CTA GENERATES ADDITIONAL $200,000 IN REVENUE WITH LATEST BUS LEASE AGREEMENT

September 24, 2003
9/24/03

Innovative Financing Technique Nets CTA $54.8 Million Since 1997

The Chicago Transit Authority finalized a financial agreement yesterday that nets the agency approximately $200,000 in revenue. Through the innovative leaseback agreement, the CTA will lease 73 of its Nova buses to an equity investor and gain valuable revenue by transferring tax benefits it is unable to use because of its tax-exempt status. The agreement is an example of the CTA's successful efforts to use innovative financing techniques to increase revenue.

The transaction is the second phase of a multi phase bus-leasing plan that has now generated $3 million. In July 2002, CTA entered into a bus leaseback agreement that generated $2.8 million for 411 Nova buses. In the future, CTA will look at leasing options for up to 226 new NABI articulated buses once delivery is complete.

?CTA has looked tirelessly for unconventional avenues for generating revenue for this agency," said CTA President Frank Kruesi. 'since 1997, leaseback agreements have provided $54.8 million in additional revenue for the CTA which has helped us to control costs while providing an increased quality of service for our customers."

In leaseback arrangements, the CTA leases property or equipment to private entities. Since the CTA is a nonprofit agency, it does not pay taxes. Instead, it sells its depreciation credits to private firms (equity investors) and shares the benefit. This provides a tax benefit to the firm and revenue to the CTA.

This is the fifth leasing arrangement the CTA has entered into since 1997.

In 2002, in addition to the first phase Nova bus lease, the CTA generated approximately $19.4 million in revenue as the result of an agreement involving portions of the CTA's Control Center, Automated Fare Collection system, rail and bus communications systems and the rail control/signaling system. Other transactions include an agreement in 1998 that added $16.5 million in revenue with the leasing of the Green Line, four properties in 1997 generated $11.8 million and the refinancing of a leaseback agreement in 2000, which garnered $4.1 million.

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