New York MTA to Resume $51.5 Billion Capital Plan After Rescue
(Bloomberg) -- New York’s Metropolitan Transportation Authority is restarting its $51.5 billion capital plan and the borrowing to finance it as federal aid rescues the city’s bus and subway operator from the financial toll of the pandemic.
The MTA, the largest public transportation system in the nation, plans to sell bonds backed by the revenue its gets from taxes on Internet sales and mansions to help fund its 2020-2024 capital plan, Bob Foran, the agency’s chief financial officer, said during a board meeting Wednesday. The coronavirus outbreak put those financing plans on hold as the agency weighed using the revenue instead for operating needs.
“The latest infusion of federal aid allows us to unfreeze our historic 2020-2024 capital program,” Pat Foye, the MTA’s chief executive officer, said during the board meeting.
The MTA will receive a combined $14.5 billion of federal relief, including about $6.5 billion in the latest rescue package, to cover lost revenue as ridership has plunged. With that money, the MTA is no longer considering major service cuts and layoffs in 2023 and 2024 and can instead restart key infrastructure projects, Foye said. Those include expanding the new Second Avenue subway, upgrading train signals, making stations accessible and increasing service to New York’s Pennsylvania Station.
“It is imperative that we continue to modernize the system so that once we move past this current crisis we don’t find ourselves in the situation we did in the 1970s and 1980s,” Foye said during the meeting, referring to a period when riders suffered on a dilapidated and broken-down subway network. “We remain committing to bringing our 117-year-old subway system into the 21st century and this new federal funding package will help us do that.”
Planned fare increases remain on hold and the board will discuss the delayed fee hikes in the coming months, Foye told reporters after the meeting. The MTA raises fares and tolls every two years and still plans to increase fees on bridge and tunnel crossings next month.
The MTA, which had $48.2 billion of outstanding debt as of March 2, anticipates selling bonds this year backed by Internet sales-tax revenue and mansion-tax receipts, Foran said. Those revenues were originally pegged to supply $10 billion of funding for the multi-year capital plan, he said.
“We’ll see what we can generate, but it should certainly be a significant amount of bond proceeds this year as opposed to having to wait to next year,” Foran said during the meeting.
The board also Wednesday approved selling $1.3 billion of debt this year that’s repaid with the payroll mobility tax to finance capital projects.
While the MTA borrowed $2.9 billion last year thorough the Federal Reserve’s Municipal Liquidity Facility to cover budget deficits in 2021 and 2022, the agency may not need to use those proceeds now that the MTA is getting $6.5 billion of federal aid, Foran said. The agency will still keep the $2.9 billion and repay the loan with those proceeds if the MTA doesn’t need additional funds to cover budget gaps, he said.
©2021 Bloomberg L.P.