WASHINGTON - The Metropolitan Washington Airports Authority has received final approval and a promise of $900 million of funds from the U.S. Department of Transportation for its $5.2 billion Dulles Metrorail extension project, which will be financed with $2 billion of bonds beginning in April.
The authority also is preparing to issue up to $300 million of airport system revenue bonds as soon as February, and is hoping that Congress will include in the forthcoming stimulus package legislation that would exempt airport bonds from the alternative minimum tax, said Lynn Hampton, the MWAA's chief financial officer. The agency had planned to issue $175 million of the bonds in the fall, but postponed the deal due to market turmoil.
Transportation Secretary Mary Peters gave the Metrorail extension the final OK late Wednesday. Congress will review her action for the next 60 days but is not required to approve it, officials said.
"Through a collaborative effort between local, state, and federal governments and the private sector, I think the project is now stronger, more financially sound, and a better deal for commuters and taxpayers," Peters said in a release.
The 23-mile extension of the region's metro rail system to Dulles International Airport was all but dead about a year ago when the Federal Transit Administration told Virginia Gov. Timothy Kaine that it did not meet federal funding cost-benefit requirements. But project officials tweaked their original plan and provided some much-needed assurances to the FTA that the MWAA was capable of managing the project.
"I commend the long-term commitment of the commonwealth of Virginia, the Metropolitan Washington Airports Authority, the Washington Metropolitan Area Transit Authority, Dulles Transit Partners, and the Virginia congressional delegation to address the valid concerns we had previously raised about the viability of this project," Peters said. "I urge the project partners to continue their diligent efforts to contain costs and address any other issues that may arise, and wish them well in realizing the long-term aspiration of bringing rail to the Dulles corridor."
Kaine, who has been a champion of keeping the project alive, said the "demonstrated leadership and willingness to work together" is a model for other "complex projects."
The MWAA has plans to issue about $1.2 billion of toll road bonds for the first phase of the project, an 11-mile stretch between the West Falls Church Metrorail station and a new station at Wiehle Avenue in Reston, Va., that is expected to cost $2.6 billion and to be completed by 2013. The authority has been buying rail cars and moving utilities to accommodate the extension since the middle of last year, but with the $900 million of federal funds on its way, officials will be able to soon begin construction.
The second phase is projected at about $2.5 billion.
The MWAA plans to bring the $500 million of toll road revenue bonds to market by April, Hampton said. Proceeds of the bonds will pay down about $150 million of the agency's commercial paper, with the rest to be used to finance construction costs, according to Hampton.
More than $2 billion of bonds will be used in both phases and the debt will be backed by tolls from the Dulles Toll Road, which the authority received control over from the Virginia Department of Transportation in November. The rates on the Dulles Toll Road will remain the same with no toll adjustments expected until 2010, and the MWAA would be required to conduct public hearings prior to any future toll adjustments, she said.
Meanwhile, the authority's board this week approved up to $300 million of Series 2009A bonds, which Hampton said could come to market as soon as "late winter," for ongoing capital improvement projects at Dulles International Airport and Ronald Reagan National Airport, which the MWAA operates.
The CFO said the authority is "very excited" at the prospect of Congress passing legislation introduced Tuesday by Sen. John Kerry, D-Mass., that would exempt private-activity bonds from the alternative minimum tax.
The MWAA had planned to issue $175 million of airport system revenue bonds in early October, but canceled the deal after the fallout from the collapse of Lehman Brothers Holdings Inc. crippled the municipal and other markets. The bond issue was shelved after conditions did not improve and debt with the AMT attached was shunned by investors.
Hampton said the authority is preparing bond documents for the upcoming deal and expects to come to market as early as February.