CHICAGO — The Chicago Transit Authority has tapped its chief financial officer Karen Walker to focus on its public-private partnership efforts to fund major light-rail expansion and renovation projects and has hired Ronald DeNard from the private sector to fill the CFO spot.
Walker will serve as senior advisor to CTA president Forrest Claypool on P3 efforts. “Karen will guide the CTA’s effort to identify public-private partnership opportunities to fund the $1.5 billion needed to extend the Red Line from 95th Street to 130th Street and the estimated $4 billion to modernize the Red and Purple Lines,” CTA spokeswoman Tammy Chase said in a statement.
DeNard took over the role of treasurer and CFO this month. He left his position as CFO of Johnson Publishing Co. to return to the public sector. He joined Johnson in 2009 after working for five years as director of finance for Exelon. He previously had spent six years as vice president of finance at L’oreal USA Co.’s Soft Sheen Carson. Prior to those private sector positions, he served for nearly three years as CFO of the Chicago Park District.
Walker took the financial reins of the CTA in 2009. She previously worked for the Illinois Finance Authority and held public finance banking positions at the former A.G. Edwards & Sons Inc. and former Banc of America Securities LLC.
Strapped for cash and with limited state and federal aid available to fund billions in needed expansion and rehabilitation work, the CTA has been exploring alternative financing options. The agency has said among its ideas is the use of P3s to leverage new non-farebox revenue sources and capture real-estate value created by the Red Line.
The CTA early last year hired Goldman, Sachs & Co. and two other firms to serve as advisors to explore P3s and other financing methods. The board approved a four-year advisory agreement with Goldman Sachs in the lead spot, supported by co-financial advisors Loop Capital Markets LLC and Estrada Hinojosa & Co.
The CTA plans to borrow $1 billion of sales-tax-backed bonds over the next five years and is receiving a chunk of the $2.7 billion of funding allocated to transit in the state’s ongoing capital budget.
But the numbers fall far short of what the agency needs to maintain and expand its system.
The double-A rated Regional Transportation Authority of Illinois which provides oversight of CTA’s finances has long served as the main borrower for its service boards but it has exhausted its legislatively approved bonding capacity.
The CTA’s $860 million of federal capital grant bonds carry ratings in the single A category and its $2.5 billion of bonds primarily backed by sales taxes carry double-A level ratings. The credit benefits from ongoing improvement in sales tax collections, the essential service provided to more than 2.3 million riders daily, and ample debt service coverage, Fitch Ratings said in its most recent report.