The New York State Thruway Authority approved a personal income-tax bond deal of up to $600 million at its monthly board meeting Wednesday.
The deal includes $450 million of new money and up to $150 million of refunding bonds, depending on market conditions. The authority expects to price the bonds as soon as next month, though the date is not certain.
The state delayed the marketing of a $1.2 billion PIT deal through the Dormitory Authority of the State of New York, originally expected to price in May, because the budget remains incomplete. Lawmakers have enacted a spending budget but not the revenue budget.
Gov. David Paterson revoked previous proclamations of a special legislative session Wednesday to clear the way for calling a new one, if necessary. The aim would be to finish the budget and possibly close a $1.06 billion gap in the increasingly likely event Congress doesn’t extend a temporary increase in its Federal Medical Assistance Percentages formula.
New York delayed the PIT deals to add new disclosure to the bond documents, though the state could begin issuing the bonds again without a completed state budget.
“We could go back into the market in the absence of a revenue bill because we have done so in the past in the absence of a budget,” Division of Budget spokesman Erik Kriss said in an e-mail. “Our best ballpark guesstimate for the timing [is] late August or September, but that could change subject to disclosure and other factors.”
Proceeds from the Thruway PIT deal will be used to reimburse municipalities for expenditures on bridge, road, and other transportation projects under several state programs. The board approved the deal as either partially or completely taxable Build America Bonds, but matters have been complicated by the need to ensure local governments are in compliance with Internal Revenue Service rules.
“There hasn’t been a determination yet whether or not we’ll apply BABs to this transaction,” said Thruway Authority chief financial officer John Bryan. “It’s relatively unlikely because of all of the work that needs to be done with 1,900 municipalities that these projects are ultimately reimbursed.”
Some of the municipalities are not sophisticated, making it hard to get necessary information, Bryan said. Another wrinkle is that some projects being reimbursed may be ineligible because they were completed before the BAB program was created, he said.
Hiscock & Barclay LLP and the Law Offices of Joseph C. Reid are co-bond counsel.
Goldman, Sachs & Co will lead manage the deal with Siebert Brandford Shank & Co. as coordinating manager, a role that is effectively co-book-runner.
First Southwest Co. is financial adviser.
