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Release date: July 17, 2012

*** Press Release ***

The San Francisco Municipal Transportation Agency (SFMTA), which oversees transportation in the city, including the Municipal Railway (Muni), today announced that it closed its first bond issue last week. The Agency raised $63.8 million, $25.8 million of which will be invested in frontline Muni infrastructure and improving city-owned parking garages. Approximately $38 million will be used to refinance existing debt.

The Agency’s healthy credit ratings and the market, combined with strong investor demand for the bonds, resulted in a very favorable interest rate of 3.7 percent over 30 years. The Agency will also realize a net present savings of $6.96 million or 15.8 percent for the refinanced bonds. The SFMTA received ratings of “Aa3” from Moody’s and “A” from Standard & Poor’s.

“In 2007, San Francisco voters recognized the need for the SFMTA to raise funds for crucial capital improvements and investments,” said Mayor Edwin M. Lee. “We are investing in the future of our City today by investing in our critical transportation infrastructure.”

“The SFMTA has been entrusted with the stewardship not only of the city’s physical transit infrastructure, but also the financial health of the city’s transportation network. This bond issuance plays an important part in maintaining both,” said Tom Nolan, SFMTA Chairman of the Board of Directors. “Keeping our infrastructure in a state of good repair is paramount to our city’s Transit First policy.”

“The confidence shown by the market in the SFMTA provides an excellent opportunity for us to invest in the future of transportation in San Francisco,” said Edward D. Reiskin, SFMTA Director of Transportation. “We will expeditiously and efficiently deliver this work to improve the condition of our transit system.”

The frontline Muni improvements that will be targeted with this first series of bonds include:

  • Transit Signal Priority—Increase transit ridership and improve the path of travel to transit stops and stations while minimizing delays associated with customer boarding and alighting from Muni vehicles and reducing delays associated with traffic signals.
  • Sunset Tunnel Rail Rehabilitation—Improve the safety, reliability and quality of the ride on the system’s busiest rail line.
  • Muni Metro Turnback Rehabilitation—Improve service reliability in the subway by reducing train and control failures and to improve safety. It is also expected to reduce on-going maintenance costs.
  • Metro System Public Announcement and Public Display System Replacement—Replace the existing 28-year-old subway Public Address System & Platform Display systems with new devices.
  • Radio Replacement Project—Modernize Muni’s radio communications system and meet the Federal Communications Commission’s narrow banding requirements that include Computer Aided Dispatch/Automatic Vehicle Monitoring and integrated incident management/reporting, as well as ADA-compliant travel information on Muni’s light rail vehicles.
  • Muni Green Light Rail Facility Rehabilitation—Enhance system reliability while reducing the need for excess maintenance.
  • Garage capital funds will be used to perform major rehabilitation, preservation, and improvement of existing parking facilities to enhance parking infrastructure and improve parking management.

The repayment of the bonds is part of the SFMTA’s budget. The issuing of bonds is a valuable tool in allowing the Agency to fund critically needed infrastructure projects that have had funding gaps.

The SFMTA was granted the authority to issue the revenue bonds in 2007 when voters passed Proposition A. Prior to the July 11 issuance, the SFMTA had no outstanding bonds issued under the Proposition A authorization in the City Charter. The SFMTA was indirectly associated with several outstanding series of bonds through other issuers, including the Parking Authority of the City and County of San Francisco and various non-profit corporations. The SFMTA included the refinancing of the outstanding associated debt in the July 11 issuance. Another series is planned for next year for SFMTA capital improvements.

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