ATLANTA - The Metropolitan Atlanta Rapid Transit Authority will sell $111 million ofrevenue refunding bonds Monday in a deal that is expected to save it almost $8 millionas the authority contends with historic declines in sales tax revenue used to secure itsdebt.
Better known as MARTA, the authority operates the public transportation system thatserves metro-Atlanta. Monday's deal will be sold competitively and will be structuredwith maturities from 2004 through 2020. Bidders will be able to designate as term bondsconsecutive maturities beginning on or after July 1, 2013. The bonds will be insured atthe bidder's option.
Standard & Poor's and Moody's Investors Service are expected to affirm their AA-minusand A1 ratings. There is no rating from Fitch Ratings.
Evensen Dodge and Pinnacle Investment Advisors are the financial advisers. King &Spalding and Howell & Associates are co-bond counsel.
Proceeds will be used to refund Series 1993A sales tax bonds. Richard Marsh, manager offinancial planning and analysis for MARTA, said the current refunding will have a net-present-value savings of about 7%, or $7.8 million.
The authority last issued debt in November when it sold about $160 million of new-moneysales tax bonds. Marsh said plans call for another issue next year to continue fundingfor several projects already underway. The issue has not been sized yet.
Projects to be funded with the next new-money issue include completion of a maintenancefacility for rail car storage, improvements to the fare collection system, replacementof the radio information system, and the refurbishment of about 238 rail cars.
In 2000, the authority issued about $200 million of debt to buy additional rail cars. Bythe end of the year the fleet will total 338.
MARTA's debt, about $1.1 billion, is secured by sales taxes collected in DeKalb andFulton counties. The tax is levied at the rate of 1% through June 30, 2032. At that timeit will decrease to one-half percent.
Collections from the tax for fiscal 2002 were down almost 6%, which was the biggestpercentage drop since the inception of the taxes for MARTA in 1973. They totaled about$286 million.
Estimated collections for fiscal 2003, which ends June 30, are expected to be down about3.8%, totaling about $275 million. Whole percentage point increases are not projected toreturn until fiscal 2005 when a 7.2% increase has been estimated.
The estimates are the result of an analysis done by Rajeev Dhawan, the director ofeconomic forecasting for Georgia State University. In his report submitted at the endApril, Dhawan found that on a quarterly basis sales tax collections should begin toimprove by the middle of 2004. However, given the severe drop in revenues, the initialslow recovery means that previous robust levels of revenues will not be seen again until2006.
