A bill pending in the state Senate would increase the Virginia Resources Authority’s debt ceiling to $1.5 billion from $900 million in response to increased demand from localities looking to enter the municipal bond market to finance infrastructure projects.
VRA executive director Sheryl Bailey said requests from localities to be included in the authority’s pooled financing program have more than tripled in the past year because of volatility in the bond market and the near extinction of bond insurance.
“Without the VRA, many of these communities would not have access to capital,” Bailey said.
The agency last came to market in mid-November with $200 million of infrastructure revenue bonds that financed projects for nine borrowers.
“When we closed that transaction, by that time, we already had another $100 million of requests,” Bailey said. “Many localities don’t have market access, and it is extremely expensive for those that do have access.”
The VRA was established in 1984 and can finance infrastructure related to roads and federal facilities, drinking water, wastewater, solid-waste management and recycling, airport facilities, law enforcement and emergency preparedness projects, brownfield remediation, and petroleum storage-tank cleanups. The authority created the pooled financing program in 2003 and issues debt in the spring and fall.
The VRA’s debt ceiling has not been raised since 2001. It currently has $865.7 million of debt outstanding for 64 borrowers.
Bailey said she expects the bill to make its way through the legislature. It is currently scheduled to be considered by the full Senate before heading to the House.