Frequently Asked Questions

How much does it cost to rehabilitate an Interstate highway?
Depending on the specific scope of work performed, costs range anywhere from $1 million to more than $4 million per mile to rehabilitate an existing Interstate highway. Although each job is unique, costs associated with performing a complete reconstruction of an existing Interstate highway are in the neighborhood of $5 million per mile.

Work associated with bridges, overpasses and large drainage structures under the roadway can significantly increase the cost of repairing an Interstate highway. Current estimates range from $63 to $106 per square foot. Bridge work will also extend the amount of time required to complete an Interstate rehabilitation project.

To help bring these numbers into perspective, consider that in the late 1960s and early 1970s these costs were less than $1 million per mile to initially construct Interstate 40 from the Oklahoma state line to the Tennessee State Line. That includes the purchase of right of way and the construction of bridges and overpasses along the 284-mile corridor.

 

How is rehabilitating an Interstate highway different from reconstructing an Interstate highway?
Interstate rehabilitation typically only involves replacement of the roadway driving surface. Although some projects might include an interchange or a few bridges, the bulk of the work is best described as removal of existing pavement and replacing it with new pavement.

Increasing volumes of traffic over time will have an impact on the driving surface. Ruts can form. Cracks can form too, and when they do, water enters the pavement and causes damage beneath the surface. Expansion and contraction during the freeze-thaw cycle often results in potholes. Together, all of these events can make for a rough ride on Arkansas Interstates.

By simply replacing the pavement, the smooth ride is restored. If the pavement is asphalt, a milling machine grinds the roadway into fine particles that are hauled away for recycling. If the pavement is concrete, a crushing machine pulverizes the roadway. A roller is then used to compact the resulting material to form a good base for the new roadway pavement.

Reconstruction of an Interstate highway is like starting from scratch. Similar to a rehabilitation project, the pavement is removed first. Next the material under the pavement is removed. This can be another layer of pavement or even the earthen foundation upon which the roadway lays. Once the underlying material is replaced and/or the earthen foundation is reset, the new driving surface pavement can be added.

Reconstruction takes a little longer than rehabilitation because of the extra steps involved. Both processes, however, result in a stretch of roadway that is as good as new.

 

Couldn’t we get the same amount of work done in a “pay-as-you-go” funding program?
No. Some 355 miles of projects were underway in approximately three years during the 1999 IRP. Had we pursued the “pay-as-you-go” strategy, it would have taken more than 20 years to get the same amount of work underway. Considering the amount of inflation in recent years, the timeframe would likely have been much longer, resulting in a greater deterioration of the Interstate system in Arkansas. And a higher cost to solve the problem.

 

When is it beneficial to issue bonds vs. “pay-as-you-go” funding?
Many variables were evaluated prior to the decision to issue bonds. An oversimplified answer is that a favorable environment exists to issue bonds if interest rates are lower than the rate of inflation.

 

How can bonds be used as protection against inflation?
The Arkansas Construction Cost Index (CCI) is a method of measuring inflation in the construction industry. All projects in the 1999 IRP were underway between 2000 and 2004. Between these years, the CCI was fairly stable. The 2004 CCI was 140.0. In 2005 the CCI rose 29.9 percent to 181.9. It rose another 27.9 percent in 2006 to 232.7. The CCI remained relatively unchanged in 2007, but in 2008 it rose to 278.3.

In retrospect, the CCI rose almost 100 percent during the four years after the final 1999 IRP contract was awarded. Getting these jobs underway quickly using bond proceeds allowed the state to avoid a doubling of construction costs on these projects.

 

What happens if Congress reduces the amount of federal funds that states rely on for surface transportation projects?
Estimates for the 2011 IRP are very conservative and a reduction in federal Interstate maintenance funds would not affect the program. The dollar amount pledged to retire the bonds (federal Interstate maintenance funds plus revenues from the four-cent state diesel fuel tax) is approximately five percent of the total AHTD budget.

 

What are GARVEE bonds?
GARVEE is an acronym for the term Grant Anticipation Revenue Vehicle. It’s a type of bond or similar financing method issued by a state under the guidelines of the National Highway System Designation Act of 1995, eventually made permanent in section 122 of Title 23 of the United States Code. States must repay the bonds using federal funds expected to be received in the future and the required state match.

GARVEE bonds may be used for major projects receiving federal funding. Details of projects must be sent to the appropriate Federal Highway Administration division office to ensure the project follows federal rules for eligibility.

