On the eve of a $1 billion transportation revenue refunding bond sale, New York’s Metropolitan Transportation Authority on Wednesday authorized another $1 billion in bonding for capital projects.
According to MTA finance officials, the authority expects to price $500 million of the Series 2012E bonds the week of July 9, and the remainder later in the year, based on cash-flow needs. Proceeds will fund capital projects in the MTA’s approved program.
The board approved the measure at its monthly meeting — the first for its newest member, former Gov. David Paterson.
On Thursday, the authority will sell $1 billion of Series 2012D bonds through negotiated bid. Bank of America Merrill Lynch is the lead manager and Lamont Financial Services Corp. is the financial advisor. Hawkins Delafield & Wood LLP is bond counsel.
Standard & Poor’s and Fitch Ratings rated the bonds A, while Moody’s Investors Service rated them A2. All have stable outlooks.
Analysts cited the heavy debt the MTA has amassed through its large capital program as a mitigating credit factor. “The MTA’s capacity to continue to leverage resources to fund expansion projects while meeting renewal and replacement needs may be limited in the future if projected financial performance does not come to fruition,” Fitch wrote.
Moody’s noted that lacking additional resources, borrowing will increase to meet the almost $8 billion required for the 2012-2014 portion of the MTA’s capital program. “In addition to more debt, the MTA will look to continued efficiencies, pay-go funding, funding from local partnerships, and the sale of assets to support its sizeable maintenance and infrastructure expansion program,” Moody’s wrote.
The board on Wednesday also unanimously approved zero-fare MetroCards for riders who qualify for the Access-A-Ride paratransit service. According to board Chairman Joseph Lhota, projected reductions in the number of trips involving the more expensive Access-a-Ride will save the MTA more than $90 million per year by 2015 and beyond.
The MTA’s paratransit costs spiked 20% annually from 2005 to 2010.
The discussion prompted the maiden board speech by Paterson, who is legally blind. The former governor worried whether such riders would lose their Access-A-Ride eligibility.
“I want to make sure we don’t have a conversation later about people who have lost their eligibility,” said Paterson. Lhota said he envisioned no such problem.
Meeting the media afterward, Paterson said the difficult part of his job will be balancing fiscal restraint with the need to provide services. The MTA implemented massive service cuts late in 2010 to save an estimated $20 million. One year earlier, Paterson as governor negotiated an MTA rescue package.
“Where do we find the money to restore the cuts? I don’t know the answer to that. People tell me they want the cuts restored, but nobody can tell me how to balance the budget. We still have developmental issues,” Paterson said.
Paterson spoke as MTA officials are preparing their annual spending plan, which they will introduce to the finance committee and full board next month.
Lhota sidestepped questions about the budget and possible restoration of service cuts. “We are evaluating all options. I’m not sure we have the stability to restore all the cuts,” he said.
Paterson, whom Gov. Andrew Cuomo nominated and the state Senate approved, replaces Nancy Shevell, who resigned in January, shortly after she married musician Paul McCartney.
One vacancy remains on the 17-member board, the position formerly occupied by Patrick Foye, who left to become executive director of the Port Authority of New York and New Jersey.
Nassau County Executive Edward Mangano is charged with recommending a replacement to Cuomo.