December 1, 2005 The Honorable Janet Napolitano Governor, State of Arizona The Honorable Ken Bennett President, Arizona State Senate The Honorable James P. Weiers Speaker, Arizona House of Representatives Members of the Legislature, and Citizens of the State of Arizona Pursuant to the requirements of Title 28, Chapter 21, Article 5 Arizona Revised Statutes, I am pleased to present the 2005 Annual Report for the Highway Expansion and Extension Loan Program (HELP). HELP has proven to be a significant tool for financing the construction of highway projects throughout the State. In recognition of the success of the program and the continuing need for funding for highway projects by the State and local governments, the 2005 Legislature passed House Bill 2123. The bill extends a primary funding source for the HELP – Board Funding Obligations or BFOs – through 2024. This major commitment will help to ensure the long-term viability of the program. An additional five loans were approved for a total of $36 million during the past year. To date, 51 HELP loans have been approved for nearly $570 million. Projects have ranged in size from an $80,000 loan to the Town of Miami to a $100 million loan to complete projects on the Maricopa County Regional Freeway System. Of the approved loans, 26 loans have been fully repaid with loan repayments totaling nearly $347 million. The State Transportation Board, HELP Advisory Committee and ADOT staff look forward to continuing to assist with the financing of important highway projects in the coming years. Sincerely, Victor M. Mendez Director TABLE OF CONTENTS Page/ s INTRODUCTION 1 2005 HIGHLIGHTS 2 2005 LOANS 3 FINANCIAL CONDITION OF HELP FUND 5 - 10 HELP PROJECT LOCATION MAP 11 - 12 INTRODUCTION The Highway Expansion and Extension Loan Program (HELP) provides the state and its communities with an innovative financing mechanism to accelerate the funding of road construction projects. This mechanism is referred to as a State Infrastructure Bank (SIB) and was initially authorized by Congress in 1995. A SIB operates like a bank by providing loans or credit enhancement for highway projects. HELP, Arizona’s SIB, was established in 1998, and is operated under the authority of the State Transportation Board. A seven member HELP Advisory Committee accepts loan applications, reviews and evaluates requests for financial assistance, and makes recommendations to the State Transportation Board on loan and financial assistance requests. The cur rent members of the State Transportation Board are: Dallas “Rusty” Gant, Chair Richard “Dick” Hileman, Vice Chair James Martin Joe Lane S. L. Schorr Delbert Householder Robert Montoya Wickenburg Lake Havasu City Willcox Phoenix Tucson Thatcher Flagstaff The current members of the HELP Advisory Committee are: John McGee, Chair (as designee of Victor Mendez) Bill Beyer David Felix Jim Glock Paul Schwartz Lela Steffey Michael Anderson ADOT Glendale Sierra Vista Tucson Sun City Mesa Page 2005 HIGHLIGHTS Without question, the highlight for 2005 was the passage by the Legislature of House Bill 2123 which extended the Board Funding Obligation (BFO) program through 2024. This will allow the State Transportation Board to continue to issue BFOs to provide capitalization for the HELP. Currently, BFOs represent nearly 70 percent of the total capitalization of the HELP. Arizona Revised Statutes 28-7676 required that 