UTA — about $2 billion in debt — aims to borrow $88.5 million more

Bonds may help relocate TRAX station at airport, cover $10 million overrun for Provo-Orem transit project.<br>

(Al Hartmann | The Salt Lake Tribune) Utah Transit Authority President and CEO Jerry Benson is proposing borrowing $88.5 million more next year to help, in part, cover costs of relocating the airport TRAX station and cost overruns of a new Provo-Orem transit project.

Nearly $1 of every $3 that the Utah Transit Authority spends already goes for debt payments. But it proposed Monday to borrow another $88.5 million next year.

UTA aims to use that to provide $20 million to relocate its TRAX station at Salt Lake City International Airport for terminal reconstruction; $10 million to help cover cost overruns for a controversial Provo-Orem bus rapid transit project; and the rest for long-planned, needed maintenance projects on rail and buses.

UTA President and CEO Jerry Benson called for the additional borrowing as he presented the 2018 budget on Monday to a committee of the UTA Board, which plans several meetings and a public hearing before final approval in December.

Despite UTA’s many recently built rail projects — which led the agency to amass about $2 billion in debt — UTA anticipates a drop next year in revenues from passenger fares. It acknowledges that ridership has remained stagnant for years as low gasoline prices led more people to opt to drive their own cars instead of taking transit.

In fact, UTA currently is projecting that fare revenue will drop by 5 percent next year, down from $53.2 million budgeted this year to $50.3 million in 2018.

Benson sought to put a positive spin on the projection by saying that while UTA ridership has been flat in recent years, “We’re bucking a national trend where transit ridership across the country is generally down, and in some areas significantly down.”

At UTA, “We’re happy to have our ridership staying stable,” Benson said. “In the areas where we’ve been able to add service or adjust service, we’ve seen ridership grow. So we know that there’s a market for transit.”

One of the projects that seeks to expand service is a long-controversial $190 million bus rapid transit (BRT) project in Provo and Orem — now 50 percent complete. Last month, officials reported that project faces a big cost overrun, which Benson said now amounts to $10.2 million.

“That project has seen some increased costs due to real-estate prices and contractor expenses — just like about every other project underway right now. So we are looking to include that amount in the bond when we issue it,” Benson said.

Bus rapid transit is described by UTA as “TRAX on rubber wheels,” where passengers buy tickets from machines in advance. Extra-long buses would have bus-only lanes for about half their 10.5 mile route. Buses may receive priority at traffic signals and would come about every six minutes at peak travel times.

Activists challenged the BRT project, but ultimately lost court cases seeking a voter referendum. They argued the high-cost project will not have the ridership to justify it and will lead to more congestion for non-bus vehicles. UTA and city leaders disagreed, pushing ahead with the project that Benson said should be finished next August.

Bonding next year should help pay for another controversial project: relocating the airport TRAX station.

Salt Lake City initially wanted UTA to spend $68 million to elevate tracks to take trains into a new gateway building at the airport. After UTA balked at that high cost, the city worked out a no-frills, surface-level extension that could cost $50 million less.

(Courtesy of Salt Lake City International Airport) A rendering of the airport's proposed Terminal Drive, with the Utah Transit Authority's elevated TRAX train seen at left turning toward the airport's "Gateway Center."

UTA said last month it is willing to spend about $20 million for the scaled-down project. If the city wants the costlier option, it would need to come up with the extra money, and the city council is now studying the issue.

UTA had been planning since 2010 to issue some bonds next year, mostly for long-term maintenance needs, Benson said. Money for the airport and BRT projects are now being added.

Benson presented a letter from Zion Public Finance, Inc., saying it studied the bonding strategy and plans by UTA, and called them “conservative and prudent” over recent years.

Board member Greg Bell, a former lieutenant governor, said the letter gave him some comfort and should help also help the public, which he said worries “because the conventional wisdom is that UTA has this huge overhanging debt that is going to come due and come crashing down” — which he said is not the case.

UTA is proposing a $402.6 million operating budget next year, up 3 percent. It would spend 7 percent more on buses; 1 percent more on TRAX; and 1 percent less on FrontRunner commuter rail. It anticipates that sales tax collections — which generate 70 percent of UTA revenue — would increase by 8 percent.

Of UTA’s $402.6 million operating budget for next year, $120.1 million would go to payments on debt.

The agency also proposes a separate $191.3 million budget for facility improvements. These include $40 million to complete the Provo-Orem BRT; $22.9 million total for the airport station relocation; and $23.8 million for new vehicles.