WASHINGTON -- House and Senate1appropriations conferees yesterday dealt the final blow to the $11 billion Superconducting Super Collider, providing only $640 million of funding for an orderly termination of the energy research project this year.
In the wake of the defeat, Moody's Investors Service announced yesterday that it put under review the lease revenue bonds issued by the Texas National Research Laboratory Commission Financing Corp. The corporation has sold $250 million of revenue bonds, rated A by Moody's.
"We have accomplished the purpose of the House," Rep. Vic Fazio, D-Calif., said yesterday upon conclusion of the conference committee over the fiscal 1994 energy appropriations bill. On Tueday, the House voted 282 to 143 to kill the project.
The conferees' decision casts a cloud over the $250 million of lease revenue bonds issued by Texas in 1991 to finance some of its share of the project. But there were signs yesterday that the federal government might help the state make good on its pledge to appropriate payment on the bonds.
"President Clinton gave Governor Anne Richards his word that Texas will be made whole" for the nearly $500 million it has spent so far on the project, said Sen. Kay Bailey Hutchison, R-Tex. The $500 million includes not only the lease bonds but $250 million of general obligation bonds Hutchison was involved in selling when she was treasurer of Texas.
In addition to being backed by a state appropriation pledge, the lease bonds are indirectly linked to the federal appropriations in the bond documents. The financing is also tied to facilities that were to be used jointly by the state and the federal Department of Energy in carrying out collider experiments.
Hutchison said she and other Texas members of Congress took pains to ensure that the termination language included in the appropriations bill preserves an agreement between Texas and the federal government that allocates ownership of the project assets underlying the revenue bonds.
"The practical effect of what they did is that Texas will have the assets it needs to pay for the bonds," Hutchison said. "The state must make good on the bonds."
Hutchison said the state and federal government intend to study ways to make use of the leased assets, but no ways of using the assets other than for the collider so far have been identified. Project officials say the collider would be too expensive for the state to complete on its own.
Hutchison expressed hope that the collider project will be revived in the future, perhaps by another presidential administration, but said she doubted there would be serious attempts to revive it next year.
"I'm disappointed that the House could not see further than the next election and that they shut the collider down for a cheap political thrill," she said.
A proposal by the Senate's chief conferee, Sen. Bennett Johnston, D-La., to provide the project with the full $640 million requested by Clinton -- only for close-out purposes -- raised suspicion among some House conferees that he might try to revive the project later this year. But Johnston repeatedly denied that was his intent.
"There's no hidden agenda in our language here," he said. "The money can only be used for the orderly termination of the SSC."
Meanwhile, Texas officials were considering options to deal with state bonds issued in 1990 and 1991 to help finance construction of the collider project, and rating agencies were monitoring some bonds.
Rating officials were not concerned about the $250 million in general obligation bonds, backed by the full faith and credit of the state, but were looking at the ratings for the lease revenue bonds.
In deciding to place the lease bonds under review yesterday, Moody's said it will evaluate the level of federal funding to be provided to pay debt service and monitor actions taken by Texas.
"While the state does not anticipate taking any action until the level of federal participation is known, state officials have indicated to Moody's that the state is considering various options to reduce the risk to bondholders," Moody's said.
At Standard & Poor's Corp., managing director Hyman Grossman said, "We are not taking immediate rating action, but we are monitoring the situation day-to-day."
Grossman said Texas could consider several alternatives, including redeeming the bonds early under the extraordinary call provisions outlined in the official statement or paying the debt over the current life of the bonds. Standard & Poor's rates the bonds A-minus.
"We expect the state to do what it has to do to assure bondholder security," Grossman said.
Claire Cohen, executive vice president at Fitch Investors Service, said her organization will review its A rating of the lease-revenue bonds as it develops.
Officials at the governor's office and the Texas Public Finance Authority could not be reached for comment, but state leaders have said they will honor their pledge to appropriate funds to pay debt service on the bonds.
