Issuers Ask for Federal Help Paying Sandy Debt

WASHINGTON - Federal and transit agency officials made their case for federal aid to rebuild in the aftermath of Superstorm Sandy, telling a Senate panel they will need it to help pay debt service on new muni debt.

The Senate Banking Committee's subcommittee on housing, transportation and community development held the hearing to get input for a supplemental appropriations bill intended to aid recovery efforts in the wake of what Federal Transit Administration Administrator-designate Peter Rogoff called "the worst transit disaster in the history of the United States."

Rogoff joined Yolanda Chavez, the U.S. Department of Housing and Urban Development's deputy assistant secretary for grant programs, and three transit officials in requesting that lawmakers quickly provide billions of dollars of federal grants.

Chavez said state and local officials would likely be very hesitant to commit to expensive and lengthy infrastructure investments absent a strong statement of congressional financial support. The White House is requesting a total of $60.4 billion in federal resources for Superstorm rebuilding, and has assigned HUD Secretary Shaun Donovan to head the effort.

"Major infrastructure investments take time to build out," Chavez told the lawmakers. "The assured availability of these funds is crucial to ensure that workers can be hired and other commitments can be made to move projects forward."

Chavez urged the panel to approve $17 billion for community development block grants to help rebuild housing along the devastated coastline from Virginia to New York.

Thomas Prendergast, president of the Metropolitan Transit Authority New York City Transit, told the panel that his agency has, and will continue to take on, a heavy debt load in response to Sandy.

"We've already spent hundreds of millions of dollars to restore service as quickly as possible," Prendergast said. "And just yesterday, our board approved for us to move forward in selling $2.5 billion in bond anticipation notes that will be used for rebuilding. But we are simply not able to shoulder this incredible burden on our own and we cannot fully undertake these financing efforts without knowing what Congress plans to do."

Subcommittee Chairman Robert Menendez, D-N.J., asked Prendergast whether the MTA would have to increase fares to pay debt service if it did not receive its share of the full $11.7 billion the Obama administration is requesting for transit relief.

"We're increasing the debt service to be able to do that," Prendergast said of the debt issuances. He said fares might have to be "looked at" absent significant federal help. The next fare increase is planned for 2015, pursuant to a 2009 agreement on biennial increases. The MTA has issued more than $6.5 billion of bonds in 2012, the most since it issued just over $9 billion in 2002. It estimates it will need to spend about $5 billion to rebuild stronger after the storm.

Patrick Foye, executive director of the Port Authority of New York and New Jersey, urged the lawmakers to act quickly in authorizing new spending. Foye said his agency faces a hugely expensive effort to repair, rebuild, and replace infrastructure and equipment that is in many cases so old there are no longer any parts readily available.

Menendez asked Foye what his response would be to lawmakers concerned that the administration's request was inflated or "plucked out of the sky."

"We're prepared to show and be accountable for every dollar we're provided," Foye said.

The transit officials said part of the cost stems from the need to, not just simply repair the damage caused by Sandy, but to improve the infrastructure so that another similar storm does not have them coming back to Congress and requesting the same amount of help all over again after the next increasingly common "100-year storm."

"Sandy has shown we cannot merely restore our rail and other infrastructure to its previous state," said New Jersey Transit Corp. executive director James Weinstein. "That would only leave us vulnerable to the next super storm. We must go further and make the rail and other transit modes more resistant in the face of future super storms. Those steps will require additional resources."



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