC. The CDM Smith market share diversion routines, designed specifically to emulate motorists’ willingness to pay tolls at different toll levels and congestion conditions, were used to test the toll sensitivities within the corridor for the both the validation year and 2035 forecast year.

The toll diversion traffic assignments were run using an equilibrium diversion technique to evaluate the toll feasibility of the corridor. In the process, the travel model builds two paths between each pair of zones, one including the project mainlane links, and the other path excluding the project mainlane links. The travel cost associated with using both travel paths is computed, and the amount of trips using the toll facility is then estimated based on travel time savings between the two paths. This technique simulates the driver’s decision to use a toll or toll free route, which depends largely on the marginal differences in time and cost between the defined routes. Time Cost and Vehicle Operating Costs In addition to tolls, two other end-user costs are considered when calculating the total cost of a trip on SWJKT and EOC projects: time cost and vehicle operating costs. The motorists’ time cost is calculated using value of time estimates that are integrated into the modeling process. How travelers value their time helps them determine which route to use for a specified trip. The value of time parameter provides a measure to convert travel time into an equivalent monetary cost for inclusion in the toll diversion process. Vehicle operating costs include a multitude of additional costs to travelers such as wear and tear, maintenance, tires, oil, fuel, and other variable costs.

Based on the results of the stated preference survey summarized in Section 3, average values of time (as a function of income) were used for the current study. Values of time were assumed to inflate at an average annual rate of two percent throughout the forecast period.

A vehicle operating cost of $0.21 per mile for passenger vehicles in 2015 was assumed based on estimates published by the American Automobile Association and inflated at the rate of two percent per year. This includes motor fuel and limited other perceived out-of-pocket costs that are well below the full cost of operation. These are generally not perceived by the drivers as variable costs that affect their route decision choices. Demographics and Trip Tables Revenue estimates along the SWJKT and EOC corridors that are presented in Section 6 of this report are based on the base demographic datasets from ACOG as a starting point. However, the updated demographic datasets developed by RDS as described in Section 4 were used as an input to generate an alternate set of trip tables and are referred to as the “revised” trip tables. These revised trip tables were used as the baseline for the revenue estimation and toll sensitivity evaluations completed for both the SWJKT and EOC projects.

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General Assumptions The forecasted traffic volumes and estimated toll revenues from this study are based on the following general assumptions, which CDM Smith believes are reasonable for the purposes of this study (more project specific assumptions can be found in Section 6):

• The SWJKT and EOC projects are expected to open to traffic on January 1, 2020

• Alignment of SWJKT and EOC are to be as described in Section 1 of this report

• No additional competing limited-access highways will be constructed within the SWJKT and EOC corridors at any time during the forecast period.

• A combination PIKEPASS/Cash toll collection system will be used, and toll collection policies and rates for OTA System, SWJKT and EOC will be adopted as shown in Section 6 of this report

• The OTA System, SWJKT, and EOC will be well-maintained, efficiently operated, and effectively signed to encourage maximum usage

• Economic growth in project corridors will follow the assumptions described in Section 4

• Growth in vehicle operating costs (which include fuel, maintenance, and tires) will not significantly deviate from the assumed inflation rate

• No local, regional, or national emergency will arise which would abnormally restrict the use of motor vehicles

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Section 6 Revenue Forecasts

This section presents thirty-year revenue estimates for the OTA System as well as the SWJKT and EOC projects. The long-term forecasts are based on the modeling methodologies and background assumptions described in Section 5 and other assumptions presented in this section. In addition, this section describes the toll sensitivity analyses that were performed to estimate the impacts of toll rate changes on revenue generation. The results of various sensitivity tests performed to assess impacts on revenue of the various key influential variables are also presented. Input Assumptions The forecasted traffic volumes and estimated toll revenues from this study are based on the following general assumptions, several of which were derived through coordination with OTA staff, that CDM Smith believes are reasonable for the purposes of this study: OTA System • A systemwide toll rate increase will be implemented thusly:

o An initial 12.0 percent increase will be implemented on January 1, 2017

o An incremental 2.5 percent increase will be implemented on January 1, 2018

o An additional 2.5 percent increase will be implemented on July 1, 2019

• The EOC Turnpike will open to traffic on January 1, 2020

• The SWJKT will open to traffic on January 1, 2020

• A PIKEPASS/Cash toll collection system is assumed throughout the forecast period

