Illinois RTA Plans Taxable Refund Supported by Improving Rating Outlook


The Illinois Regional Transportation Authority will release favorable rating news to the market later this month as work begins in earnest on a 2022 budget cushioned by unused federal COVID-19 relief and increased tax collections of sale.

RTA’s board of directors, at its monthly meeting on Wednesday, approved the $ 93.6 million taxable general bond agreement that will pay off 2014 bonds with present value savings of between 8%. and 12%. This is expected to translate into annual cash benefits of $ 1 million over the 24-hour payback period, RTA Treasurer William Lachman told board members.

The bonds will be competitively sold on September 29. Hilltop Securities Inc. advises the agency and Ice Miller LLP is the bond adviser. RTA, the tax parent company of the Chicago Transit Authority, the Metra commuter train, and the Pace commuter bus service, has approximately $ 1.7 billion in debt. No new monetary obligations are expected this year.

A commuter boards a Chicago Transit Authority train in Chicago; CTA is one of the three service boards of the Illinois Regional Transportation Authority.

Bloomberg News

Last week, S&P Global Ratings downgraded the agency’s outlook from negative to stable and confirmed its AA rating.

“The revised outlook to stable reflects our view on stabilizing the underlying solvency of RTA, supported by its strong performance of promised earnings,” said analyst Helen Samuelson. S&P changed the outlook to negative last year due to the expected injuries from the pandemic.

“Additionally, we note that the recent injection of federal stimulus grant dollars has strengthened RTA’s liquidity position and provides significant financial flexibility for the next 24 to 36 months as its service boards adapt to the changes. traffic, ”Samuelson said.

Fitch Ratings confirmed the agency’s AA-plus rating and stable outlook this month.

Moody’s Investors Service raised the GO rating of RTA, which is mainly supported by its regional sales tax, from A1 to A2 in July with a stable outlook. Moody’s stock followed its revaluation of Illinois by one notch to Baa2.

Federal aid, the rebound in sales tax revenues and the management of operational costs allowed the agency to keep its budget on track despite the drop in ridership levels that followed the first days of the pandemic when commuting and school trips stopped last year.

Federal aid to Illinois has also helped avert further delays in state payments for debt service subsidies and transit aid and plans to divert some of the RTA aid during the state’s 2022 fiscal year was discontinued amid improving state revenues.

RTA’s reliance on its regional sales tax collections rather than tariff revenues protected its rating, as collections have proven to be resilient and strong debt service coverage ratios have weathered the demand. pandemic. RTA sales taxes fell 9% last year, but officials expected darker news and initially predicted a 30% blow.

Sales taxes rose in part due to the extension of taxes on additional online purchases, setting a month-long record of $ 129.2 million in May, Budget Manager Doug Anderson said. The RTA also expects higher than expected levels for June as well.

The increase in sales taxes has created some problems in the collection of federal relief, as it limits the levels that can be drawn on, resulting in a decrease in the budget item for these funds.

Ridership remains on the mend to 45% of pre-pandemic levels in July with hopes that it will return to 65% by the end of the year. Officials have warned that the recovery could falter due to some back-to-work plans delayed by employers as COVID-19 cases caused by the Delta variant outbreak.

RTA has taken about $ 1.1 billion from its $ 1.4 billion share of the CARES law of March 2020. It also receives $ 486 million from the December 2020 law on supplementary appropriations for the response and coronavirus relief and an additional $ 1.5 billion from the American Relief Plan Act signed last March. The aid helped prevent service cuts and layoffs. Part postponed to 2021 to again avoid deep cuts.

RTA’s board has set funding levels for FY2022 and gives its service boards an opportunity to determine how they would like to use the remaining aid.

The combined budgets of Metra, Pace and CTA total $ 3 billion. Approximately $ 1.15 billion in operating revenue comes from system-generated revenue, primarily from passenger fares. Public funding amounts to approximately $ 1.88 billion and comes from regional sales tax and state funding.

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