DALLAS -- Seattle's Central Puget Sound Regional Transit Authority will use a $1.33 billion federal loan to revive a voter-approved light rail project that was suspended when its sales tax revenues plummeted during the recession.
The Transportation Infrastructure Finance and Innovation Act loan is the largest ever to a transit agency and the second largest overall. The execution of the loan was announced Jan. 16 by Transportation Secretary Anthony Foxx.
The TIFIA loan carries an interest rate of 2.38%, the lowest in the credit subsidy program's 25-year history. That rate is much lower than the 5.75% cost of borrowing assumed in Sound Transit's financial plan for the project.
Loan repayments will begin five years after the project is substantially completed. Sound Transit said it does not intend to draw on the loan until fiscal 2019.
The loan and another $90 million in other federal subsidies and grants will provide a third of the funding for the $4 billion, 14.5-mile East Link extension of Sound Transit's Link rail system. The federal funding will also help build eight miles of HOV lanes, ramps, and seismic improvements on the I- 90 floating bridge.
The two projects and others were delayed by the transit board when sales tax revenues failed to meet expectations during the recession.
Sales tax collections actually rose 2013 because voters in November 2008 approved an increase in the tax rate to 0.9% from 0.4% on April 1, 2009.
However, when adjusting for the hefty rate increase, Sound Transit said sales tax revenues fell by 8% in 2009 and 12% in 2012. The recession wiped out an estimated $4.5 billion of expected revenues overall, the authority said.
The $23 billion Sound Transit 2 capital program approved by 58% of the voters at the sales tax election was pared by $1.2 billion by the transit board in response to the weak revenues. The expected new debt total was whittled down by $1.7 billion.
The current capital program through 2023 will be funded with $6.7 billion of new debt, including the TIFIA loan, and $11.8 billion of tax collections and fare revenue. The authority currently has $1.5 billion of outstanding debt.
A Sound Transit 3 election is expected in November 2016 if state lawmakers approve a proposal at the current legislative session.
The new rail segment will connect some of the region's most densely populated and fastest growing areas to the existing light rail system that links downtown Seattle and the Seattle-Tacoma International Airport. The route will run through Mercer Island and downtown Bellevue to the Chinatown station in Seattle.
Construction is expected to begin later this year, with the extension scheduled to open in 2023. The new line is expected to serve approximately 50,000 daily riders by 2030.
The Sound Transit system serves 50 cities in King, Pierce, and Snohomish counties.
The Puget Sound region includes 40% of the state's population and 70% of its economic activity. Population in the transit authority's jurisdiction is projected to grow 30% by 2040.
