CHICAGO - The transit agency that provides commuter rail in the Chicago region could soon join the ranks of tax-exempt borrowers under a proposed $2.4 billion, 10-year capital program that relies on about $400 million of financing.
Metra's plan relies on the issuance of $400 million in bonds, including $100 million next year, and the continuation of state and federal funding totaling $710 million. Metra cautioned that, as it has not yet tested the bond market, it could instead use "similar financing" methods. It didn't elaborate.
Metra would phase in fare increases to help repay the borrowing, cover routine capital spending, and rising operational expenses.
The first hike would occur in February with fares going up 10.8% to support the 2015 budget. A portion of the additional fare revenue would go to begin repaying debt service on Metra's inaugural bond issue of $100 million, or what officials called "similar financing."
Fares would eventually rise a total of about 68% from current prices --generating more than $1.2 billion in new revenue -- to help upgrade a system with rail cars that date back to the Eisenhower administration.
Metra still needs $1.3 billion in funding for the 10-year plan. Officials said the agency would "aggressively pursue additional federal and state funding, new financing strategies and alternative financing mechanisms."
The proposed plan lays the groundwork for the agency to argue for state aid in a new capital budget lawmakers may tackle in the coming year as the state's ongoing $31 billion capital program winds down. The current infrastructure program provided $2.7 billion for transit agencies.
Metra officials unveiled the capital campaign, its first long-term rolling stock plan ever floated, Thursday along with its proposed budget that must be approved by its board and the Regional Transportation Authority of Illinois. The RTA provides fiscal oversight of Metra along with the Chicago Transit Authority and Pace suburban bus service.
The capital program would allow Metra to replace its aging rail cars and locomotives, fund a maintenance program for some cars and engines and cover the costs of installing the federally mandated Positive Train Control safety system.
"The majority of our rail cars are older than the majority of our daily commuters. While nobody ever likes fare increases, Metra's fares are significantly lower than our peer railroads in major cities and have not kept pace with inflation," Metra board chairman Martin Oberman said in a statement.
Metra would follow up its $100 million of borrowing next year with the same amount in 2017, 2019, and 2022.
"Metra believes that by taking the lead to fund its capital needs through financing - which will largely be paid by Metra riders - we will convince government leaders to step up to the plate to provide the additional needed funding," Oberman said.
State lawmakers gave Metra authorization in 2008 to issue up to $1 billion of bonds, but the agency has never moved to tap the authority over repayment concerns. The RTA had long served as the primary borrower for its service boards backing its bonds with a general obligation pledge supported by transit's share of sales taxes. The CTA more than a decade ago rejoined the ranks of borrowers selling debt backed by its share of sales taxes and leveraging its federal capital grants.
The RTA and CTA have butted heads over the CTA's borrowing and the RTA has proposed centralizing and expanding its bonding authority.
The region's current transportation agency structure has come under fire and a state task force has recommended scraping it and creating one super agency to manage the system. RTA oversight came into question after a scandal at Metra in which the agency's former chief accused the Metra board of forcing him out over patronage allegations and attempting to keep him quiet with a lucrative severance package, leading to exodus of board members.
Metra's capital needs are estimated at $9.9 billion over the next decade to maintain a state of good repair with the total tab for the three service boards at about $32 billion.
Metra said the $2.3 billion would not cover all its needs and additional funding would be needed to cover upgrades to its tracks, signals, stations, and other facilities. The average age of its fleet in 2012 was 29.7 years, while the average age of the fleets of other large commuter railroads was 19 years.
About $275 million from the capital plan would cover the cost of installing the $400 million GPS-based safety technology system mandated by the federal government. Metra has already set aside $133 million.
Metra's proposed 2015 budget includes $749.1 million for operations and $328.9 million for capital. The Metra board will vote on the budget and fare hike Nov. 14.
