APPENDIX B The Commonwealth of Massachusetts Commonwealth Transportation Fund Revenue Bonds Federal Highway Grant Anticipation Notes Rating Agency Presentation $350,000,000* Commonwealth Transportation Fund Revenue Bonds (Rail Enhancement & Accelerated Bridge Programs), 2017 Series A $151,255,000* Commonwealth Transportation Fund Revenue Refunding Bonds, 2017 Series A $142,640,000* Federal Highway Grant Anticipation Notes (Accelerated Bridge Program), 2017 Series A * Preliminary, subject to change
Table of Contents 1. Introduction 1 2. Revenues and Bondholder Security 2a. Commonwealth Transportation Revenue Bonds 7 2b. Federal Highway Grant Anticipation Notes 15 3. Projects to be Financed 19 4. Pro Forma Debt Service Coverage 21 5. Conclusion and Financing Schedule 28 6. Appendix 31
1. Introduction
Transaction Summaries* Commonwealth Transportation Fund Revenue Bonds, 2017 Series A 2017 Series A – Preliminary Amortization by Maturity Year Principal Amount: $350,000,000* Due Due (06/01) Amount (06/01) Amount Interest Payment Dates: June 1 and December 1, 2019 $3,270,000 2036 $14,130,000 beginning June 1, 2018 2020 3,370,000 2037 13,825,000 2021 3,475,000 Final Maturity Date: Due June 1, 2047 2022 3,610,000 2042 Term Bond Security: Amounts credited to the Commonwealth 2023 7,410,000 2042 $80,740,000 Transportation Fund, the primary sources of which are 2024 7,780,000 the Motor Fuels Tax and Registry Fees 2025 8,125,000 2047 Term Bond 2026 8,490,000 2047 $93,005,000 Use of Proceeds: Proceeds from the 2017A CTF Bonds 2027 9,640,000 will be used to fund costs of certain transportation 2028 10,065,000 projects of the Commonwealth under the: 2029 9,850,000 − Accelerated Bridge Program ($50,000,000*) 2030 10,935,000 − Rail Enhancement Program ($300,000,000*) 2031 11,410,000 Current Ratings on Parity Bonds: ____/_____ 2032 11,915,000 (S&P/Moody’s) 2033 12,440,000 2034 12,975,000 Optional Redemption: Maturities from 2026 – 2035 will 2035 13,540,000 be subject to optional redemption on any date after June 1, 2024. Maturities on or after June 1, 2036 will be subject to redemption on any date after June 1, 2027. * Preliminary, subject to change 1
Transaction Summaries* Commonwealth Transportation Fund Revenue Refunding Bonds, 2017 Series A 2017 Refunding Series A – Preliminary Amortization by Maturity Year Due Principal Amount: $151,255,000* (06/01) Amount 2027 $12,625,000 Interest Payment Dates: June 1 and December 1, beginning June 1, 2018 2028 12,845,000 2030 6,715,000 Final Maturity Date: Due June 1, 2043 2031 7,485,000 Security: Amounts credited to the Commonwealth 2032 8,335,000 Transportation Fund, the primary sources of which are 2033 6,400,000 the Motor Fuels Tax and Registry Fees 2034 10,325,000 Use of Proceeds: Proceeds from the 2017A CTF 2035 11,430,000 Refunding Bonds will be used to refund certain 2036 12,630,000 outstanding Prior CTF Bonds 2038 15,575,000 Current Ratings on Parity Bonds: ___/___ 2039 7,125,000 (S&P/Moody’s) 2040 8,035,000 2041 9,025,000 Optional Redemption: The bonds are not subject to 2042 11,380,000 optional redemption 2043 11,325,000 * Preliminary, subject to change 2
Transaction Summaries* Federal Highway Grant Anticipation Notes, 2017 Series A Principal Amount: $142,640,000* Interest Payment Dates: June 15 and December 15, beginning June 15, 2018 2017 RefundingSeries A – Preliminary Amortization by Maturity Year Final Maturity Date: Due June 15, 2027 Due (06/15) Amount Security: Federal Highway Reimbursements and net amount 2021 $9,675,000 credited to the Commonwealth Transportation Fund 2022 9,960,000 Use of Proceeds: Proceeds from the 2017A Notes will be used 2023 10,255,000 to fund additional costs of the Accelerated Bridge Program and 2024 37,505,000 to refund certain outstanding Prior GANS 2025 24,240,000 Current Ratings on Parity Notes: ___/___ (S&P/Moody’s) 2026 25,040,000 Optional Redemption: Each maturity will be subject to 2027 25,965,000 redemption on any date on and after the June 15 immediately preceding the applicable maturity date at the option of the Commonwealth and as determined at pricing * Preliminary, subject to change 3
