Dallas transit agency debt sales on hold amid member city unrest

Dallas Area Rapid Transit

Dallas Area Rapid Transit announced Wednesday it will not issue any new debt ahead of elections in five of its 13 member cities that will determine their future participation in the agency.  

Randall Bryant, who chairs the DART board, said the moratorium on long-term debt issuance until after the Nov. 3 election is in response to member city concerns. 

"We welcome feedback from our partners on solutions that benefit all cities while ensuring DART continues to provide critical public transportation services for our residents and communities," he said in a statement.

Since November, Plano, Irving, Highland Park, Farmers Branch, and University Park opted to hold May 2 elections on withdrawing from DART, which provides bus, rail and other transit services in a more than 700-square-mile area.

Concern over a ramp up in DART debt sales was raised earlier this month when the University Park City Council unanimously voted to hold an election.

The transit agency has plans to issue about $2.5 billion of bonds over the next six years primarily for light-rail vehicle and bus replacement, system modernization and remaining costs from the Silver Line Commuter Rail project.

The debt pause should ease the urgency felt by member cities making decisions in the coming months, according to DART President and CEO Nadine Lee. 

"This will delay some of the scheduled and promised updates the DART staff has been working on, but as good-faith partners in these negotiations, we will honor this compromise," she said in the statement.

The main reason cities cited to ditch DART was inequity between their 1% sales tax contributions and transit services they receive. Historically, the five member cities with upcoming withdrawal elections accounted for 29.5% of DART's sales tax revenue, which is expected to total $937.5 million in fiscal 2026.

Rating analysts have said the cities' exodus would subject DART to budget and credit pressures.

If voters decide to withdraw, transit services would cease in the cities, which would still have to contribute sales tax revenue until their financial obligations, including their share of debt payments, are fulfilled.

DART has taken and is considering steps to address member city concerns, including potential governance changes that were reportedly taken up this week by Dallas' Transportation and Infrastructure Committee.

The transit agency had $3.86 billion of senior lien sales tax revenue bonds outstanding as of Sept. 30. It last issued bonds in 2021: $1 billion of tax-exempt and taxable debt in two deals rated Aa2 by Moody's Ratings, AA-plus by S&P Global Ratings, and AAA by KBRA — all with stable outlooks.