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Sound Transit Receives $1.3 Billion TIFIA Loan
On Jan. 16, Sound Transit in Seattle executed a $1.3 billion federal loan under the Transportation Infrastructure Finance and Innovation Act (TIFIA)—the largest single TIFIA loan to a public transit agency in the nation and the second largest loan overall.
The loan has the lowest rate in the 25-year history of the program—2.38 percent, compared with the 5.75 percent assumed in the agency’s current financial plan—and it offers more favorable terms than traditional bonds. Agency officials expect the loan will increase its financial capacity by an estimated $200 million to $300 million. That capability may allow the Sound Transit Board of Directors to restore some voter-approved Sound Transit 2 (ST2) projects that were suspended as a result of the recession.
“I am pleased that Sound Transit has secured this TIFIA loan from DOT,” said Mike Harbour, acting chief executive officer of Sound Transit. “This loan gives our agency greater flexibility in managing costs and provides our board a valuable tool for addressing capital projects deferred due to the lasting impact of the recession on our tax revenues.”
Sound Transit Board Chair and King County Executive Dow Constantine added, “As ridership on our trains and buses grows, more investments in our transportation infrastructure are needed to meet the demand for transit services. This innovative financing allows local tax dollars to go farther in building the regional system.”
In his announcement of the TIFIA loan, DOT Secretary Anthony Foxx highlighted one particular Sound Transit project: the East Link Light Rail Extension, now in the design stage. This 14.5-mile line extension will connect some of the region’s most populated and fastest-growing areas to the existing light rail system: in Foxx’s words, it will have “a significant impact on the entire region and expand a world-class transit system.” FTA Acting Administrator Therese McMillan also spoke about the importance of the East Link Extension.
Sound Transit applied for the TIFIA loan after the recession wiped out $4.5 billion in projected ST2 revenues. This shortfall required the agency to realign the ST2 program, which included suspending some of its capital projects and public transit services and reducing costs.
Among the projects suspended during the recession that could now move forward include new light rail service in Federal Way, preliminary light rail engineering and right-of-way acquisition between Federal Way and the Tacoma Dome and a permanent multimodal station at Edmonds.
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