Debt Management.

• Author: Douglas, Jennifer Ritter
• Position: Brief Article - Review

Grant Anticipation Revenue Vehicles: An Option to Finance Transportation Projects

Debt Line, December 1999, pp. 1-4.

Grant Anticipation Revenue Vehicles, or GARVEE bonds as they are commonly known, are financing instruments available to states for transportation projects. Through the passage of the National Highway System Designation Act of 1995, the use of GARVEE bonds was authorized to enable states to issue bonds based on the anticipated receipt of future federal highway funds. Prior to 1995, states could only use highway funds to repay the principal on bonds; now they can use the funds for principal, interest, and other costs associated with the issuance of bonds. There are two types of GARVEEs available to states: Direct and Indirect. Direct GARVEE bonds are financed by future federal reimbursements for a specific project; Indirect GARVEEs are repaid by federal funds that the state...