CHICAGO – The Chicago Transit Authority Friday unveiled plans for a $500 million overhaul of its bus fleet by 2014.
The agency intends to purchase 425 new buses, including standard 40-foot clean diesel buses and 100 60-foot articulated vehicles, which include a mix of hybrid and clean diesel engines. The price tag is $330 million and would be financed with CTA sales-tax backed bonds.
“A world-class city needs world-class infrastructure, and this investment in our infrastructure will help millions of Chicagoans commute while creating hundreds of jobs throughout our city,” Chicago Mayor Rahm Emanuel said in a statement. The announcement was made by Emanuel and CTA president Forrest Claypool.
Later this year, the agency will begin rebuilding 1,030 standard 40-foot buses, equipping them with new engines, transmissions, heating and air conditioning systems, and making repairs. The price tag is $165 million.
The fleet overhaul is expected to save the CTA $15 million annually in maintenance costs by 2016.
Bus rides account for about 60% of all trips taken by CTA passengers annually and last year ridership rose by 4 million to 310 million. Officials also touted the environmental improvement to the air as a result of the upgrades.
The CTA has $2.5 billion of debt primarily supported by its sales taxes. Rating analysts say the sales-tax credit’s strengths include a pledged revenue stream of the agency’s share in sales taxes collected in the region, strong debt service coverage, and an improved pension fund status. The credit is challenged by the economic impact on sales tax collections and the agency’s vulnerability to chronic state-payment delays.
The CTA last October sold a mix of sales tax revenue bonds and new-money and refunding capital grant-backed bonds to fund the purchase of rail cars.
Moody’s Investors Service rates the capital grant bonds A1 and Standard & Poor’s rates them A. Moody’s rates the sales tax bonds Aa3 and Standard & Poor’s rates them AA. The capital grant bond ratings apply to a total of $860 million of debt.