DALLAS — The Northern Virginia Transportation Authority plans to go to market in early December with its first tranche of revenue bonds supported by collections from regional taxes that were part of the state's 2013 overhaul of its transportation funding system.
The negotiated sale of the $68.7 million of the transportation special tax revenue bonds is tentatively set for the week of Dec. 1. The bonds will be payable from a first lien on and pledge of regional revenue, which is essentially 70% of NVTA funds generated by the new state law known as House Bill 2313.
The NVTA bonds are rated AA-plus by Standard & Poor's and Fitch, and Aa1 by Moody's Investors Service.
NVTA chairman Marty Nohe said the high ratings will allow the authority to move forward on regional congestion-relieving projects as quickly as possible at a low interest rate.
"The rating also affirms our promise to taxpayers that all financial activities of the authority are conducted in a manner of utmost transparency and respect for our partner's excellent individual credit ratings," Nohe said.
Fitch senior director Michael Rinaldi said the AA-plus rating with a stable outlook reflects the probability that "NVTA will prudently manage execution of its capital plan and debt issuance in lockstep with the strong financial and debt management practices demonstrated by the state and local governments represented on the board."
The state and five of the nine jurisdictions have triple-A ratings on their general obligation bonds, Rinaldi said.
Citigroup and JPMorgan Chase are co-senior managing underwriters on the NVTA issue, with Davenport & Co. and Raymond James as co-managers. Public Financial Management is the NVTA's financial advisor. McGuireWoods LLP is bond counsel.
The Virginia General Assembly met in special session Nov. 10 to reverse an earlier budget bill that could have imperiled the NVTA bond issue.
The budget measure would have delayed, until 2016, a transfer of $50 million of transportation sales tax revenues from the general fund to the state transportation trust fund. The revision keeps the revenue transfer in 2015.
Gov. Terry McAuliffe and legislative leaders wanted to retain the $50 million to cover a portion of a $2.4 billion revenue shortfall in the state's biennial budget. However, NVTA officials said the deferral could trigger a kill switch in the 2013 legislation that stipulated that the transportation-related taxes could no longer be collected if any dedicated revenues were diverted to other uses.
NVTA avoided another potential pitfall by filing a bond validation lawsuit in July 2013 to ensure the bonds supported by the new state-imposed taxes could be used to support the revenue bonds after a similar effort was rejected by the Virginia Supreme Court in 2008. A favorable ruling was returned in May.
The Virginia Supreme Court had ruled in March 2008 that $130 million of bonds that the regional body planned to issue would be unconstitutional. The court said the appointed board members did not have the authority issue bonds or to levy seven new taxes and fees that would have supported the debt.
The revamping of Virginia's transportation funding last year included new state taxes within the four-county region, including an 0.7% sales tax, an additional state transient occupancy tax of 2%, and an real estate deed recordation fee of 15 cents per $100 of the value of property sales.
Collections in the first year totaled $200 million, but are expected to grow to $300 million a year by 2020.
The regional taxes are collected in Arlington, Fairfax, Loudoun and Prince William counties and the cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park.
NVTA was created in 2002 to plan and fund road and transit projects within the region.
NVTA's capital program calls for $23.2 billion of transportation projects through 2040, including $9.3 billion of road projects and $13.2 billion of transit.