• Economic growth along OTA System corridors will follow the forecasts described in this report SWJKT and EOC • The EOC Turnpike will open to traffic on January 1, 2020

• The SWJKT will open to traffic on January 1, 2020

• The base toll rates for 2-axle vehicles will be $0.10 per mile for PIKEPASS users and $0.12 for cash users

• Minimum tolls charged will be $0.30 for PIKEPASS users and $0.35 for cash users

• Toll rates will be calculated as a function of distance and the base per mile rate, with all rates rounded up to the next highest nickel

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• Truck toll rates will be set as follows:

o 3-axle vehicles: 1.5 times the 2-axle rate

o 4-axle vehicles: 2.0 times the 2-axle rate

o 5-axle vehicles: 3.5 times the 2-axle rate

o 6-axle vehicles: 4.5 times the 2-axle rate

• Economic growth along project corridors will follow the forecasts described in this report

Toll Sensitivity Analysis A toll sensitivity analysis was performed to test the impacts of changes to toll rates on the revenue generated by the OTA System, SWJKT and EOC. It is advisable that the planned toll rates on all OTA System facilities be less than that required to maximize revenue as determined by the toll sensitivity analysis. Future flexibility should be maintained to increase tolls, if necessary, to generate additional revenue. Toll sensitivity curves are based on changes in traffic characteristics along OTA System corridors such as congestion levels, values of time and attractiveness of competing facilities. These curves are essential in estimating the viability of planned toll rate increases.

In general, the toll sensitivity curve suggests that when the toll rate increases, a portion of travelers will leave the toll facility and choose other routes. Therefore, as the toll rate increases, demand for the toll facilities will decrease. However, as the toll rate increases, the toll revenue increases until it reaches the highest revenue point where an additional toll rate increment would reduce demand enough to result in less revenue.

Toll sensitivity analyses were conducted for the year 2020 after all planned toll rate increases have gone into effect. Figures 6-1 through 6-3 illustrate the toll sensitivity curves for the OTA System, SWJKT and EOC projects. The curves were developed using toll rates up to 600 percent of the base toll rate. Toll sensitivity results for the OTA System indicate that rates could be increased up to 250 percent before total revenues begin to fall below the revenue maximization point. For the SWJKT and EOC projects, the revenue maximization points occur at approximately 300 percent and 200 percent of base rates, respectively. These results indicate that the planned toll rates are below the revenue maximization points, demonstrating that, if needed, there is potential for revenue enhancement through toll increases above those assumed for traffic and revenue forecasting purposes.

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Figure 6-1. Toll Sensitivity Results – OTA System

Figure 6-2. Toll Sensitivity Results – Southwest Kilpatrick Extension

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Figure 6-3. Toll Sensitivity Results – Eastern Oklahoma County Turnpike

Corridor Share Analysis As part of the analysis of the future traffic on the SWJKT and EOC projects, the corridor share of each was analyzed across multiple screenlines in the study areas. As shown in Figures 6-3 and 6- 4, two screenlines were analyzed along each corridor to determine what percentage of the total demand is expected to use the new turnpikes.

Table 6-1 shows the results of the corridor share analysis for the SWJKT project area. For Screenline 1, the SWJKT accounts for 11.5 percent of the corridor throughput in 2020 under a toll- free scenario. The addition of tolls drops that share to 8.9 percent with large portion of the traffic shifting to Morgan Road. By 2035, the SWJKT accounts for a 14.0 percent corridor share without tolls and 11.2 percent with tolls. For Screenline 3, the SWJKT attracts 12.1 percent of the corridor throughput in 2020 without tolls and 8.2 percent with tolls. In 2035, SWJKT accounts for a 17.3 percent corridor share without tolls and 12.7 percent with tolls.

