The Orange County Transportation Authority (OCTA) announced Oct. 25 a savings of $482 million on the Interstate 405 improvement project through debt service savings, a big help on the $2.1 billion project.
“I’m proud of OCTA for being proactive in taking advantage of low-interest rates to help save millions of dollars for our taxpayers,” OCTA Chairman Andrew Do said in a statement.
“Thank you to our partners at the U.S. Department of Transportation for working with us to create a model on how to refinance a drawn TIFIA loan, setting an example for other transportation agencies throughout the country to save public funds that can be reinvested in our infrastructure.”
Last month, OCTA secured a savings of $158 million after being the first agency ever to reset a partially drawn Transportation Infrastructure Finance and Innovation Act (TIFIA) loan by paying off its existing loan and executing a new one while taking advantage of current low interest rates.
The majority of the savings came after OCTA finalized its initial TIFIA back in 2017, where they saved $300 million over the life of the loan instead of utilizing traditional bond financing.
In addition, OCTA was able to generate $24 million in additional savings after issuing Bond Anticipation Notes, which allow the organization to take advantage of lower short-term interest rates in the next three years, instead of drawing further on TIFIA loan funding.
After initially setting a 2.91 percent rate in 2017 through the TIFIA loan, OCTA was able to work with the U.S. Department of Transportation’s Build American Bureau, which runs the TIFIA program, to lower the interest rate to 1.95 percent from the $629 million funded to OCTA through the program, dramatically lowering the amount they will have to pay back over the life of the loan.
The 405 improvement project is an initiative between OCTA and the California Department of Transportation to widen the 405 between State Route 73 and Interstate 605, which will improve 16 miles of the freeway and include the addition of one regular lane in each direction from Euclid Street to I-605, among other freeway entrance, exit, and bridge improvements.
The project, which is the largest of its kind in California, aims to alleviate growing pressure on the nation’s busiest stretch of highway.
In addition, the project will include the construction of 405 express lanes, incorporated into the existing carpool lanes, which will consist of two lanes in each direction from SR-73 to I-605.