DALLAS – The Chicago Transit Authority will use a $255 million low-interest federal loan to replace almost 500 rail cars that will be assembled at a new facility on the city's far south side.
The Transportation Infrastructure Finance Innovation Act loan, the CTA's third in the last two years, is rated AA-minus by Kroll Bond Rating Agency and A-plus by Standard & Poor's.
The TIFIA loan will fund a portion of the CTA's acquisition of 490 rail cars as part of its efforts to modernize the transit system by replacing aging railcars that have, or soon will, reach the end of their intended service life.
The CTA is the nation's second-largest public transit system, exceeded only by New York City's in terms of ridership. It provides bus and rail service to 3.5 million residents of Chicago and 35 adjacent suburbs in Cook County. More than 1.6 million commuters use the CTA on an average day, including 70% of the workers who commute into Chicago's central business district.
CTA's ridership demand is strong with significant annual increases over the past 10 years, said Kroll managing director Harvey Zachem and senior analyst Gopal Narsimhamurthy.
"The existing road infrastructure would be unable to accommodate the amount of travel provided by the CTA in a manner that is as efficient as the transit system," the Kroll analysts said in their report. "The level of traffic that would likely result if CTA users chose to travel by car instead of bus or rail would likely overwhelm the existing road infrastructure." The CTA earlier this month awarded a long-term car replacement contract of up to $1.3 billion to the Chinese firm CSR Sifang America to build as many as 846 of the rail cars for its rapid transit elevated and subway lines. The firm will build a new $40 million rail car assembly facility on Chicago's far south side to produce the cars.
CSR said at least 69% of the rail car components will be made in the U.S. The first cars are scheduled for delivery to the CTA in 2019. The other cars in the first phase of the replacement project are to be delivered by 2024.
The new cars have fewer center-facing seats, LED lighting, and at least 11 security cameras.
The CTA has introduced 714 new railcars into service since the 2011, replacing some that were up to 40 years old.
The total cost of the first phase of the replacement car project is $772.5 million, of which the TIFIA loan represents a third. Other sources of funding include Federal Transit Administration grants and CTA sales tax bonds, which are rated AA by Fitch, Standard & Poor's, and Kroll.
Fitch last year affirmed CTA's federal-grant-backed bonds at BBB with a stable outlook ahead of a $176 million refunding while Standard & Poor's affirmed its A rating and stable outlook.
Repayment of the TIFIA loan is secured by all transit fare revenues derived from CTA's operations. The CTA's two existing TIFIA loans and the new fleet renewal loan are considered as secured bond obligations under a 2014 master trust indenture.
The CTA issued $555 million in sales tax revenue bonds in 2014 and received a $79 million TIFIA loan. The second TIFIA loan last year added another $120 million of debt.
The capital plan adopted in the fiscal 2015 budget includes $2.5 billion in projects through fiscal 2020.
