RTD Debt Refinance Plan Could Accelerate North Metro Rail Line
Denver's Regional Transportation District General Manager Phil Washington announced Jan. 22 that RTD has identified another item for the FasTracks Internal Savings Account that may allow it to take advantage of favorable debt interest savings. Refinancing a portion of the transit agency’s debt could offer RTD an opportunity to build the North Metro Rail Line to 72nd in Commerce City sooner than expected.
Washington said RTD staff has been studying its FasTracks Internal Savings Account as part of the agency’s risk-allocation matrix to identify additional innovative ways to allocate more funds to complete FasTracks projects.
“We believe and are confident that if financial market conditions remain constant, and we receive timely approvals from local governments on the in-process design, we can release a request for proposal to build the North Metro rail line to 72nd within the next 10 months,” Washington said.
Washington said he will be asking the board to allow RTD to take advantage of several financial market opportunities, including:
• Refinancing three RTD debt issues at the current lower-than-issued rates to reduce payments, improve cash flow and provide additional capacity under the Taxpayers’ Bill of Rights (TABOR).
• Issuing the bridge-financing debt for the EagleP3 project now to bridge the Full Funding Grant Agreement (FFGA) at a lower interest rate than assumed, which would save interest costs and preserve additional capacity under TABOR.
• Issuing sales tax revenue bonds in third quarter 2013 to finance the remaining portion of the light rail segment from Denver Union Station to 72nd Avenue in Commerce City.
“This approach,” Washington said, “is consistent with our past innovative financial arrangements that created the Eagle P3 project, the revitalization of Denver Union Station, the public-private partnership to build out I-225 and U.S. 36. We believe that continuing with these innovative financial approaches when available remains in the best interests of the entire district and region.”
Meanwhile, RTD is analyzing federal grants programs and preparing to submit funding proposals for the remainder of the North Metro Corridor and is seeking financial assistance from partners in the region to fund the other 50% funding match, approximately $250 million.
“The bottom line,” he said, “is this will allow RTD to build more of the FasTracks program sooner, does not require new revenue sources to complete the North Metro segment to 72nd, allows RTD to take advantage of historically low interest rates, and with no negative impact on the other projects we have identified as a priority in the FasTracks Internal Savings Account.”
He added that the approach allows RTD to complete within the next eight to 10 months the final design now under way on North Metro to 72nd, reduces construction risk, allows time to complete Intergovernmental Agreements (IGAs) with regional stakeholders and will not negatively affect the availability of funding for other priority projects.
He outlined next steps in the process as follows.
1. The RTD Board of Directors will review the proposed approach and will consider approval at its February meeting.
2. RTD will finalize IGAs with stakeholders.
3. RTD will quickly begin to apply for federal funds to finance 50% of the Northwest Metro line.
4. RTD will identify the other 50% match for federal funds from 72nd to the end of the line to complete the entire North Metro line.
5. Since RTD already owns the track along the right-of-way past 72nd Avenue, it will determine whether minimum service from 72nd to the end of the line is technically and financially feasible.