2019 -- H 5883

========

LC002199

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

____________

J O I N T   R E S O L U T I O N

AUTHORIZING THE ISSUANCE AND REFINANCING OF GARVEE BONDS

     

     Introduced By: Representatives Edwards, Bennett, Canario, Casey, and Maldonado

     Date Introduced: March 21, 2019

     Referred To: House Finance

     (Dept. of Transportation)

1

     SECTION 1. This joint resolution consists of joint resolutions submitted pursuant to

2

chapter 18 of title 35.

3

     SECTION 2. Refinancing of GARVEE Bonds.

4

     WHEREAS, The Rhode Island Department of Transportation ("RIDOT") has

5

undertaken five (5) major transportation projects, and these projects were either

6

substantially completed or nearing completion in the year 2019; and

7

     WHEREAS, The construction of these projects was deemed critical in order to preserve

8

and maintain the public safety and continued economic success and viability of the state of Rhode

9

Island, its ports and infrastructure; and

10

     WHEREAS, RIDOT explored various options to finance the costs of the five (5) major

11

transportation projects and determined that the federal-aid financing program authorized in

12

federal law by Section 311 of the National Highway System Designation Act of 1995 and

13

commonly referred to as the Grant Anticipation Revenue Vehicle Program ("GARVEE

14

Program") represented the best financing mechanism for the state of Rhode Island in as much as

15

the GARVEE Program accelerated the funding and construction of the five (5) major

16

transportation projects; and

17

     WHEREAS, The general assembly, in Chapter 376, Article 36, Section 8 of the Public

18

Laws of 2003, authorized the Rhode Island Economic Development Corporation, now the Rhode

19

Island commerce corporation ("commerce corporation"), to issue bonds ("GARVEE Bonds") or

20

other debt instruments on behalf of RIDOT and such GARVEE Bonds are secured by future

 

1

appropriations for federal-aid transportation projects whereby such amounts are used to cover an

2

assortment of bond-related costs, including principal and interest payments, issuance costs,

3

insurance, and other costs incidental to financing; and

4

     WHEREAS, GARVEE Bonds may be issued as special, limited obligations payable

5

solely from federal transportation funds, subject to annual appropriation by the state, without a

6

full faith and credit pledge by the state; and the holders of the GARVEE Bonds may not look to

7

any other revenues of the commerce corporation, the state or RIDOT for the payment of the

8

GARVEE Bonds; and

9

     WHEREAS, The original Public Corporation Debt Management authorization in Article

10

36 of the FY 2004 Budget as enacted included a total of seven hundred nine million six hundred

11

thousand dollars ($709,600,000) in GARVEE funding to be distributed across five (5) projects, as

12

follows: one hundred twenty-six million two hundred thousand dollars ($126,200,000) for the

13

Sakonnet River Bridge; three hundred forty-eight million three hundred thousand dollars

14

($348,300,000) for the Route I-195 Relocation; eighty-five million four hundred thousand dollars

15

($85,400,000) for the Washington Bridge; forty-two million five hundred thousand dollars

16

($42,500,000) for the Freight Rail Improvement Program (FRIP); and one hundred seven million

17

two hundred thousand dollars ($107,200,000) for Route 403; and

18

     WHEREAS, Interest rates are at historical lows and the existing revenue available to

19

RIDOT is insufficient to fund the necessary program to replace, reconstruct, and maintain Rhode

20

Island's bridges and otherwise bring the state's transportation infrastructure into a state of good

21

repair; and

22

     WHEREAS, It would be in the best interests of the state to maximize all potential sources

23

of revenue to provide a more robust infrastructure program; now, therefore be it

24

     RESOLVED AND ENACTED, That the governor of the state of Rhode Island or the

25

director of the department of transportation or the director of the department of administration or

26

the chief executive officer or the chief operating officer of the commerce corporation each be and

27

each hereafter are, acting singly, authorized and empowered by the general assembly to enter into

