Transportation board to vote on new method to fund Bypass
If approved, a new method of funding the Monroe Bypass could speed construction and save $90 million. At their July 20 meeting, the Mecklenburg Union Metropolitan Planning Organization will vote on the possibility of using Garvee bonds to help fund the Bypass project.
“The use of Garvee bonds in the finance plan for Monroe will save money and, pending a favorable lawsuit ruling in August or September, will allow (the Turnpike Authority) to expedite the signing of the contract with its low bidder,” NCDOT Chief Finance Officer Mark Foster said.
Currently the project would be funded through three sources: federal bonds, state Transportation Improvement Program dollars and gap funds, authorized in 2009 by the N.C. General Assembly.
The federal bonds are “borrowed” dollars, using what’s known as “toll revenue” bonds to cover the cost. That money would have to be paid back through the funds generated from tolls set up on the Bypass. Because it’s not guaranteed how much the tolls will generate each year, those bonds have a higher interest rate and can be harder to sell. By switching to Garvee bonds, Foster said, the department could save money and move forward with the project as soon as the current lawsuit is resolved.
Garvee or Grant Anticipation Revenue Vehicle bonds, basically swap out a future project for a current one. The money is loaned out for a current project, with a lower interest rate. The region then pays the debt back by using future federal transportation grants.
“Garvee bonds will save money in two ways,” Foster said. “First, NCDOT can borrow at a lower interest rate. Second, NCDOT will borrow less because (toll revenue bonds) require much higher cash reserves. The total amount of borrowing for the Monroe project can be reduced by approximately $90 million”
NCDOT started looking at other ways of funding the project, Foster said, after the winning construction bidder announced they were considering withdrawing their bid, frustrated that the ongoing lawsuit prevented the state from selling the bonds needed to fund the project.
“The winning design-build team has thus far extended the bid, but is very concerned about rising prices,” Foster said. “Rebidding could delay the procurement process by more than six months and potentially add $65 million to the project bid cost.”
Monroe based Boggs Paving is part of that winning bid, a joint venture with Anderson Columbia Co. Inc and Rumel, Klepper and Kahl LLP. The state can’t officially award the contract for the road until the final round of bonds is sold. The project will stretch 19.7 miles, starting at the edge of Stallings and linking with Interstate 85 near Marshville.
The Turnpike Authority also can’t sell those final bonds with the lawsuit unsettled. The Southern Environmental Law Center filed a lawsuit against the Turnpike Authority last year, arguing the Bypass would do little to reduce the region’s air quality problems, as opposed to alternative solutions.
The National Environmental Policy Act, is the article cited by the Center, as they argue building the Bypass would endanger the environment. The Center alleges only information collected from the western end of the road was submitted to the state, giving a skewed picture of the project’s potential impact. Additionally, SELC alleges that inconsistent data was used in assessing the impact on streams in the Yadkin River water basin.
Using Garvee bonds would provide the state with a way around that issue, allowing the bonds to be sold and the contract awarded, so that the state can finish purchasing right of way and prepare for construction.
“Garvee bonds would enable us to fund and build the project before we would need to sell revenue bonds,” NCDOT Division 10 Engineer Barry Moose said.
MUMPO representatives will vote on moving forward with Garvee bonds July 20. Even with the delays, Turnpike officials said they expect the Bypass to be open sometime in early 2015.