Analyses of GARVEE Bonding Capacity 2008

VII. California Transportation Commission Policy

The Commission adopted a GARVEE policy in December 2003.  This policy extends through the next federal transportation reauthorization act, which is expected to continue through the 2008-09 federal fiscal year.

The policy, contained in Commission Resolution No. G-03-21, is as follows:

• Debt Limit. The Commission limits annual GARVEE debt service to 15 percent of qualifying federal revenues.  This limit will be calculated on the basis described in Section 14553.4 of the Government Code (i.e., 15 percent of the total amount of federal transportation funds deposited in the State Highway Account for any consecutive 12-month period within the preceding 24 months). In 2004 SB 1507 amended the statutory cap from a 30 percent limit to a 15 percent limit, which aligned it with the commission’s policy.
• Term. Each bond is structured for debt service payments over a term of no more than 12 years.
• Project Selection. The Commission selects projects for accelerated construction through the use of GARVEE bonding.  The selection will be made through the programming process for the State Transportation Improvement Program (STIP) and the State Highway Operation and Protection Program (SHOPP).  The Commission will select projects that are major improvements to corridors and gateways for interregional travel and goods movement.  Major improvements include projects that increase capacity, reduce travel time, or provide long-life rehabilitation of key bridges or roadways.