U.S. Dept. of Transportation executes $87.7 million loan for Sound Transit light rail operations and maintenance facility
Second installment of $1.99 billion master loan agreement will support upcoming light rail extensions
The U.S. Department of Transportation has executed a $87.7 million low-interest loan that will reduce regional taxpayers' costs in constructing a new maintenance base in Bellevue to support upcoming light rail expansions across the region.
The loan, with an interest rate of 2.73 percent, is the agency's second under a $1.99 billion master credit agreement approved by USDOT last December through the Transportation Infrastructure Finance and Innovation Act (TIFIA). This credit agreement is the first of its kind in the nation in supporting four separate Sound Transit projects. It is expected to yield regional taxpayers long-term savings of between $200 million and $300 million in reduced borrowing costs.
"As our region's population grows and congestion worsens, we need, more than ever, a mass transit network that connects our communities to jobs and economic opportunity," said Sound Transit Board Chair and Snohomish County Executive Dave Somers. "Our strong partnership with the U.S. Department of Transportation is essential to helping us meet the demand for fast, reliable transit services."
"Investing in our infrastructure isn't just good for workers and families in Puget Sound, it's also good for the regional economy," said U.S. Sen. Patty Murray. "As a voice for our state, I'm proud to do what I can at the federal level to advocate for investments in smart, efficient transportation systems, especially when they can save taxpayer money."
"The people of Puget Sound stand to benefit the most from this needed U.S. Department of Transportation loan that will make possible a second storage and maintenance facility for upcoming light rail expansions," said Sound Transit CEO Peter Rogoff. "Securing the nation's first master credit agreement last year was a big win for our region, especially when one considers the taxpayer dollars we'll save on borrowing costs. I want to thank Secretary Chao and her team for our continued federal partnership through the TIFIA program."
Sound Transit applied for the U.S. Department of Transportation TIFIA loans, administered by the Build America Bureau, 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. Loans supporting Sound Transit's Lynnwood and Federal Way light rail extensions are expected to be executed in 2018.
Sound Transit is continuing to advocate for Congress to maintain the federal government's longstanding and bipartisan partnership with regions around the country of providing grants supporting transit expansions. These grants, which unlike loans don't need to be repaid, are proposed for elimination by the Trump Administration's FY 2018 budget.
Without congressional action, the most immediate impact of the budget proposal would be elimination of a $1.17 billion federal commitment to the Lynnwood Link light rail extension that was identified last February when the Federal Transit Administration authorized the project to enter into the engineering phase. The region's congressional delegation recently secured a $100 million FY 2017 initial installment toward the $1.17 billion commitment.
Following regional voters' approval of the $54 billion Sound Transit 3 ballot measure in November 2016, over the next 25 years Sound Transit's financial plans assume approximately $5 billion in New Starts funding for voter-approved capital projects. Sound Transit's next project in the pipeline is seeking $500 million in federal funding to reach the City of Federal Way.
While the expected savings from TIFIA loans are significant, they are forecasted to accrue over the lives of the loans and are in relation to the borrowing costs assumed in Sound Transit's financial plan. With federal funding uncertainties and other factors, it will not be prudent in the near term to "spend" or assume a specific amount of additional financial capacity from the loans. Federal funding levels, borrowing rates, tax collections, project costs and many other financial assumptions will all require close monitoring in the coming years.
The 25-acre Operations and Maintenance Facility East in Bellevue is needed for continuing expansion of the region's light rail system. By 2024, the system will grow from 22 to 62 miles and the existing light rail fleet will more than triple in size, from 62 to 214 vehicles. The current facility in Seattle can store and maintain at least 104 light rail vehicles. The new eastside facility will be designed to maintain, store and deploy an additional 96 vehicles.