A bill that would enable the Central Puget Sound Regional Transit Authority to issue 75-year bonds is advancing through the Washington state legislature.
Officials for the authority, better known as Sound Transit, say the extra-long bond term would allow it to deliver its planned expansion projects as quickly as possible.
Ultra-long bonds in the 75-year to 100-year range have rarely been used by public finance issuers other than highly-rated and financially strong universities, said Howard Cure, a partner and director of research for Evercore Wealth Management.
Sound Transit began exploring adding the mechanism to its toolbox after the Biden administration's Infrastructure Investment and Jobs Act
Local governments in Washington, including Sound Transit, are limited by
"The potential use of these bonds was surfaced through internal analysis," Enbysk said. "As our staff evaluated how to deliver our capital projects during a period of peak construction and investment, we examined the existing federal tools available that are used for large-scale infrastructure projects."
TIFIA loans are made directly by the federal government, and are "often available on more advantageous terms than in the financial market," according to
"The TIFIA program allows loan terms of up to 75 years, and when we tested that structure against traditional 30-year debt, we determined the longer-term bonds could ease near-term financial pressure and help keep projects moving forward," Enbysk said.
The Seattle regional transit authority, formed in 1996, has faced criticism for how long it's taking to deliver projects.
Liaas said he lives at the end of one of the proposed light rail lines, and he's looking forward to riding it, so he would like to see it be completed sooner rather than later.
A 54% majority of voters in three counties approved a November 2016 ballot measure to pay for ST3, a 25-year, $53.8 billion expansion of the regional public transit system. The measure included sales, property, and motor vehicle registration taxes.
"The ability to take full advantage of the TIFIA terms, including a 75-year repayment period, would increase Sound Transit's ability to deliver core Sound Transit 3 projects as quickly as possible," Enbysk said.
The plan includes the expansion of the light rail system to the suburbs of Tacoma, Federal Way, Everett and Issaquah, as well as the Seattle neighborhoods of Ballard and West Seattle.
The expanded light rail after completion is slated to reach 116-miles.
The light rail system will expand to 62 miles when a long-awaited link
Staff estimated in an Aug. 28
"Much of the cost pressure is driven by external market forces related to higher base costs following post-COVID inflation and potential tariff impacts," according to the staff report.
The transit agency, "like many public agencies working to deliver large infrastructure projects in the face of rising costs and persistent inflation, faces a significant funding shortfall later in our long-range financial plan," Enbysk said.
In addition to extension of TIFIA loans, Liias said a motivating factor for the bond maturity extension was that the agency will exceed its debt limit ceiling in the next few years with the projects it has planned.
"Using this program is one way they can manage debt restrictions," he said.
"While we are in a strong financial position today, pinch points in the future have necessitated a comprehensive look at the ST3 plan and how best to balance revenues with our expansion plans," Enbysk said.
The legislation as written extends the maturity limit for general obligation and revenue bonds to 75 years. Iliias and Sound Transit's spokeswoman both referenced the TIFIA loan program as the impetus.
The bill only applies to regional transit authorities; Sound Transit
"Our analysis shows that under traditional 30-year financing, some capital projects could face delays, which is why we evaluated tools such as the 75-year TIFIA loan," Enbysk said. "Use of these bonds would free up capital during the peak construction period between 2026 and 2046, helping to keep projects on schedule without increasing long-term risk."
Borrowing over 75 years "would enable us to increase our capital capacity by reducing our annual payments," Enbysk said. "This would free up needed cash in the near-to-medium term that we could devote to our capital and operating budgets."
Sound Transit's modeling, "affirmed by third party experts, shows that when applied to more expensive and complex fixed assets, like tunnels and bridges, this tool could play a significant role in building out the ST3 plan," Enbysk said.
The agency holds the high investment grade ratings Cure said would be necessary to make ultra-long maturity bonds viable.
Moody's Ratings affirmed an Aaa rating on its senior lien debt in July. S&P confirmed its AAA rating on its senior and junior lien debt the same month. Fitch Ratings affirmed its AA-plus long-term issuer default ratings. Moody's and S&P assign a stable outlook and Fitch a positive outlook.
Sound Transit is also looking at a variety of other tools to speed up its plans, including methods of streamlining construction projects, Liaas said.
"They are looking at dozens of ideas to resize the capital program and make sure they can deliver it in the timeline they want to," Liaas said.
SB 6148, currently in the Senate's rules committee, would need to be approved by lawmakers and signed by the governor before it would take effect.
In May 2025, the agency launched the Enterprise Initiative, a comprehensive effort aimed at delivering the maximum benefits of ST3 within available financial resources, Enbysk said.
"This work includes analyzing how the region has changed since 2016 and factors in new conditions that have emerged since 2021," she said.
"Currently we are taking a holistic look at our capital, operating and finance portfolios to update agency plans that will set us on a sustainable financial trajectory," she said. "This effort will continue in partnership with the Sound Transit Board of Directors through the balance of 2026."
Once it are out of the crunch regarding debt limits, Liaas suspects Sound Transit would refinance.
He doesn't plan to bake specificity into the law, like requiring a 30-year call date, because what instruments to use and how the financial plan is managed are "really the responsibility of the board. I just want to give them the tools to have the flexibility to tap the federal program."
The debt would be issued to match the life cycle of the project, which is possible because one of the projects planned is adding a second transit tunnel in downtown Seattle and a significant bridge structure, which he said "would last as long as the city."
"They are pairing assets that would have a long useful life," he said.
Municipal issuers that have gone long on bonds, include several
"My assumption is that even though many of these institutions can finance an infrastructure project with current balance sheet resources or fundraising, they would rather issue the long-dated debt and invest or preserve their balance sheet," Cure said.
The bonds were also typically issued in a low interest rate environment, so the issuer doesn't get penalized with higher interest rates, Cure said.
The universities selling century bonds sold them on a taxable basis, as did the District of Columbia Water and Sewer Authority, which was the first water and sewer utility to issue a municipal century bond when it priced $350 million of green water bonds in July 2014. The bonds were offered at an interest rate of 4.814%. That deal was The Bond Buyer's
Super-long term bonds sold on a tax-exempt basis, as Sound Transit would presumably want to for cost reasons, are exceedingly rare, though the Port Authority of New York and New Jersey
