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, which is planning a station in the Hamilton section of Novato, has learned that two ratings agencies have 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.
Novato's Judy Arnold, SMART vice chair and a member of the Marin County Board of Supervisors 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, a Novato resident and 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.