10/17/2008
Idaho Transportation Department delays sale of $116 million GARVEE bond
BOISE - The Idaho Transportation Department (ITD) will delay the sale of a $116 million GARVEE bond until the nation's financial markets stabilize.
The bond would finance reconstruction of the Orchard Interchange over Interstate 84 and improvements to U.S. 30, including three new bridges. The bond was scheduled to be sold in November. The program uses Grant Anticipation Revenue Vehicle (GARVEE) bonds to expedite highway improvements.
"We have been advised that due to current market conditions it is not a favorable time to issue transportation bonds," ITD Director Pamela Lowe said. "We will not move ahead with issuing construction contracts for new projects until we have the bonds sold and the money in the bank. It is the cautious and appropriate approach to take."
While some transportation bonding is being done throughout the country, it is on a limited basis and being financed at relatively high interest costs, said Gerald Hunter, president and executive director of the Idaho Housing and Finance Association (IHFA).
"Our financial advisors recommended that we prepare to issue bonds but wait for greater market stability and a better reception by both institutional and retail investors," Hunter said.
The Idaho Legislature authorized the ITD to issue $597 million in bonds through a partnership with the IHFA. Bonds have been sold for $213 million and $179 million. The bonds are part of the $998 million GARVEE program for improving and expediting construction in six highway corridors across the state.
This decision to postpone the sale of the $116 million bond does not affect work already under way or contracts funded by the GARVEE program.
"We cannot predict when the next bond will be sold, but will continue to work with the Idaho Housing and Finance Association to determine when conditions are favorable, " Lowe said. "If they occur in the next few months, disruption to these project construction schedules would be minimized."
The replacement of the Orchard Interchange is estimated to cost $30 million. An advertisement for bids on the contract was issued in October but was postponed by the ITD on Friday. Construction was scheduled to begin next year.
Three projects on U.S. 30, totaling $75 million, also were put on hold. The projects will replace culverts on U.S. 30 with two bridges, replace the Topaz Bridge and improve the highway.
"By selling the bonds first and then letting the construction contracts, the transportation department will avoid the liquidity concerns that many municipalities and states across the nation are encountering," Hunter said.