transportation; parity
bonds; limits.
Dp |
Committee on Transportation |
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W/D |
Committee on Appropriations |
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DP |
Caucus and COW |
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DP |
Third Read |
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DP |
As Passed the House |
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X |
As Transmitted to Governor |
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House Bill 2588 increases the statutory cap on Highway User Revenue Fund (HURF) parity bonds issued by the State Transportation Board by $300 million.
The State Transportation Board issues Highway User Revenue Bonds to accelerate the construction of highway construction projects throughout Arizona. The pledged revenues for the bond issues are the HURF funds deposited in the State Highway Fund. The bonds are an obligation of the State Transportation Board and are not obligations of the State of Arizona. They do not constitute a legal debt of the State, and payment is not enforceable from any revenue other than HURF.
Within the structure of HURF bonds, bonds may be issued on a senior or subordinate level. Bonds issued in the first year may be issued at a senior level with certain rates of return, rights and covenants attached. If senior level bonds are issued within the second year with the same return rates, rights and covenants, the second year bond issue is considered to be a “parity” bond, or a bond equal to the HURF bonds issued in the first year.
Current statute prescribes a $1 billion cap on issuance of HURF bonds. ADOT reports that $776 million in HURF bonds are outstanding, and that the remaining $225 million has been programmed for construction projects in Fiscal year 2003-2004. These bonds will mature in July of 2020. The total amount due in principal and interest (assuming no refunds), will be approximately $1.1 billion.
According to ADOT, given current economic forecasts, increasing the bond cap will mitigate anticipated federal fund losses over the current five-year program. In addition, the 2001 bonding cap increase did not totally offset the Vehicle License Tax and general fund cuts enacted at that time. ADOT states that acceleration of projects through bonding can offset higher, future inflation costs, particularly with right-of-way purchases, and that the cost of borrowing is lower with HURF bonds than with Board Funding Obligations.
Arizona’s HURF bond program is rated highest in the nation (AAA/Aa1).
Increases the HURF bonding cap from $1 billion to $1.3 billion.
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45th
Legislature
Second
Regular Session 2 May 13, 2002
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