The results of the EOC corridor share analysis are shown in Table 6-2. On Screenline 1, the EOC accounts for 18.2 percent of the 2020 traffic without tolls and 8.8 percent with tolls. In 2035, the EOC holds a 23.3 percent share without tolls and 12.6 percent share with tolls. On Screenline 2, the EOC accounts for 9.6 percent of the corridor throughput in 2020 under a toll-free scenario. This drops to 5.4 percent with tolls added to the facility. By 2035, the EOC accounts for a 13.4 percent corridor share without tolls and 8.2 percent with tolls.

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Figure 6-4. Corridor Share Analysis Screenlines – Southwest Kilpatrick Extension

Figure 6-5. Corridor Share Analysis Screenlines – Eastern Oklahoma County Turnpike

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Table 6-1. Corridor Share Analysis – Southwest Kilpatrick Extension 2020 2035 Screenline 1 Toll Free Toll Toll Free Toll S Cemetary Rd North of SW 15th St 2.9% 3.0% 2.9% 3.0% N Czech Hall Rd North of SW 15th St 3.9% 4.3% 4.7% 5.3% S Mustang Rd-SH 4 North of SW 15th St 5.6% 6.7% 6.9% 7.7% SWJKT North of SW 15th St 11.5% 8.9% 14.0% 11.2% S Sara Rd North of SW 15th St 1.4% 1.8% 2.3% 2.8% S Morgan Rd North of SW 15th St 5.8% 7.6% 5.7% 7.1% S Council Rd North of SW 15th St 7.7% 7.8% 7.6% 7.7% S Macarthur Blvd North of SW 15th St 8.2% 8.0% 9.2% 9.1% IH 44 North of SW 15th St 53.0% 51.8% 46.7% 46.1% 2020 2035 Screenline 3 No Build Build No Build Build IH 40 East of S Sara Rd 43.9% 44.3% 42.9% 44.1% SW 15th St East of S Sara Rd 5.6% 7.0% 5.9% 7.5% SWJKT East of S Sara Rd 12.1% 8.2% 17.3% 12.7% SW 29th St East of S Sara Rd 9.0% 8.7% 10.5% 9.9% SW 44th St East of S Sara Rd 5.5% 6.7% 3.5% 4.8% SW 59th St East of S Sara Rd 5.4% 5.4% 7.6% 7.9% SW 74th St East of S Sara Rd 18.6% 19.7% 12.3% 13.1%

Table 6-2. Corridor Share Analysis – Eastern Oklahoma County Turnpike 2020 2035 Screenline 1 Toll Free Toll Toll Free Toll S Choctaw Road north of IH 40 8.3% 10.5% 8.9% 10.8% IH 40 west of Indian Meridian Rd 67.5% 70.1% 61.5% 65.7% S Peebly Road north of IH 40 2.4% 4.9% 2.7% 5.2% S Harrah Road north of IH 40 3.6% 5.7% 3.6% 5.6% Eastern Oklahoma County Turnpike 18.2% 8.8% 23.3% 12.6% 2020 2035 Screenline 2 No Build Build No Build Build SB I-35 Mainlane North of US 62 57.9% 58.9% 55.2% 56.2% N Choctaw Road north of US 62 3.6% 4.2% 4.6% 5.4% N Triple X Road north of US 62 0.8% 1.8% 0.8% 1.6% N Luther Road north of US 62 2.7% 3.2% 2.6% 2.9% Eastern Oklahoma County Turnpike 9.6% 5.4% 13.4% 8.2% N Harrah Road north of US 62 1.4% 2.2% 1.3% 2.0% SH 102 north of US 62 1.8% 1.8% 1.4% 1.7% US 177 north of US 62 4.5% 3.8% 3.5% 4.2% N Hiwassee Rd north of US 62 2.9% 3.2% 3.0% 3.2% N Post Rd north of US 62 5.2% 5.5% 5.1% 5.2% N Douglas Rd north of US 62 4.3% 4.5% 4.1% 4.3% N Midwest Blvd north of US 62 5.4% 5.6% 4.9% 5.1%

