Revenue bonds totaling $170 million were authorized by the San Francisco Municipal Transportation Agency on Tuesday, the first such act since a 2007 ballot initiative paved the way for their creation.
Of the funding approved by the agency’s board of directors, $50 million will go toward fixing up city-owned garages, about $48 million will pay for long-term Muni system improvements, and $50 million will buy up and refinance the SFMTA’s existing debt, said Sonali Bose, the agency’s chief financial officer. The agency authorized up to $170 million — about $20 million more than needed — in case of any cost overruns in those projects, she said.
Interest rates are at historic lows in the bond market, making the $170 million authorization a sensible call at this time, Bose said.
“We’re not going to get a better deal than now,” Bose said.
While the revenue bonds — which don’t require voter approval — can pay for system improvements, the money cannot be used to help plug the SFMTA’s current operating budget deficit. The agency is facing a two-year projected shortfall of $80 million.
Supervisor Sean Elsbernd, who has raised concerns in the past about The City using bond revenue for operational programs, said he was OK with the SFMTA borrowing money to pay for one-time capital projects like rail rehabilitation.
The agency’s ability to issue revenue bonds came from Proposition A, a 2007 ballot measure approved by 55 percent of voters. The focus of that measure was to give the SFMTA greater authority over parking measures, an initiative touted as a way to provide the debt-ridden agency an extra $26 million a year in revenue.
However, the economy tanked after the ballot approval, and that extra $26 million for the SFMTA has all been diverted to pay for the agency’s work orders — bills from other city departments for services rendered.
The revenue bonds approved Tuesday will begin to take effect next year. The funds will help pay for a rehabilitation project at Muni’s Green yard, replacing system radios, and upgrading rail infrastructure in the Sunset Tunnel.