Analyses of GARVEE Bonding Capacity 2008

II. The 2004 GARVEE Financing

The Series 2004A Bonds are secured by a Master Trust Indenture dated February 1, 2004, as amended and supplemented by a First Supplemental Indenture dated February 1, 2004, by and among the Treasurer, the Commission and the California Department of Transportation (Department).  The Series 2004A Bonds and all future bonds and obligations issued under the Master Trust Indenture are secured solely by the Trust Estate, as defined in the Master Trust Indenture, which consists solely of federal transportation funds.  The primary source of federal transportation funds is the amount appropriated to the State by the federal government pursuant to Federal Aid Authorization, pursuant to Title 23 U.S. Code authorizing federal funding of state transportation projects.

The Department entered into a Memorandum of Agreement with the Federal Highway Administration (FHWA) in anticipation of reimbursement by FHWA for debt service and other bond related costs associated with the federal-aid projects approved by the FHWA.

The Master Trust Indenture provides for the issuance of additional bonds on parity with the Series 2004A Bonds.  Any additional parity bonds or other bonds issued on a basis subordinate to the Series 2004A Bonds would have to comply with the “statutory cap.”

The $657,713,000 proceeds of the Series 2004A Bonds were generated to pay a portion of the costs of acquisition of right-of-way and/or construction costs for eight federal-aid projects approved by the Commission for funding.  As of December 31, 2007, approximately 91 percent of the bond proceeds were expended for project delivery.  The Commission and the Department continue to monitor each project’s progress to ensure the expedient use of bond proceeds.