Tools & Programs:
Federal Debt Financing Tools
Grant Anticipation Revenue Vehicles (GARVEEs)
The following is a brief summary of GARVEE transactions in 2011.
- Arizona sold $158.6 million of GARVEE bonds in January 2011 to fund certain controlled access, U.S. highway, and State routes across the state.
- The District of Columbia issued $82.6 million of GARVEE bonds in February 2011 to fund a portion of $300 million Eleventh Street Bridge Replacement Project over the Anacostia River. The project will replace the twin structures, improve the interchanges at both ends of the bridges, improve regional as well as local traffic flow and local access to and from connecting freeways; increase vehicular, pedestrian and bicycle safety; and provide an alternative evacuation route and a better link to neighborhoods across the Anacostia River.
- The District is using a variation of tapered match in conjunction with the GARVEE issue. District expenditures of $63.6 million prior to the bond issuance will be used as a credit for the local share of debt service. In this manner, only future Federal-aid revenues will be used to repay the cost of debt service for the bond - an estimated $110 million over 15 years. Typically, federally-authorized GARVEE projects require the State to match the Federal share on a payment-by-payment basis. However, GARVEE bond guidance does allow a State to satisfy its match requirements with in-kind contributions such as donated property or toll credits. As such, the District Department of Transportation proposed that FHWA allow the District's previous Eleventh Street Bridge local dollar expenditures to meet the non-Federal share requirement of the GARVEE bond debt service.
- Mississippi refinanced $17.2 million in GARVEE bonds in March.
- Idaho made its sixth sale ($72.9 million) since May 2006 in support of its GARVEE Transportation Program to fund six critical transportation corridors throughout the state: US-95 Garwood to Sagle, US-95 Worley to Setters, SH-16, I-84 to South Emmett, I-84 Caldwell to Meridian, I-84 Orchard to Isaacs Canyon, and US-30 McCammon to Lava Hot Springs. In November 2005, the Idaho Transportation Board recommended $998 million in GARVEE bonds to be brought to the Idaho Legislature. Funding authorizations are requested annually. The total GARVEE bonds sold to date amount to $697 million.
- Alabama refunded its Series 2002 bonds originally used to pay for a county road
and bridge program. A remaining principal of $96,755,000 existed from the
original $200 million in bonds. The new issue of $91,195,000 will be repaid
within the same 2017 timeframe and save the state over $3.1 million in interest.
- North Carolina sold $145.5 million in GARVEEs as interim financing for the construction of the 19.7-mile Monroe Connector Bypass, the state's second toll road. Rather than issue debt backed by unknown toll receipts, the GARVEEs are being used until the road's expected opening in 2017, when they will be taken out with long-term toll backed bonds. This financing arrangement is believed to be the first of its kind and is expected to save the state more than $600 million over the life of the toll road, compared to greenfield, toll-backed financing.
- NC DOT issued $145.535 million on December 28, 2011.
The following is a brief summary of GARVEE transactions in 2010.
- Idaho made its fourth and fifth sales ($12.5 million and $71.8 million) since May 2006 in support of its GARVEE Transportation Program to fund six critical transportation corridors throughout the state: US-95 Garwood to Sagle, US-95 Worley to Setters, SH-16, I-84 to South Emmett, I-84 Caldwell to Meridian, I-84 Orchard to Isaacs Canyon, and US-30 McCammon to Lava Hot Springs. In November 2005, the Idaho Transportation Board recommended $998 million in GARVEE bonds to be brought to the Idaho Legislature. Funding authorizations are requested annually. The total GARVEE bonds sold to date amount to $624 million.
- The 2009 Kentucky General Assembly authorized the sale of $231 million of GARVEE bonds in support of the Louisville-Southern Indiana Ohio River Bridges project that provide two new bridges over the Ohio River connecting Louisville to Southern Indiana as well as major approach road and interchange reconstruction. Kentucky's Governor authorized an initial sale of $100 million in December 2009 for right-of-way acquisition, utility relocation, and environmental mitigation. In February 2010, $89.7 million of bonds were sold by the Kentucky Asset Liability Commission.
- The Mississippi Development Bank issued $161.1 million of GARVEEs on behalf the Mississippi Department of Transportation to fund highway projects in Desoto County, continuing a series of county-specific issuances in 2005, 2006, 2007, and 2009.
- Ohio's first of two issuances in 2010 and 12th since 1998 totaled $215 million to support a series of highway and bridge projects across the state. Of that amount $98 million were taxable Build America Bonds and $117 million were tax-exempt fixed-rate bonds.
