The agency managing a 23-mile Metrorail extension to Dulles Airport plans to start a $650 million bond sale this month, hoping to capture a mammoth federal subsidy offered through the stimulus package.
Under the stimulus’s “Build America Bonds” initiative — which is set to expire at the end of the year — the federal government helps municipalities pay for infrastructure projects by footing the bill for 35 percent of the interest on the projects’ debt. President Obama has proposed to make the subsidy permanent, though smaller.
Officials at the Metropolitan Washington Airports Authority are using that program to defray part of the costs of financing the more than $5.2 billion rail extension. The agency is pressing forward on the bond sale in mid-May to get ahead of other government borrowers looking to tap the subsidy before it either shrinks or disappears, said Deputy Chief Financial Officer Andrew Rountree.
“We wanted to be on the front end of that curve so that we weren’t competing with everybody else in the market trying to do last-minute [Build America Bonds] sales,” Rountree added.
The debt will be paid down with proceeds from the Dulles Toll Road.
The airports authority last year issued the first in a series of bonds that will pay for Dulles Rail, which received an A rating from Standard and Poor’s and an A2 rating from Moody’s Investors Service.
The upcoming round of bonds received a lesser rating. Moody’s, which rated the bonds a less stellar Baa1 and Baa2, cited risks including the potential for slow toll revenue growth, construction cost overruns and the possible loss of the Build America Bonds subsidy.
Rountree met with potential investors in New York late last week.
“I expect very good demand for what we’re going to offer,” he said.
The Metrorail extension is split into two parts. The initial leg — running from Falls Church to Reston — is now under construction and slated for completion in 2013. The final phase running into Loudoun County is slated to be complete in 2016.
