LOS ANGELES — The strike against the San Francisco Bay Area Rapid Transit District could lead to increased financial pressure for the transit system, according to Moody's Investors Service.
The agency said the strike, which began Friday, is a credit negative for BART because it will disrupt passenger fare revenue and could increase labor costs.
"Although the bonds BART has issued have special revenues dedicated to debt service, which insulate the bonds from short-term financial and operating dips, an extended strike could negatively affect the issuer, and thus the bonds," said Moody's analyst Andrew Nowicki. "An interruption in service would disrupt farebox revenues and adversely affect the agency's balance sheet."
BART currently has $626 million of rated sales tax bonds, which are secured by 75% of a half-cent sales tax assessed in BART's service area of San Francisco, Alameda County, and Contra Costa County. Moody's rates the bonds at Aa2, with a stable outlook.
The agency also has $408 million of triple-A rated general obligation bonds which are secured by an unlimited ad valorem property tax pledge collected in the three-county service area.
"Contract negotiations may lead to higher labor costs and operating expenses, which the organization would likely offset with reduced capital expenditures on infrastructure," Nowicki said. "Any long-term deterioration of BART's infrastructure would weaken the overall viability of the system, though we expect the system to address critical capital needs as they occur."
He added that increased financial pressure could lead to service cuts and additional leveraging of general obligation liens and the sales tax securing BART's sales tax revenue bonds.
The Amalgamated Transit Union and the Service Employees International Union, which comprise a majority of BART employees, have been in contentious negotiations with the agency over the terms of a four-year labor contract.
In July, the negotiations resulted in a strike followed by a 60-day cooling off period requested by Governor Jerry Brown.
The cooling off period ended on Oct. 10, but service and negotiations continued until Friday, when union leaders walked away and called for a strike.
BART workers previously went on strike in 1997, and threatened to walk off the job during negotiations in 2001, 2005, and 2009.