Debt Financing Prepared By: Lee Helgerson, Debt Manager October 1, - - PowerPoint PPT Presentation

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Debt Financing Prepared By: Lee Helgerson, Debt Manager October 1, - - PowerPoint PPT Presentation

May 23, 2023 214 likes •417 views

Governors Transportation Vision Panel Transportation Finance Subcom m ittee Debt Financing Prepared By: Lee Helgerson, Debt Manager October 1, 20 15 Agend a Oregons Bonding Process ODOT Debt Financing Program s Highw ay

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Governor’s Transportation Vision Panel

Transportation Finance Subcom m ittee

Debt Financing

October 1, 20 15 Prepared By: Lee Helgerson, Debt Manager

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Agend a

  • Oregon’s Bonding Process
  • ODOT Debt Financing Program s
  • Highw ay User Tax Revenue ( HUTR) Bonds
  • Facility Bonds
  • Certificates of Participation ( COPs)
  • Article XI -Q General Obligation ( GO) Bonds
  • Article XI , Section 7 State Highw ay GO Bonds
  • Lottery Revenue Bonds
  • Oregon Transportation Infrastructure Bank (OTIB)
  • Future State and Local Funding Options
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Governor Budget & Bonding Proposal Legislature Considers & Approves Bonding Bill State Treasurer Issues State Bonds Capital Markets Underwrite, Buy,& Sell Oregon State Bonds State Agencies Bond Program Managers Rating Agencies Moody’s, S&P, Fitch Credit Analysis

Oregon’s Bond ing Process

  • Governor Proposes
  • Legislature Approves
  • State Treasurer I ssues
  • State Agencies Adm inister

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Direct revenue bonded debt

  • Special revenue obligations of the State
  • Payable solely from dedicated State Highway Fund revenues
  • Does not constitute a debt or general obligation of the state

Oregon Transportation I nvestm ent Act ( OTI A) :

  • From 2001 to 2010 , the State committed over $2.4 billion of

bond proceeds for transportation projects

Jobs and Transportation Act ( JTA) :

  • 2009 legislation authorized $840 million in bonding for

highways and bridges

  • October 2013, the State issued $450 million in net bond

proceeds for JTA projects

  • The remaining $390 million in JTA bond authorization is

projected to be issued in Fall 2016

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Highw a y User Ta x Rev enue Bond s

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Fa cility Bond s

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Certificates of Participation ( COPs)

  • Appropriation credits
  • $75 million issued over last decade
  • State Radio Project (SRP)

Article XI -Q GO Bonds

  • New program – First issuance in 2011
  • Constitutes a general obligation of the State
  • Generally replaces the more costly COPs
  • Self-supporting or General Fund Supported
  • $158 million issued on behalf of ODOT
  • State Radio Project (SRP)
  • State Transportation Building Renovation
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$ 2 .5 billion of debt supported by the Highw ay Fund currently outstanding

  • $1.5 billion senior lien HUTR bonds rated

AAA/ Aa1/ AA+ by S&P , Moody’s, and Fitch

  • $826.2 million subordinate lien HUTR bonds

rated AA+ / Aa2/ AA

  • $169.5 million of COPs and XI-Q bonds

Rem aining $ 3 9 0 m illion of JTA authorization planned for Fall 2 0 1 6 :

  • $195 million fixed rate senior HUTR Bonds
  • $195 million variable rate subordinate HUTR

Bonds

Existing Gross Debt Service by Lien

$ Millions; By Fiscal Year; As of September 28, 2015

Existing and Projected Gross Debt Service by Lien

$ Millions; By Fiscal Year; As of September 28, 2015

Current Outstanding Par Amount by Lien Highway Trust Fund Bonds

$ Millions; As of September 28, 2015

65% 35% Senior Subordinate

Ov erv iew of Outsta nd ing Debt

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100 150 200 250 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Millions Senior Subordinate Facility Bonds Future Senior Future Subordinate

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100 150 200 250 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Millions Senior Subordinate Facility Bonds

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Com p osition of Debt

Currently and Projected Outstanding Par Amount by Product Highway Trust Fund Bonds

$ Millions; As of September 28, 2015

89% 11% Current Fixed Rate Variable Rate 83% 17% Projected Existing Gross Debt Service by Product

$ Millions; By Fiscal Year; As of September 28, 2015

Existing and Projected Gross Debt Service by Product

$ Millions; By Fiscal Year; As of September 28, 2015

Approxim ately 1 1 % of HUTR Bonds are variable rate

  • $265 million bank direct purchase SIFMA

indexed floating rate notes

  • Supported by considerable cash balances

Projected to rise to 1 7 % of outstanding HUTR Bonds after 2 0 1 6 JTA issuance

  • Still below 20% ‘rule of thumb’ limit

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100 150 200 250 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Millions Fixed Rate Variable Rate Facility Bonds

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100 150 200 250 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Millions Fixed Rate Variable Rate Facility Bonds Future Fixed Rate Future Variable Rate

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Most of the existing debt service supports the OTI A I / I I and OTI A I I I program s

  • Maximum total annual debt service supported by

the Highway Fund is approximately $207 million

  • Approximately $33 million of annual debt service

supports OTIA I/ II

  • Approximately $112 million of supports OTIA III

– $10 million of federal BABs subsidies applied as revenues to support the Series 2010A Taxable Build America Bonds

  • Approximately $28 million supports JTA
  • Approximately $23 million supports COPs and

XI-Q bonds Com pletion of the bonding for JTA in the Fall of 2 0 1 6 w ill increase aggregate m axim um annual debt service to approxim ately $ 2 1 0 m illion

