$1B bond finalized for work on I-15

Utah just finalized issuing the state's biggest-ever bond, borrowing a whopping $1 billion to continue work on I-15 in Utah County and other transportation projects.

That's more than twice the size of any previous state bond issue, but state treasurer Richard Ellis said this is the time to take advantage of low interest rates.

Taxpayers will end up getting the money for what amounts to an unusually low 2.72 percent interest rate over 15 years, Ellis said.

"This was really an historic bond sale for the state," a smiling Ellis said shortly after the final details of the mid-September sale were wrapped up last Tuesday.

Earlier this year, he'd been planning to put together a record bond of between $650 million and $750 million to ensure the Utah Department of Transportation could cover construction costs through next spring.

But realizing the state agency then would need another $300 million, and interest rates were at all-time lows, Ellis and other state officials started crunching the numbers on a single bond.

"It seemed like good timing," Ellis said.

This is only the second bond issued by Utah that takes advantage of a new federal stimulus program providing a rebate on just over one-third of the interest paid on taxable municipal bond.

That deal, Ellis said, will save the state $24 million over time. And because Utah typically issues tax-exempt bonds, adding taxable bonds to the mix opened up a whole new category of buyers, he said.

Among the long list of buyers for the taxable bonds, which pay about 4.5 percent interest to holders, was Microsoft, which invested $8 million in the offering, as well as retirement systems for state workers in Arizona and teachers in California.

While this may have been the first state bond to hit the billion-dollar mark, Ellis said it won't be the last. He predicted the state will be looking to borrow another $1 billion in the next year, again for roads.

Last session, lawmakers approved borrowing up to $2.2 billion largely for three major transportation projects — the reconstruction of I-15 through Utah County, the new Mountain View Corridor between Utah and Salt Lake counties and the Southern Parkway in St. George.

The bill authorizing the bonding was not without controversy. Not only do many lawmakers loathe borrowing money but the bill also contained a $20 increase in motor vehicle fees needed to balance the budget.

Despite the opposition, GOP leaders succeeded in getting the bill passed, pitching the borrowing as a way to stimulate the economy by creating new jobs while taking advantage of lower construction costs and interest rates.