HBA-NRS S.B. 241 77(R) BILL ANALYSIS Office of House Bill AnalysisS.B. 241 By: Lucio Transportation 4/17/2001 Engrossed BACKGROUND AND PURPOSE The federal National Highway System Designation Act of 1995 and the federal Transportation Equity Act for the 21st Century authorized the use of Grant Anticipation Revenue Vehicle (GARVEE) bonds to finance highway projects. GARVEE bonds may be issued by the state and are guaranteed by future federal reimbursements. The bonds are backed by state funds, usually state gas tax revenues, if federal funds are insufficient to repay the state's obligations. Allowing the Texas Transportation Commission (TTC) to utilize GARVEE bonds as a financing option may speed delivery of new construction projects. Senate Bill 241 authorizes TTC to fund state highway transportation projects through GARVEE bonds. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS Senate Bill 241 amends the Transportation Code to authorize the Texas Transportation Commission (TTC) to issue bonds secured by a pledge of and payable from revenue received or to be received by the federal government that is available for the payment of bonds and bond-related costs, other revenue deposited in the state highway fund, or a combination of those sources. The bill requires proceeds from the sale of grant anticipation revenue bonds (GARVEE bonds) issued to be used to fund improvements to the state highway system. The bill requires TTC to select the improvements to be funded considering certain criteria. The bill prohibits the proceeds of GARVEE bonds to be used for any purpose other than the purpose for which federal revenues are dedicated for certain state expenditures. The bill authorizes TTC to enter into bond enhancement agreements relating to GARVEE bonds and authorizes the agreements to be secured by and made payable from the same sources as GARVEE bonds. The bill provides that GARVEE bonds must mature not later than 15 years after their date of issuance. The bill prohibits GARVEE bonds issued and bond enhancement agreements from having a principal amount or terms that, at the time of the issuance or agreement, are expected to cause expenditures with respect to the obligations to exceed five percent of the federal highway obligation authority anticipated to be received by the state in any year payments are to be due on the obligations. The bill prohibits TTC from issuing GARVEE bonds without the approval of the Bond Review Board. Before the issuance of GARVEE bonds or the entering into of a bond enhancement agreement, the bill requires the proceedings relating to the issuance or agreement to be submitted to the attorney general for review and approval. The bill requires the comptroller of public accounts to withdraw from the state highway fund and forward to TTC or another person at the direction of TTC the amounts as determined by TTC to permit timely payment of the principal of and interest on GARVEE bonds that mature or become due and any cost related to GARVEE bonds that become due. Before each issuance of GARVEE bonds, the bill requires TTC to determine the 10-year historic average expenditure ratio of nonfederal aid projects to federal aid projects and certify that the ratio will not be reduced as a result of the proposed issuance. EFFECTIVE DATE November 6, 2001, if the constitutional amendment that authorizes the legislature to provide for the issuance of bonds for improvements to the state highway system is approved by the voters.