N.Y. MTA's Capital Plan Pitch: Mind the Gap

mta-subway-bl-357.jpg
An "R" line subway train arrives to the Union Square stop in New York, U.S., on Wednesday, May 20, 2009. Build America Bonds were meant to help local governments borrow at lower cost amid a global credit crunch. When the New York’s Metropolitan Transportation Authority (MTA) sold $750 million of the securities, it shared the savings with traders and investors. Photographer: Andrew Harrer/Bloomberg News

New York's Metropolitan Transportation Authority intends to pitch the city, state and federal government and corporate leaders to help cover the $15.2 billion gap in its four-year, $32 billion capital plan.

Otherwise, it might have to borrow even more. The authority already is one of the largest municipal issuers with about $34 billion in debt and its latest plan includes $3.9 billion in new bonding capacity.

The MTA board on Wednesday approved the plan by a 12-1 vote. The plan, minus a separate $3 million allocation for bridges and tunnels, goes to the Capital Program Review Board, a state control panel implemented as part of a 1981 aid package that enabled the MTA to issue bonds for needed funding.

Chairman Thomas Prendergast admitted the extra funding would be a tough sell that goes beyond state leaders in Albany.

"This is just the start of a dialogue," he told reporters after Wednesday's board meeting in midtown Manhattan. "Everyone focuses on Albany, but the dialogue is with Albany, the city of New York, business leaders and stakeholders in the region."

The city's contribution to the capital plan is about $627 million. "Everyone benefits from our network, and we're putting an ask on them," said Prendergast.

The city's transportation commissioner, Polly Trottenberg, serves on the MTA board. "The city is prepared to have your back as you head to Albany," she said.

The MTA's debt-to-income ratio is about 17%, according to Chief Financial Officer Bob Foran.

Options for new revenue include dedicated sources, private funds and additional appropriations from governments at all levels.

Borrowing an additional $15 billion would cost a further $1 billion a year to service it, Foran said. "For funding the capital program we're talking about additional revenue, sales of assets and things like that."

Moody's Investors Service assigns an A2 rating to the MTA's transportation revenue bonds, its primary credit. Standard & Poor's and Fitch Ratings assign AA-minus and A ratings, respectively.

The plan's largest component, $22.2 billion, is for "safety and reliability projects," including new subway cars, Staten Island Railway cars, commuter railroad cars and buses, improving tracks and other related infrastructure, maintaining the MTA's seven bridges and two tunnels, and installing so-called positive train control and communications-based train control safety measures on commuter lines and subways, respectively.

The program also includes $5.5 billion for the next phase of the Second Avenue Subway from 96th Street to 125th Street, for East Side Access for Long Island Rail Road trains and to begin the Penn Access project to bring Metro-North New Haven Line service into Penn Station and add four stations in the Bronx.

Allen Cappelli was the board's lone dissenter. Cappelli, a Staten Island attorney, was dismayed that the plan omitted bus rapid transit service for the island's North Shore despite assurances of its inclusion. "It's bait and switch," he said.

Prendergast admitted that the MTA must sell itself better. "I don't think we have collectively sold people on how vital the network is to the region," he said.

Board member Charles Moerdler said the tri-state region's survival hinges on a vibrant mass transit system. "Only the seriously myopic would urge otherwise," he said.

He added that the capital plan still falls short in many respects. "We need to extend the Second Avenue subway line to the Bronx," he said. "We need buses from the Bronx to Queens, Queens to Brooklyn and Staten Island light rail."

The Staten Island Economic Development Corp. has started an online signature petition urging light-rail service along the West Shore, with a possible connection to New Jersey's Hudson-Bergen line over the Bayonne Bridge. The business group hopes to present 10,000 signatures to Gov. Andrew Cuomo.

For reprint and licensing requests for this article, click here.
Transportation industry New York
MORE FROM BOND BUYER