50% of loans be for projects in Maricopa County, 25% be for projects in Pima County, and the remaining 25% be for projects in the 13 other counties through December 31, 2004. This requirement was met during the year with the following percentage distribution of approved loans by region as of December 31, 2004 (excluding loans approved prior to August 9, 1999): Amount Maricopa County Pima County 13 Other Counties $253.0 million $129.4 million $126.5 million Percentage Distribution 50% 25% 25% The statutes do not prescribe a percentage distribution after December 31, 2004. However, the State Transportation Board has adopted guideline percentages to be used through June 30, 2010 that are the same as the percentages used to distribute highway construction program dollars within the State. These guidelines are 37% for projects in Maricopa County, 13% for projects in Pima County, and 50% for projects in the 13 other counties. HELP continues to be among the most active State Infrastructure Banks in the nation. The Federal Highway Administration collects loan activity data from the states and periodically publishes this information. As of the June 30, 2005 SIB loan activity data, HELP ranked: • • • fifth in total number of approved loans (49); third in total amount of approved loans ($564 million); and second in loan amounts disbursed to recipients ($474 million). 2005 LOANS Five new HELP loans were approved during the year including: Thornydale Road Reconstruction, Orange Grove Road to Ina Road Project, Town of Marana Date Approved: November 19, 2004 Loan Amount: $7,000,000 Interest Rate: 2.51% Project Acceleration: 48 months Project: The Town of Marana will use the loan proceeds to widen a one mile segment of Thornydale Road to six lanes (three in each direction). Improvements will include curb and gutter, sidewalks, multi- use lanes, left-turn lanes, drainage and undergrounding of utilities. I-10, Pinal Air Park Road to Marana Traffic Interchange Project, ADOT Date Approved: November 19, 2004 Loan Amount: $18,500,000 Interest Rate: To be determined. Project Acceleration: 24 to 36 months Project: The proceeds of the loan will be used to construct an additional travel lane on I-10 in each direction between Pinal Air Park Road and the Marana Traffic Interchange. This construction project will include new lanes and shoulders, storm drain system extensions, cable barrier and approximately 5000 feet of noise wall. Alvernon Way, River Road to Fort Lowell Road Project, Pima County Date Approved: May 20, 2005 Loan Amount: $4,836,000 Interest Rate: To be determined. Project Acceleration: 4 months Project: Pima County will use the loan proceeds to extend Alvernon Way from the existing intersection of Fort Lowell Road across the Rillito River to connect with River Road. The road will be a four- lane cross section with a median from River Road to just south of the Rillito River and will include curbs, drainage, landscaping and pedestrian facilities. North Bank Street Reconstruction Project, City of Kingman Date Approved: September 23, 2005 Loan Amount: $2,000,000 Interest Rate: To be determined. Project Acceleration: 36 months Project: The City of Kingman will use the loan proceeds to reconstruct a one mile segment North Bank Street from Airway Avenue to Gordon Drive. This construction project will include complete reconstruction to a full 78- foot width, curb and