6-6 Section 6 • Revenue Forecasts

Travel Time Savings Analysis An important part of the decision to use a toll facility is the potential time savings that is offered to the traveler. This section illustrates the travel time savings associated with using the SWJKT and EOC rather than alternative routes in the study area for the years 2020 and 2035. Two origin- destination pairs were evaluated for both the morning and evening peak periods, as illustrated in Figures 6-6 and 6-7.

For the SWJKT project, a trip between Will Rogers World Airport and northwest Oklahoma City was evaluated. Two alternative routes were considered: one that utilizes the SWJKT, and one that uses Meridian Avenue and I-40. The two analyzed routes are shown in Figure 6-6. The routes were evaluated in future years 2020 and 2035 for the morning peak period, midday period and evening peak period. The maximum observed travel time savings for each are summarized in Figure 6-6. In 2020, the SWJKT offers time savings of three minutes during the morning peak period over the alternate route and a time savings of two minutes during the evening period. In 2035, the SWJKT route is four minutes faster during the morning peak period and two minutes faster in the evening peak period. An average time savings of one minute was measured during the midday period of both forecast years.

For the EOC study area, a trip between McLoud and Edmond was evaluated, and two routes were again measured. One route was assumed to use the EOC and Turner Turnpike, and the second route was assumed to use I-40 and I-35. The two analyzed routes are shown in Figure 6-7. The routes were evaluated in future years 2020 and 2035 for the morning peak period, midday period and evening peak period. The maximum observed travel time savings for each are summarized in Figure 6-6. In 2020, the EOC route offers time savings of eight minutes during the morning peak period over the alternate route and a time savings of six minutes during the evening period. In 2035, the EOC route is seven minutes faster during both the morning peak period and evening peak period. An average time savings of three minutes was measured during the midday period of both forecast years.

6-7 Section 6 • Revenue Forecasts

Figure 6-6. Travel Time Comparison – Southwest Kilpatrick Extension

Figure 6-7. Travel Time Comparison – Eastern Oklahoma County Turnpike

6-8 Section 6 • Revenue Forecasts

Estimated Annual Revenue Using the forecasting methodologies described in Section 5, revenue estimates were developed for the thirty-year period between 2017 and 2046. Revenue estimates were developed independently for each of OTA’s existing ten turnpikes as well as the proposed SWJKT and EOC projects. OTA System The final multivariate regression functions developed for each turnpike and vehicle type were used in concert with the models to first validate against the previous forecasts established for the turnpikes to ensure that there was a level of consistency in the new models, and to ensure that the explanatory variables were not yielding results that were too sensitive to any one of the independent variables’ forecasted fluctuations.

The forecast of the independent variables was also reviewed to ensure that the cyclical fluctuations that are evident from historical trends were also significantly addressed in the future projections. As such, dampening factors for the passenger and commercial vehicle markets were applied to the model forecast based on observed historical growth trends to normalize the results. Recently observed trends over the past several years for each respective turnpike were used to generate the baseline growth profiles between 2017 and 2046. These traffic growth profiles were then adjusted to reflect the impacts of the planned toll rate increases in 2017, 2018, and 2019.

