While voters dismissed two ballot measures this month intended to fund billions of dollars in transportation projects, the Colorado Department of Transportation did get a $545 million boost in its funding Sept. 26, on top of $500 million in the 2018 legislative session. And they’re ready to spend it.
It’s how that $545 million got funded that is worth looking at.
It started with Senate Bill 17-267, which converted the hospital provider fee to an enterprise. The law, signed by Gov. John Hickenlooper in June 2017, freed up $500 million under the spending cap set by the Taxpayer’s Bill of Rights and saved Colorado hospitals, including a dozen rural ones, from a budget cut.
But the omnibus bill also allowed the state to raise up to $500 million through a “lease-purchase” of state buildings. The buildings are in effect sold and then leased back to the state. The money raised is then repaid over 20 years.
Then, the state architect, state treasurer and Office of State Planning Budgeting came up with a list of 25 buildings that could be sold to raise the money.
On Monday, the Joint Budget Committee reviewed how that transaction was set up with JBC Principal Analyst Steve Allen. And Allen told the committee he was surprised by what he found.
The state’s building inventory is valued at $12.6 billion, based on a December 2017 report from the state architect. That covers 2,355 buildings across 40 state agencies and public colleges and universities, totaling 48.4 million gross square feet. About 55 percent of that is in buildings on public college and university campuses. But higher education was left untouched in the list of buildings put up for sale.
Allen explained the first borrowing took place in September 2018 and the revenue received was more than what was anticipated, at around $545 million instead of $500 million.
Allen said that there was more property put up than anticipated, too. The additional revenue, which SB 267 allows for, is because those buying the securities tied to the lease-purchase arrangement believed the buildings are worth more than the stated replacement value.
Allen also said he was surprised by some of what the state put up for sale: A dozen buildings owned by the Department of Corrections.
“I wasn’t expecting that,” Allen told the JBC, adding: “What good is a prison in Cañon City” to someone who could take possession if the state fails to pay back the loans?
“It’s because those buildings are considered “essential state assets.”
These are bonds with really good security, Allen added. Investors say, “We take your prison if you don’t pay for it,” although there’s little chance the state won’t pay back those bonds, he said.
Under SB 267, 25 percent of the money raised has to go to highway and other transportation projects in rural Colorado, defined in the bill as counties with populations of 50,000 or less.
Oct. 18, CDOT published its list of where those dollars will go, combined with dollars the department also will get from SB 1. More than half will be spent on I-25, north and south of Denver.
Under a resolution adopted by the Transportation Commission, which oversees CDOT, seven of those projects will receive the first dollars in the 2018-19 fiscal year. They are:
U.S. 550/160 Connection, $54.4 million.
I-25: Colorado-Springs Denver South, $25 million.
I-25 North: SH 402–SH 56 (Segment 6), $165 million.
I-70: Westbound PPSL, $20 million.
SH 13: Reconstruction, $30.5 million.
SH 9: Frisco North, $9.5 million.
I-70 East: Failing Pavement, $33.1 million.
Rural projects include Colorado Highway 13, which runs north of Meeker to the Wyoming line and through Garfield and Moffat counties. Highway 9 starts in Fairplay, in Park County and runs north through Frisco to Kremmling in Grand County. The U.S. Highway 550/160 intersection is just south of Durango.
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