gutter, sidewalks, drainage, lighting and intersection improvements. La Canada Phase II Project, Town of Sahuarita Date Approved: September 23, 2005 Loan Amount: $3,900,000 Interest Rate: To be determined. Project Acceleration: 12 months Project: The Town of Sahuarita will use the proceeds of the loan to improve La Canada Road from Duval Mine Road to Amanax Mine Road. This project will provide much needed drainage improvements and will include construction of raised medians, curbs, landscaping, sidewalks and intersection improvements. FINANCIAL CONDITION OF HELP FUND Arizona Department of Transportation Highway Expansion and Extension Loan Program Fund Statement of Net Assets For the fiscal years ended June 30, 2005 and 2004 (Unaudited) Assets Current assets: Restricted cash on deposit with the State Treasurer Receivables: Accrued interest Loans Due from other Arizona Department of Transportation funds Due from Arizona counties and cities Total current assets Noncurrent assets: Receivables: Loans Total noncurrent assets Total assets Liabilities Current Liabilities: Accrued payroll and other accrued expenses Compensated absences Total current liabilities Noncurrent liabilities: Interfund Payable Notes payable Total noncurrent liabilities Total liabilities Net assets Restricted for loans and other financial assistance Total net assets 2005 2004 $ 95,305,084 $ 92,038,681 272,427 16,533,685 135,578 47,349,662 4,531,210 203,158 116,845,564 2,886,157 386,147 142,796,225 114,896,628 114,896,628 231,742,192 83,544,472 83,544,472 226,340,697 4,310 10,120 14,430 6,711 19,645 26,356 20,000,000 146,454,466 166,454,466 166,468,896 20,000,000 142,414,466 162,414,466 162,440,822 65,273,296 $ 65,273,296 63,899,875 $ 63,899,875 FINANCIAL CONDITION OF HELP FUND Arizona Department of Transportation Highway Expansion and Extension Loan Program Fund Statement of Activities For the fiscal years ended June 30, 2005 and 2004 (Unaudited) Operating revenues: Interest on loans receivables Total operating revenues Operating expenses: Salaries and related benefits Supplies Professional and outside services Travel Interest on notes payable Other Total operating expenses Operating loss Non-operating revenues: Interest on investments Total non-operating revenues Changes in net assets Total net assets - July 1 Total net assets - June 30 2005 2004 3,008,667 3,008,667 3,529,351 3,529,351 201,557 877 110,301 1,297 4,040,000 5,700 4,359,732 <1,351,065> 214,707 1,464 98,560 711 4,097,236 1,023 4,413,701 <884,350> 2,724,486 2,724,486 1,373,421 63,899,875 $ 65,273,296 1,559,446 1,559,446 675,096 63,224,779 $ 63,899,875 HIGHWAY EXPANSION AND EXTENSION LOAN PROGRAM (HELP) LOAN STATUS AS OF SEPTEMBER 2005 STATEWIDE LOANS PROJECT SPONSOR PURPOSE OF LOAN PROJECT LOCATION LOAN APPROVAL INTEREST RATE* MAXIMUM LOAN FINAL DRAWS TO MATURITY DATE OUTSTANDING LOAN BALANCE ADOT Reconstruction SR260, Show Low to Pinetop 02/18/2000 2.93% $5,664,000 Feb-02 $4,666,837 Paid in full 02/25/2002 TOWN OF CHINO VALLEY Construction Center Street 03/17/2000 4.50% $300,000 Jan-05 $300,000 Paid in full 01/11/2005 ADOT Design, Right of Way Various projects state wide 05/19/2000 3.46% $5,707,000 Mar-04 $5,165,861 Paid in full 03/16/2004 CITY OF SIERRA VISTA Construction Buffalo Soldier Trail 7th St. to SR 90 07/21/2000 4.00% $1,970,000 Jun-03 $1,970,000 Paid in full 06/13/2003 LA PAZ COUNTY Reconstruction Salome Road Centennial