Introduction to the GANs and CTF Credits Massachusetts’ Federal Highway Grant Anticipation Notes (GANs) are issued for the Accelerated Bridge Program (ABP) − $940 million (which amount includes net premium) issued to date with $1.108 billion authorized Massachusetts’ Commonwealth Transportation Fund (CTF) Revenue Bonds are issued under two programs: − Accelerated Bridge Program (ABP) - $1.770 billion (which amount includes net premium) issued to date with $1.876 billion authorized − Rail Enhancement Program (REP) - $729 million (which amount includes net premium) issued to date with $6.7 billion authorized Accelerated Bridge Program Pursuant to the Accelerated Bridge Program Act, the Commonwealth commenced a program to finance the accelerated capital improvement of bridges and related infrastructure. Intended to provide financing for the design, construction, reconstruction and repair or improvements to bridges and approaches. Since the ABP commenced, 268 structures have been replaced, renovated or preserved. Of the 200 projects that have received notices to proceed since the program began, 76% of the projects are trending on budget and 68% are on track to be completed by their original contract completion dates. The Program exceeded its primary goal of reducing the number of structurally deficient bridges to below 450 by the program target date of September 30, 2016. Rail Enhancement Program Authorized by Chapter 79 of the Acts of 2014 to provide for the issuance of either general obligation or special obligation bonds to fund capital expenditures of MassDOT for the benefit of the MBTA and for other rail improvements in the Commonwealth Intended to provide financing for certain significant rail improvement projects in the Commonwealth outside the MBTA’s regular capital program MassDOT expects to fund portions of the following seven major REP projects with bond proceeds Green Line Extension Silver Line to Chelsea Orange and Red Line Project Casey Overpass South Coast Rail Expansion Fairmount Line Improvements Knowledge Corridor 4
Key Credit Strengths: Commonwealth Transportation Fund Key CTF Credit Points • Pledged revenues include fuel and non-fuel sources with Motor Fuels Tax and Registry Fees • Statewide taxes and fees, on large and diverse regional economy Diverse and Stable • Revenue collections are strong with diversity in timing State-wide Revenue • The Commonwealth increased the annual CTF Pledged Revenues base by over $120 million per year in Stream conjunction with authorizing the CTF Rail Enhancement Bonds • Payment of CTF Bonds from CTF Pledged Funds requires legislative appropriation annually Appropriation • However, if no appropriation is made for debt service, funds in the CTF may not be utilized for any other purpose Debt Service • Strong debt service coverage of approximately 8.1x based on actual FY2017 CTF revenues of $1.349 billion Coverage After 2017 Series A Issue* • Pledged Funds for any 12 consecutive months during the last 18 months must be at least 4.0x future MADS, Additional Bonds Test including all parity bonds • Trust Agreement does not allow the Commonwealth to change the rate of the Registry Fees or the Motor Fuels Tax unless Net Pledged Revenues exceed 4.0x MADS coverage after the changes • NO Pledged Funds may be applied to “any other use” until appropriation has been made sufficient to pay Commonwealth Rate Covenants principal and interest • Article 78 – State Constitution requires all revenue from vehicle, fuel and motor vehicle license and registration fees be used for transportation purposes only • Advance monthly set asides for payment of principal and semi-annual interest on a 1/10th and 1/5th basis, Debt Service Fund respectively *Preliminary, subject to change 5
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