Table 6-3 presents the forecasted annual revenues over a thirty-year period for each OTA System turnpike. As shown in the table, the OTA System is expected to generate $298.12 million in 2017 following the implementation of the first planned toll rate increase and, and it is anticipated to generate $325.95 million in 2020, the first full year following the full implementation of planned toll rate increases. Revenue is forecasted to reach $395.24 million by 2045, representing an average annual growth rate of 0.8 percent between 2020 and 2045. The Turner and Will Rogers turnpikes are expected to remain as the highest revenue earning facilities in the OTA System throughout the forecast period. SWJKT and EOC An equilibrium diversion technique was used to carry out traffic assignment runs for four periods, AM peak, PM peak, midday and night. The model runs were conducted for the years 2020 and 2035. Traffic volumes were estimated by using the revised demographics trip tables, which were adjusted based on the base year model validation process, as described above.

The proposed new projects will utilize a PIKEPASS/Cash toll collection system, such that two separate traffic assignments, one with PIKEPASS toll charges and the other with cash charges, were conducted for each model year. The traffic volumes obtained by the PIKEPASS toll charge assignment were factored by the assumed PIKEPASS transaction shares to get the PIKEPASS volumes and the traffic volumes obtained by the cash toll charge assignment run were factored by the cash transaction shares to get the cash traffic volume. The sum of the two volumes provided the total traffic using the proposed facilities. In this manner, the volume totals along each facility were estimated for each model year. All other years were interpolated or extrapolated between or beyond the modeled years to obtain the yearly T&R estimates.

6-9 Section 6 • Revenue Forecasts

The traffic assignment results at each of the analysis years were reviewed for reasonableness and post-model adjustments were made as necessary. This included adjustments to reflect model validation results along each corridor. Based on forecasted traffic along each project, annual forecasts for each were prepared through 2046. Estimates beyond year 2035 are based on nominal assumptions regarding future traffic growth. As shown in Table 6-4, the SWJKT is expected to generate $3.08 million in its first year of operation, increasing to $6.37 million by 2035 and $7.71 million by 2046. The EOC is anticipated to produce $4.98 million in its first year of operation, increasing to $11.94 million in 2035 and $15.32 by 2046.