Wash 12/18/2000 2.93% $2,000,000 Jan-04 $1,448,568 Paid in full 05/31/2002 ADOT Reconstruction SR 260, Pinetop to Hon-Dah 01/19/2001 2.93% $8,400,000 May-03 $6,038,856 Paid in full 05/20/2003 SANTA CRUZ COUNTY Reconstruction South River Road 01/19/2001 3.11% $1,150,000 Jan-07 $643,827 Paid in full 09/27/2005 ADOT Design Naha 'Ta' Dziil Rd Sanders TI 03/16/2001 3.32% $1,000,000 Jan-05 $1,000,000 Paid in full 01/20/2005 CITY OF YUMA Reconstruction Ave. A, 40th Street to Desert Avenue 04/20/2001 1.65% $1,000,000 Dec-06 $1,000,000 $400,000 TOWN OF TAYLOR Reconstruction Paper Mill Road 05/18/2001 3.42% $1,000,000 Jun-05 $1,000,000 Paid in full 06/02/2005 ADOT Reconstruction SR 260, Christopher Creek 05/18/2001 2.85% $41,900,000 Jul-05 $37,678,400 Paid in full 06/22/2005 TOWN OF PAYSON Reconstruction McLane Road 06/15/2001 3.56% $1,100,000 Jul-06 $1,100,000 $596,334 CITY OF YUMA Reconstruction I-8, Giss Parkway Redondo Drive TI 06/15/2001 1.77% $2,000,000 Jul-06 $2,000,000 $500,000 ADOT Design, Right of Way SR89A, Glassford Hill Section 09/21/2001 1.76% $3,216,000 Sep-03 $2,031,264 Paid in full 09/17/2003 TOWN OF MIAMI Reconstruction Rose Road & Sullivan Street 01/18/2002 2.20% $80,000 Jun-05 $80,000 Paid in full 06/02/2005 LOAN STATUS AS OF SEPTEMBER 2005 STATEWIDE LOANS PROJECT SPONSOR PURPOSE OF LOAN PROJECT LOCATION SR 89A, Glassford Hill Section Avenue 3E Traffic Interchange SR 89A, Glassford Hill Section US 60/SR 79 Traffic Interchange SR 95, Parker to Lakeside LOAN APPROVAL INTEREST RATE* MAXIMUM LOAN ADOT Construction ADOT Construction YAVAPAI COUNTY Construction ADOT Right of Way ADOT Design GILA COUNTY Reconstruction GILA COUNTY Reconstruction 03/15/2002 1.35% $13,855,000 Oct-04 $13,855,000 03/15/2002 0.86% $9,900,000 Aug-04 $9,900,000 03/15/2002 1.83% $4,500,000 Jun-05 $4,500,000 03/15/2002 1.56% $4,000,000 Oct-04 $2,691,459 03/15/2002 1.14% $500,000 May-05 $500,000 Fossil Creek Road 04/19/2002 1.43% $1,237,500 Mar-09 $1,237,500 $866,220 04/19/2002 1.81% $600,000 Jun-08 $600,000 $600,000 ADOT Construction 05/17/2002 1.99% $5,000,000 Jun-06 $5,000,000 $3,800,000 YAVAPAI COUNTY Construction 06/21/2002 2.25% $4,500,000 Jun-06 $4,500,000 $1,687,500 CITY OF LAKE HAVASU CITY Reconstruction 06/21/2002 1.18% $789,508 Feb-05 $789,508 Paid in full 02/01/2005 ADOT Design 06/21/2002 1.35% $650,000 Nov-06 $650,000 $209,435 CITY OF SAFFORD Construction 20th Avenue 08/16/2002 2.42% $2,000,000 Oct-07 $2,000,000 $1,825,000 TOWN OF THATCHER Construction 20th Avenue 08/16/2002 1.56% $2,000,000 Oct-07 $2,000,000 $1,825,000 GILA COUNTY Construction Six Shooter Road and Bridge 04/19/2002 $487,500 Jun-08 CITY OF KINGMAN Construction North Bank Street 09/23/2005 $2,000,000 Oct-10 TOWN OF MAMMOTH Reconstruction Main Street 12/14/2001 $334,800 - Six Shooter Canyon Road SR 260, Cottonwood to Camp Verde Fain Road Realignment SR 95, North City Limits Fort Grant Road Traffic Interchange To be Determined To be Determined - * Interest rate will be determined by the State Transportation Board when the first construction draw is made. FINAL DRAWS TO MATURITY DATE - Withdrawn OUTSTANDING LOAN BALANCE Paid in full 10/19/2004 Paid in full 08/19/2004 Paid in full 06/06/2005 Paid in full 10/19/2004 Paid in full 05/19/05 - - LOAN STATUS AS OF SEPTEMBER 2005 MAG LOANS PROJECT SPONSOR CITY OF MESA CITY OF CHANDLER ADOT PURPOSE OF PROJECT LOAN LOCATION New Construction Red Mountain Urban