Oct 31 New York's Metropolitan Transportation Authority faces "very significant" repair costs following massive storm Sandy, adding a still-unknown burden to a system that had already cut its proposed capital budget, the state comptroller said on Wednesday.
The state agency operates New York City's subway and buses, as well as commuter trains serving surrounding suburbs and various bridges and tunnels.
The fierce storm flooded subway tunnels and certain key road tunnels that link Manhattan and will add unexpected spending for the authority, which is a big borrower in the $3.7 trillion municipal bond market, State Comptroller Thomas DiNapoli said in an interview on CNBC.
"The issue with the MTA is not just short-run -- how soon will the trains be running? -- but what will be the repair costs. They are obviously going to be very significant," DiNapoli said.
The MTA, the nation's largest mass transit operator, already needed at least $20 billion from 2015 to 2020 to keep its system in good repair, according to a report issued Oct. 2 by DiNapoli.
"The MTA has had its own financing troubles, particular with regard to their capital program," DiNapoli said. "They obviously weren't anticipating the kind of damage that this storm has brought. So, long term, where we are at with financing for the MTA is a very unclear picture."
Subway service in New York City, which has been shut down since Sunday evening ahead of the storm, was scheduled to resume to Thursday on a limited basis. Full bus service resumed on Wednesday.
The MTA had planned to tap the primary market this week with $259 million variable rate refunding bonds, but the deal might be postponed as underwriters have been forced to shut down their business while Sandy ravaged the New York metropolitan area. Though the activity was slowly resuming and the bond market was open on Wednesday, a date for the MTA bonds has not yet been set. JP Morgan is the lead manager for the sale.
The MTA's debt outstanding is expected to rise to $40 billion in 2016 from $31.8 billion at the end of 2012, according to DiNapoli's early October report.
The MTA's current capital program, running from 2010 to 2014, totals about $22 billion, down from an initial $28 billion of proposed spending due to inadequate funding.
On Wednesday, DiNapoli said New York officials were assessing damages from Sandy and declined to estimate overall damages and lost business for New York's economy and governments.
"In the short run it is going to be a negative impact," DiNapoli said. "If you look at Hurricane Irene, tropical storm Irene (in 2011), the cost to the state and local governments in New York was about $1.2 billion, and that was just for recovery and cleanup."