Los Angeles Daily News
MTA views $1.1 billion bond plan
By Lisa Mascaro
Friday, September 10, 2004 - Faced with dismal government funding for transportation, the MTA is considering an ambitious plan to borrow $1.1 billion in order to finance and expedite five major transit projects, officials said Friday.
Metropolitan Transportation Authority officials want to push the projects ahead to help relieve congestion on the nation's busiest freeways, which would go a long way toward meeting federal requirements for reducing smog.
"We've been able to keep our head above water with (traffic) congestion. If we're more aggressive, maybe we can make some ground," MTA Chief Executive Officer Roger Snoble said.
"It gives us the confidence to commit to those projects."
The proposal will be reviewed by MTA committees next week and the full MTA board later this month.
MTA Chairman Frank Roberts compared the borrowing plan to a family taking out a mortgage to buy a house.
"That's prudent for us to consider," said Roberts, also the mayor of Lancaster. "We're building things now that can be used for generations to come."
Under the proposal, the MTA would issue up to $1.1 billion in bonds over the next decade, which would be repaid using revenue from the 1 percent countywide sales tax earmarked for transportation.
The principal and interest would cost $80 million to $100 million annually for the 30-year life of the bonds.
Officials predict they'll need to issue only $500 million in bonds, and that the state and federal governments will come up with the rest.
The loan would be in addition to the $3.1 billion the MTA still owes for building its subway and light-rail lines. The principal and interest on those loans total about $290 million annually, or about 10 percent of the MTA's $2.9 billion annual budget.
"This is a last-resort plan," said MTA treasurer Terry Matsumoto. "We only issue that much if a lot doesn't happen."
The ambitious borrowing plan is designed to overcome obstacles created over the past three years when the state diverted $5 billion in transportation funds to shore up the general fund, shelving all but the most pressing transportation improvements.
Transportation improvements are especially critical in Southern California. New car-pool lanes and mass transit projects are needed to reduce traffic congestion so the region can meet its federal air-quality goals.
If the region fails to meet its air-quality targets, the federal government could suspend transportation funds across six Southern California counties until those goals are met.
The Southern California Association of Governments has pressed the MTA to find alternative ways to keep the projects going.
Already, the MTA has borrowed $561 million over the past 18 months to save the Valley's Orange Line busway and the Eastside light-rail project. The state and federal governments have promised to repay the MTA in future funds or in-kind projects.
Additionally, officials said federal funding has faltered because Congress has gone a year without approving a new multiyear transportation funding bill.
The MTA had been criticized in the past for excessive borrowing to build the rail lines, and federal authorities required the agency to establish a debt policy that sets limits on loans.
Officials said this proposal is well within the capacity for borrowing allowed under the agency's debt policies.
"It's actually a very smart business decision to move these projects forward through borrowing," said David Yale, MTA's director of regional programming.
"There's always a concern, even when you're doing your own family budget, you're going to be borrowing more than you can afford to pay back in the future. We looked at that very carefully."
Lisa Mascaro, (818) 713-3761 firstname.lastname@example.org