The board of New York’s Metropolitan Transportation Authority approved a contract with Kawasaki Rail Car Inc. for up to $1.8 billion to design and build the next generation of rail cars for the Long Island Rail Road and Metro-North Railroad.

The MTA expects Kawasaki to assemble up to 676 cars at its plant in Yonkers, N.Y.

“This contract will not only make the Metro-North and LIRR more efficient and resilient, but the additional cars will be assembled right here in New York, helping create jobs and grow the regional economy,” said Gov. Andrew Cuomo.

The cars will replace 1980s-era M3 railcars that serve the LIRR’s eight electric branches and Metro-North’s Harlem and Hudson Lines and expand fleet capacity for both railroads to allow for ridership growth. A portion of this contract and related development costs are funded with $355.5 million from the MTA’s 2010-2014 capital plan.

The initial contract will provide 92 cars to the LIRR. If funding is available in the forthcoming 2015-2019 MTA capital plan and the railroads choose to exercise future options, Kawasaki will manufacture up to 304 additional cars for the LIRR and up to 280 cars for Metro-North.

“While we spend a lot of time and energy modernizing our railroads’ aging infrastructure, few improvements are more visible and more welcomed by customers than updating our trains,” MTA chairman and chief executive Thomas Prendergast said after Wednesday’s board meeting.

According to authority officials, the MTA, with the LIRR acting as the lead agency, initially advertised a request for proposals for the cars in June 2012. Best and final offers free carbuilders arrived last month.

The MTA, with about $32 billion of debt, is one of the largest issuers in the municipal marketplace. Moody’s Investors Service rates the MTA’s transportation revenue bonds A2, while Fitch Ratings and Standard & Poor’s assign A ratings.

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