28

a financing lease, guarantee, loan and trust agreement, indenture or other obligations or contracts

29

or agreements and to take such other actions as such official shall deem necessary or appropriate

30

in order to issue or facilitate the refinancing and restructuring by the commerce corporation of the

31

previously issued GARVEE Bonds pursuant to the authorization granted in Chapter 376, Article

32

36, Section 8 of the Public Laws of 2003; and be it further

33

     RESOLVED, That the commerce corporation or any subsidiary thereof or other

34

instrumentality, agency or quasi-public corporation otherwise authorized and empowered to

 

LC002199 - Page 2 of 5

1

refinance and restructure the bonds specified in this Joint Resolution each be and each hereafter

2

are, acting singly, authorized and empowered by the general assembly to provide for the

3

necessary security for such bonds consistent with the provisions of this Joint Resolution,

4

including any action to pledge, assign or otherwise transfer the right to receive all or any portion

5

of future Federal Highway Administration (FHWA) appropriations for federal-aid transportation

6

projects or other revenues permitted by the laws of the state of Rhode Island to secure or provide

7

for the payment of any such GARVEE or other bonds; and be it further

8

     RESOLVED, That notwithstanding the amount of total debt service referenced in

9

Chapter 376, Article 36, Section 8 of the Public Laws of 2003 and Chapter 241, Article 7, Section

10

5 of the Public Laws of 2012, any refinancing and restructuring may be structured to provide a

11

net benefit to RIDOT with the approval of the governor; and be it further

12

     RESOLVED, That no other changes in allocations or expenditure are authorized beyond

13

the amendments included in this Joint Resolution; and be it further

14

     RESOLVED, That this general assembly hereby approves refinancing and restructuring

15

of the existing GARVEE Bonds in order to provide funding for critical and transportation

16

infrastructure needs; and be it further

17

     RESOLVED, That this joint resolution shall take effect immediately upon its passage by

18

the general assembly.

19

     SECTION 3. Issuance of GARVEE Bonds.

20

     WHEREAS, The Rhode Island department of transportation ("the department") has

21

completed a detailed review of available funding sources for transportation reconstruction,

22

maintenance, and repair and has determined that the funding available to carry out an immediate

23

program of bridge reconstruction and preventative maintenance (the "program") is insufficient;

24

and

25

     WHEREAS, The limitation in funding has occurred, in part, due to the absence of a stateĀ­

26

funded capital investment program in transportation infrastructure, and the level funding of

27

federal appropriations to the state, along with a reduction in federal funding through the

28

elimination of federal earmarks and expiration of additional special federal funds; and

29

     WHEREAS, Congress has enacted the Fixing America's Surface Transportation (FAST)

30

Act, which provides an increase in available federal funding; and

31

     WHEREAS, The department has explored various options to finance the costs of a robust

32

infrastructure program and concluded that the federal-aid financing program authorized in federal

33

law by Section 311 of the National Highway System Designation Act of 1995 and commonly

34

referred to as the Grant Anticipation Revenue Vehicle Program ("GARVEE program") represents

 

LC002199 - Page 3 of 5

1

the best financing mechanism for the state of Rhode Island inasmuch as the GARVEE program

2

accelerates the funding available to ensure that more Rhode Island bridges do not become

3

structurally deficient; and

4

     WHEREAS, The GARVEE program allows a state to issue bonds ("GARVEE Bonds")

5

or other debt instruments backed by future appropriations for federal-aid transportation projects

6

whereby such amounts are used to cover an assortment of bond-related costs, including principal

7

and interest payments, issuance costs, insurance, and other costs incidental to financing; and

8

     WHEREAS, Among other advantages, GARVEE Bonds may be issued as special

9

revenue bonds without a full faith and credit pledge by the state of Rhode Island; and

10

     WHEREAS, This general assembly finds that the reconstruction, maintenance, and repair

11

of the transportation infrastructure of the state is critical for economic development and the

12

general welfare of both businesses and residents; and

13

     WHEREAS, The general assembly has studied the issue of sustainable transportation

