Metropolitan Transportation AuthorityPresentation to
Bank of America Merrill Lynch2018 New York Municipal Investor Conference
Transportation and Economic Development PanelSeptember 14, 2018*
*This presentation is subject to the disclaimers on the following page and will be removed from the MTA Investor website on September 20, 2018
Disclaimer
• The information contained in this Investor Presentation has been prepared by MTA to provide, for the convenience of persons and entities which may in the future consider investing in MTA's bonds, a brief overview of MTA, its operations and capital programs and its currently outstanding credits. It is not intended to and should not be used as a basis for making any investment decisions. Any decision to invest in bonds issued under any of MTA's multiple credits should be made only on the basis of a review of the preliminary official statement and final official statement or other disclosure materials for the related bonds, which should be read in their entirety.
• Many statements contained in this Investor Presentation are forward‐looking statements rather than historical facts. Such statements are based on assumptions made by and information currently available to MTA. Because the forward‐looking statements are based on expectations about future events and economic performance, actual results may differ materially from those projected. The words "estimate", "projection", "plan", "forecast" or similar words are intended to identify such forward‐looking statements.
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Who We Are, What We DoMTA’s essential transportation network in NYC Metro Area
• MTA is the primary mass transportation provider in the New York City metropolitan area, covering over 5,000 square miles and serving a population of over 15.3 million
• MTA’s Network includes:• New York City Transit• Manhattan and Bronx Surface Transit
Operating Authority (MaBSTOA) • MTA Bus Company• Staten Island Railway• Long Island Rail Road• Metro‐North Railroad• Bridges and Tunnels
• MTA serves the five boroughs of NYC and seven New York suburban counties and southern CT
• System Facts:• 2.7 billion annual ridership• 8.6 million average weekday paid rides• 2,952 bus route miles• 2,080 subway and commuter rail track miles• 741 stations (472 subway, 21 Staten Island, 124
LIRR, 124 Metro‐North)• 7 bridges• 2 tunnels
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($ in millions) Actual2017
Mid‐Year Forecast
2018
PreliminaryBudget2019
Projected 2020
Projected2021
Projected 2022
Operating Revenue:
Fares, Tolls and Other Revenues 8,737 8,788 8,852 8,945 8,982 8,990Dedicated Taxes and State/Local Subsidies 6,416 7,147 7,221 7,394 7,631 7,879
Total Operating Revenue 15,153 15,935 16,073 16,339 16,613 16,869Expenses:
Labor Expenses 9,373 9,942 10,216 10,566 10,925 11,234Non‐Labor and Other Expenses 3,505 3,840 3,754 3,723 3,850 3,933Expense Adjustments (including General Reserve) 49 303 319 248 211 203Debt Service (excludes Service Contract Bonds) 2,525 2,575 2,731 2,888 3,124 3,270
Total Operating Expenses with Debt Service 15,452 16,660 17,020 17,425 18,110 18,640
Net Surplus/Deficit After Subsidies and Debt Service (300) (725) (946) (1,086) (1,497) (1,771)
Conversion to Cash Basis 173 459 337 185 123 132
Cash Balance Before Prior Year Carryover (127) (267) (609) (901) (1,374) (1,639)
Adjustments 0 155 604 635 950 1,005Prior‐year Carryover 248 121 9 4 0 0Net Cash Balance 121 9 4 (262) (424) (634)
Notes:1) Total operating expenses with debt service excludes non‐cash liability adjustments for depreciation, OPEB obligation, and environmental remediation2) Adjustments are below‐the‐line adjustments affecting revenue and expense totals that have not yet been allocated to Agencies3) Numbers may not total due to rounding
Preliminary Budget 2019 and July Financial PlanSummary of MTA Consolidated Statement of Operations by Category
($ in millions)
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
2018 July Plan
2017 November Plan
2016 November Plan
2015 November Plan
2014 November Plan
2013 November Plan
2012 November Plan
