MBTA to issue $574 million in bonds
Money will be used for capital investments
THE MBTA, with $5.01 billion in debt outstanding, is preparing to borrow another $574 million to raise funds for capital projects.
“It’s an ambitious capital program and it needs to be because we need to make a dent in our state of good repair,” said Paul Brandley, the MBTA’s treasurer, referring to the backlog of projects needed to bring the T system up to snuff.
The MBTA plans to spend $7.4 billion over the next five years on new vehicles ($1.7 billion); track, signal, and power upgrades ($1.28 billion); modernization initiatives ($1.4 billion), and expansion projects ($1.6 billion).
T officials said they will borrow the $574 million by issuing bonds backed by sales tax revenues that by law are steered to the transit agency. The T’s debt service cost, which is paid out of the operating budget, is expected to rise from $451 million this fiscal year to $501 million in fiscal 2019 and then hover between $472 million and $507 million over the next eight years.
Transportation Secretary Stephanie Pollack said she was a student of MBTA debt in her previous work as an academic, and one of her biggest concerns was the T’s failure to pay principal down. She also said she was glad to see the T had successfully found a way to pay for a $492 million federally mandated project to prevent train crashes. The cost of the so-called positive train control program is being split between the federal government ($393 million) and the T ($99 million).
“When I walked in, we had no clue about how a half-billion dollar project was going to be paid for,” Pollack said.Bradley said $418 million of the $574 million in bonds will meet the definition of sustainability bonds, meaning they are being used for climate resilience, energy efficiency, accessibility, passenger safety and other issues.
Bradley said the sustainability bonds may have little impact on the MBTA’s next bond issue, but he said they will likely command a premium in the future as bond holders want to make sure their money is going for such projects.