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2022 N A T I O N A L C O O P E R A T I V E H I G H W A Y R E S E A R C H P R O G R A M NCHRP RESEARCH REPORT 990 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt WSP USA Inc. Washington, DC B Reese Advisory Midlothian, VA Subscriber Categories Administration and Management â¢ Highways Research sponsored by the American Association of State Highway and Transportation Officials in cooperation with the Federal Highway Administration
NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM Systematic, well-designed, and implementable research is the most effective way to solve many problems facing state departments of transportation (DOTs) administrators and engineers. Often, highway problems are of local or regional interest and can best be studied by state DOTs individually or in cooperation with their state universities and others. However, the accelerating growth of highway transporta- tion results in increasingly complex problems of wide interest to high- way authorities. These problems are best studied through a coordinated program of cooperative research. Recognizing this need, the leadership of the American Association of State Highway and Transportation Officials (AASHTO) in 1962 ini- tiated an objective national highway research program using modern scientific techniquesâthe National Cooperative Highway Research Program (NCHRP). NCHRP is supported on a continuing basis by funds from participating member states of AASHTO and receives the full cooperation and support of the Federal Highway Administration (FHWA), United States Department of Transportation, under Agree- ment No. 693JJ31950003. The Transportation Research Board (TRB) of the National Academies of Sciences, Engineering, and Medicine was requested by AASHTO to administer the research program because of TRBâs recognized objectivity and understanding of modern research practices. TRB is uniquely suited for this purpose for many reasons: TRB maintains an extensive com- mittee structure from which authorities on any highway transportation subject may be drawn; TRB possesses avenues of communications and cooperation with federal, state, and local governmental agencies, univer- sities, and industry; TRBâs relationship to the National Academies is an insurance of objectivity; and TRB maintains a full-time staff of special- ists in highway transportation matters to bring the findings of research directly to those in a position to use them. The program is developed on the basis of research needs iden- tified by chief administrators and other staff of the highway and transportation departments, by committees of AASHTO, and by the FHWA. Topics of the highest merit are selected by the AASHTO Special Committee on Research and Innovation (R&I), and each year R&Iâs recommendations are proposed to the AASHTO Board of Direc- tors and the National Academies. Research projects to address these topics are defined by NCHRP, and qualified research agencies are selected from submitted proposals. Administration and surveillance of research contracts are the responsibilities of the National Academies and TRB. The needs for highway research are many, and NCHRP can make significant contributions to solving highway transportation problems of mutual concern to many responsible groups. The program, however, is intended to complement, rather than to substitute for or duplicate, other highway research programs. Published research reports of the NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to https://www.mytrb.org/MyTRB/Store/default.aspx Printed in the United States of America NCHRP RESEARCH REPORT 990 Project 19-15 ISSN 2572-3766 (Print) ISSN 2572-3774 (Online) ISBN 978-0-309-68681-5 Library of Congress Control Number 2022934264 Â© 2022 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FTA, GHSA, NHTSA, or TDC endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The research report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; the FHWA; or the program sponsors. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the National Cooperative Highway Research Program do not endorse products or manufacturers. Trade or manufacturersâ names or logos appear herein solely because they are considered essential to the object of the report.
The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Marcia McNutt is president. The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. John L. Anderson is president. The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The National Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.nationalacademies.org. The Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. The mission of the Transportation Research Board is to provide leadership in transportation improvements and innovation through trusted, timely, impartial, and evidence-based information exchange, research, and advice regarding all modes of transportation. The Boardâs varied activities annually engage about 8,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.