‐Identified/Implemented initiatives are represented with a solid line‐Projected savings targets are represented with a dashed line
Aggressive Savings TargetsAnnually recurring savings targets are added in Financial Plans
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• Latest MTA initiatives and investments to address reliability and service• Subway Action Plan• LIRR “Forward”• Bus Improvement Plans• Metro‐North “Way Ahead”• NYCT “Fast Forward”
Network Investments and InitiativesMaking strides, but funding challenges remain
• Imperatives and challenges• Securing new sustainable revenues• Implementing biennial fare and toll increases that net to 4% in March 2019 and March 2021• Achieving increased cost reduction targets• Successfully implementing the initiatives to address reliability and service
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• Effective January 16, 2017, MTA New York City Transit and MaBSTOA entered into a 28‐month labor contract agreement extension with TWU Local 100
• This agreement, which has been ratified by the TWU membership and approved by the MTA Board, has an expiration date of May 15, 2019
• Additional costs from agreement already incorporated into the budget• Other smaller unions traditionally follow the TWU pattern
• LIRR settled with all of its unions, following TWU pattern
• MNR has settled with six of its unions; negotiations ongoing with remainder• Financial Plan included projected wage base consistent with LIRR’s pattern
Labor and PensionsMaking strides in labor agreements and improving funding ratios for MTA’s sponsored pension plans
• Funding Ratios for MTA Sponsored Pension Plans (as of January 1, 2017)• MTA Defined Benefit Pension Plan – 71.8%• MaBSTOA Pension Plan – 72.3%• LIRR Additional Pension Plan – 50.9%
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• Management and governance structure, policies and procedures have supported stable financial operations through stress scenarios
• Early 1990’s and 2000’s recessions• September 11 Terrorist Attacks• Global Financial Crisis of 2008• Superstorm Sandy and other weather‐related events• Labor Actions (e.g. TWU Local 100 strike, December 2005)
• Liquidity and conservative fiscal approach protect financial operations• General reserve funded annually equal to 1% of cash budget• $700 million JP Morgan line of credit ($693 million available)• Insurance provides business interruption coverage
• On‐going and innovative initiatives enhance MTA’s fiscal stability and flexibility• Cost cutting/efficiency improvements• Fuel hedging for budget stability• Independent, disciplined and transparent fare and toll increases• Supplemental capital markets reinsurance program through MetroCat Re Ltd (catastrophe bonds)
30+ Year Record of Fiscal Stability and System Resiliency Sound financial operations and management initiatives successfully mitigate stress events and downturns
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$15.3$16.7 $17.1
$23.7 $24.1
$33.3
$0
$5
$10
$15
$20
$25
$30
$35
1982‐1991 1992‐1999 2000‐2004 2005‐2009 2010‐2014 2015‐2019
Total Per Capital Program$ in billions
Note:The 2010 – 2014 Capital Program funding level does not include approximately $7.9 billion for resilience and mitigation projects related to Superstorm Sandy (federal funding)
Commitment to Capital InvestmentOver $125 billion invested in MTA transportation network since 1982
• Since 1982, MTA focuses capital investment to stabilize, renew, enhance, and expand the system
• 20‐Year Needs Assessment defines MTA’s long term goals and objectives to:
• Preserve and maintain the system in a state of good repair
• Provide for the region’s future travel needs based on projected economic and demographic growth and changes
• Establishes the foundation for MTA’s near term, 5‐year capital programs
• Every five years, capital programs prioritize projects identified in the 20‐Year Needs Assessment
• Program is first approved by the MTA Board• Capital programs for transit and commuter projects are
then submitted by October 1 to the Capital Program Review Board (CPRB) for approval or rejection, in accordance with NY PAL §§ 1269‐B and 1259‐C
