LOS ANGELES — The Los Angeles County Metropolitan Transportation Authority doesn’t plan to issue bonds this year because it is securing a $546 million federal loan to help fund the $1.74 billion Crenshaw Line light-rail project.
When it applied for a Tiger II loan a year ago, Metro was awarded a $20 million loan-origination fee to be used for the Transportation Infrastructure Finance and Innovation Act loan.
“We have a unique situation that we didn’t have to go through the TIFIA process,” said Terry Matsumoto, Metro’s chief financial services officer. “They were able to issue the loan based on our credit ratings and the loan origination fee.”
TIFIA, enacted in 1998, provides credit assistance to transportation projects that have a dedicated revenue stream. The program funds up to one-third of project costs in the form of direct loans, loan guarantees and lines of credit. TIFIA loans are also subordinate to other senior obligations such as bank loans.
The appeal of TIFIA financing comes from its low interest rate, a fixed-rate pegged to the 30-year Treasury rate that has been in the 3% range for the past few days.
If Metro issued bonds at a 25-year maturity, it would realize rates today of 3.5% or 4%, Matsumoto said.
The loans will be repaid with proceeds from Measure R, a half-cent sales tax approved by voters in 2008 to enable the county to move forward on a long-range transportation plan that includes 10 light-rail and subway projects designed to create a rail network connecting the county’s vast area.
Metro found out at the end of 2010 that the money was available, Matsumoto said, but it could not submit the application until the environmental review process on the Crenshaw line was completed in October 2011.
The 8.5 mile Crenshaw Line will connect the Metro Green Line with the under-construction Expo Line in south Los Angeles. It’s part of the $300 billion of Metro projects included in its 30-year long-range plan.
The authority did a $235 million deal on Oct. 28, 2011, with Stone & Youngberg as lead underwriter.
The bonds received a Aa2 rating from Moody’s Investors Service and AAA rating from Standard & Poor’s.
Proceeds from last year’s sale will be used to refund bonds backed by Proposition A revenues, a different half-cent sales tax voters approved in 1980.
According to Matsumoto, Metro did not need to issue bonds last year to fund projects because it had issued $750 million of taxable Build America Bonds in fall 2010.
