The Louisiana State Bond Commission has agreed to Department of Transportation and Development (DOTD) Secretary Sherri H. LeBas’ request to bond all three years of the Quality Surface Program in an effort to take full advantage of the current historically low interest rates. Bonding the full amount for all three years now, rather than breaking the financing into multiple years, makes sound fiscal sense, according to LeBas.
This historic resurfacing program was made possible through legislation sponsored by Gov. Bobby Jindal allowing for the bonding of the State Highway Improvement Fund (SHIF) revenue stream for nonfederal-aid routes. The bonded funds, combined with the SHIF’s regular funds, will allow the state to improve the quality of roadways, many in rural areas that have not been repaired in more than 30 years due to lack of funding.
In September, the Bond Commission approved securing bond counsel and underwriters in order to receive financial information on the sale of the bonds. The intention in securing this counsel was to ensure that the state undertook the best financial deal possible.
At a hearing this week, the Bond Commission provided direction and authority to the solicitation team on moving forward with the financing of the Quality Surface Program’s $325-390 million bond effort.
The bonded funds, dependent on the market, will provide between $325 million and $390 million for the state to repair and resurface more than 700 miles of roadway.
At the hearing, the Bond Commission was presented the analysis related to issuing the entire amount now or doing it in two or three issues and made the final determination related to the financing of this program.
The three-year program, combined with the regular SHIF funds, includes approximately $425-490 million in projects to repair and resurface nearly 1,100 miles of roadway segments across Louisiana. Projects in the program were selected through DOTD’s priority program based on traffic volumes and roadway assessments, with the first year of projects having been submitted to the Bond Commission. The second year of projects has been going through the highway priority program public comment process and has been submitted to the Joint Transportation Committee, while year-three projects also will be selected through DOTD’s highway priority program. DOTD plans to accept bids for the first-year projects beginning in January 2013.
"We want to utilize the most efficient and effective plan to maximize the bond issuance,” said LeBas. “This is a prudent plan that makes good fiscal sense, builds roads and saves taxpayer dollars."
Nonfederal-aid routes are made up of mostly rural roads. Unlike major roadways, nonfederal-aid routes are not eligible for matching funds from the federal government, which means there is less money available to fund projects for rural roads throughout the state. The SHIF receives dedicated funding from commercial vehicle registration and license fees.