The finance committee of New York's Metropolitan Transportation Authority on Monday approved up to $1.5 billion of transportation revenue bonds and $200 million of Triborough Bridge and Tunnel Authority general revenue bonds for capital projects.
The MTA's full board will vote on both new-money items at its regular meeting Wednesday.
"This should take care of our new-money needs for the existing year," said finance manager Patrick McCoy, who expects the agency to issue the bonds in three series.
Next week, the MTA will sell $500 million in transportation revenue bonds, with Barclays the senior manager under the rotation system. Ramirez & Co. will lead a $200 million sale of TBTA bonds the first week in April.
The MTA, not including the $1.7 billion in new planned issuance, has just under $32 billion in debt outstanding, which triggered concerns from board member Charles Moerdler.
"I wish my great-grandchildren a lot of luck," he said.
"Your great-grandchildren will be riding a system with reasonable investment into it and planned service to it," chief financial officer Robert Foran responded.
The committee also approved amendments to the MTA's policy on swap payments to reflect significant changes to the regulatory framework under the Dodd-Frank Act.
Substantive changes to the policy, which would take effect May 1, include investment-grade criteria for counterparties, including the requirement of collateral agreements; a prohibition on the use of "structured" counterparties that allow for automatic termination; limits that tie total interest mark-to-market exposure to 5% of total long-term debt outstanding; guidelines for fuel-hedging limits; and the hiring of a third party as a swap advisor.
Swap Financial Group LLC and Nixon Peabody LLP advise the MTA on swap and legal matters, respectively.
Additionally, the committee approved a request by finance officials to use up to $2.5 billion in new-money bond anticipation notes, which the board authorized for Hurricane Sandy repair in December, for any existing capital project through liquidity facilities.
Since December, the timing of Sandy-related expenses and the expected reimbursements from the federal government and insurance companies may lessen the need for the intended use, Foran and McCoy said in a memo.
"MTA finance and capital programs believes the use of the liquidity facilities will be beneficial as a low-cost funding source to continue to advance approved programs while waiting for the permanent funding," the memo said.
They said banks have been agreeable to the change. "We've gotten a healthy response from the banking community," McCoy said Monday.
Meanwhile, the authority is proceeding with plans to reopen the old South Ferry station by April. Sandy destroyed the current station, which opened in 2009 and sits below the water table.
The Federal Transit Administration has reimbursed MTA New York City Transit for an initial $629,100 of recovery work at the new station, which included pumping out water, removing debris, assessing damage and inspecting equipment. According to an announcement from Gov. Andrew Cuomo on Friday, this initial FTA funding reimburses the authority for costs incurred from storm preparation through Jan. 29.
