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SMART Says Taxpayer Money Saved with Strong Bond Ratings

Rail authority to sell bonds in the coming weeks as construction ramps up for the commuter line between Santa Rosa and San Rafael.

The Sonoma-Marin Area Rail Transit is beaming about its strong bond ratings and how it will save taxpayer money as construction on the commuter rail line moves into full swing.

SMART said this week that two ratings agencies examined SMART’s financials and issued “AA” & “A” ratings respectively, saving dollars from taxpayers in Marin and Sonoma County. SMART plans to sell bonds in the next two weeks.

Marin County Supervisor and vice chair of the SMART board Judy Arnold, said she was thrilled with the news.

“Achieving an ‘AA’ rating is yet another sign that SMART is on track,” she said.  “This rating will reduce the cost of borrowing against our future sales tax revenues, allowing us to look at ways to speed up the timeline or extend the work in Phase I.”

SMART board chair Valerie Brown said General Manager Farhad Mansourian and his staff, including Chief Financial Officer Erin McGrath, deserve kudos for showing the ratings agencies that SMART is on solid financial footing.

“We weren’t sure what the ratings agencies would say about SMART’s credit-worthiness, but none of us expected ‘AA’ ratings,” Brown said. “As SMART goes to market to sell its bonds, an ‘AA’ rating will has the potential to save a lot of taxpayers’ money. ... This is a ringing endorsement for SMART and its leadership team.”

Mansourian, the former head of the Marin County Department of Public Works, deflected credit to his staff.

“(They) really sharpened their pencils and presented a thought out proposal to Fitch and Standard & Poors rating agencies,” he said. “We got grilled hard by the ratings agencies and exceeded expectations with Fitch issuing an ‘A’ rating and Standard & Poors issuing an ‘AA’ rating — very impressive for the first time an agency seeks to sell bonds.”

In the past three months, SMART has issued $171 million in bonds. The sale was held up pending the resolution of the effort to repeal SMART’s sales tax. With the failure of the Repeal SMART effort, SMART is proceeding to market to sell the bonds in the next two weeks.

SMART has also awarded a $103 million contract to a Bay Area construction firm created by joint venture between Stacy and Witbeck as well as Herzog Contracting Corp. to step up the work on Phase I of the SMART train between North Santa Rosa and the San Rafael transit center.

The rail authority predicts the contract will create 1,000 jobs in the North Bay this year.

kbf April 08, 2012 at 08:10 PM
Having issued literally $billions in bonds and met with S&P, Moody's, Fitch and other rating agencies countless times, I can say that the above is pure nonsense issued by self serving bureaucrats who know very little about what they're doing. The ratings have nothing to do with SMART, but everything to do with the source of repayment for the bonds which is the .25% dedicated increase in sales tax imposed in Marin and Sonoma.
Scott April 09, 2012 at 12:28 AM
Who wrote this article? It couldn't have been a real journalist because it is so blatantly a piece of PR being set up as actual unbiased "news." It's a real discredit to the Patch not to either research and question what they're being fed or not to disclose it as an advertisement for this agency.

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