Strategic Capital Program Planning and Execution20‐Year needs assessment provides long‐term planning; 5‐year capital programs prioritize projects
20‐Year Needs Priority Areas(Latest Assessment published Oct 2013)
• Prevent capacity and reliability backslide, maintain State of Good Repair/Normal Replacement
• Complete projects addressing longstanding problems
• Possible strategies to address current trends and support future growth:• Overcome subway capacity obstacles• Optimize the transit, commuter rail, and bus network
• Create a “21st Century” transit system• Develop a “resilient” MTA network
NEXT 20‐Year Needs Assessment expected to be published in January 2019
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Funding Sources
Program Funding Plan ($ mm) % of Total
Federal Formula, Flexible and Misc $6,701 20.1%
Federal Core Capacity 100 0.3%
Federal New Starts 500 1.5%
MTA Bonds 7,968 24.0%
Pay‐as‐you‐go Capital (PAYGO) 2,145 6.5%
State of New York 8,640 26.0%
City of New York 2,666 8.0%
Asset Sales/Leases 1,018 3.0%
Other MTA Sources 595 1.8%
Total 2015‐2019 CPRB Program $30,334 91.2%
Bridges and Tunnels Bonds ($2.36 b) & PAYGO ($551 m) 2,936 8.8%
Total Capital Program $33,270 100%
Funding by Agency
Program Elements ($ mm) % of Total
Core Capital Program
New York City Transit $16,742 50.3%
Long Island Rail Road 2,859 8.6%
Metro‐North Railroad 2,462 7.4%
MTA Bus 376 1.1%
MTA Interagency 243 0.7%
Core Subtotal $22,682 68.2%
Network Expansion Projects(Second Ave Subway, East Side Access) 7,652 23.0%
Total 2015‐2019 CPRB Program $30,334 91.2%
Bridges and Tunnels 2,936 8.8%
Total Capital Program $33,270 100%
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Notes: 1) MTA Capital Program 2015‐2019 as of Amendment No. 3, approved by the MTA Board on April 25, 2018 and the CPRB on May 31, 20182) Numbers may not total due to rounding
2015 – 2019 Approved Capital ProgramRenew, Enhance, Expand
Transportation Revenue$24,599 63.5%
Dedicated Tax Fund$5,336 13.8%
TBTA General$7,581 19.6%
TBTA Sub$1,224 3.2%
Debt by Credit
Notes:1) Debt Outstanding reflects the $146.5 million draw dated 9/20/2016 on the Railroad Rehabilitation and Improvement Financing Program loan (RRIF Loan)/TRB Series 2015X2) Debt by Credit chart incorporates BANs into their respective credits3) Term Rate bonds have a fixed rate for a defined period (until the mandatory tender date) and do not have a fixed rate for the entire life of the bonds4) Excludes $246.4 million Special Obligation Bonds and $1.057 billion Hudson Rail Yards Trust Obligations5) Numbers may not total due to rounding
(1)
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MTA Debt Overview$38.7 billion – Debt Outstanding on Core Credits (as of 8/31/2018)
Fixed Rate$30,264 78.1%
Synthetic Fixed Rate$2,098 5.4%
Variable Rate$2,297 5.9%
Bond Anticipation Notes (BANs)
$3,100 8.0%
Term Rate$981 2.5%
Debt by Type
$ in millions
-
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
$ in Millions
TRB DTF TBTA Sen TBTA Sub
Debt Service on Outstanding Bonds by CreditStated Debt Service as of 8/31/2018
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• Transportation Revenue Bonds• Strengths include MTA as dominant regional mass transit provider, overall sound financial management, diverse
revenue base and gross revenue pledge
• Dedicated Tax Fund Bonds• Strengths include diverse mix of dedicated taxes levied either statewide or in the MTA district, long record of state
support and ample debt service coverage
• TBTA General and Subordinate Resolution Bonds• Strengths include TBTA facilities providing critical transportation links for the region, strong historical financial
performance and solid debt service coverage levels
Notes:*On August 9, 2018, S&P downgraded MTA’s Transportation Revenue Bonds from A+ to A with a negative outlook under its Mass Transit Enterprise Ratings criteria**NAF = Not applied for
Credit Moody’s S&P Fitch KBRATransportation Revenue A1
StableA
Negative*AA-
StableAA+
Dedicated Tax Fund NAF** AAStable
AAStable
NAF**
TBTA – General Resolution Aa3Stable
AA-Stable
AA-Stable
AAStable
TBTA – Subordinate Resolution A1Stable
A+Stable
A+Stable
AA-Stable
