Meeting_Body
REGULAR BOARD MEETING
JANUARY 28, 2021
Preamble
Motion by:
DIRECTORS BONIN, HAHN, BUTTS, NAJARIAN, AND SOLIS
Creation of Federal Reserve State & Local Agency Lending Facility
Metro should seek additional ways of reducing debt interest and fee obligations to free more local tax revenue for transit service and capital projects.
Metro uses debt strategically to fund priority projects and meet the cash flow needs of a complex agency with varying revenue streams and multiple business lines. Metro currently has a total of $5.67 billion in outstanding debt principal from transit, regional rail, and highway investments that are serving Angelenos today, including the Red and Purple Lines, the Expo Line, and various highway projects. In the original FY21 budget, Metro's debt service totaled $509.2 million, or about 8% of the total Board-adopted annual budget.
As with any debt, a significant amount of the cost of repayment is interest and fees. In recent years, Metro has taken proactive steps to reduce these payments through several debt refinancing actions, saving millions of taxpayer dollars. However, it is still common for municipal borrowers to pay one dollar in fees and interest to banks and bondholders for every dollar that they borrow. While Metro enjoys consistently low interest rates due to its strong financial management and high bond rating, those interest payments cost Metro nearly $200 million per year-money that could otherwise go to transit operations or capital project priorities.
After the passage of Measure R, Metro's America Fast Forward campaign won congressional authorization for an eight-fold increase in the TIFIA loan program, increasing Metro's access to low-cost borrowing to finance Measure R capital projects. This innovative partnership with the U.S. Department of Transportation is helping to finance the delivery of three key Metro capital projects: the Crenshaw/LAX Line, Regional Connector, and Purple Line Extension. Metro's...
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