TRIP Offers Low-Cost Bond Financing for Cities in “Self-Help” Counties
James Hamill is managing director of the California Statewide Communities Development Authority (CSCDA) and can be reached at email@example.com.
California’s streets and roads system has been declining at an alarming rate for some time, something that drivers in the Golden State encounter daily in the form of potholes, cracked pavement and deteriorating roads and bridges. This well-documented trend has generated concern statewide. The biennial California Statewide Local Streets and Roads Needs Assessment reported in 2018 that a $55.5 billion funding shortfall exists over the next 10 years for maintenance and repairs. Sponsored by a coalition that includes the League, California State Association of Counties (CSAC) and regional transportation planning agencies, the 2018 report notes, “The condition of California’s local streets and roads has continued to deteriorate significantly since the initial study [in 2008]. On a scale of zero (failed) to 100 (excellent), the average Pavement Condition Index is now 64.7 (“at risk” category). Even more alarming, 53 of 58 counties are either at risk or have poor pavements.”
Total Road Improvement Program Offers Efficient, Cost-Effective Assistance
With federal and state transportation dollars scarce in recent decades, city and county officials have acted locally to slow and prevent the degradation of their streets and roads. To reduce the severe impact of inadequate funding, 24 counties — encompassing 88 percent of the state’s population — have passed sales tax measures to fund essential transportation programs and projects. But even with added local dollars, these “self-help” counties and the cities in them continue to face a significant backlog that far exceeds annual revenues. Capitalizing on their self-help status, local officials are finding quick, efficient and cost-effective assistance through the Total Road Improvement Program (TRIP).
Established through the California Statewide Communities Development Authority (CSCDA), a joint powers authority cofounded and sponsored by the League and CSAC, TRIP provides cities located within a self-help county access to a low-cost bond financing program for transportation projects. Cities using TRIP borrow against their share of the countywide transportation sales tax revenue to generate funds that are available today to address critical transportation needs before projects become more costly in later years.
TRIP allows participating cities and counties to issue bonds through CSCDA either on a stand-alone basis or with other agencies. Secured solely by an agency’s local transportation sales tax revenue, each agency is responsible only for repaying its own debt. The program creates no exposure for the General Fund nor does it require the use of public assets as collateral. Offering flexible terms up to 30 years and rates ranging from 3 to 5 percent, depending on terms of the financing and market conditions, TRIP bonds are proving popular with investors.
A Practical Option for Financing Transportation Projects
Since its inception in 2008, TRIP has assisted 16 agencies in financing more than $230 million for transportation projects. Most recently, the City of Salinas (in Monterey County) utilized TRIP in July 2018 to finance $40 million in transportation improvements throughout the municipality. Leveraging countywide voter-approved transportation revenues, the city is now undertaking projects that will address the backlog of deferred maintenance issues that have contributed to its at-risk pavement condition.
“Of all the options considered, TRIP was the best suited for Salinas. The city did not need to encumber any asset as security, and the process and team of experts were already in place, which made this approach very easy,” says Matt Pressey, finance director for the City of Salinas. “The TRIP financing worked out very well!”
The City of Claremont (in Los Angeles County) also took advantage of TRIP’s offerings in 2018. Claremont Finance Director Adam Pirrie says, “TRIP will allow the city to fully fund improvements to Foothill Boulevard, its largest thoroughfare. The entire financing team was knowledgeable and responsive, making the process of obtaining the funds a smooth one.”
For More Information
CSCDA is sponsored by the League, and CSCDA financing activities help keep League membership dues low for California cities. Contact Norman Coppinger, League administrative services director, at firstname.lastname@example.org or (916) 658-8277 for additional information on how California cities benefit from participating in CSCDA or the TRIP program.