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MTA and TBTA Credit RatingsStrong ratings reflect core mission and financial discipline
MTA Flow of Funds
TBTA O&M(and Other Adj)
Transportation Revenue Bonds Gross Pledged Revenues
FareboxRevenue
(Transit, Bus,Commuter
Rail)
Other Operating & Investment Income
Real Estate Tax (Urban Tax and
Mortgage Recording Tax)
Bridges and Tunnels
Toll Revenue
State, Local and City Subsidies
TBTA Bonds Debt Service
Available for Operations
DTF BondsDebt Service
TRB Debt Service
TBTA Surplus
Non‐Pledged Revenues (Concession revenue Penn and GCT, and
Other)
DTF Excess MMTOA
MMTOA(Sales Tax, PBT, Franchise Tax and Other)
MTTF (Motor Fuel Tax, PBT, MV Fees)
PMT, PMT Replacement and Aid Trust
Receipts
General Transportation
Account
Subway Action Plan Account
Outer Borough Transportation
Account
New York City Transportation Assistance Fund
Pledged Revenue Non‐Pledged Revenue
Pledged Revenue
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• BAN Program• BAN transactions typically ranging from $500 million to $1 billion in size• Sold via competitive method of sale • Minimum bid size of $25 million, with increments of $5 million, to facilitate wider participation• Bids awarded based on lowest true interest cost• Low cost short‐term financing• Better able to match assets and related debt liability once bonds are issued
• Green Bonds (Climate Bond Certified)• MTA’s inaugural 2016 issuance of green bonds was first Climate Bond Certification in the U.S.• Certified under the Climate Bonds Initiative’s (CBI) Climate Bonds Standards using the Low Carbon Transport
criteria• The Low Carbon Transport criteria establishes the transportation projects that are applicable for certification;
projects are determined eligible if they are compatible with an emission trajectory that limits global temperature rise to 2○ C
• Each year, MTA’s network helps avoid net ~17 million metric tons (MMT) of Greenhouse Gas (GHG) emissions
• $11.3 billion of projects identified from the 2010‐2014 Capital Program that conform to the CBI’s Low Carbon Transport criteria; value level against which bonds are issued on a programmatic approach
• $5.7 billion MTA green bonds issued since 2016
Financing ApproachesUtilizing BANs for ability to match assets and debt liability; green bonds to expand and diversify investor base
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• Why SOFR?• SOFR was identified by the Alternative Reference Rate Committee (ARRC) as best suited for replacing LIBOR,
which is slated to be phased out by the end of 2021
• SOFR is an index published by the Federal Reserve Bank reflecting overnight borrowing rates collateralized by Treasuries
• SOFR is based on actual transactions in a deep and growing market with an average daily volume of approximately $800 billion
• The Federal Reserve Bank publishes the SOFR on its website: https://apps.newyorkfed.org/markets/autorates/sofr
Financing ApproachesForward thinking debt management – MTA anticipates utilizing SOFR index as LIBOR is phasing out by end of 2021
• TBTA General Revenue Variable Rate Bonds, Series 2001B (SOFR Tender Notes), $107.28 million
• MTA is planning its inaugural issuance of Secured Overnight Financing Rate (SOFR) Tender Notes
• Expected to be the first issuance of debt instrument bearing SOFR rate in the municipal market (other issuers of SOFR notes include Fannie Mae, the World Bank, and MetLife)
• TBTA Series 2001B Bonds will be tax‐exempt and will bear interest in the Term Rate Mode at a variable rate equal to the Adjusted SOFR Rate (67% of SOFR plus per annum spread, to be determined at pricing)
• Pricing scheduled for Thursday, September 20, 2018
• Preliminary Remarketing Circular available on EMMA and on MTA Investor website under Upcoming Transactions: http://web.mta.info/mta/investor/new/upcoming‐transactions.htm
MTA Investor ContactAvailable as a direct resource for any questions
For more information:
Investor Contact:Marcia Tannian
Deputy Director, Finance(212) 878‐7278
Connect: http://web.mta.info/mta/investor/https://twitter.com/MTABonds
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