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State issues bonds to build bridge

Armed with Monday’s decision by a Thurston County Superior Court judge to dismiss the latest Tacoma Narrows Bridge lawsuit, the Washington State Treasurer’s Office on Wednesday issued the first $158 million in bonds to pay for the project.

“It’s not every day — or every decade — that we help build a bridge of this magnitude,” said State Treasurer Michael J. Murphy. “This day is the culmination of a lot of work by a lot of people. We’re excited now to see the bridge project begin early next month.”

The total pricetag for the bridge is around $850 million, and additional bonds will have to be sold later to pay for the remaining portion. But Wednesday’s issue of the first $158 million gives developers the capital to begin construction.

The State Finance Committee, consisting of Gov. Gary Locke, Lt. Gov. Brad Owen and Murphy, voted to approve the bridge bond sale and two other issues, all awarded to J.P. Morgan.

Morgan offered a true interest cost (TIC) bid of 4.85742 percent for the bridge bonds. Also competing were Goldman Sachs (4.859134 percent), Salomon Smith Barney (4.89020) and Merrill Lynch (4.904569).

The finance committee decided to go ahead with the bond issue after Thurston County Superior Court Judge Daniel Berschauer on Monday issued a summary judgment dismissing a lawsuit filed by Gig Harbor-based Citizens Against Tolls (CAT) designed to block construction of the bridge.

Bershchauer two years ago dismissed an earlier lawsuit filed against the bridge by the Peninsula Neighborhood Association. In that case, his ruling was subsequently overturned by the Washington State Supreme Court, which unanimously found the state’s contract with a private developer to build the bridge was unenforceable.

“That was a different case entirely,” said Tom Morrill, an attorney representing the Treasurer’s Office at the Sept. 13 hearing on the CAT lawsuit. “It’s an altogether different set of circumstances. There’s no reason we couldn’t proceed with the bond sale just because the same judge was overruled before.”

CAT spokesman Randy Boss, meanwhile, said the organization has no plans to drop its appeal. “We will continue to fight for the interests of the people of the 26th District,” he said. “The finance committee is risking the full faith and credit of this state by issuing bonds for a project we believe will ultimately be shown to be illegal. When this thing comes back to bite them, I hope the voters remember who they are.”

The state benefited from a 34-year low in interest rates in the other two other bond sales: $639 million in refunding (refinancing) bonds and $140.5 million in general transportation bonds.

The state saved more than $50 million (net present value) on the refunding of bonds originally sold in 1992 and 1994. Morgan’s winning offer was a TIC bid of 4.0353783 percent. Merrill Lynch (4.0482151), Goldman Sachs (4.0500369) and Salomon Smith Barney (4.0746085) also competed.

“Any time we can save the state this kind of money through a refinancing, we jump at it,” Murphy said.

Murphy added he could not recall a lower interest bid for a regular tax-exempt issue than Morgan’s 4.4479537 percent bid for the general transportation bonds. Also competing were Merrill Lynch (4.4904709) and Salomon Smith Barney (4.5027488).

“Obviously, we’re benefiting from the low interest rate environment right now,” Murphy said. “But these rates and the healthy competition show that not all the news is bad about our state’s economy. Municipal bonds remain a great investment, and the market recognizes that.”

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