The Chicago Transit Board today approved the issuance of $250 million in Capital Grant Receipt Revenue Bonds to accelerate funding of capital improvement projects including the purchase of buses and rail cars, and slow zone elimination. The Board's approval means the CTA will issue up to $250 million in tax-exempt Capital Grant Receipts Revenue Bonds backed by the pledge of Federal Transit Administration Section 5307 Urbanized Area Formula Program and 5309 Fixed Guideway Modernization Program Funds.
"This bond issue will help accelerate our capital investment in the neighborhoods and communities we serve," said Chicago Transit Board Chairman Carole Brown. "The projects these funds will support are designed to improve the quality and safety of our service while also reducing operating costs with more efficient infrastructure and equipment."
"CTA has developed an ambitious and worthwhile capital investment program and is moving forward on bringing these projects to fruition," said CTA President Ron Huberman. "The magnitude of this program and our ability to advance capital projects demonstrates the commitment we have to rebuilding and improving the infrastructure for our customers."
The bonds are expected to be rated favorably by Standard & Poor's and Moody's based on CTA's financial position and past experience with debt instruments. Staff will consider use of a bond insurance policy based on a cost benefits analysis prior to issuance.
Issuing longer-term debt for these projects is similar to using a mortgage to pay for a long-term capital project up-front and paying off the debt over time.
CTA's financial advisors for the revenue bond issuance are DEPFA First Albany Securities, LLC and A.C. Advisory, Inc. In addition to George K. Baum & Co., the Senior Managing Underwriter, additional underwriters are: Co-Senior Managing Underwriter Cabrera Capital Markets, Inc. and Co-Managing Underwriters Siebert Brandford Shank & Co., Banc of America Securities, LLC, SBK Brooks and MR Beal & Co.
The Chicago Transit Authority's five-year Capital Improvement Program has identified $6.3 billion worth of unfunded projects necessary to reach and maintain a state of good repair.
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