The transit agency that serves Pulaski County has the legal ability to sell bonds to buy new buses and other capital needs, but probably could not support the debt with current revenues, according to the legal department at the Central Arkansas Transit Authority.
CATA attorney Jess Sweere said the debt service would have to be pledged by its member entities over many years.
The authority is a public corporation that under state law can issue tax-exempt debt, according to Sweere.
“From a legal standpoint, the agency has the authority to borrow money for capital expenditures,” he told the agency board last week. “From a practical standpoint, you’re limited.”
“The authority spends virtually all of the money it receives for operating expenses” he added. “The funding partners ultimately would be on the hook to pay it back.”
CATA’s annual operating budget of $15.6 million includes total contributions of $11.8 million from Little Rock, North Little Rock, Pulaski County and two smaller cities.
Agency officials said CATA must replace 26 buses over the next three years. Trustees in February delayed a proposed purchase of buses fueled with compressed natural gas and a $2.4 million fueling station until funding options could be explored.