Regional Transportation District board members and managers join city officials and other leaders to pull rail spikes, marking the onset of work for the North Rail project. Existing rail will be replaced with new track along part of the route.

DALLAS - Colorado's Regional Transportation District will use proceeds from Thursday's $431 million certificates of participation pricing to add a major branch to its growing FasTracks rail transit system.

The COPs are pricing through negotiation with JPMorgan as senior manager. Co-managers are Piper Jaffray, BMO Capital Markets, Loop Capital Markets and Harvestons Securities Inc.

Brendan Morgan, RTD manager of debt and investments, said the final size of the deal could vary.

In a muni market starved for new issues, the COPs with final maturities of 2044 are expected to go mostly to institutional investors, he said.

"I think the market is looking good," said Morgan, who was in New York Wednesday for the pricing. "There's not a lot of supply out there. We're getting good investor interest."

Marshall Crawford, managing director at JPMorgan is lead banker on the deal.

RTD financial advisor Michael Newman, senior vice president of FirstSouthwest, has worked with the district since 2010.

"What's appealing about the COPs is the rating," Newman said. "It's a nice sized transaction, which will offer secondary market liquidity. The other thing that's attractive is the fact that RTD is a very good name."

The COPs earned ratings of A from Standard & Poor's and Fitch Ratings, and Aa3 from Moody's Investors Service. Fitch has a negative outlook, while Moody's and S&P assign stable outlooks.

S&P raised its rating to A from A-minus March 19 based on the agency's new criteria.

"We consider RTD's market position strong, and we believe that RTD's virtual monopoly on public transit mitigates ridership fluctuations," wrote S&P analysts Paul Dyson and Robert Hannay in their May 28 report.

Fitch downgraded RTD's COPs to A from A-plus in March and retained a negative outlook that "reflects their exposure to projected thinning financial margins amidst RTD's aggressive expansion plan."

Voters in the Denver and surrounding counties approved a major expansion of rail service known as FasTracks in 2004. With that approval came a 0.4 cent sales tax increase designed to finance $4.7 billion of projects. Those costs have increased to $5.7 billion, and projects promised for 2017 are now on hold, possibly for decades.

RTD anticipates funding FasTracks 56% by bonds and loans, 36% by federal grants, 9% by public/private partnerships, and the remainder by pay-as-you-go capital and other sources.

RTD has only $1.1 million of remaining FasTracks prior-lien sales tax debt authorization, but public-private concession agreements allow other parties to issue subordinate sales tax-secured debt outside the voter authorization, with a lien on sales tax ahead of the COPs.

In November, RTD and Regional Rail Partners (RRP) signed a contract to begin construction on the North Metro Rail Line, one of four electrified commuter rail lines RTD is building. RRP is the prime contractor for the line which will serve north Denver, Commerce City, Thornton, Northglenn and Adams County.

In a ceremonial "spike-pulling" that served as a groundbreaking ceremony for the new line on March 20, Denver mayor Michael Hancock noted that the new rail line will serve the National Western Stock Show grounds, nearby industrial plants and the working-class neighborhoods of North Denver.

"In north Denver, we're jumpstarting positive revitalization thanks to the opportunity provided by the North Metro Rail Line, and we can't wait to see it through to completion," Hancock said.

The first phase of North Metro Rail is to open in 2018. When the entire line is completed it will run 18.5 miles between Union Station and 162nd Avenue/Colorado Highway 7.

"Building North Metro to 124th Avenue as a first phase makes it affordable for RTD to fund the project," said RTD general manager Phil Washington. "When additional funds become available-and we are confident that will happen-we will be able to complete this important corridor."

With the North Metro line underway, RTD is reconsidering its options to the more affluent northwestern suburbs in Broomfield, Boulder and Jefferson counties. Residents of the area have grumbled about the lack of rail service, despite their contributions to FasTracks finance.

In meetings this month, RTD's board will consider whether to use bus rapid transit to the northwest at a much lower cost than a rail line. With lack of FasTracks funding, the rail line could be decades away, whereas a bus rapid transit line could be built more quickly and at a fraction of the cost. Moreover, BRT could be built with RTD revenues that were not pledged to FasTracks.

Fitch issued some special comment on the northwest line in a report Wednesday.

"In the short term, BRT can be implemented quickly along existing roadways," Fitch noted. "This may garner voter support as the services can begin soon after approval while rail projects often take decades and result in higher costs than projected."

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