Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt (2022) / Chapter Skim
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Pages 19-34
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From page 19... ...
19 3.1 Overview This chapter discusses statutory restrictions and constraints, agency policies, and transportation investment priorities, which inform debt policies and the types of debt that issuers elect to issue. Planning for debt issuance should be conducted through a collaborative and iterative process with key debt management stakeholders.
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20 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt transportation agencies advance program goals and should be aligned with the agency's longterm plan and, if a state agency, with STIP. State DOTs and other transportation agencies can issue debt for projects ranging from new construction to repairs and maintenance for a variety of modal investments, including bridges, highways, transit, rail, freight, seaports, and airports.
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Phase 1: The Decision Process -- Planning for Debt Issuance 21 Example 1. Distributed Debt Issuance Authority (Ohio)
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22 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt Figure 5 summarizes the types of statutory and regulatory restrictions that inform surface transportation debt strategies in each of the eight case studies, exemplifying the diversity of restrictions. e examples in Figure 5 are not intended to re ect the full extent of restrictions on debt issuances in each of the case study examples.
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Phase 1: The Decision Process -- Planning for Debt Issuance 23 Figure 5. Examples of restrictions on debt issuance.
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24 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt Other examples of eective or robust debt policies include the Texas Department of Transportation (TxDOT) Debt Management Policy.5 e TxDOT policy is comprehensive since it includes guidance and policies for each aspect of the debt issuance and management process: • Decision Process -- Planning and Analysis: High-level debt policy objectives and philosophy, outlines the ten currently authorized nancing programs for transportation and allowable purposes of debt issuance, and approaches for selection of a range of outside professionals.
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Phase 1: The Decision Process -- Planning for Debt Issuance 25 the objectives of the debt structure, including term length, debt service reserve fund, and redemption provisions. • Marketing and Placement of Individual Transactions: Conditions for pursuing each of the three types of methods of sale are competitive sale, negotiated sale, and private placement.
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26 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt Figure 6. Foundational components of a debt affordability study.
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Phase 1: The Decision Process -- Planning for Debt Issuance 27 though there is not one correct way to develop a debt aordability study. Issuers can elect a variety of metrics to leverage for the analysis conducted for a debt aordability study, including debt service per capita, debt as a percentage of personal income, or debt as a percentage of annual revenues.
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28 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt With respect to what types of debt are issued, surface transportation agencies have dierent debt approaches that are largely based on the legal authority of their debt programs as described earlier in this chapter, the history of their debt program, how the program has evolved, and constraints to debt issuance, among other factors. e spectrum of approaches to de ning a debt strategy or overarching decision-making approach ranges between programmatic approaches and project-driven approaches.
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Phase 1: The Decision Process -- Planning for Debt Issuance 29 • A hybrid approach is when a state DOT or other agency regularly issues consolidated transportation debt for a wide range of needs, and the use of proceeds for each issuance is tied to speci c projects. Whether an agency employs programmatic and/or project-driven strategic approach depends on both external constraints (state regulations on debt issuance)
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30 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt Example 9. Project-Speci c Approach to Debt Issuance (Colorado)
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Phase 1: The Decision Process -- Planning for Debt Issuance 31 Figure 8. Programmatic approaches to surface transportation debt.
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32 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt toll revenue bonds, GARVEEs, and lease revenue bonds. Loans and federal credit programs, such as TIFIA, can be used as bonds.
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Phase 1: The Decision Process -- Planning for Debt Issuance 33 Example 10. Inter-Agency Coordination (Virginia)
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34 Guidebook for Effective Policies and Practices for Managing Surface Transportation Debt systems shape decisions to meet surface transportation goals. Further, state constitutions or statutes establish which state agencies are authorized to issue debt, and in many cases, set limits on the amount of debt that can be issued on an annual or debt authorization basis.
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