Louisiana plans to use a federal borrowing program for the first time to issue $600 million of bonds to advance four transportation projects.
The House Committee on Transportation, Highways and Public Works and the Senate Committee on Transportation, Highways and Public Works met jointly Wednesday and approved issuance of grant anticipation revenue vehicle bonds to finance the projects.
A state law authorizing Garvees has been on the books since 2002.
“We put together a proposal to use Garvee bonds for a number of projects that will be culminating their environmental reviews later this year,” Department of Transportation and Development Secretary Shawn Wilson told the committee. Some of the projects have been planned for up to 30 years.
When asked about the stability of the Federal-aid Highway Program, Wilson said more than 25 states have used Garvees and none of them have stopped using the financing program because of budget difficulties in Washington, D.C.
Sen. Jim Fannin, R-Jonesboro, said the state considered using Garvee bonds twice before but received recommendations against moving forward with the program. “What changed today?” he asked.
Wilson said the state had a manageable capital program for a number of years that was supported by surpluses and federal stimulus funds that could be used without any restrictions.
“It’s important to note that if we had additional revenue on a sustainable basis we would not be here today,” he said. “What you see here is a balanced approach to investing in infrastructure but also using a tool that we have not used.”
Wilson said that legal opinions that he reviewed said the Garvee bonds would not impact the state’s debt limit because the federal money goes directly to bondholders.
Some committee members were concerned that the transportation department will spend about $67 million a year as the state’s matching share required by the Garvee program, meaning those funds will not be available for other local projects.
“When we start spending $300 million of these Garvee bonds, we’re not tapping into other funds,” Wilson said.
When each project is ready to begin construction over the next three or four years, Wilson said, bonds will be issued for each project with 12-year maturities to pay down the debt quickly as opposed to tying up funds over a longer period of time.
Local entities and planning organizations are also contributing funds toward the projects.
Several people committee members and others appearing before the panel hailed the inclusion of a project to substantially reconstruct and widen Interstate 10 from the Mississippi River Bridge to the area where I-10 and I-12 split in Baton Rouge.
“The capital region I-10 widening is so critical to our region,” said Baton Rouge Area Chamber President Adam Knapp. “This is the most traffic congested chokepoint.”
Knapp cited a Texas A&M Transportation Institute Urban Mobility Scorecard that ranked Baton Rouge as the third worst for mid-sized cities for commuter delays and excess fuel costs.
Other projects to be financed with Garvee bonds include a new I-10 interchange for the new airport terminal under construction at the Louis Armstrong New Orleans International Airport and a new I-20 access point to Barksdale Air Force Base in Bossier City.
The Garvee program also must be approved by the Joint Legislative Committee on the Budget and the State Bond Commission.