Hurricane Sandy blew apart — at least temporarily — plans by the Utah Transit Authority to borrow $180 million more through bonds this week to help pay for constructing new TRAX and FrontRunner lines.
The hurricane forced closure of bond markets in the East, which interfered with UTA’s plan to have agencies there “pre-price” its bonds on Monday, give final negotiated prices on Tuesday, and have the UTA board approve issuing bonds during a special meeting on Wednesday, said UTA spokesman Gerry Carpenter.
“Basically, it’s been postponed due to weather,” he said, adding UTA will meet with financial advisers to figure out when to resume the process, perhaps next week.
Besides borrowing $180 million to keep rail construction on track, UTA is also planning at the same time to refinance $140 million of earlier variable rate loans to lock in long-term rates.
Earlier this month Fitch ratings again gave UTA an “A+” bond rating, the same rating it gave UTA last year after lowering it from an “AA-” rating. Last year, Fitch said UTA’s “debt profile is somewhat weak” because “rising debt service has been shrinking revenues available for operations” and could hurt operations unless sales taxes pick up in a bad economy.
This month, Fitch said it is continuing that lower rating even though the planned refinancing of variable rate bonds “somewhat improves an otherwise weak debt profile.”
Fitch also said it believe UTA’s “long-term sales tax growth rate assumptions are somewhat aggressive” in how well UTA figures it can afford paying off the bonds.
Earlier this year, the Utah legislative auditor’s office warned that UTA was using overly optimistic revenue estimates and understated expenses in its planning and borrowing — a combination auditors feared “may threaten the agency’s ability to operate the system being built.”
UTA has several rail lines nearing completion. A FrontRunner commuter rail extension from Salt Lake City to Provo is scheduled to open Dec. 10.
A TRAX extension to the Salt Lake City International Airport is scheduled to open April 14; a TRAX extension to Draper should open next summer; and the new Sugar House streetcar line is scheduled to open next winter.