The Metropolitan Transportation Authority, the nation’s largest public-transit provider, is set to approve the sale of $1 billion of sales-tax debt Wednesday, a new borrowing vehicle for the agency as it faces an expected delay in getting congestion-pricing revenue needed to finance its ambitious capital plan.
The MTA’s $51.5 billion five-year plan -- its largest ever -- will modernize subway signals, finance new buses and upgrade tracks. It relies on $15 billion of proceeds from issuing debt backed by congestion-pricing fees, a new program to charge motorists coming into Manhattan that may not start in January as planned.
The federal government has been slow to approve the congestion-pricing plan and may delay it indefinitely, Governor Andrew Cuomo said last week. That puts at risk the MTA’s ability to upgrade its system, improve service and expand capacity.
The congestion-pricing delay and the capital plan’s funding will be a focal point of the MTA’s monthly board meeting Wednesday. State lawmakers last year approved new revenue to help finance MTA’s capital program with congestion-pricing fees, internet sales taxes and levies on high-end real estate, dubbed a mansion tax.
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MTA officials are seeking to use the sales-tax receipts to borrow up to $1 billion to help finance infrastructure needs, according to board documents. It will be a new type of security for the transit agency, which owes $44 billion, and may draw investors who are looking to diversify their holdings of New York municipal bonds.
“We think the bonds will be well received in the market given the strong nature of the economic activity in the state and local region generating the tax,” Pat McCoy, MTA’s director of finance, said in a phone interview.
The agency anticipates selling the bonds this summer, McCoy said. They’ll be repaid from $320 million the MTA is set to receive in state and city sales-tax revenue in New York’s fiscal year that starts April 1. That allocation increases by 1% each following year, according to McCoy.
The Trump administration also has yet to support the Gateway project that would replace aging Hudson River rail tunnels and a new train to LaGuardia Airport. The U.S. Army Corps of Engineers has stopped a study aimed to protect the New York City area against storm surges and rising seas.
--With assistance from Henry Goldman.
This article was provided by Bloomberg News.