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Committee endorses $185 million SFMTA refinancing to shore up operating budget
Summary
The committee voted to forward a SFMTA plan to issue up to $185 million in refunding bonds to refinance 2012–2014 revenue bonds, freeing near-term cash flow (estimated $43M through FY23) and delivering long-term net present value savings (about $20.4M).
San Francisco Municipal Transportation Agency officials told the Budget & Finance Committee on Jan. 13 that refinancing a portion of outstanding revenue bonds could provide immediate budget relief and long-term savings.
SFMTA presented a conservative refunding structure that would target 2012–2014 series bonds (excluding 2017 series because of negative arbitrage tied to call protection) and seek a refunding that could yield near-term cash-flow relief of up to $43 million through FY2023 and net present value savings of roughly $20.4 million through 2044. Agency staff said amortization on the new refunded bonds would be structured to begin in FY2024 to preserve FY2021–FY2022 budget flexibility. The proposed "not to exceed" authorization is $185 million to allow wiggle room for reserve requirements and market variance; outstanding par to be refunded was cited at about $156 million.
SFMTA officials told the committee the agency is weathering substantial revenue losses driven by the COVID-19 crisis (projected fare revenue shortfalls), and the near-term savings would be applied toward closing a structural deficit and avoiding layoffs. Members asked whether the transaction would increase principal or add new money; staff said this refunding does not increase principal in this transaction, though SFMTA plans a separate new-money proposal to address capital needs.
The committee accepted technical CEQA-related amendments proposed by the City Attorney’s Office and recorded a roll-call approval of the amended item. Chair Haney moved the item to the Board with a positive recommendation; the committee vote was unanimous (3–0). The Board will consider final authorization and issuance as market conditions permit.
