DALLAS — Arkansas will be able to repair and upgrade more than 400 miles of Interstate highway with proceeds from $575 million of Garvee bonds being decided by voters on Tuesday, up from earlier estimates of 300 miles.
Voters are being asked to extend a program originally approved in 1999 that would allow the state to issue another $575 million of 12-year bonds supported by federal highway grants and an existing diesel fuel tax of 4 cents per gallon.
Scott Bennett, director of Arkansas Highway and Transportation Department, on Monday said the combination of bond proceeds and existing federal and state revenues should support around $1 billion of road upgrades and repairs.
“Based on preliminary cost and mileage estimates developed by the AHTD staff, we believe we can improve well over 400 miles of Interstates under this proposal,” Bennett said. “We also believe we will be able to exceed $1 billion in work. After the financial advisor develops a detailed financial plan, we’ll have a better idea of how much money we’ve got to work with.”
There are 650 miles of Interstate highway in Arkansas.
Bennett said it costs $1 million to $4 million to rehabilitate one mile of Interstate highway, and $5 million per mile to fully rebuild a mile of roadway.
The roads originally cost $1 million per mile when they were built in the late 1960s and early 1970s, he said.
Proponents and opponents of the road bond program are putting out lots of information as election day nears, according to Bennett.
“Sometimes, this information includes facts that get distorted or misused, usually unintentionally,” he said. “It’s important that people make an informed decision based on facts.”
The proposal originally called for $1.1 billion of road bonds, but was scaled back in April when the Arkansas Trucking Association withdrew its support for a 5-cent-per-gallon increase in the diesel fuel tax to support the additional debt.
Gov. Mike Beebe called the special election in late August.
Voters must approve the reauthorization as a constitutional amendment because the highway bonds are considered general obligation debt.
Bennett said the current grant anticipation revenue vehicle, or Garvee, program financed work on 356 miles of Interstate highway over three years. It would take the state more than 20 years to do that amount of work under a pay-as-you-go plan, he said.
The revised work list includes repairs to highway segments upgraded with proceeds from the existing bond program, Bennett said, but those will take place later in the effort. The new work will cost less than it would if the roads had not been improved.
If the state’s voters approve the extension of the Garvee program, Bennett said, the bonds would be issued in late 2012 or 2013. All the bonds must be issued by Dec. 31, 2015.
Bennett said Arkansas officials expect to receive a premium on the bonds as it did on the $575 million issued under the current authorization. Premiums totaled $44.6 million on three issues of Garvee bonds from 2000 to 2002 and a 2010 refinancing.
Interest costs of the existing program totaled $246.6 million, but the premiums and the $13 million in debt service savings realized in fiscal 2011 from the 2010 refinancing cut the total interest paid on the 12-year bonds to $208 million, Bennett said
The last of the bonds issued in 2002 will mature in August 2014. The 2010 refinancing of $253.2 million of outstanding Garvee bonds did not extend the maturity.
The refunding bonds are rated AA by Standard & Poor’s and Aa1 by Moody’s Investors Service.
