Grant Anticipation Note

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Grant Anticipation Note

A bond issued by a state government or state highway bank that is secured by future, expected federal highway funding. States issue grant anticipation notes to provide cash for immediate or time sensitive needs related to highway construction or maintenance. There is no guarantee the state will receive anticipated funding; however, once it is received, it is used to repay the bond. A grant anticipation note is also called a grant anticipation revenue vehicle or a GARVEE.
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References in periodicals archive ?
CIFS offers expertise on a variety of innovative finance options, including Grant Anticipation Revenue Vehicles (GARVEEs), State infrastructure banks, revenue tools, and public-private partnerships.
Massachusetts sold $921.7 million in GARVEE bonds for the "Big Dig" project in Boston to help pay for the reconstruction of part of Interstate 93 as a tunnel.
Use of the GARVEE bonds became possible with passage of the Transportation Equity Act for the 21st Century, a massive highway bill signed by President Clinton in 1998.
The answer became clear in 1998 when the federal highway bill known as TEA-21 included a provision called Grant in Anticipation of Revenue Vehicles, or GARVEE for short.
Fitch's analysis incorporated full leveraging to the 2x pledged revenue ABT for the consolidated transportation bonds; to the 2x HUR allocation ABT for local governments for county transportation bonds; and maximum issuance to the ABT for federal grant anticipation revenue bonds (GARVEEs) issued by the Maryland Transportation Authority.
The state recently completed an extensive financial review needed to float a Garvee bond that may help to shorten the time it takes to complete the project by two to three years.
The new law has a provision called a Grant Anticipation Revenue Vehicle (GARVEE) that allows states to borrow against future federal entitlements through bond issues to speed up work on highways.
The law includes the same debt and contractual obligations cited above including the DOT's outstanding right-of-way bonds, GARVEE bonds, seaport bonds, and State Infrastructure Bank bonds, in addition to availability and milestone payments for P3 projects, and commitments of the DOT under lease purchase agreements to cover O&M expenses.
The $635 million project relies on a $211 million Transportation Infrastructure Finance and Innovation Act (TIFIA) loan, a $125 million Grant Anticipation Revenue Vehicles (GARVEE) bond, and more than $53 million in other Federal-aid funding.