MARTA CEO and General Manager Beverly Scott, who was recently appointed chair of the American Public Transportation Association, testified before a U.S. House committee today and urged Congress to pass legislation that would inject sorely-needed funds into transit projects across the country.
APTA, Scott says, recently identified 559 "ready-to-go" projects in the United States worth $8 billion that would help create jobs and reduce greenhouse gas emissions. She also asked the government step in and examine financial agreements which I'll warn you are rather complex but good to wrap your head around transit agencies made with companies such as AIG that are in danger of unraveling because of Wall Street's meltdown.
To read her full testimony, click here. To read about how Georgia specifically could benefit from Here are her comments about Georgia specifically:
In the Atlanta region, MARTA carries more than 450,000 passengers per day on our heavy rail, bus, and paratransit services. Since the spring, we have seen our ridership consistently increase each month over the same month last year. MARTA provided service for over 14 million customers in September 2008a 13.3 percent increase in total ridership over September 2007. Other regional providers, like the Georgia Regional Transportation Authoritys Express buses, Cobb Community Transit, and Gwinnett County Transit, take many more thousands of cars off Atlantas congested highways every day.
To cite just a few examples of how transit agencies across Georgia could make immediate use of federal investment:
- The Columbus transit system, METRA could immediately utilize $900,000 in stimulus funding to acquire three (3) replacement clean fuel buses; and Hinesville/Liberty County, home of Fort Stewart, has a critical need for $200,000 to purchase small passenger buses under an option to an existing contract.
- Cobb County Transit and the Gwinnett County transit system--each located in suburban Atlanta--have combined near-term capital needs in the estimated amount of $22 million to construct a new park-and-ride lot and transit center, to acquire new buses and paratransit vans, to complete the mid-life overhaul of 28 CNG buses, as well as implement smart-bus technology and security enhancements.
- The Clayton County Transit System has an immediate need for $7.4 million for vital capital projects, including the acquisition of 12 clean fuel buses to relieve overcrowding and replace aging vehicles ready for retirement.
- The Georgia Regional Transportation Authority has immediate unfunded needs of $21 million to purchase 42 additional express coaches to meet ridership demands for downtown Atlanta routes, and an additional $15 million to construct three park-and-ride lots in Gwinnett, Henry, and Rockdale counties to meet rising demand for express bus service.
As promised, the wonkish but very important financial agreement I mentioned.
In addition to shrinking local sources of funding for public transportation, 31 of the nations largest transit systems, including MARTA, could be financially crippled in the coming months as a result of the collapse of the nationwide credit markets and the ratings downgrade of AIG and other insurers. From the early 1990s to 2003, the Federal Transit Administration urged transit systems to enter into innovative financing deals known as Sale-in/Lease Out and Lease-In/Lease Out (SILO/LILO) transactions. These transactions helped transit systems finance large, capital intensive projects by selling their assets to investors and leasing them back. The transit agencies received up-front one time payments in consideration for future tax benefits for the investors, until these transactions were prohibited in 2003. To secure these transactions, sale proceeds in the form of Treasury securities were placed into an account that AIG and a small number of other insurers guaranteed. Under the terms of the contracts, transit agencies are responsible for replacing the guarantors of the secured assets if they fail to maintain a certain bond rating- often AAA status. Unfortunately, because AIG and the other insurers have lost their AAA rating, and there are no available financial institutions to replace them, the equity investors are able to find the transactions in default. Under this scenario, through no fault of their own, transit agencies could be forced to pay hundreds of millions of dollars in fees to make the investors whole. The banks have the opportunity to gain 100 percent of the tax benefits that have been disallowed, which would in turn devastate transit agencies, which will be required to pay more than $2 billion to the banks immediately.
The U.S. Treasury has the power under the recently enacted Emergency Economic Stabilization Act of 2008 (P.L. 110-343) to take over the role of AIG and other insurers in SILI/LILO transactions. This would prevent any predatory action by banks against transit systems, and because the Treasury would be backing its own securities, there is no financial risk on the part of the federal government. APTA has urged the U.S. Treasury to take this action immediately. We urge Congress, and Members of this Committee, to contact the U.S. Treasury and request that they intervene on our behalf. Failing this, we hope to work with Congress to enact a legislative remedy in economic stimulus legislation or another legislative vehicle.
In spite of these many challenges, as a veteran of more than 30 years in the public transportation industry with stops in Houston, Washington, DC, New York, New Jersey, Dallas, Rhode Island, Sacramento, and now Atlanta I can honestly say that what we are seeing today is truly a transit renaissance.
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