Sound Transit signs $1.99 billion U.S. Dept. of Transportation master loan agreement spanning four light rail projects

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Federal program's support for light rail extensions could save taxpayers $200-$300 million

Sound Transit and the U.S. Department of Transportation today executed a $1.99 billion credit agreement under the Transportation Infrastructure Finance and Innovation Act (TIFIA), offering expected long-term savings of between $200 million and $300 million for regional taxpayers through reduced borrowing costs.

"This announcement demonstrates that the Build America Bureau is already playing a major role in how projects are planned and paid for by streamlining the financing process and bringing together valuable tools for accessing federal dollars. This means projects contemplated under the Master Credit Agreement can move forward more quickly and effectively," said USDOT Secretary Anthony Foxx. "We are proud of the work done through the Bureau to speed investments needed in growing regions like the Pacific Northwest. This development is a big win for the entire region."

"With the use of a Master Credit Agreement, the Build America Bureau can now negotiate one deal with entities that have multiple projects in their pipeline to gain access to federal loans," Foxx said. "This has tremendous potential to save time and resources for infrastructure owners and to bring additional stability that can speed the investments that growing regions need today like the Northgate Link Extension project in Seattle."

"As Puget Sound continues to grow, it's more important than ever to invest in smart, efficient transportation systems that meet the needs of workers, families and the local economy," said U.S. Sen. Patty Murray. "I'm proud to support programs that can create jobs and save Washington state taxpayers money at the same time."

"Building a mass transit network that connects all corners of a growing region is a monumental task," said Sound Transit Board Chair and King County Executive Dow Constantine. "Our strong partnership with the U.S. Department of Transportation stretches our transit dollars even further, helping us meet the demand for fast, reliable light rail and express bus service."

"The people of Puget Sound are fortunate to benefit from strong partnerships with the U.S. Department of Transportation as we build the mass transit network our region desperately needs," said Sound Transit CEO Peter Rogoff. "Securing the nation's first master credit agreement will help ensure that more of our tax dollars are spent providing a path out of traffic than on borrowing costs."

Sound Transit applied for the U.S. Department of Transportation TIFIA loans to insulate the agency from unexpected downturns in the economy and provide taxpayers savings from agency borrowing costs. The TIFIA loans allow the agency to borrow money at rates that are typically significantly lower than otherwise available.

The $200 million to $300 million of savings are forecasted to accrue over the 35-year lives of the loans and are in relation to the borrowing costs assumed in Sound Transit's financial plan. The loans improve the agency's long-term financial outlook and reduce risks associated with completing regional transit projects approved by voters in both 2008 and 2016. However, it will not be prudent in the near term to "spend" or assume a specific amount of additional financial capacity. Borrowing rates, tax collections, project costs and many other financial assumptions will all require close monitoring in coming years.

The loans will support the following projects:

  • Northgate Link – 4.3-mile extension from the University of Washington Station at Husky Stadium to Northgate Mall, opening in 2021. Loan amount: $615.3 million
  • Lynnwood Link – 8.5-mile extension from Northgate to the Lynnwood Transit Center, opening in 2023. Loan amount: $657.9 million
  • Federal Way Link Extension – 7.5-mile extension from South 200th Street in the City of SeaTac to the Federal Way Transit Center, opening in 2024. Loan amount: $629.5 million.
  • New Operations and Maintenance Facility, which will support a growing light rail system serving trains to Lynnwood, Bellevue/Overlake and Kent/Des Moines. Loan amount: $87.7 million.

Enacted by Congress to provide credit assistance for qualified regional and national transportation projects, TIFIA loans can increase the financial capacity and enhance the credit of the borrower by offering flexible repayment terms and potentially more favorable interest rates than can be found in traditional capital markets. Sound Transit's TIFIA loans were upgraded from A+ to AA+ by Fitch Ratings, Inc. and from A- to A+ by Standard and Poor's ahead of the close of the MCA and Northgate loan.

In advance of a sale of bonds executed earlier this month the agency received a rating upgrade from Moody's for its Senior bonds from Aa1 to its highest AAA rating. Moody's also upgraded the agency's Parity bonds from Aa2 to Aa1.