First bonds sold to fuel Gov. Whitmer’s Rebuilding Michigan plan

On this week’s Talking Michigan Transportation podcast, MDOT Finance Director Patrick McCarthy talks about the process and work leading up to the sale of $800 million in bonds to finance rebuilding several freeways with the state’s heaviest traffic volumes.

Later, the discussion focuses on the first high-profile project made possible through the bond sales, rebuilding I-496 west of Lansing, with MDOT Lansing Transportation Service Center Manager Greg Losch and Jason Early, MDOT construction engineer on the project.

The bonds closed today will cover the cost of rebuilding some of Michigan’s most highly traveled freeways, including the $60 million I-496 project. When all of the $3.5 billion bonds are sold over the next few years, they will finance or help accelerate rebuilding or major improvements of 122 major highways across the state.

“For too long, our freeways have been held together with patches and emergency repairs,” Michigan Gov. Gretchen Whitmer said in a news release. “The Rebuilding Michigan program assures Michiganders across the state that they can drive to work and drop their kids at school on safe and reliable roads for many decades to come. It has also allowed us to start moving dirt this year, without an increase at the gas pump.”In a unanimous vote on Jan. 30, the Michigan State Transportation Commission (STC) authorized the department to issue and sell $3.5 billion in bonds backed by state trunkline revenues. Gov. Whitmer spoke on the podcast at the time about her Rebuilding Michigan plan, rolled out in her 2020 State of the State address, and the STC vote.

Bond Buyer reported on the bond sale in August, observing that while the COVID-19 pandemic has hurt recent collections of pledged revenues, sturdy coverage ratios provide a cushion that the state is banking on to see the credit through the current fiscal storm. "Michigan's state trunkline bonds are not susceptible to immediate material credit risks related to coronavirus because of strong coverage of debt service and limits on additional leverage," Moody's said. "The longer-term impact will depend on both the severity and duration of the crisis." Moody’s concluded that the lack of investment has taken a severe toll on the state’s transportation assets.