HB2206 - 472R - House Bill Summary

House of Representatives

HB 2206

state highway fund bonds

Sponsor: Representative Biggs

X	Committee on Transportation
	Committee on Appropriations (P)
	Caucus and COW
	As Engrossed and As Passed the House

HB 2206 removes the statutory cap (currently set at $1.3 billion) on Highway User Revenue Fund (HURF) parity bonds issued by the State Transportation Board.

History

Current statute prescribes a $1.3 billion cap on issuance of HURF bonds. ADOT reports that $1,278.3 million in HURF bonds are outstanding, and an additional $46 million has been programmed for construction projects in Fiscal year 2007 (the total exceeds the current cap because a portion of the currently outstanding HURF bonds will be retired during fiscal year 2007). These bonds have a final maturity in 2025. The total amount due in principal and interest (assuming no refunds), will be approximately $1.9 billion.

According to current statute, the monies subject to pledge for the payment of HURF bonds for the preceding twelve months must exceed by two times the highest annual principal and interest payment on all of the outstanding bonds and the bonds to be issued for the highest one year period during the life of both the outstanding bonds and the bonds to be issued. The HURF Bond Resolutions contain an additional bonds test that is more stringent than the statutory test. Under the Resolutions, additional senior HURF bonds may only be issued if HURF revenues are four times maximum annual debt service and additional subordinate HURF bonds may only be issued if HURF revenues are three times maximum annual debt service.

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.

The bonds have been sold in 34 separate issues between 1980 and 2004. All bonds outstanding as of June 30, 2004, are scheduled to mature on various dates, but not later than July 1, 2023. The bonds are obligations of the State Transportation Board and are not obligations of the State of Arizona.

Laws 2001, Chapter 238, increased the HURF bonding cap to $1 billion from $800 million. Laws 2003, Chapter 4 (HB 2588), Arizona Revised Statute 28-7510, increased the HURF bonding cap to $1.3 billion from $1.0 billion.

Provisions

Removes the HURF bonding cap on Highway User Revenue Fund (HURF) parity bonds issued by the State Transportation Board.

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Forty-seventh Legislature Analyst Initials _______