Lhota: N.Y. MTA May Get State Relief for Pricey Refunding Fees

The Metropolitan Transportation Authority may get needed relief from New York State for high borrowing fees connected with refunding bond sales, its executive director said Wednesday.

Joseph Lhota, briefing reporters in Manhattan, said he met a day earlier in Albany with Gov. Andrew Cuomo’s officials — including deputy secretary of transportation Karen Rae — about the bond issuance fees, for which the MTA could be on the hook for about $75 million.

“We did have discussions yesterday with the budget division about a waiver for fees related to refunding bonds,” Lhota said, following his first board meeting after the state Senate confirmed his nomination by Cuomo. “The issue for us is greater savings on refinancing.”

State law requires the MTA, which runs subways and commuter rail systems in the New York City region, to pay a fee of $8.40 for every $1,000 in bonds. The authority could issue up to $9 billion of bonds this year.

“I can understand the state’s rationale about new money, but what do we do when we’re refunding? We don’t want to double pay,” Lhota said.

He said any savings would reduce bond debt and not restore service. The MTA made widespread cuts in service a year ago.

“The savings would be about $50 million in debt service over 20 to 30 years. That’s not anywhere near the amount needed to put a route back,” Lhota said.

When it passed a $12.7 billion budget and $24.3 billion capital plan through 2014 last month, the board rejected a motion to restore $20 million in bus and subway service cuts.

Lhota also said the state assured him that it would fully reimburse the MTA for lost revenue from cuts to the payroll mobility tax under an overhaul to the state tax code passed two months ago. The agency expects to lose $212 million this year because of the new law.

Moody’s Investors Service rates the MTA’s transportation revenue bonds A2. Fitch Ratings assigns an A-plus, while Standard & Poor’s rates them A.

Finance Committee chairman Andrew Saul relayed to Lhota the anger about the fees some board members expressed at Monday’s committee meeting.

“I feel encouraged by Joe Lhota’s comments,” board member Allen Cappelli, a Staten Island attorney who led the call for fee relief on Monday, said in an interview. “Joe told us before the meeting that he had a good conversation with budget officials.”

“My position is that as a public transportation agency, we should not have to pay those fees. The city of New York doesn’t have to pay those bonding fees, and we similarly serve a governmental purpose,” Cappelli added.

The MTA, meanwhile, has two vacancies to fill.

Nancy Shevell, the third longest-serving member and chairwoman of the board’s bus operations committee, announced her resignation Monday.

Appointed by Gov. George Pataki in 2001, she had been serving as a holdover since June 2010, when her term expired. Shevell — a vice president of the New England Motor Freight Inc. trucking company and the Shevell Group of Cos. — married musician Paul McCartney in October.

“It was time,” said Shevell, walking past reporters and photographers. Speaking to the board moments earlier, Shevell called her MTA work the “absolute highlight” of her 30-year professional career.

Patrick Foye, who became the executive director of the Port Authority of New York and New Jersey in October, resigned from the board on Friday. He had served since May 2010.

Messages were left with Cuomo’s office seeking the governor’s timetable for nominating replacements.

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Transportation industry New York
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