April 15, 2010

OR TREASURY DEPT: Major "Build America Bond" sale will create thousands of Oregon jobs, improve highways, and save $56 million thanks to lower loan costs

State, federal officials applaud completion of highly rated $580 million sale for ODOT

SALEM – Oregon State Treasurer Ted Wheeler and U.S. Sen. Ron Wyden announced today the completion of the State of Oregon's successful first sale of Build America Bonds, which will pay to improve roads and bridges across the state while also saving Oregonians $56 million in financing costs.

Now, they said, it's time to get Oregonians to work.

The $580 million sale, with 93 percent of the total in Build America Bonds and 7 percent in tax-exempt bonds, will allow the Oregon Department of Transportation to finance an extensive list of projects statewide, including a new interchange at Beltline and Delta Highway in Eugene, improvements to the Sunrise Corridor in Clackamas County and widening of U.S. Highway 97 south of Bend.

"More Oregonians will be earning paychecks and all Oregonians will benefit from a stronger transportation system," said State Treasurer Wheeler. "At the same time, we are stretching public dollars further and can create even more jobs because of Oregon's strong credit rating and the low cost-financing of Build America Bonds, which were made possible by U.S. Sen. Wyden."

Wyden helped pave the way for the bond sale as the chief sponsor of the federal legislation that authorized Build America Bonds.

"In one year, Build America Bonds have become the financial tool of choice to finance schools, hospitals and transportations projects that will improve America's education, health care and roads and bridges," said Senator Ron Wyden, whose legislation created the Build America Bonds program.

"These bonds that now represent 20 percent of the municipal bond market have been used by 48 states, including Oregon, to drive economic growth by creating jobs, saving taxpayer money and financing badly needed public works projects. It is gratifying for me to see the Oregon Department of Transportation and the State Treasurer's Office get on the Build America Bond bandwagon in a big way that will save $56 million while giving Oregonians jobs as well as better roads and bridges."

ODOT Director Matt Garrett said the projects were identified through the Oregon Transportation Investment Act III, which was approved by the Legislature in 2003.

"The OTIA III Program is creating and sustaining thousands of jobs for Oregonians and improving the transportation system that underpins our state's economy. Projects funded with the proceeds of these bonds will employ Oregonians and help Oregon businesses," said ODOT Director Matthew Garrett. "The savings made possible through the issuance of Build America Bonds further stretches the money provided by Oregonians, allowing the program to create and sustain jobs with the same resources. We are grateful that Senator Wyden led the effort to create this valuable financing tool."

The debt will be repaid over the next 25 years with highway user taxes. Unlike traditional tax-exempt bonds, Build America Bonds are taxable. The U.S. Treasury provides a direct subsidy to offset borrowing costs, which can make Build America Bonds more cost effective.

Treasurer Wheeler said those savings, coupled with Oregon's credit rating, will save Oregonians $56 million in total financing costs over the life of the bonds. Strong financial management by the state including adherence to a debt limit have helped to maintain the state's solid ratings, Wheeler said.

Wheeler also gave credit to the Oregon Legislature, which in February approved a State Treasury-sought bill that authorized the state use of Build America Bonds.

The package of bonds, which vary in duration, sold at an average interest rate of 3.74 percent.

The April ODOT sale kicks off the state's spring bond cycle, and a series of sales will go to market between now and July. More information on those sales will be posted as paperwork is finalized, at www.BuyOregonBonds.com.