Freeway Freeway: Country System Club to Gilbert New Construction Price Freeway: Urban Freeway Warner to Frye System Purchase of Right Various: As stipulated of Way for Urban in Senate Bill 1201 Freeway System LOAN APPROVAL INTEREST RATE* MAXIMUM LOAN FINAL DRAWS TO MATURITY DATE OUTSTANDING LOAN BALANCE 03/20/1998 4.41% $24,000,000 Mar-03 $24,000,000 Paid in full 03/21/2003 03/20/1998 3.59% $26,000,000 Jul-02 $26,000,000 Paid in full 11/30/2001 11/15/1999 3.92% $100,000,000 Jun-01 $90,324,109 Paid in full 06/28/2001 ADOT/ CITY OF PHOENIX Construction SR 51 Completion Union Hills - L101 11/17/2000 2.48% $22,500,000 Jun-05 $22,500,000 Paid in full 02/17/2005 ADOT Right of Way, Construction Regional Freeway System 09/21/2001 3.30% $50,000,000 Dec-08 $50,000,000 $50,000,000 ADOT Right of Way, Construction Regional Freeway System 11/21/2003 1.44% $80,500,000 Aug-08 $60,000,000 $60,000,000 * Interest rate will be determined by the State Transportation Board when the first construction draw is made. LOAN STATUS AS OF SEPTEMBER 2005 PAG LOANS PROJECT SPONSOR PURPOSE OF LOAN Street Improvements PROJECT LOCATION 6th Avenue, 19th Street to I-10 LOAN APPROVAL INTEREST RATE* MAXIMUM LOAN 03/17/2000 4.50% $2,000,000 Jan-05 $2,000,000 ADOT Design, Right of Way Various projects in Pima County 05/19/2000 1.77% $5,285,000 Jun-05 $5,285,000 Paid in full 06/22/2005 CITY OF TUCSON Street Improvements 6th Avenue, Ajo Way to Rodeo Wash 06/15/2001 2.91% $4,500,000 Jan-06 $4,500,000 $1,300,000 ADOT Construction I-10 / I-19 Interchange 09/21/2001 2.11% $62,500,000 Jan-06 $62,500,000 Paid in full 04/18/2005 PIMA COUNTY Street Improvements Ajo Way, Country Club to Alvernon 12/14/2001 3.23% $3,700,000 Jul-07 $3,700,000 $1,072,772 PIMA COUNTY Street Improvements Shannon Road, Ina Rd to Magee Rd 12/14/2001 3.23% $1,400,000 Jul-07 $1,400,000 $350,000 ADOT Design I-10 Mainline, Grant to Congress 03/15/2002 0.86% $5,500,000 Jun-06 $3,947,869 $1,447,869 TOWN OF ORO VALLEY Construction Tangerine Road Widening 08/16/2002 1.19% $1,716,000 Jul-05 $1,716,000 Paid in full 08/01/2005 TOWN OF ORO VALLEY Construction La Canada Drive Extension 02/20/2004 2.52% $5,000,000 Feb-08 $5,000,000 $4,023,100 TOWN OF MARANA Construction Thornydale Road 11/19/2004 2.51% $7,000,000 Mar-10 $7,000,000 $7,000,000 CITY OF TUCSON Construction Harrison Road 08/20/2004 To be Determined $12,293,000 Jan-09 - - ADOT Construction I-10, Pinal Air Park to Marana TI 11/19/2004 To be Determined $18,500,000 Jul-09 - - PIMA COUNTY Construction Alvernon Way, River Rd. to Fort Lowell 05/20/2005 To be Determined $4,836,000 Jun-08 TOWN OF SAHUARITA Construction La Canada Phase II 09/23/2005 To be Determined $3,900,000 Nov-06 - - CITY OF TUCSON * Interest rate will be determined by the State Transportation Board when the first construction draw is made. FINAL DRAWS TO MATURITY DATE OUTSTANDING LOAN BALANCE Paid in full 05/01/2001 Map Table 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Project Name SR260 Showlow to Pinetop Center Street Carr Canyon Rd. - Hunter Canyon Rd. Van’s Trading Post - East of SR264 Lake Havasu Blvd - Old London Bridge Rd. US60 - SR79 TI Glassford Hill Ave 3E SR280 TI Buffalo Soldier Trail Salome Rd. Centennial Wash SR260, Pinetop - Hon-dah South River Rd. Naha Ta Dziil Rd / Sanders TI. Ave. A 40th st to Desert Ave Paper Mill Rd. SR260, Christopher Creek McLane Rd. I-18 - Giss Parkway - Redondo Dr. TI