The Massachusetts Bay Transportation Authority last week approved a five-year, $3.8 billion capital spending plan that includes $800 million of bonds to support mass transit infrastructure improvements in the greater Boston area.
The public transportation agency updates its five-year capital plan annually. In addition to the anticipated $800 million of borrowing, the MBTA will receive $2 billion of federal funds, including American Reinvestment and Recovery Act money, to help finance the capital projects, according to chief financial officer Jonathan Davis. The rest will come from pay-as-you-go funding, project financing, and state funds. Davis expects the agency will sell new-money bonds in the fall. There are currently no refunding opportunities.
Carrying over unused federal monies from prior years along with stimulus funds allows the agency to reduce its debt issuance. Last year, the capital plan included $1 billion of bonding. Selling less debt will help the authority manage its $5.5 billion of outstanding bonds.
"Our focus as been to maximize federal funds and to minimize bond funds because we are carrying $5.5 billion of debt," Davis said. "So this is the first year where, actually, our principal payments will be higher than the amount of debt that we issue. We'll pay off more debt over that five-year time period than we'll issue — which is the focus of the board and has been a focus of ours — so that we don't continue to increase the burden to the operating budget for principal and interest payments."
The MBTA's annual debt-service costs are substantial. It will pay $387 million of principal and interest payments in fiscal 2011, accounting for 24% of that year's $1.62 billion operating budget. Fiscal 2011 begins July 1.
Nearly all of the $3.8 billion capital plan — 99% — will support state-of-good-repair projects, Davis said. Improvements include new subway cars, locomotives, and commuter-rail coaches, along with power upgrades throughout the system. The MBTA is focused on enhancing and rehabilitating its current mass-transit operations, and expansion of its commuter-rail line system accounts for $82 million of the budget.