Table 6-3. OTA System Revenue Forecast Annual Turnpike Revenue (millions) Year Will H.E. Indian John Turner Muskogee Cimarron Cherokee Chickasaw Creek TOTAL Rogers Bailey Nation Kilpatrick 2017 $71.92 $61.87 $29.76 $16.31 $20.76 $13.14 $9.62 $0.89 $41.67 $32.18 $298.12 2018 $74.42 $64.12 $30.82 $16.80 $21.47 $13.56 $9.87 $0.93 $43.71 $33.68 $309.37 2019 $76.28 $65.85 $31.63 $17.14 $21.99 $13.86 $10.03 $0.96 $45.36 $34.86 $317.95 2020 $77.59 $67.34 $32.40 $17.44 $22.50 $14.13 $10.15 $0.99 $47.44 $35.98 $325.95 2021 $78.59 $68.23 $32.88 $17.59 $22.80 $14.28 $10.19 $1.01 $48.66 $36.77 $330.99 2022 $79.56 $69.11 $33.36 $17.72 $23.08 $14.41 $10.21 $1.03 $49.75 $37.45 $335.68 2023 $80.51 $69.96 $33.82 $17.85 $23.33 $14.54 $10.23 $1.05 $50.79 $38.07 $340.15 2024 $81.44 $70.79 $34.27 $17.98 $23.58 $14.66 $10.25 $1.06 $51.79 $38.65 $344.47 2025 $82.33 $71.60 $34.71 $18.10 $23.81 $14.78 $10.27 $1.08 $52.76 $39.20 $348.65 2026 $83.20 $72.38 $35.13 $18.23 $24.05 $14.90 $10.29 $1.10 $53.71 $39.74 $352.71 2027 $84.04 $73.13 $35.54 $18.35 $24.27 $15.02 $10.31 $1.11 $54.65 $40.26 $356.67 2028 $84.84 $73.85 $35.93 $18.47 $24.49 $15.14 $10.32 $1.13 $55.58 $40.76 $360.52 2029 $85.61 $74.55 $36.31 $18.59 $24.71 $15.25 $10.34 $1.15 $56.46 $41.23 $364.20 2030 $86.35 $75.21 $36.67 $18.71 $24.91 $15.36 $10.36 $1.16 $57.32 $41.67 $367.72 2031 $87.06 $75.84 $37.02 $18.81 $25.09 $15.46 $10.37 $1.18 $58.08 $42.07 $370.97 2032 $87.73 $76.44 $37.34 $18.91 $25.26 $15.56 $10.38 $1.19 $58.75 $42.43 $373.98 2033 $88.36 $77.01 $37.65 $18.99 $25.41 $15.64 $10.39 $1.20 $59.34 $42.75 $376.75 2034 $88.95 $77.55 $37.94 $19.07 $25.55 $15.71 $10.40 $1.22 $59.87 $43.05 $379.29 2035 $89.51 $78.05 $38.21 $19.14 $25.67 $15.78 $10.40 $1.23 $60.33 $43.32 $381.62 2036 $90.03 $78.51 $38.47 $19.20 $25.78 $15.84 $10.41 $1.24 $60.74 $43.56 $383.76 2037 $90.50 $78.94 $38.70 $19.26 $25.88 $15.89 $10.41 $1.24 $61.10 $43.78 $385.70 2038 $90.94 $79.33 $38.91 $19.31 $25.97 $15.94 $10.42 $1.25 $61.42 $43.98 $387.45 2039 $91.33 $79.68 $39.10 $19.35 $26.05 $15.98 $10.42 $1.26 $61.69 $44.16 $389.04 2040 $91.69 $80.00 $39.27 $19.39 $26.13 $16.03 $10.43 $1.27 $61.94 $44.32 $390.45 2041 $92.00 $80.28 $39.42 $19.43 $26.19 $16.06 $10.43 $1.27 $62.15 $44.47 $391.71 2042 $92.26 $80.52 $39.55 $19.47 $26.26 $16.10 $10.44 $1.28 $62.34 $44.60 $392.81 2043 $92.49 $80.72 $39.66 $19.50 $26.31 $16.13 $10.44 $1.28 $62.51 $44.73 $393.76 2044 $92.67 $80.88 $39.74 $19.53 $26.36 $16.16 $10.45 $1.29 $62.66 $44.84 $394.57 2045 $92.81 $81.00 $39.80 $19.56 $26.41 $16.19 $10.46 $1.29 $62.79 $44.94 $395.24 2046 $92.90 $81.08 $39.84 $19.59 $26.45 $16.21 $10.47 $1.30 $62.90 $45.04 $395.77

6-10 Section 6 • Revenue Forecasts

Table 6-4. Southwest Kilpatrick Extension and Eastern Oklahoma County Turnpike Revenue Forecasts Southwest Kilpatrick Eastern Oklahoma Year Extension County Turnpike Annual Revenue Annual Revenue 2020 $3,082,000 $4,984,000 2021 $3,655,000 $5,980,000 2022 $4,263,000 $7,079,000 2023 $4,684,000 $7,893,000 2024 $4,890,000 $8,362,000 2025 $5,107,000 $8,860,000 2026 $5,221,000 $9,126,000 2027 $5,338,000 $9,401,000 2028 $5,458,000 $9,684,000 2029 $5,581,000 $9,976,000 2030 $5,707,000 $10,278,000 2031 $5,836,000 $10,589,000 2032 $5,968,000 $10,910,000 2033 $6,104,000 $11,241,000 2034 $6,243,000 $11,582,000 2035 $6,369,000 $11,935,000 2036 $6,495,000 $12,207,000 2037 $6,607,000 $12,487,000 2038 $6,721,000 $12,772,000 2039 $6,837,000 $13,065,000 2040 $6,955,000 $13,365,000 2041 $7,075,000 $13,672,000 2042 $7,198,000 $13,986,000 2043 $7,323,000 $14,307,000 2044 $7,450,000 $14,637,000 2045 $7,580,000 $14,974,000 2046 $7,713,000 $15,319,000

Combined Revenue Forecast Figure 6-8 illustrates the combined revenue forecasts of the OTA System, SWJKT and EOC projects. As shown in the figure, the two new turnpikes are expected to comprise a relatively small portion of total revenues throughout the forecast period. The new turnpikes are anticipated to generate 2.4 percent of all OTA revenues in their first year of operation, with this share increasing to 5.5 percent by the end of the forecast period. Combined revenues from all facilities are projected to grow from $298.12 million in 2017 to $418.80 million by 2046.

