San Luis Obispo Regional Transit Authority Secures Loan with the United States Department of Transportation to Finance a New Bus Operations and Maintenance Facility
San Luis Obispo, CA September 15, 2020
The San Luis Obispo Regional Transit Authority (RTA) has secured a $13.1 Million Transportation Infrastructure Finance and Innovation Act (TIFIA) Loan with the United States Department of Transportation (U.S. DOT) to finance the construction of a new operations and maintenance facility (Project). The recent RTA Board approval and financial close of the TIFIA Loan mark the culmination of a comprehensive funding strategy for the Project, also comprised of Federal and State grant funds and an interim and permanent loan facility with Pacific Western Bank.
The TIFIA Loan will fund 49% of the $26.7 Million total Project costs, which includes expenditures related to land purchase, environmental, and design in addition to construction.
Securing the TIFIA Loan is an important milestone for the RTA’s Project and also for the U.S. DOT. The Project was the first to qualify and receive TIFIA Loan assistance under the Rural Project Initiative (RPI). RPI is an important initiative of the U.S. DOT designed to encourage greater utilization of the TIFIA Program for projects in communities with a population of less than 150,000 and that have a total cost of under $75 million. The RPI program authorizes credit assistance for such projects and offers an interest rate that is fifty percent (50%) of the comparable treasury rate, which in today’s low interest rate market is under 1% for a 35-year loan.
After locking-in a TIFIA Loan rate of 0.70% on September 3, the fixed, equal annual repayment requirement over a 35-year term is less than the RTA’s annual lease payments on their current facility. Geoff Straw, RTA Executive Director, stated “We are grateful for the partnership between the RTA and US DOT under the TIFIA/RPI borrowing program to finance this important Project for our organization. The ability to finance and construct the new facility allows the RTA to continue our mission of providing safe, reliable and efficient transportation services that improve and enhance the quality of life for the citizens and visitors of San Luis Obispo County.”
KNN Public Finance, LLC, a municipal advisory firm, advised and assisted the RTA with the acquisition of the loan. “After a detailed analysis of borrowing options, the TIFIA/RPI program offered the RTA significantly reduced borrowing costs relative to public and private market alternatives. As the financial impact of the COVID pandemic has been particularly acute for transit agencies, the RTA’s ability to borrow under the RPI program offers important budgetary benefits over the near-term and longer-term horizon,” said Melissa Shick, Director at KNN and advisor to the RTA. Also, Nossaman LLP served as special finance counsel.
The new facility will be located along US Highway 101 at the northbound Prado Street exit. It will be 28,650 square feet and will house transit operations, administration, dispatch, and vehicle maintenance. This includes bus parking for much of the RTA fleet and the site will also allow for future inclusion of battery electric bus chargers and a solar canopy. The Project broke ground in July 2020 and construction is expected to be completed by December 2021. San Luis Obispo based Specialty Construction was awarded the construction contract.