The MTA intends to split the current subseries 2008A-2 variable-rate bonds, which have been supported by a direct pay letter of credit that is expiring, into the two new subseries of floating-rate tender notes. The MTA is effecting a mandatory tender of the outstanding 2008A-2 bonds on
Fitch has also affirmed the 'AA-' underlying, long-term rating on
The Rating Outlook is Stable.
The DTF bonds are secured by a gross lien on the
KEY RATING DRIVERS
SOLID DEDICATED TAX STREAM: The dedicated taxes are diverse and derived from a broad, wealthy state and regional economy, although revenues are sensitive to economic cycles.
RECORD OF STATE SUPPORT: Tax revenues allocated to the DTF are subject to annual appropriation by the state legislature, and the state has discretion regarding revenues flowing to the fund. The state has a track record of providing a generally reliable revenue stream to the DTF.
AMPLE COVERAGE: Dedicated revenues provide ample coverage of maximum annual debt service (MADS), and there is a strong incentive to limit leveraging of the DTF given the demands on surplus revenues for operating support of transit and commuter rail.
STRATEGIC IMPORTANCE: The MTA transportation network is essential to the economy of the
INSULATION FROM MTA OPERATIONS: The security for the dedicated tax bonds is largely insulated from the highly constrained financial operations of the MTA, although excess DTF revenues after debt service obligations are met are needed to support transit and commuter operations.
The rating is sensitive to the credit quality of both
Underlying the 'AA-' rating on the DTF bonds is the amount and diversity of revenues that are pledged to the DTF for debt service on its bonds, subject to state legislative appropriation; the record of state support of the fund; and the expectation that the MTA will continue to maintain sufficient financial flexibility within the DTF to not only cover DTF bond debt service adequately but also provide sizable transfers to the MTA to support transit and commuter rail operating needs.
The bonds are special obligations secured by state taxes deposited in the pledged amounts account from MTTF and MMTOA receipts. The state legislature established the MTTF in 1991 to address the need for continued capital investment in the state's transportation infrastructure. MTTF revenue is derived from statewide petroleum business taxes, motor fuel taxes, and motor vehicle fees. The MMTOA was created in 1980 in anticipation of continuing ongoing operating deficits of state mass transportation systems. Four categories of special taxes are deposited into the MMTOA: a regional franchise tax surcharge on business activity carried out within the transportation district; a regional sales tax imposed on sales and uses of certain tangible property and services within the MTA transportation district; a portion of franchise taxes on certain transportation and transmission companies statewide; and an additional portion of statewide petroleum business taxes.
Tax revenues allocated to the DTF are subject to annual appropriation by the state legislature. The state is not bound or obligated to continue imposition of taxes and fees from which trust fund revenues are currently derived and can amend, modify, repeal, or otherwise alter statutes imposing or relating to the fund or the taxes or appropriations. As a result, the rating on the DTF bonds could not be higher than the appropriation debt rating of
The state has a track record of providing a generally reliable revenue stream to the DTF, although as part of a gap-closing plan in late 2009 the state legislature reduced the MMTOA appropriation. This was the first time an existing appropriation to the MTA from a dedicated tax that had already been collected by the state had been reduced, and there has been no further such action since that time. The state reports that its enacted budget for fiscal 2015, which began on
Total MTTF and MMTOA receipts of
MTTF receipts are transferred to the debt service account monthly in the amount of 1/5 of the next interest payment and 1/10 of the next principal payment. MMTOA receipts are applied to the debt service account to the extent MTTF receipts are not sufficient to meet the debt service requirement but have never been needed for this purpose.
Excess MTTF and MMTOA receipts are used by the MTA for capital and operating needs of the transit and commuter rail systems, including debt service on the MTA's transportation revenue bonds (rated 'A' with a Stable Outlook). The transportation revenue bonds are also secured by the MTA's operating receipts and other sources.
For more information on the MTA, see Fitch's press release 'Fitch Rates Metropolitan Transportation Authority (NY) Revs 'A'; Outlook Stable' dated
Additional information is available at 'www.fitchratings.com'.
--'Tax-Supported Rating Criteria' (
--'U.S. State Government Tax-Supported Rating Criteria' (
Tax-Supported Rating Criteria
U.S. Local Government Tax-Supported Rating Criteria
Tertiary Analyst (MTA transportation revenue credit)
Source: Fitch Ratings
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