The Pennsylvania Turnpike Commission has borrowed $275 million to widen the Northeast Extension and its bridges near Lansdale, and pay for other projects as part of a 10-year maintenance program, in a taxable bond sale subsidized by Obama's Build America Bonds (BAB) program.
The Turnpike paid investors 6.1 percent on the bonds, said chief financial officer Nikolaus Greishaber.
But federal taxpayers, under BAB, ate 35 percent of the interest. So the bonds cost Turnpike (and, ultimately, toll-paying drivers) just 3.968 percent.
Without the federal subsidy, the Turnpike would have had to issue tax-exempt bonds paying about 4.5 percent, Greishaber said.
The subsidy was worth around $1.4 million a year, or $55 million amortized over the 30-year life of the bonds, the Turnpike figures.
The subsidy to bond investors was about triple what the Turnpike received from the federal government. But a lot of that will be paid back in the form of taxes by corporate and other private owners of the taxable bonds.
Greishaber said the Turnpike has not rushed to use BAB bonds - unlike California or New Jersey, which have increased their road programs to suck up available financing. In part that's because the PA Turnpike faces an uncertain financial future: Gov Rendell would still like to lease it to private operators, while the Turnpike hopes Obama's transportation officials will approve its plans to charge tolls for I-80, to raise money for road and bridge repairs, said spokesman Carl DeFebo.
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