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State and local officials have agreed on a $590 million bridge loan to prop up Bay Area transit agencies until voters decide on a sales tax increase to bolster the systems.
The loan will stave off service cuts at AC Transit, BART, Caltrain and San Francisco Muni pending revenue from a proposed five-county tax hike, the Metropolitan Transportation Commission said Friday.
Without the bridge loan, the systems that carry hundreds of thousands of daily transit riders faced a deficit of more than $800 million in the next fiscal year, the commission said in a press release.
Much depends on a regional funding measure authorized by the Legislature that may appear on the November ballot in Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties.
If it qualifies for the ballot and is approved by voters, the tax measure would allow increases of 0.5% to 1% to be collected in nine Bay Area counties to generate roughly $1 billion per year for transit service.
“This agreement between my administration and the Metropolitan Transportation Commission provides essential short-term financing to support Bay Area transit operations while the region works together on long-term funding solutions,” Gov. Gavin Newsom said in a statement.
The money from the loan will become available July 1. If the sales tax wins voter support, those funds would not begin flowing until the following year, the commission said.
San Francisco Democratic Sen. Scott Wiener, who co-wrote the bill authorizing the transit tax measure, said the loan headed off a potential “death spiral” for transit agencies.
“Public transportation is part of the Bay Area’s lifeblood,” he said in a statement. “So many Bay Area residents rely on transit to get to work, school, or family, and service cuts would also explode traffic congestion. We must not let this happen, and we won’t let it happen.”
The loan agreement uses money awarded but not yet allocated for Bay Area projects by the California Transportation Commission through the state Transit Intercity Rail Capital Program, according to the MTC.
It calls for repayment over 12 years, with interest-only payments during the first two years.
Payments are secured by the “revenue-based” portion of State Transit Assistance that goes directly to the transit agencies, the MTC said.
Interest rates are variable so the state is repaid at the same rate it would have earned had the funds remained in state accounts, the commission said.