14

funding and has determined that no single approach, instrument or method is able to provide

15

sufficient revenue to maintain the state transportation system in a state of good repair; and

16

     WHEREAS, The department has determined that GARVEE Bonds should be utilized to

17

fund the bridge replacement, reconstruction, and maintenance component of the ten (10) year

18

capital program known as RhodeWorks; and

19

     WHEREAS, In connection with the issuance of GARVEE Bonds, the state of Rhode

20

Island, acting by and through RIDOT, may elect to receive in lieu of certain monies which would

21

otherwise have been received as reimbursement from FHWA for project costs for bridges in the

22

RhodeWorks program, debt service payments to repay indebtedness in the form of bonds or notes

23

issued to finance the costs of the construction and financing bridges in the RhodeWorks program;

24

and

25

     WHEREAS, The Rhode Island Public Corporation Debt Management Act (chapter 8 of

26

title 35) requires the general assembly to provide its consent to the issuance of certain obligations

27

for essential public facilities of the type referenced herein; and

28

     WHEREAS, The design, construction, equipping and completion of these improvements

29

will be financed in whole or in part through revenue bonds issued pursuant to the GARVEE

30

program by the Rhode Island commerce corporation ("commerce corporation") or through

31

revenue bonds issued pursuant to the GARVEE program by another agency, instrumentality or

32

quasi-public corporation established by the state of Rhode Island now or hereafter and otherwise

33

authorized and empowered pursuant to law to issue bonds of the type referenced herein for the

34

types of projects enumerated herein, with such issuance having an expected term of fifteen (15)

 

LC002199 - Page 4 of 5

1

years, and annual revenues for the operation and maintenance of the bridges to be included in the

2

annual operating budget of RIDOT; and

3

     WHEREAS, The capital costs and anticipated bond issuance amounts associated with

4

these projects are estimated to be two hundred million dollars ($200,000,000); now, therefore, be

5

it

6

     RESOLVED AND ENACTED, That the bridges in the RhodeWorks program are each

7

essential public facilities and critical to ensure the economic viability of the citizens, businesses,

8

transportation, marine trades and port facilities of the state of Rhode Island and otherwise in the

9

best interests of the state of Rhode Island, and that this general assembly hereby approves

10

financing not to exceed two hundred million dollars ($200,000,000) in principal amount of

11

GARVEE Bonds, the repayment of which shall be derived from and supported by FHWA funds

12

due the state of Rhode Island. The term of the GARVEE Bonds shall not exceed fifteen (15) years

13

and the total debt service on the GARVEE Bonds shall not exceed two hundred seventy-five

14

million dollars ($275,000,000); and be it further

15

     RESOLVED, That the governor of the state of Rhode Island or the director of the

16

department of transportation or the director of the department of administration or the chief

17

executive officer or the chief operating officer of the commerce corporation each be and each

18

hereafter are, acting singly, authorized and empowered by the general assembly to enter into a

19

financing lease, guarantee, loan and trust agreement, indenture or other obligations or contracts or

20

agreements and to take such other actions as such official shall deem necessary or appropriate in

21

order to issue or facilitate the issuance of the GARVEE Bonds and to provide the commerce

22

corporation or any subsidiary thereof or other instrumentality, agency or quasi-public corporation

23

otherwise authorized and empowered to issue the bonds specified in this Joint Resolution for the

24

RhodeWorks program with the necessary debt service payments up to the amount specified above

25

and the necessary security for such bonds consistent with the provisions of this Joint Resolution,

26

including any action to pledge, assign or otherwise transfer the right to receive all or any portion

27

of future FHWA appropriations for federal-aid transportation projects or other revenues permitted

28

by the laws of the state of Rhode Island to secure or provide for the payment of any such

29

GARVEE Bonds; and be it further

30

     RESOLVED, That this joint resolution shall take effect immediately upon its passage.

========

LC002199

========

 

LC002199 - Page 5 of 5