- Delaware issued its first GARVEE bonds in May 2010 to complete the final design and right-of-way acquisition for the new U.S. Route 301 from the Maryland State Line to SR-1 in New Castle County near Middleton. The project also includes a Spur Road from U.S. 301 north to the Summit Bridge at SR-836. The full funding package for construction of the project has yet to be developed, but the Delaware Department of Transportation plans to rely heavily on issuing bonds backed by toll revenues generated on the new facility. In total, $113.5 million in GARVEE bonds were sold.
- Mississippi's second round of GARVEE issuances in 2010 occurred in June with a $50 million short-term offer to fund various highway projects.
- The State of New Hampshire issued its first GARVEE bonds in early November to help fund the expansion and modernization of a 19.8-mile segment of I-93 north from the Massachusetts State Line to the I-293 Interchange in Manchester. New Hampshire's $80 million transaction was issued in two tranches. The $20 million in Series A bonds were issued as taxable Build America Bonds, which receive a subsidy payment from the U.S. Treasury equal to 35% of the taxable interest paid by the state. The Series B Bonds were issued in hybrid form as "Recovery Zone Economic Development Bonds" under the American Recovery and Reinvestment Act of 2009 and will receive payments from the Treasury equal to 45% of the taxable interest paid. See IPD's Newsworthy feature on the issue.
- Maine's third GARVEE sale took place in November 2010 in the amount of $50 million in Taxable Build America Bonds issued by the Maine Municipal Bond Bank. A portion of the proceeds is being used to partially fund the construction of the replacement of the Veterans Memorial Bridge over the Fore River between the Cities of Portland and South Portland. The bridge is nearing 60 years of age and is designed to be a gateway to Maine's largest city.
- Ohio's second issuance in 2010 totaling $230 million is being used to support 20 construction projects across 11 counties.
The following is a brief summary of GARVEE transactions in 2009.
- Idaho made its third sale since May 2006 in support of its GARVEE Transportation Program to fund six critical transportation corridors throughout the state: US-95 Garwood to Sagle, US-95 Worley to Setters, SH-16, I-84 to South Emmett, I-84 Caldwell to Meridian, I-84 Orchard to Isaacs Canyon, and US-30 McCammon to Lava Hot Springs. In November 2005, the Idaho Transportation Board recommended $998 million in GARVEE bonds to be brought to the Idaho Legislature. Funding authorizations are requested annually. A total of $172.2 million in bonds were sold in January 2009, bringing the total to date to $540 million.
- The State of Georgia continued to use GARVEEs to help fund its $15.6 billion Fast Forward Program, which is accelerating 18 years worth of transportation improvements down to six years. Congestion relief projects include ITS applications, ramp metering, signal timing upgrades, HOV lanes, new bus rapid transit, and 400 lane-miles of new interstate capacity. Its third sale in the past four years amounted to $480 million.
- Rhode Island made its third sale (since 2003) of GARVEE bonds in March 2009 in the amount of $169 million for certain highway, rail and bridge improvements, including the Route 195 Relocation (Iway), Washington Bridge, Sakonnet River Bridge, Freight Rail Infrastructure Project and Route 403 Project. Rhode Island issues its GARVEE bonds through the Rhode Island Economic Development Corporation.
- West Virginia continued to fund improvements to Route 35 through GARVEE bond sales, completing its third sale in March 2009 in the amount of $77 million. The project is widening this important route from Charleston on to major Ohio cities including Cincinnati, Dayton, and Columbus.
- Arizona sold $55.4 million of GARVEE bonds in April 2009 to continue to fund certain controlled access highway projects in Maricopa County.
North Carolina authorized the sale of up to $900 million in GARVEE bonds in 2005 (House Bill 254). Its second issue of $243 million in July 2009 (following $288 million in October 2007) is being used to continue to support various roadway improvements throughout the state to increase safety, preserve and improve interstate routes, and enhance North Carolina's strategic highway corridors. Additional issuances are planned for 2011 and 2013.
Unlike most states, North Carolina designed its GARVEE program with an "evergreen" structure that allows it to issue additional bonds over time, subject to certain legislative requirements. Highlights of North Carolina's GARVEE legislation include the establishment of conservative annual debt service relative to anticipated Federal revenue, geographic distribution of the bond proceeds to finance improvements to the Federal highway system, flexibility in project selection, and most importantly, legislative authority for continuing use of the bonds.
NCDOT estimates that 29 strategic projects were accelerated at an average time savings of 3.4 years with an estimated cost savings after debt service of $135 million through the initial October 2007 GARVEE bond issuance. The agency also estimates that $509 million will be saved through the GARVEE projects included in its 2009-2015 STIP.
- The Mississippi Development Bank issued $72.8 million of GARVEEs on behalf the Mississippi Department of Transportation to fund highway projects in Harrison County, continuing a series of county-specific issuances in 2005, 2006, and 2007.