In 2015, Missouri moved forward with a bonding package, “Build Missouri,” of about $300 million to invest in improvements to the State Capitol building and much needed maintenance projects at Missouri colleges and universities. In addition, in 2014 the state had moved forward with the rebuilding of the Fulton State Hospital. The need was present, the rates were reasonable, and the projects put many people to work.
Today, with the COVID-19 pandemic running rampant over our health and economic systems, it makes sense to take stock of our needs, the extremely low cost of borrowing money, and the need to put people back to work. Fortunately, Missouri has many infrastructural needs and bonding tools to allow our state to improve critical buildings, borrow low-cost money, and return people to work.
As of July 1, 2019, the state had slightly more than $1 billion in general obligation bonds (BFC), revenue bonds (BPB) and other appropriation debt. The Missouri Department of Transportation (MoDOT) had about $1.6 billion in debt.
Missouri has many bonding tools, depending on the need and/or the scope of the particular project. The Board of Public Buildings (BPB) is comprised of Missouri’s governor, the attorney general and the lieutenant governor. The speaker of the house of representatives and the president pro tem of the senate are ex-officio members. The Board of Fund Commissioners (BFC) is comprised of the governor, lieutenant governor, attorney general, state treasurer and the commissioner of administration. Both the BPB and BFC have the authority to execute and incur bonding obligations on behalf of the state.
The Board of Fund Commissioners gets its authority from the Missouri Constitution and state statutes. Pursuant to Art. III, Sec. 37 of the Missouri Constitution, state-backed debt (backed by the full faith and credit of the state) can be put forth to the voters of Missouri. Currently, the BFC issues three types of general obligation bonds: Water Pollution Control (Art. III, Sec. 37(b)), Fourth State Building Bonds (Art. III, Sec. 37(f)), and Stormwater Control Bonds (Art. III, Sec. 37(h)). The BFC has the authority to take advantage of lower interest rates and can refund various outstanding bond issues to save taxpayer dollars. These are considered general obligation bonds, and the principal and interest amounts are placed one year in advance into the state’s debt service fund.
The Board of Public Buildings receives its authority to issue bonds from the statute. Certain statutes restrict the authorization to specific purposes like repair/renovations or education. In addition, the BPB must obtain legislative authority for the projects funded by the board. BPB bonds are considered revenue bonds and are not deemed to be indebtedness of the state of Missouri.
Regional Convention and Sports Complex Authority
Sections 67.650-67.658, RSMo, were established to authorize each city not within a county (City of St. Louis) and each first-class county with a charter form of government which adjoins such a city not within a county to create an authority. The commission has bonding authority and the ability to construct, operate, and maintain convention centers, sports stadiums, fieldhouses, indoor and outdoor convention, recreational and entertainment facilities including parking facilities.
Convention and Sports Complex Fund
Sections 67.638-67.639, RSMo, were established to allow a city or county to create by ordinance or by order a convention and sports complex fund to develop, maintain and operate such facilities. These commissions must promulgate rules that provide for the purchase of goods and services and for construction of capital improvements before becoming eligible for an annual appropriation from the General Assembly.
Missouri Health and Educational Facilities Act (MOHEFA)
Set out in Chapter 360, RSMo, MOHEFA is responsible in part for educational facilities in educational institutions and health facilities. MOHEFA issued $35 million in revenue bonds in 2001 to finance the University of Missouri arena in Columbia. These bonds are special, limited obligations of the authority and do not constitute a pledge of the full faith and credit of the state. However, the Office of Administration entered into a financing agreement that it will annually request in the governor’s budget that the General Assembly pay the outstanding principal and interest.
Missouri Higher Education Loan Authority (MOHELA)
While seldom used, the MOHELA has authority to issue bonds. These bonds are paid from and secured by a pledge of revenues derived from or by reason of ownership of student loan notes and investment income. The “Lewis and Clark Discovery Fund” was established under this authority to support funding of capital projects at public colleges and universities and to support funding for the Missouri Technology Corporation’s work with colleges and universities.
Missouri Development Finance Board (MDFB)
The authority for the MDFB is set out in Sections 100.250-100.297, RSMo. The MDFB in recent years has issued bonds for office buildings (2013), Fulton State Hospital (2014 and 2016) and for the State Historical Society of Missouri (2016). Benefits of using the MDFB is the broad range of potential borrowers and the large scope of potential projects. The MDFB is comprised of the lieutenant governor, the directors of the departments of Economic Development, Natural Resources, and Agriculture and eight additional members appointed by the governor with advice and consent of the Missouri Senate.
The Missouri Highways and Transportation Commission has the authority to issue bonds to allow Missouri’s Department of Transportation to perform construction projects on the state’s roadways and bridges. Debt service on these bonds is paid solely from revenues in the State Road Fund and the State Road Bond Fund as provided by the Missouri Constitution.