What's paying for the 5000s

[Busjack]

Getting by indirection to the CTA site, there is a press release that CTA Board authorized $550 million in bonds to pay for the 406 L cars. However, looking at the Board Meeting Agenda (Word document), those bonds are "corporate purpose debt obligations payable from the sales tax receipts fund."

While all the talk has been about capital being diverted to operating, isn't this operating being diverted to capital? Sales tax receipts are already encumbered by the "loan" Quinn authorized to stave off fare increases, but apparently the FTA is not paying too much towards the cars.

Wordguy asked for an audit, and isn't one needed here?

[jajuan]

Getting by indirection to the CTA site, there is a press release that CTA Board authorized $550 million in bonds to pay for the 406 L cars. However, looking at the Board Meeting Agenda (Word document), those bonds are "corporate purpose debt obligations payable from the sales tax receipts fund."

While all the talk has been about capital being diverted to operating, isn't this operating being diverted to capital? Sales tax receipts are already encumbered by the "loan" Quinn authorized to stave off fare increases, but apparently the FTA is not paying too much towards the cars.

Wordguy asked for an audit, and isn't one needed here?

Quick question, what is the source of the capital funding supposed to be anyway?

[jacksone44]

I thought these cars were already paid for by the FTA and IDOT.

[chitowndude84]

this reveals some info

http://www.chicagotr...cta_11-20100210,0,7109825.story

"The board approved issuing up to $550 million in revenue bonds to help pay for the $674 million deal, which will lead to the belated retirement of CTA trains that date to 1969."

"The bonds that the CTA intends to sell within the next two weeks will be backed by sales taxes and federal funding that the CTA receives, said Paul Fish, CTA vice president of budget and capital finance.

The CTA and its financial advisers are considering using the Obama administration's Build America bond structure, designed to boost infrastructure projects and create jobs, for the transaction"

[Busjack]

Quick question, what is the source of the capital funding supposed to be anyway?

Normally it would be either FTA or the "Illinois Capital Bill." However, I previously had the sort of gut feeling about "where is CTA going to get $650 million for 406 cars; that's an awful expensive initial order?"

It turned out with the NABIs, it was mostly Illinois First money. The CTA budget makes it clear that they bonded out future FTA money to pay for Option 4 (1830-2029) and the current capital plan calls for repaying that. It still isn't clear what pays the lease for 4000-4049.

I had read the Press Release that chitowndude had posted.

As far as the bonds being backed, I'm not buying the bonds, but somebody will want to make sure that they will be paid before buying.

Elsewhere, I coalesced the issue as follows:

• Sales taxes are now inadequate to sustain the 2009 service level, and all of the service boards are supposedly using capital (federal funds) for operating.
• The fare increase was forestalled by the RTA borrowing $166 million. Supposedly, the state is on the hook for 2 years of that bond service, but the state is supposedly broke. Eventually, will RTA sales taxes be needed to pay that off?
• Pile on top of that that it appears from the posted CTA sources that sales taxes are pledged to these bonds.
• Ergo, if the economy improves, is the sales tax revenue stream so encumbered that they won't be able to restore service?

Unless someone from the CTA financial department is shadowing this forum, I don't actually expect an answer. The text of the President's report doesn't say anything other than that the bonds were programmed.

[Busjack]

...

The CTA and its financial advisers are considering using the Obama administration's Build America bond structure, designed to boost infrastructure projects and create jobs, for the transaction"

Since that mentioned it, and it was also mentioned in connection with the New Trier bond referendum going down in flames, here is a reference from the government.

Apparently, the only point seems to be that since municipal bonds are not selling, the feds are allowing municipalities to issue taxable bonds, but then subsidize the municipality for the difference between interest rates on the two bonds, assuming that someone in the 35% tax bracket would buy either.

However, that doesn't affect the repayment obligation.

[jajuan]

this reveals some info

http://www.chicagotr...cta_11-20100210,0,7109825.story

"The board approved issuing up to $550 million in revenue bonds to help pay for the $674 million deal, which will lead to the belated retirement of CTA trains that date to 1969."

"The bonds that the CTA intends to sell within the next two weeks will be backed by sales taxes and federal funding that the CTA receives, said Paul Fish, CTA vice president of budget and capital finance.

The CTA and its financial advisers are considering using the Obama administration's Build America bond structure, designed to boost infrastructure projects and create jobs, for the transaction"

I saw similar info earlier today in the RedEye. And thanks Busjack for your info.

[RJL6000]

I saw similar info earlier today in the RedEye. And thanks Busjack for your info.

It also means that we won't be seeing any 5000s in regular revenue service until Fall at the earliest. The CTA wants additional testing of the 5000s they already have throughout the Spring and Summer before any more deliveries commence.

In the meantime, we'll have to put up with the aging 2200s and 2400s for at least the next several months. And the CTA would have to hold off on the mid-life rehab of the 3200s for a little while longer. Also, because the Brown Line normally does not use its assigned ex-Skokie (roof-board-equipped) 3200s (3441-3452) on weekends, several of them (along with a few "regular" 3200s) actually end up on the Green Line on those days (usually laid up at the Harlem Yard, and occasionally put out on a revenue run or two).

[jacksone44]

Normally it would be either FTA or the "Illinois Capital Bill." However, I previously had the sort of gut feeling about "where is CTA going to get $650 million for 406 cars; that's an awful expensive initial order?"

It turned out with the NABIs, it was mostly Illinois First money. The CTA budget makes it clear that they bonded out future FTA money to pay for Option 4 (1830-2029) and the current capital plan calls for repaying that. It still isn't clear what pays the lease for 4000-4049.

I had read the Press Release that chitowndude had posted.

As far as the bonds being backed, I'm not buying the bonds, but somebody will want to make sure that they will be paid before buying.

Elsewhere, I coalesced the issue as follows:

• Sales taxes are now inadequate to sustain the 2009 service level, and all of the service boards are supposedly using capital (federal funds) for operating.
• The fare increase was forestalled by the RTA borrowing $166 million. Supposedly, the state is on the hook for 2 years of that bond service, but the state is supposedly broke. Eventually, will RTA sales taxes be needed to pay that off?
• Pile on top of that that it appears from the posted CTA sources that sales taxes are pledged to these bonds.
• Ergo, if the economy improves, is the sales tax revenue stream so encumbered that they won't be able to restore service?

Unless someone from the CTA financial department is shadowing this forum, I don't actually expect an answer. The text of the President's report doesn't say anything other than that the bonds were programmed.

If I remember correctly, 4000-4149 ($13.4 Million a year for 12 years) are being paid out of the operating budget.