BRADENTON, Fla. - The Metropolitan Atlanta Rapid Transit Authority adopted a $885.7 million budget for fiscal 2015 that will require no increase in bus or rail fares even though service levels will increase.
The board approved the budget June 5, the same day MARTA priced a sales tax bond deal to finance capital needs and take out commercial paper.
The budget goes into effect July 1, and allocates $415.6 million for operations, a decrease of 2.7% over fiscal 2014, and $470.1 million for capital projects, an increase of 9.2%.
MARTA is Georgia's largest ground transit system, and consists of about 500 buses and 175 mobility vans operating in Atlanta and five neighboring counties, and a passenger rail system that operates over 47.6 miles in Atlanta and Fulton and DeKalb counties.
The agency, which is largely funded from a sales tax and through fares, experienced pressured finances through the prolonged recession.
Analysts said in recent reports that the transit system is showing signs of recovery, and that sales tax collections began to stabilize in 2011. Collections grew by more than 6% between 2011 and 2013.
The fiscal 2015 budget is based on maintaining fares at existing levels, and increasing rail service hours by 19%.
The board also approved the results of the competitive sale of $300 million of third indenture sales tax revenue bonds.
Bank of America Merrill Lynch won the 30-year bonds with a true interest cost bid of 3.77%.
"We were very pleased with the pricing, which was about $4.2 million better than anticipated," said MARTA Treasurer Kevin Hurley.
The bonds are rated AA-minus by Fitch Ratings and AA-plus by Standard & Poor's.
Bond proceeds will provide $100 million for capital improvements and $200 million to refinance commercial paper notes issued in 2012.
The last time MARTA sold a similarly sized 30-year deal was in 2007 when $389.8 million of third indenture sales tax bonds were awarded to Citi at a true interest cost of 4.65%.
On May 27, Moody's Investors Service upgraded its ratings to Aa3 from A1 on $1.7 billion of outstanding third indenture sales tax revenue bonds, though it was not asked to rate the bonds that priced June 5.
Moody's said the upgrade was the result of recent restructuring activities that reduced MARTA's variable-rate and swap portfolio to 10% from 56% of total outstanding debt through the termination of $645 million of basis swaps with counterparties Goldman Sachs Group Inc. and Merrill Lynch & Co. Inc.
According to Fitch, which said it also viewed the restructuring favorably, the all-in $13 million termination cost was fully funded from a swap reserve.
"Termination of the swaps removes the authority's exposure to basis risk, a potential cost pressure on the authority's tight finances," Fitch said.
Co-financial advisors on the June 5 bond sale were Public Financial Management Inc. and Pinnacle Investment Advisors LLC.
Holland & Knight LLP was bond counsel.
