The Alameda Corridor Transportation Authority (ACTA) on Thursday authorized the sale of approximately $1.2 billion in bonds, the centerpiece of the funding package for the rail cargo expressway project.
"This is the last critical point before full-scale construction," said Los Angeles City Councilman Rudy
Svorinich, Jr., chairman of the ACTA Governing Board. "Selling the bonds is the last thing we do before we start digging dirt."
ACTA, a joint-powers authority between the cities and ports of Long Beach and Los Angeles, is building a 20-mile railroad freight expressway linking the ports to the transcontinental rail yards just east of downtown Los Angeles. The project will speed the shipment of cargo and improve the flow of rail and vehicle traffic by consolidating rail lines and eliminating more than 200 street-level railroad crossings.
Wall Street rating agencies are expected next week to release their ratings on the bonds, which will determine interest rates to be paid. ACTA officials said that based upon the strength of the project, they anticipate a very favorable rating. The bonds are scheduled to be made available for sale the week of Jan. 11.
The bond debt will be retired with revenues from fees paid by railroads for use of the Alameda Corridor. The railroads will pay $30 per 40-foot shipping container, $8 per empty container and $8 for other types of railroad cars, such as tankers and coal carriers. Over a 30-year period, the fees will increase between 1.5 percent and 3 percent per year, depending on inflation.
All debt is to be paid off within 35 years of the scheduled date of project completion in early 2002. Independent consultants have projected steady growth in cargo container traffic at the ports, resulting in a revenue stream more than sufficient to pay off the debt.
ACTA has taken several steps to ensure project completion and repayment of debt. These precautions include nine months of interest payments built into the budget, a $200 million contingency fund and authority to sell more than $100 million in completion bonds.
"We have woven a very broad and secure safety net to protect our project, our bondholders and our other creditors and to keep corridor work on-time and on-budget," ACTA CEO Jim Hankla said.
Funding sources for the $2.4 billion project include:
$1.165 billion in bond proceeds.
$400 million loan from the U.S. Department of Transportation.
$394 million in grants from the ports.
$347 million administered by the Los Angeles County Metropolitan Transportation Authority.
$154 million in other state and federal sources and interest income.
The Alameda Corridor is among the largest public works projects in the nation. Various construction projects began in April 1997, and actual excavation of the trench is expected to commence in mid-1999.
The completed project is scheduled to open in early 2002.