During this tough economic time, the N.C. Department of Transportation is working hard to stretch every transportation dollar. One way we are helping our funds go further is by selling a second round of Grant Anticipation Revenue Vehicles, or GARVEE bonds.
GARVEE bonds allow us to borrow against future federal funding. Using that money, we can move forward with important highway improvement projects now rather than waiting years for the funding to become available through traditional sources. This helps reduce construction-related inflation and saves time.
This week, we sold $242.5 million in GARVEE bonds at an interest rate of 3.36 percent. That is about half a percentage point lower than the first time we sold GARVEE bonds in 2007. We earned a lower interest rate because we have proven to Wall Street that our GARVEE bond program is effective and reliable. Based on market confidence, Standard and Poor’s has upgraded NCDOT’s bond rating to AA from AA- in an economic climate where upgrades are not common.
We are using the GARVEE bonds to fund 49 projects across the state. The money is allowing us to accelerate construction by 3.5 years and save hundreds of millions of taxpayer dollars by avoiding inflationary costs. These projects include widening I-40 in Raleigh from Wade Avenue to U.S. 1/64, building the New Bern Bypass and purchasing right of way for the I-85 Corridor Improvement project in Davidson and Rowan counties.
Our use of GARVEE bonds will not stop there. We plan to sell more GARVEE bonds in the future, but we must schedule those sales in cycles to ensure we abide by federal rules. They require us to pay for projects within set time periods, and our expenses have to match what we borrow. By actively following those guidelines, we will maintain our high bond rating and continue to save taxpayer money while completing needed projects sooner.