C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR NCHRP RESEARCH REPORT 990 Christopher J. Hedges, Director, Cooperative Research Programs Lori L. Sundstrom, Deputy Director, Cooperative Research Programs Waseem Dekelbab, Associate Program Manager, National Cooperative Highway Research Program Lawrence Goldstein, Senior Program Officer (retired) Jennifer L. Weeks, Senior Program Officer Anthony P. Avery, Senior Program Assistant Natalie Barnes, Director of Publications Heather DiAngelis, Associate Director of Publications Sreyashi Roy, Editor NCHRP PROJECT 19-15 PANEL Field of AdministrationâArea of Finance Michael J. DeMers, Missouri Department of Transportation, Jefferson City, MO (Chair) Thomas H. Boast, THB Advisory LLC, Brooklyn, NY David A. Clark, District of Columbia, Washington, DC Lisa Danka, Arizona Department of Transportation, Phoenix, AZ Douglas D. Gransberg, Gransberg & Associates, Inc., Norman, OK Brian Keys, Columbia, SC Suzanne H. Sale, Phoenix, AZ Humberto Adolfo Tasaico, North Carolina Department of Transportation, Raleigh, NC Jennifer L. Wright, Texas Department of Transportation, Austin, TX Ben Hawkinson, FHWA Liaison Jennifer Brickett, AASHTO Liaison William B. Anderson, TRB Liaison
NCHRP Research Report 990 is a guidebook that provides a detailed, step-by-step approach to debt issuance and management, featuring a diverse suite of effective practices issuers can use to inform their decisions. The guidebook describes the federal institutions and tools available to state and regional debt issuers, and provides guidance and effective practices for each phase of the debt issuance and management process. It will be of immediate interest to surface transportation debt financial practitioners, executives, and other key decision-makers. Prior studies identified key challenges currently facing surface transportation agency debt management professionals. These challenges include the following: â¢ Accessing complete information about the stateâs or agencyâs comprehensive debt obliga- tions, making it difficult for issuers to effectively do their jobs; â¢ Responding to uncertainty following economic downturns, especially uncertainty sur- rounding federal funding and new federal tax reforms; and â¢ Technological advances that have impacted traditional revenue sources like gas taxes. Under NCHRP Project 19-15, âGuidebook for Effective Policies and Practices for Managing Surface Transportation Debt,â WSP USA conducted a comprehensive synthesis of practice, interviewed debt management practitioners, and documented case study examples to develop practical guidance for transportation agencies to address challenges encountered by profes- sionals managing debt for transportation agencies. The resultant guidebook describes effective practices and lists additional resources practitioners can apply to manage an effective debt management process, using a set of geographically diverse case studies to highlight differences between issuers and debt programs from state to state. The guidebook is accompanied by case studies, a âTechnical Memorandum on Implemen- tation of Research Findings and Products,â and a presentation about the guidebook. These materials can be found on the National Academies Press website (www.nap.edu) by searching for NCHRP Research Report 990: Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt. The findings from this research, as documented in this guide- book, are intended to help issuers prepare for and implement the various decisions they must make, identifying alternative strategies available to them throughout the process while offer- ing diverse and nuanced recommendations on what practices add value in different contexts. F O R E W O R D By Jennifer L. Weeks Staff Officer Transportation Research Board
1 Summary 8 Chapter 1 Introduction 8 1.1 Purpose 8 1.2 Context 9 1.3 Approach 11 1.4 Framework 12 1.5 Organization 13 Chapter 2 National Context for Debt Issuance 13 2.1 Overview 13 2.2 Laws, Regulations, and Guidelines 16 2.3 Federal Transportation Financing Programs 18 2.4 Endnotes 19 Chapter 3 Phase 1: The Decision ProcessâPlanning for Debt Issuance 19 3.1 Overview 19 3.2 Determining the Need to Issue Debt 20 3.3 Developing Debt-Management Policies 27 3.4 Determining Financing Approaches and Debt Types 32 3.5 Implementing Iterative Learning 33 3.6 Summary 34 3.7 Endnotes 35 Chapter 4 Phase 2: Individual Transaction Preparation and Development 35 4.1 Overview 36 4.2 Determining Timing and Amount of the Issuance 38 4.3 Determining the Method of Sale 42 4.4 Confirming the Debt Approach 46 4.5 Soliciting and Utilizing Professional Support 48 4.6 Selecting and Engaging with Credit Rating Agencies 52 4.7 Developing Relevant Debt Documents 56 4.8 Summary 56 4.9 Endnotes 57 Chapter 5 Phase 3: Marketing and Placement of Individual Transactions 57 5.1 Overview 57 5.2 Developing a Bond Pricing Strategy 62 5.3 Developing a Strategy for Marketing Individual Transactions 67 5.4 Meeting Closing Requirements and Guidelines 69 5.5 Summary 69 5.6 Endnotes C O N T E N T S
70 Chapter 6 Phase 4: Post-Issuance Compliance Strategy 70 6.1 Overview 70 6.2 Understanding Post-Issuance Compliance Requirements 73 6.3 Managing Post-Issuance Compliance Based on Organization Structures 75 6.4 Managing Capacity and Resources 77 6.5 Collecting and Managing Data 78 6.6 Implementing Strategies to Track and Adjust to Changes 80 6.7 Establishing a Repeatable and Reliable Process 82 6.8 Summary 82 6.9 Endnotes 83 Chapter 7 Conclusion 85 Key Terms 87 Acronyms A-1 Appendix A Additional Resources B-1 Appendix B Major Debt Types and Their Corresponding Debt-Financing Vehicles Note: Photographs, figures, and tables in this report may have been converted from color to grayscale for printing. The electronic version of the report (posted on the web at www.nap.edu) retains the color versions.