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TO: |
Board of Trustees |
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THROUGH: |
Jay Fox, Executive Director |
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FROM: |
Viola Miller, Chief Financial Officer |
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PRESENTER(S): |
Viola Miller, Chief Financial Officer |
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Brian Reeves, Associate Chief Financial Officer |
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Brian Baker, Zions Public Finance |
TITLE:
title
Potential Financing Opportunities
end
AGENDA ITEM TYPE:
Discussion
RECOMMENDATION:
Informational item for staff to receive strategic direction from the Board before moving this financing opportunity forward for review by the State Finance Review Commission and Local Advisory Council. These financing opportunities include issuance of new debt for financing capital projects, tender outstanding taxable UTA Sales Tax Bonds for savings, and refunding certain taxable bonds with tax-exempt bonds for savings as well.
BACKGROUND:
As of December 31, 2024, UTA has approximately $2 billion in outstanding senior and subordinate sales tax revenue bonds. These bonds play a crucial role in funding UTA’s transit services across a six-county region, supporting bus, light rail, commuter rail and other operations. Many of these services rely on sales tax revenue bonds to supplement capital funding.
As part of the TRAX Modernization project, which aims to enhance and expand service over the next decade, UTA selected Stadler to manufacture new light rail vehicles to replace and grow its existing fleet. Additionally, with expanded transit services in the Ogden area, UTA is investing in infrastructure improvements, including new bus canopies and facility upgrades. These capital projects are needed to sustain service delivery and require supplemental funding to move forward. UTA has pursued financial support through state and federal sources without success and are now pursuing funding through targeted bond issuances.
UTA has also identified opportunities to optimize its existing debt profile by refinancing outstanding bonds to reduce overall debt service costs. This can be achieved through two key methods: first, by conducting bond tenders, a strategy UTA has successfully executed twice; and second, by refunding certain taxable bonds with tax-exempt bonds to secure more favorable financing terms.
DISCUSSION:
UTA’s staff and Municipal Advisor, Zions Public Finance, will present information to the Board for three financing strategies to fund new capital projects, tender existing debt outstanding and refunding taxable bonds with tax exempt bonds.
After this meeting, if the Board concurs, the Authority will proceed with statutorily required consultations with the State Finance Review Commission and UTA’s Local Advisory Council. Final authorization to proceed with these financing opportunities will require future review and approval by the Board of Trustees.
ALTERNATIVES:
This proposal is subject to available capital markets, potential investor appetite and, UTA’s bond investors willingness to tender bonds.
Should the Authority not pursue this funding opportunities, the planned capital projects to replace and grow UTA’s light-rail vehicle fleet and to implement infrastructure improvements at the Ogden bus facility will be delayed and will impact delivery of service.
FISCAL IMPACT:
New issuance target total of approximately $215 million bonds with two bond issuance targets of $131 million in 2025 and $84 million in 2028.
For tendered bonds, an aggregate net present value savings of at least $5 million and a target 3-5% range.
Refunded bonds, an aggregate net present value savings amount of at least $1 million and a target 1-3% range.
ATTACHMENTS:
None