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Supervisors recommend MTA bond package with amendments, ask for tighter oversight
Summary
The Budget & Finance subcommittee recommended forwarding a revised MTA revenue bond package to the full Board with amendments that reduce the initial authorization, require a controller review of advisor use and place a $1.6 million reserve for the muni radio project pending COIT guidance.
The Budget and Finance subcommittee on April 2012 recommended the San Francisco Municipal Transportation Agency—s request to issue revenue bonds be forwarded to the full Board with modifications, after a lengthy presentation and questioning about scope, cost and oversight.
The subcommittee heard from Ed Reiskin, director of the SFMTA, who described a three-series plan to refinance higher-cost garage debt and fund state-of-good-repair projects. Reiskin said the agency estimated a 20-year state-of-good-repair need of about $10 billion and that the bond issuance would be structured as MTA revenue bonds, not general-fund obligations. "We are structuring these as revenue bonds based on MTA-only revenue," Reiskin said.
Why it matters: The package would let the MTA borrow to address deferred capital needs across transit and parking assets while keeping the city—s general fund off the hook. Budget analysts and supervisors pressed the agency on whether issuing standalone MTA bonds was more cost-effective than the city issuing debt on the MTA's behalf, and on the use and cost of outside financial advisers.
Budget analyst Harvey Rose reported the SFMTA currently had about $44.3 million in outstanding parking meter and parking garage revenue bonds at an average ~5.6% interest rate; the proposed refunding bond (~$46.935 million) was estimated at about 3.41% and could yield roughly $5.01 million in net present-value savings on the refunded bonds. Rose recommended several amendments, including narrowing the initial authorization to give time for DPW to complete a garage assessment and for the controller's office to report on adviser use.
Supervisors asked how the bond proceeds would be applied. Reiskin said roughly $5 million in the first series would fund planning and design for parking garage work, with the second series intended primarily for construction. "The $5,000,000 is largely for planning and design," he said. The agency said other funding sources (federal, state and local) would constitute a majority of total project funding and the bond proceeds often would plug final funding gaps.
Public comment included objections from longtime resident Douglas Yap, who said the MTA has failed at certain operational responsibilities and "if you're deficient and you can't do the basics, why are we giving you new authority?" The committee treated those concerns as part of the oversight discussion rather than a bar to forwarding the measure.
What the subcommittee changed: The committee moved an amendment of the whole to lower the maximum authorization and accepted budget-analyst recommendations to (a) reflect CEQA exemptions, (b) ask the controller to evaluate the costs and benefits of outside financial advisers versus in-house debt-management staff within six months of issuance, (c) place $1.6 million for the muni radio replacement project on committee reserve pending COIT recommendations, and (d) stage issuance so DPW can complete its assessment. The committee voted to forward items 5—8 to the full Board with those recommendations.
Next steps: The items will appear on the full Board of Supervisors agenda for final action. The MTA will proceed with rating-agency steps and validation processes if the Board approves the recommendations.