SR89A, Glassford Hill Section Rose Rd. to Sullivan Street SR89A, Glassford Hill Section Avenue 3E TI. SR89A, Glassford Hill Section US60 - SR79 TI SR95 Parker to Lakeside Fossil Creek Rd. Six Shooter Canyon Rd. SR260 Cottonwood to Camp Verde Fain Rd. Realignment SR95, North City Limits Fort Grant Rd. TI 20th Avenue 20th Avenue Six Shooter Rd. and Bridge North Bank Street Project Description Reconstruction Construction Design Design Design Design Design Design Construction Reconstruction Reconstruction Reconstruction Design Reconstruction Reconstruction Reconstruction Reconstruction Reconstruction Design Reconstruction Reconstruction Reconstruction Reconstruction Reconstruction Reconstruction Reconstruction Reconstruction Construction Construction Construction Construction Construction Construction Construction Construction Loan Amount $5,664,000 $300,000 $457,000 $500,000 $1,850,000 $600,000 $1,500,000 $800,000 $1,970,000 $2,000,000 $8,400,000 $1,150,000 $1,000,000 $1,000,000 $1,000,000 $41,900,000 $1,100,000 $2,000,000 $3,216,000 $80,000 $13,855,000 $9,900,000 $4,500,000 $4,000,000 $500,000 $1,237,500 $600,000 $5,000,000 $4,500,000 $789,508 $650,000 $2,000,000 $2,000,000 $487,500 $2,000,000 $128,506,508 City / Location Showlow Chino Valley Cochise Cty Coconino Cty Mohave Cty Pinal Cty Prescott Valley Yuma Sierra Vista La Paz Cty Pinetop Santa Cruz Cty Apache Cty City of Yuma Town of Taylor Gila Cty Payson Yuma Prescott Valley Miami Prescott Valley Yuma Prescott Valley Pinal Cty Parker Gila Cty Gila Cty Yavapai Cty Yavapai Cty Mohave Cty Cochise Cty Safford Thatcher Gila Cty Kingman 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 6th Avenue Project I-10 - I-19 TI I-10 Mainline Prince Rd. I-10 - I-19 TI th 6 Avenue Project Phase II JCT I-10 / I-19 Phase 1&2 Ajo Way - Country Club Rd -Alvernon Way Shannon Road: Ina Rd - Magee Rd. I-10 Mainline Grant - Congress Tangerine Rd. La Canada Dr. Extension - Tangerine Rd. Thornydale Rd. Reconstruction Harrison Rd., Speedway - Old Spanish Trail I-10 Pinal Park Air Park - Marana TI. Alvernon Way - River Rd. - Lowell Rd. Town of Sahuarita Street improvements Design Design Design Street improvements Construction Street Improvements Street Improvements Design Construction Construction Reconstruction Construction Construction Construction Construction $2,000,000 $3,285,000 $1,000,000 $1,000,000 $4,500,000 $62,500,000 $3,700,000 $1,400,000 $5,500,000 $1,716,000 $5,000,000 $7,000,000 $12,293,000 $18,500,000 $4,836,000 $3,900,000 $138,130,000 Tucson Pima Cty Pima Cty Pima Cty Tucson Tucson Pima Cty Pima Cty Pima Cty Oro Valley Oro Valley Pima Cty Oro Valley Pima Cty Pima Cty Pima Cty 1 Red Mountain Country Club - Gilbert Construction 2 Price Freeway - Warner - Frye Construction Above two loans are not included in totals 3 Various: as stipulated / MAG Right of way 4 SR51 Completion Union Hills - L101 Construction 5 Regional Freeway System / MAG ROW Construction ROW Construction 6 Regional Freeway System / MAG 57 Total projects Grand Total $24,000,000 Mesa $26,000,000 Chandler $100,000,000 $22,500,000 $50,000,000 $80,500,000 $253,000,000 $519,636,508 Maricopa Cty Phoenix Maricopa Cty Maricopa Cty Prepared By: Arizona Department of Transportation Financial Management Services Highway Expansion and Extension Loan Program Section 206 S. 17th Avenue, Suite 200 B Phoenix, AZ 85007-3213 Phone (602) 712-7441 * Fax (602) 712-6672