New strategy to produce $40 million for GARVEE projects

ITD anticipates savings of approximately $40 million in interest on four highway projects funded by bonds.
           
The state will issue $38 million in Grant Anticipation Revenue Vehicle (GARVEE) bonds in October and another $82 million in late 2013 to pay for the Idaho 16 expansion and reconstruction of the Interstate 84 Meridian, Broadway and Gowen interchanges. The sale of the two bonds will bring the total of the GARVEE program to $857 million.
 
The first six GARVEE bonds issued are being repaid using a level-pay plan. As new bonds were added, the total amount being paid increased for the life of the program. If that same approach was continued for the two new bonds, the loan payment for the total GARVEE program would have been increased to $56 million annually through 2031.
 
By paying an additional $3 million,  or $59 million annually, the state will save $40 million in interest and reduce the final two loan payments to less than $10 million each. This approach and favorable market conditions will allow Idaho to issue these bonds at a projected interest rate of 3.3 to 3.6 percent.
 
Idaho was one of only two states that maintained an A+ bond rating after Fitch Rating recently downgraded ratings for other states.
 
“The high rating reflects the conservative approach Idaho has taken with GARVEE bonds and the efficient management of the program,” said ITD Chief Deputy Scott Stokes. “Idaho has used the bonds as a tool to construct critically needed projects now, but we have not relied on them to entirely finance the state’s highway improvement program.”

Published 9-21-2012