Grant Anticipation Revenue Vehicles (GARVEE) Program Highlights
Chapter 862 of the Statutes of 1999 (SB 928) added Chapter 4 (commencing with Section 14550) to Title 2, Division 3, Part 5.3 of the Government Code, authorizing the State Treasurer to issue Federal Highway Grant Anticipation Revenue Vehicles (GARVEE) Bonds and authorizing the California Transportation Commission (CTC) to select and designate projects to be funded for accelerated construction from bond proceeds. The intent of the Legislature in authorizing the use of GARVEE financing in California is to accelerate the funding and construction of critical transportation infrastructure projects in order to provide congestion relief benefits to the public significantly sooner than traditional funding mechanisms.
- Any highway or other transportation project eligible under State law for the State Transportation Improvement Program (STIP) and eligible under Federal law for federal funds apportioned to the state which has environmental clearance and a completed project design.
- Must meet all federal requirements, including compliance with the National Environmental Protection Act (NEPA).
- GARVEE bonds issued by the State Treasurer's Office that will be deposited in the State Highway Account (Transportation Financing Subaccount). Bonds have a 12-year maximum term.
- Total of all annual bond repayments may not exceed 15% of annual Federal transportation funds deposited in the State Highway Account.
- Funding limited to right of way and construction costs.
- Funds will be disbursed on a reimbursement basis. However, an initial advance deposit may be made at the discretion of the CTC.
- Applicants must be a transportation planning agency or a county transportation commission that is the approving authority for the county's submission of projects to the STIP. Other local entities, such as city or county governments or local transportation authorities, must apply jointly with their regional transportation planning agency or county transportation commission.
- GARVEE bond project allocations will be charged against county or interregional shares except that the charge will be for the debt service (principal, interest, and cost of issuing bonds) by fiscal year rather than for the allocation of bond proceeds. The charge will be spread over a period of years normally well beyond the current STIP period.
- GARVEE financing of a project is only appropriate when the additional public benefits resulting from early construction exceed financing costs and other funding mechanisms are not available. Other considerations are the anticipated economic, safety, and other benefits of the early construction of the project and the anticipated useful life of the project.
- GARVEE bond funding is Federal funding subject to federal match requirements. Project proposals for GARVEE bonds must specify the source of the matching funds.
- Projects are eligible for funding allocation until the end of the first fiscal year that it is identified in the STIP for project debt service.
For additional information, please contact the Office of Innovative Finance.