The massive loan will help build miles of light-rail extensions throughout the Puget Sound region.
The federal government signed an agreement Thursday that would allow Sound Transit to borrow $1.99 billion during the next few years at low interest rates to build 20 miles of light-rail extensions.
The deal creates something like a national infrastructure bank, offering low rates and deferred repayment spread over 35 years.
Sound Transit is the first signee. Transportation Secretary Anthony Foxx is leveraging the pact for national publicity in hopes to encourage other regions to apply.
“Hopefully people see these can be done, and are being done, and they can make use of these, especially the commuters who will use the infrastructure,” said Andrew Curtis Right, executive director of the U.S. Department of Transportation’s Build America program.
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Officials also plan to sign the first of four loans within the credit agreement on Thursday, to finance the University District, Roosevelt and Northgate corridor, for $615 million at just shy of 3.2 percent interest. That’s 1.1 percentage points cheaper than the rates for a home mortgage.
Other planned loans are for the 2024 Angle Lake-Federal Way line, the 2023 Northgate-Lynnwood line, and a future train base in Bellevue, covering one-third of the projects’ total costs.
Previously, the feds loaned $1.33 billion toward the $4 billion Chinatown-Bellevue-Overlake line, to open in 2023.
The agencies held a ceremony at Roosevelt Station to announce the deal.
Sound Transit executives think they’ll save the equivalent of $200 million to $300 million worth of capital spending, and help make the vast construction plan recession-proof for several years.
Sound Transit CEO Peter Rogoff hasn’t earmarked the savings for future projects. That’s premature, he says.
Still, visions of sugar plums like a light-rail tunnel under Salmon Bay at Ballard, a timeline sooner than 2036 to reach Mariner, Paine Field and downtown Everett stations, or more park-and-ride spaces are inevitable.
“We are now launching a 25-year capital program,” Rogoff said. “Past precedent indicates we are going to encounter at least one, if not two, recessions.”
Sound Transit recently sold $477 million in bonds at a favorable 3.6 percent, before the Federal Reserve Board boosted rates a quarter-point.
The agency’s revenue will double soon, to about $2 billion a year, after voters this fall approved sales, car-tab, and property-tax hikes to fund the $54 billion Sound Transit 3 plan.
Officials showed discipline this decade to ensure revenues were at least 50 percent greater than debts, and usually double.
“We are very proud of the way we have been able to steward taxpayer dollars and resulted in us having one of the strongest credit ratings in the country,” Rogoff said. “We compare quite favorably to many transit agencies, in terms of our creditworthiness.”
Bellevue City Councilmember Kevin Wallace, who was the leading debater against ST3, figures the bond-sale alone saved enough to slightly reduce the coming property tax, of $25 per $100,000 of value. That’s not being considered.
As for any other credit savings, Wallace says he’ll prod transit-board members, especially Claudia Balducci of Bellevue, to improve the Eastside’s I-405 bus-rapid transit program, which he said deserves more stations and parking.