Frequently Asked Questions

How much does it cost to rehabilitate an Interstate highway?
Depending on the specific scope of work performed, costs range anywhere from $1 million to more than $4 million per mile to rehabilitate an existing Interstate highway. Although each job is unique, costs associated with performing a complete reconstruction of an existing Interstate highway are in the neighborhood of $5 million per mile.

Work associated with bridges, overpasses and large drainage structures under the roadway can significantly increase the cost of repairing an Interstate highway. Current estimates range from $63 to $106 per square foot. Bridge work will also extend the amount of time required to complete an Interstate rehabilitation project.

To help bring these numbers into perspective, consider that in the late 1960s and early 1970s these costs were less than $1 million per mile to initially construct Interstate 40 from the Oklahoma state line to the Tennessee State Line. That includes the purchase of right of way and the construction of bridges and overpasses along the 284-mile corridor.

 

How is rehabilitating an Interstate highway different from reconstructing an Interstate highway?
Interstate rehabilitation typically only involves replacement of the roadway driving surface. Although some projects might include an interchange or a few bridges, the bulk of the work is best described as removal of existing pavement and replacing it with new pavement.

Increasing volumes of traffic over time will have an impact on the driving surface. Ruts can form. Cracks can form too, and when they do, water enters the pavement and causes damage beneath the surface. Expansion and contraction during the freeze-thaw cycle often results in potholes. Together, all of these events can make for a rough ride on Arkansas Interstates.

By simply replacing the pavement, the smooth ride is restored. If the pavement is asphalt, a milling machine grinds the roadway into fine particles that are hauled away for recycling. If the pavement is concrete, a crushing machine pulverizes the roadway. A roller is then used to compact the resulting material to form a good base for the new roadway pavement.

Reconstruction of an Interstate highway is like starting from scratch. Similar to a rehabilitation project, the pavement is removed first. Next the material under the pavement is removed. This can be another layer of pavement or even the earthen foundation upon which the roadway lays. Once the underlying material is replaced and/or the earthen foundation is reset, the new driving surface pavement can be added.

Reconstruction takes a little longer than rehabilitation because of the extra steps involved. Both processes, however, result in a stretch of roadway that is as good as new.

 

Couldn’t we get the same amount of work done in a “pay-as-you-go” funding program?
No. Some 355 miles of projects were underway in approximately three years during the 1999 IRP. Had we pursued the “pay-as-you-go” strategy, it would have taken more than 20 years to get the same amount of work underway. Considering the amount of inflation in recent years, the timeframe would likely have been much longer, resulting in a greater deterioration of the Interstate system in Arkansas. And a higher cost to solve the problem.

 

When is it beneficial to issue bonds vs. “pay-as-you-go” funding?
Many variables were evaluated prior to the decision to issue bonds. An oversimplified answer is that a favorable environment exists to issue bonds if interest rates are lower than the rate of inflation.

 

How can bonds be used as protection against inflation?
The Arkansas Construction Cost Index (CCI) is a method of measuring inflation in the construction industry. All projects in the 1999 IRP were underway between 2000 and 2004. Between these years, the CCI was fairly stable. The 2004 CCI was 140.0. In 2005 the CCI rose 29.9 percent to 181.9. It rose another 27.9 percent in 2006 to 232.7. The CCI remained relatively unchanged in 2007, but in 2008 it rose to 278.3.

In retrospect, the CCI rose almost 100 percent during the four years after the final 1999 IRP contract was awarded. Getting these jobs underway quickly using bond proceeds allowed the state to avoid a doubling of construction costs on these projects.

 

What happens if Congress reduces the amount of federal funds that states rely on for surface transportation projects?
Estimates for the 2011 IRP are very conservative and a reduction in federal Interstate maintenance funds would not affect the program. The dollar amount pledged to retire the bonds (federal Interstate maintenance funds plus revenues from the four-cent state diesel fuel tax) is approximately five percent of the total AHTD budget.

 

What are GARVEE bonds?
GARVEE is an acronym for the term Grant Anticipation Revenue Vehicle. It’s a type of bond or similar financing method issued by a state under the guidelines of the National Highway System Designation Act of 1995, eventually made permanent in section 122 of Title 23 of the United States Code. States must repay the bonds using federal funds expected to be received in the future and the required state match.

GARVEE bonds may be used for major projects receiving federal funding. Details of projects must be sent to the appropriate Federal Highway Administration division office to ensure the project follows federal rules for eligibility.

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