Analyses of GARVEE Bonding Capacity 2008

I. Purpose of Analyses

The following analyses are provided to assist the Commission in meeting the requirements of SB 928 (Chapter 862), sponsored by the STO to ensure California has the necessary state legislative authority to make use of this financing tool for accelerating high priority transportation projects.  The analyses relate specifically to those requirements found in Section 14553(b) of the Government Code, which states:

“Notwithstanding Section 7550.5 of the Government Code, on or before April 1 of each year, the commission, in conjunction with the Treasurer’s office, shall prepare an annual analysis of the bonding capacity of federal transportation funds deposited in the State Highway Account in the State Transportation Fund.”

The analyses have been performed consistent with the GARVEE bonds bonding capacity guidelines provided in Government Code Section 14553.4, which states:

“The Treasurer may not authorize the issuance of notes if the annual repayment obligations of all outstanding notes in any fiscal year would exceed 15 percent of the total amount of federal transportation funds deposited in the State Highway Account in the State Transportation Fund for any consecutive 12-month period within the preceding 24 months.”

The following analyses are intended to measure the capacity of the State Highway Account to support future issuance of GARVEE bonds, given:

1. the historical record of federal deposits to the State Highway Account (we examine deposits of pledged funds only);
2. requirements preceding any issuance of additional bonds under the Master Trust Indenture; and
3. the “statutory cap” on total outstanding GARVEE bonds.