AASHTO Journal, 03 July 2015
The Idaho Transportation Department now has $12.7 million in extra funding over the next decade after the state refinanced a portion of its GARVEE infrastructure bond debt at lower interest rates.
“This is an additional $12.7 million that can be put toward restoring and preserving the state’s transportation network of highways and bridges,” said ITD Director Brian Ness.
That refinancing comes soon after the Idaho Legislature raised per-gallon motor fuel and vehicle registration fees to generate $94 million in added annual funding to help close the state’s $262 million annual shortfall for road and bridge projects. (Ness recently discussed that revenue measure with Transportation TV. See the video here.)
The Idaho Housing and Finance Association is the issuer of the GARVEE bonds, which are formally called “grant anticipation revenue vehicles” and backed by expected future state allocations from the federal Highway Trust Fund.
Idaho has used the revenue generated by $806.8 million in initial GARVEE debt to improve highways statewide. The ITD said all projects funded with its original GARVEE bonds have either been completed or are nearing completion.
“Rather than having to wait decades for these improvements, Idaho drivers are enjoying the benefits right now, thanks to this financing strategy,” said Idaho Transportation Board Chairman Jerry Whitehead. “Bonding our needed road and bridge projects allowed the department to proceed with construction and take advantage of a lower cost of materials.”
The ITD said that in consultation with Citigroup and the IHFA it determined the best timing to refinance all its Series 2006 callable bonds, totaling $97.7 million, and a portion of Series 2008 callable bonds for another $84.5 million. They refinanced at an interest rate of 2.92 percent without extending the period to pay off debt, down from previous interest rates of 4.57 percent for the 2006 series and 4.73 percent for the 2008 bonds.
“As issuer, IHFA is always on the lookout for ways to save ITD and Idaho money on its bonds, and $12.7 million dollars is a sizable savings for Idaho and ITD,” said John Sager, executive vice president and chief financial officer of IHFA.