Since January 2004, six new Grant Anticipation Revenue Vehicle (GARVEE) issues have been brought to market ranging from Oklahoma's $47.6 million issue to New Mexico's $700 million issue that was part of a $1.1 billion combined refunding/new money bond sale. These six new issues brought total GARVEE bond issuance since Ohio's first issue in May 1998 to over $5 billion.

Arizona

The Arizona Department of Transportation (ADOT) in mid-May issued $51 million of Grant Anticipation Notes (GANs) to fund Arizona's share of the cost to construct the Hoover Dam Bypass Bridge. The construction project will be managed by the Central Federal Lands Highway Division with funding provided by ADOT and the Nevada DOT. The GANs have an average life of 6.8 years and a final maturity of July 1, 2014. The True Interest Cost (TIC) for this issue is 4.116 percent. The GANs are insured by AMBAC. ADOT expects to repay the GANs, which are Arizona's version of GARVEE bonds, with future Federal reimbursements.

California

On March 10, 2004 the State of California issued $615 million in Federal Highway Grant Anticipation Bonds Series 2004A. The bonds received underlying ratings of Aa3, AA-, and AA- from Moody's, Standard & Poor's, and Fitch Ratings, respectively. All but the 2005 series were also backed by bond insurance, which brought the ratings up to AAA.

The bonds will finance San Diego's I-15 managed lanes; Riverside's SR-60 and SR-91/I-215; three Santa Clara projects (I-880, and SR-87 North and South); and three Los Angeles projects (I-5 HOV Lanes, I-405 Auxiliary Lanes, and I-405/Highway 101 Gap Closure).

The bonds are structured with level debt service, with maturities ranging from 2004 through 2015. The maximum annual debt service is $73 million, in FY 2013.

California's enabling legislation permits GARVEEs to be issued only if the combined debt service on all outstanding issues does not exceed 30 percent of the state's historical annual deposits of Federal funding into its highway trust fund. In the Master Trust Indenture for this bond issuance, the California Transportation Commission further strengthened the security by reducing this test to 25 percent (legally) and 15 percent as a matter of policy. Using these tests under varying market conditions, an April 2004 analysis of the State Treasurer shows that the state has total capacity ranging from a low of $2.8 billion to a high of $8.0 billion.

Oklahoma

Oklahoma also issued its first of a series of planned GARVEE bonds this March in the amount of $47.575 million. With the premium, Oklahoma realized $50 million in net proceeds that will be used on projects located on 12 transportation corridors of economic significance across the state. The proceeds will be used for right-of-way acquisition, utility relocation, and construction. The state Supreme Court's decision that permitted issuance of the bonds prohibited the state from seeking bond insurance, so the bonds were not insured.

The stand-alone bonds, which will run for a term of 15 years, achieved ratings of Aa3 and A+ from Moody's and Fitch, respectively. The issue was priced on March 4, 2004 and closed on March 24 with an average cost of 3.59 percent. The state anticipates a second issuance to occur in March 2005 for a similar amount - $50 million. These proceeds will be used for additional work within the 12 transportation corridors.

Colorado

On May 17, the State of Colorado completed its final new money issuance of TRANs (Transportation Revenue Anticipation Notes) bonds totaling $134.6 million. This is the culmination of the state's multibillion-dollar GARVEE program. Additionally, the Colorado DOT sold $280.2 million of refunding, noncallable revenue anticipation notes. The refunding will save the state $9.8 million.

The bond proceeds and savings will allow a critical project to proceed in Colorado Springs pending approval of an Environmental Assessment. The project includes major reconstruction and widening of I-25 through the heart of the city, which follows on the success of the widening of I-25 through Denver known as the T-REX project. The Colorado Springs I-25 project could start in spring of 2005 and is estimated to cost approximately $140 million.

Puerto Rico

On April 6, 2004, the Puerto Rico Highway and Transportation Authority priced its first series of GARVEEs as part of a $621 million transportation issue that also included new money transportation bonds and refunding bonds. A total of $136.0 million in GARVEE bonds was sold, secured only by Federal highway reimbursements. The maturities range from 2005 to 2021. The bonds were rated A2 by Moody's and A by Standard and Poor's. A portion of the bond proceeds will be used to fully fund a debt service reserve fund.