DALLAS - Fitch Ratings downgraded $655 million of certificates of participation from the Colorado Regional Transportation District to A from A-plus and retained a negative outlook.

The COPs are subordinate to RTD's senior bonds, which Fitch affirmed at AA-plus, and FasTracks bonds, rated AA.

The senior bonds are secured by a 0.6% sales tax, while the FasTracks bonds are backed by a 0.4% sales tax.

The COPs are financing RTD's work on the Eagle P3 commuter rail project that includes a 22.8-mile link between Union Station and Denver International Airport. The COPs, which are secured by lease payments from funds remaining after debt service on the senior and FasTracks bonds, are also financing redevelopment of Union Station.

"The downgrade of the COPs and negative outlook reflects their exposure to projected thinning financial margins amidst RTD's aggressive expansion plan," Fitch analyst Jose Acosta wrote in his March 3 report. "As an operating expense of the system, COPs base rental payments, which have increased notably with recent and planned offerings, are paid after all other system debt service."

Standard & Poor's rates the COPs A-minus with a developing outlook based on the agency's new ratings criteria. Moody's Investors Service rates the COPs Aa3 with a stable outlook.

With costs of the FasTracks system of rail and bus lines running ahead of available revenue, RTD has reprioritized its capital plan to cover shortfall.

"Such pressures have spurred management to pursue innovative methods to leverage its constrained resources, which Fitch believes could result in increased risk to the overall debt structure," Acosta noted.

RTD has repeatedly postponed a referendum on raising sales taxes to cover the shortfall in FasTracks costs. FasTracks was expected to cost $4.7 billion and to be completed in 2017 when voters in eight counties approved the 0.4% sales tax increase in 2004. By 2010 the budget had risen to $6.5 billion while projected revenues fell to $4.1 billion. At the current rate, the project is expected to be completed in 2042.

Fare increases are programmed every three years, although 2014's fares remained level, Acosta said.

"With the financing of its capital plan in flux, Fitch views the projected debt service coverage levels as having more inherent uncertainty than is typical for a transit system COP," Acosta said. "Fitch's ratings also consider the uncertainty inherent with the implementation of a substantial transit network expansion."

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