UTA borrows $200M to continue construction
The Utah Transit Authority board on Thursday approved borrowing $200 million to continue construction on four new TRAX lines and a FrontRunner commuter rail extension to Provo and achieved its lowest cost ever on financing by taking advantage of a federal stimulus program.
"The proceeds will go to continue construction on our FrontLines 2015 projects," said Ken Montague, chief financial officer and treasurer for UTA.
The projects include four extensions of the TRAX trolley system to Salt Lake City International Airport, Draper, West Valley City and the new Mid-Jordan line. It also includes extending the FrontRunner commuter rail line from Salt Lake City to Provo.
"We have activity on all of those lines right now. We will probably spend some of the money on each of the projects," Montague said.
The West Valley and Mid-Jordan lines are scheduled to open next August. All other projects are scheduled to be completed by 2015.
Montague said the bonds are being sold through the Build America Bonds program established by the stimulus package passed by Congress last year.
To make taking on debt more affordable for cash-strapped local governments, the program has the federal government pick up 35 percent of the bond-interest cost. By law, such bonds must be used only for construction projects, to help stimulate the economy and create jobs.
The twist for those who buy the bonds, however, is that they are taxable, unlike the tax-free bonds that governments usually issue. But financial consultants have reported that such bonds are popular with those who pay little or no federal tax.
"We have the lowest interest rate ever in our history" because of the Build America Bonds rebates, Montague said. The bonds will cost the UTA 3.74 percent interest, and will be repaid over 30 years.