The Seattle region’s Central Puget Sound Regional Transit Authority has racked up another series of low-interest loans from the federal government, totaling $327 million.
So far, Sound Transit, a light rail, commuter rail and express bus service serving the Seattle metropolitan region, is the largest beneficiary of the U.S. Department of Transportation’s Build America Bureau, securing $4.17 billion in loans, Morteza Farajian, the bureau’s executive director, said in a statement.
The Build America Bureau provides low-interest loans to help speed up infrastructure projects and reduce project costs through its Transportation Infrastructure and Innovation Act (TIFIA) and Rail Rehabilitation & Improvement Financing (RRIF) loans.
“Strong partnership with the federal government is crucial to our success, and these loans signal a shared commitment to reinvest in the nation’s infrastructure and help us build the transit network our region needs,” Sound Transit Board Chair and King County Executive Dow Constantine said.
Sound Transit received news of the low-interest award as the Federal Open Market Committee made the decision to raise interest rates another quarter point.
Sound Transit estimates the 3.79% loans will save $245 million through 2046, when the agency’s voter-approved expansion plan is expected to be completed, and a total of $445 million over the entire life of the three loans.
“The loans are a pivotal part of Sound Transit’s long-term financing strategy,” said John Gallagher, a Sound Transit spokesman. They “allow the agency to execute on the largest transit expansion in the US, which will greatly enhance access to public transit in the Puget Sound region.”
The awards “are a reflection of the agency’s strong cash flows as a result of the voter-approved sales and property taxes,” Gallagher said.
The projects that received funding included the Hilltop Tacoma Link streetcar extension, which qualified for a $93.3 million loan covering 33% of the total $282.7 million cost. That project will extend the streetcar line by 2.4 miles, add six new stations and relocate one station, acquire five new trains, improve the bike-pedestrian infrastructure and expand an operations and maintenance facility.
An elevated light rail platform on the Lynwood Link extension received a $79.3 million TIFIA loan covering 33% of the $240.2 million cost. The funded projects are a new light rail station in North Seattle, new bus and paratransit facilities, and sidewalk and bike infrastructure.
Sounder access improvements received a $154.2 million RRIF loan covering 49% of the $314.6 million cost. It will add 1,800 park and ride stalls at three stations on the commuter rail system, construct new sidewalks and improve street lighting.
The loans “support an alternative to car travel on congested roadways — and will reduce carbon emissions and improve air quality,” Deputy Transportation Secretary Polly Trottenberg said in a statement.
S&P Global Ratings assigned on March 15 its AA-plus rating to the RRIF and TIFIA loans. It also affirmed its AAA long-term rating on Sound Transit’s first and second-pledge sales tax and motor vehicle excise tax obligations, and its AA-plus long-term rating on the authority’s existing TIFIA loans. The outlook is stable.
The ratings reflect the authority’s “large taxing area and its record of robust economic and pledged revenue growth,” S&P Global Ratings credit analyst Kayla Smith said in a release.
Moody’s Investors Service assigns its Aaa rating with a stable outlook to Sound Transit’s senior debt, but doesn’t rate the DOT loans. Fitch Ratings on April 5 rated the recent loans AA-plus, and affirmed its AA-plus underlying long-term rating and a stable outlook.
DOT has closed more than $38.9 billion in TIFIA loans and $7.6 billion in RRIF loans, supporting more than $133 billion in infrastructure investment across the country, according to the bureau’s release.