6-11 Section 6 • Revenue Forecasts

Figure 6-8. Combined Revenue Forecast

Sensitivity Tests The base case forecasts for the SWJKT and EOC projects shown above are based on several assumptions, as described previously. As any forecast of the future is subject to considerable uncertainty, most traffic and revenue forecasts to be used in support of project financing typically include sensitivity tests. In general, these are intended to provide a general measure of the potential impact on the revenue forecasts associated with hypothetical changes in certain basic assumptions. These sensitivity tests provide a comparison with the previously presented base case toll revenue forecasts. Each sensitivity test is described in more detail below. Demographic Growth The base revenue forecasts were tested to determine the impacts of changes in demographic growth in the SWJKT and EOC project areas. Two demographic growth alternative scenarios were tested. In the first comparison, the baseline revenue forecasts were tested with a 50 percent reduction in demographic growth assumed throughout the forecast period. The impact on traffic and revenue estimates on both the SWJKT and EOC projects are shown for 2020 and 2035. As can be seen in Table 6-5, the reduced demographic growth results in a revenue decrease on the SWJKT of 15 percent in 2020 and 28 percent in 2035. The impact on EOC is a 15 percent decrease in 2020 and a 23 percent decrease in 2035.

6-12 Section 6 • Revenue Forecasts

The second test looked at the impacts on revenue if population and employment were to stay at current levels throughout the forecast period. The resulting revenue impacts under this condition were compared to the base revenues for the years 2020 and 2035. As shown in Table 6-6, the “zero growth” scenario results in a revenue decrease on the SWJKT of 27 percent in 2020 and 46 percent in 2035. The impact on EOC is a 25 percent decrease in 2020 and a 36 percent decrease in 2035.

Table 6-5. Revenue Sensitivity to Demographic Growth Southwest Kilpatrick Extension Eastern Oklahoma County Turnpike Year 50 Percent Zero 50 Percent Zero Base Base Growth Growth Growth Growth 2020 1.00 0.85 0.73 1.00 0.85 0.75 2035 1.00 0.72 0.54 1.00 0.77 0.64

Value of Time Values of time (VOT) assumed to produce revenue forecasts for the SWJKT and EOC projects are shown in Table 3-2. Two alternative scenarios with low VOT and high VOT were created to test the sensitivity of the revenue forecasts to VOT assumptions. The alternative VOTs were created by assuming a 15 percent decrease and increase for the low and high VOT scenarios, respectively. The scenarios were tested for years 2020 and 2035, and the revenue impact comparison is shown in Table 6-6.

As shown in Table 6-6, for a fifteen percent increase in VOT on SWJKT, revenue is expected to increase by approximately three percent in 2020 and two percent in 2035. A fifteen percent reduction in VOT is expected to reduce revenue by approximately three percent in both years. On the EOC, a fifteen percent increase in VOT is expected to increase revenue by four percent in both 2020 and 2035. A fifteen percent VOT decrease in 2020 and 2035 would be anticipated to reduce revenue by six percent and five percent, respectively.

Table 6-6. Revenue Sensitivity to Value of Time Southwest Kilpatrick Extension Eastern Oklahoma County Turnpike Year VOT VOT VOT VOT Base Base +15% -15% +15% -15% 2020 1.00 1.03 0.97 1.00 1.04 0.94 2035 1.00 1.02 0.97 1.00 1.04 0.95

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