  • Debt service will be structured to fill in the gap

between FY2018 and FY2028

  • Coverage of aggregate HUTR bond debt service

from FY2015 Pledged Revenue or $588.3 million expected to remain strong at 2.8x

Existing Gross Debt Service by Program

$ Millions; By Fiscal Year; As of September 28, 2015

Existing and Projected Debt Service by Program

$ Millions; By Fiscal Year; As of September 28, 2015

Debt by Progra m

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100 150 200 250 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Millions Non-OTIA OTIA I/II OTIA III JTA Facility Bonds

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100 150 200 250 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Millions Non-OTIA OTIA I/II OTIA III JTA Facility Bonds Future JTA

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Sta te Highw a y GO Bond s

Constitutional authority - Article XI , Section 7 1 9 7 4 - Last new m oney issuance 2 0 1 5 Legislative Assem bly in its HB 5 0 0 5 approved $ 3 5 m illion in State Highw ay GO Bonds for highw ay safety im provem ent projects:

  • US 26, 116th – 136th: $17,000,000
  • State Highway 34: $3,000,000
  • OR 126 Eugene to Florence: $7,000,000
  • I-5/ I-205 Cable Barrier: $2,500,000
  • US 26 Warm Springs to Downtown: $1,500,000
  • I-84 (Pendleton – La Grande): $4,000,000
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Lottery Rev enue Bond s

  • $ 8 1 0 m illion ODOT adm inistered Lottery Bonds

issued since program inception in 1 9 9 4

  • Funding restricted to non-highw ay eligible

m ultim odal purposes

  • Program funding includes:
  • ConnectOregon - $ 3 8 2 m illion issued
  • $42 million authorized in 2015-17 Biennium
  • Local Governm ent Projects - $ 4 2 8 m illion issued
  • $10 million for Port of Coos Bay authorized in 2015-17 Biennium
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Oregon Tra nsp orta tion Infra structure Ba nk (OTIB)

Established in 1 9 9 6 as one of the original State I nfrastructure Banks ( SI Bs) Funded w ith Federal funds and State m atching funds Total initial capitalization ~ $ 3 4 .5 m illion

  • Federal > $8.5 million
  • State match > $2 million
  • Other SHF contribution > $2 million
  • SHF Line of Credit > $22 million

OTIB Loans Originated

  • 40 loans originated totaling $85 million, serving 29

communities in all 5 ODOT regions.

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Oregon Tra nsp orta tion Infra structure Ba nk (OTIB)

Benefits to Oregon Com m unities

  • Generally “AA” Costs of Borrowing Through Pledge of Highway

User Tax Apportionment

  • Draw Down Construction Loans
  • Low Cost of Financing (1% )
  • Flexible Terms
  • No Prepayment Penalty
  • DOJ Standardized Loan Documents
  • Matching Funds for State & Federal Funding or Grants
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New revenue stream s could support additional borrow ing for State-level projects Transportation I nfrastructure Bonds

  • Convenient rule of thumb for Highway Revenue Bonds:
  • $21 million in new annual revenue can support approximately $100

million in new bonding for projects while still preserving targeted debt service coverage and existing high credit ratings

  • Assumes 25-year bond maturity with a minimum 3–times pledged

revenue to debt service coverage ratio

Tolls

  • Tolls can also provide additional funding and borrowing
  • pportunities
  • Bridges
  • Managed Lanes

Future Sta te Fund ing Op tions

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Public-Private Partnerships ( P3 s) can help facilitate m ajor transportation initiatives

  • Public sector participation in major projects can facilitate more

efficient project delivery and reduce costs

  • P3 can mean anything from a design-build contract for

construction, to a full risk transfer to a private party through a design-build-finance-operate-maintain concession agreement

Future Sta te Fund ing Op tions

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Federal financing vehicles can also facilitate financing of m ajor transportation projects

  • Transportation Infrastructure Finance and Innovation (TIFIA) Act
  • TIFIA loans – flexible and low-cost borrowing tool for transportation

projects, particularly toll projects

  • Interest rate is equivalent to the 30-year U.S. Treasury rate - currently

equals a borrowing cost of 2.86%

  • Private Activity Bonds (PAB)
  • Tax-exempt bonds available to private developers of transportation P3

projects

  • Build America Transportation Investment Center (BATIC)
  • Recently formed within USDOT to serve as a single point of contact to

assist state and local government project sponsors looking to utilize federal transportation expertise, apply for federal transportation credit programs, and explore ways to access private capital in P3s

Future Sta te Fund ing Op tions

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Oregon Transportation I nfrastructure Bank ( OTI B)

  • Provides Oregon local governm ents w ith an affordable

source of financing for transportation projects

  • Additional funding is necessary to continue the program
  • Som e considerations include:
  • Bonding to leverage existing loan repayments can provide additional

proceeds, although some equity infusion likely will be necessary to significantly expand the OTIB

  • $200 million of statutory revenue bonding authorization exists but has

not been used

  • Federal Recapitalization of State Infrastructure Banks (SIBs)
  • State Highway User Tax Revenue Bonds
  • State Highway GO Bonds
  • State Highway Fund Revenues

Future Loca l Fund ing Op tions

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Rural TI FI A Program could help finance local transportation projects

  • Projects must be $25 million or more
  • Interest rate is ½ the amount for a regular TIFIA loan (or ½ of

the 30-Year Treasury yield – currently equals a borrowing cost of 1.43%

  • Could be used in conjunction with OTIB

Future Loca l Fund ing Op p ortunities

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Sum m a ry

  • Oregon’s Bonding Process
  • ODOT Debt Financing Program s
  • State Highway Fund Supported
  • Lottery Revenue Supported
  • Oregon Transportation Infrastructure Bank (OTIB)
  • Future State and Local Funding Options
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Questions?

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